Different EXAM FX chapter test questions pt.1

A personal auto policy has bodily injury limits of 50/100. Three persons are injured in the same accident and each claim $40,000 for bodily injury. How much will the policy pay out in total?

$100,000

Coverage E - Must be added via endorsement on which dwelling policy:

Basic

On a personal auto policy, all of the following are duties after a loss except

Accept payment directly from the party whose car you damaged.

Which of the following grants express authority to an agent?

Agent's contract with the insurer.

Which of the following contractual elements consists of the offer and the acceptance?

Agreement

Who is considered a nonresident agent?

An agent who resides and is licensed in another state, but who is authorized to transact insurance in this state.

An insured insists that the insurer owes him $10,000 for liability damages, while the insurer asserts that they owe no more than $7,000. Which of the following would most likely describe the type of claim settlement that the insured and the insurer might pursue?

Arbitration

A couple bought tickets to a college hockey tournament. At the game, a stray puck flies into the stands and hits the wife in the face, breaking her nose. Which legal defense may bar her from recovering damages for the injury she received at the hockey game?

Assumption of risk

Which of the following defenses attests that if a person recognizes and understands that there is danger involved in an activity and voluntarily chooses to encounter it, he or she may be barred from seeking recovery for injury due to negligence?

Assumption of risk

All of the following terms are used to describe an insurance contract EXCEPT:

Bilateral

Which of the following coverages provides payment to a third party, instead of to the named insured?

Bodily Injury and property damage liability coverage.

All of the following are key features of Dwelling policies except?

Cannot have any roomers residing in dwelling

All of the following are elements of insurable Risk EXCEPT

Catastrophic

Which part of an insurance contract sets forth the rules of conduct, duties and obligations of the insured and the insurer?

Conditions

Of the following, which is true about coverage C on a dwelling policy?

Coverage C is not included unless listed on the declaration page and a premium is charged.

On a personal auto policy, which of the following is not covered under other than collision coverage?

Crashing into a tree

Additional Coverages in a homeowner policy would cover:

Debris removal

On an HO policy, where would you look to see who is covered as an insured?

Declarations

What term includes damage where the insured peril was the proximate cause of loss?

Direct loss

An insurance company is domiciled in Montana and transacts insurance in Wyoming. Which term best describes the insurer's classification Wyoming?

Foreign

What type of compensatory damages will pay for pain and suffering and disfigurement?

General

All of the following are needed to qualify for an insurance license EXCEPT

Have a Bachelors Degree

Which of the following organizations has the primary responsibility forms for the standard market?

Insurance Services Office

What part of an insurance contract shows the insurers promise to pay?

Insuring Agreement

Val-U insurance company's main goal is to collect sufficient premiums to pay for the insured losses, to cover the costs of expenses and to make a reasonable profit. Val-U predicts the incurred expenses while still allowing for a margin of error. The ultimate premium charged will be reduced by which of the following?

Investment income

All of the following statements describe the concept of strict liability EXCEPT

It is imposed on defendants engaged in hazardous activities.

Which of the following lists all the required elements for establishing a charge of negligence?

Legal duty owed, standard of care, proximate cause, damages

DP Policies Coverages automatically include all of the following EXCEPT

Liability

A contractor who builds homes has never made a claim on his business insurance policy. His agent discovers that his policy is written on a scheduled rating. If the contractor changes to an experience rating policy, which is most likely?

Premiums would go down.

Which is INCORRECT regarding consideration?

Only the policy owner makes a promise

In an insurance transaction, who does the agent represent?

Principal/Insurer

Which of the following is NOT one of the four primary elements considered in establishing negligence?

Proof of carelessness

Homeowner's policies provide liability coverage for which of the following?

Property damage and bodily injury

Which of the following will NOT be considered to be an unfair trade practice?

Providing different benefits based on the insured's habits and lifestyle like smoking or driving records.

Furniture that got wet from the fire hose when a building burns down is an example of what kind of loss?

Proximate cause of loss

What type of damages may be awarded by the court to create disincentives that discourage behavior that is deemed highly undesirable by society?

Punitive

A situation in which a person can only lose or have no chance of gain represents?

Pure Risk

The cost of a unit of insurance is known as the

Rate

A HO-4 policy covers what?

Renters or Tenants

Statements that the applicant makes on the application that are believed to be true, but not guaranteed to be true are called?

Representations

The Department of Insurance is responsible for all of the following actions EXCEPT:

Setting premium rates

Local sportscaster Fred Fillmore states on the air during a news telecast that the local pro football coach has a lousy record, which is untrue. This is an example of

Slander

Payment for medical expenses, loss of wages, funeral expenses, or the cost to repair or replace damaged property are known as what type of compensatory damages?

Special

Who does an agent represent?

The Insurer

Negligence is defined as

The failure to do what a reasonable prudent person would do under given circumstances.

Which of the following best describes negligence?

The failure to use reasonable and prudent care.

General conditions on a personal auto policy include all of the following EXCEPT:

Uninsured Motorist

Liability imposed on one party as a result of the actions of another person is known as

Vicarious liability

The termination of an insurance contract with the premium charge being adjusted in proportion to the exact time the protection has been in force is considered a

pro rata cancellation

Actual cash value means

replacement cost less depreciation