PC Insurance

Named perils are found in which cause of loss forms Answers: special only basic and broad basic only basic, broad, and special

basic and broad

In order for a contract to meet the standard of legal purpose the insured must demonstrate which of the following Answers: they have not filed a claim in the past 3 years that no one in the household is intoxicated that they have the money to pay the whole year's premium in advance they have an insurable interest in the property

they have an insurable interest in the property

A property policy has an other insurance provision that states that the policy will only pay once the primary policy has exhusted their limit. This provision means the policy will be Answers: excess concurrent primary pro rata

excess

A house built on a flood plain is an example of Answers: exposure peril morale hazard moral hazard

exposure

Authority that is given to a producer either in writing or verbally is which of the following Answers: Governmental authority Expressed authority Implied authority Apparent authority

expressed authority

Which factor would NOT be considered when examining a property risk? Answers: Type of business Fees charged by the owner Distance from the fire station Location

fees charged by the owner

A condition that increases the likelihood of a loss is which Answers: peril risk hazard exposure

hazard

A contract in which the insurer must perform certain duties is Answers: Aleatory Adhesion Unilateral Conditional

unilateral

Grandma is moved from her house to a nursing home, she took most of her belongings, her house is now Answers: a moral hazard vacant uninsurable unoccupied

unoccupied

A homeowner keeps a stack of newspapers next to the fireplace, this is an example of which of the following Answers: hazard peril neglect none of the above

hazard

Which of the following statements best describes perils and hazards Answers: hazards and perils are both active perils are inactive, hazards are active hazards and perils are both inactive hazards are inactive, perils are active

hazards are inactive, perils are active

Authority that is not formally communicated to a producer is which of the following Answers: Governmental authority Expressed authority Implied authority Apparent authority

implied authority

Rating services are designed to do which of the following Answers: verify insurers are in compliance with all state laws verify insurers can pay all claims verify insurers have the lowest rates verify the financial strength of the insurer

verify the financial strength of the insurer

The concept in which the insurer is to put the insured in the same position they were in before the loss takes place is which Answers: Replacement Cost Insurable Interest Actual cash value Idemnification

indemnification

A house is destroyed by a fire, the insured's costs for renting another house while repairs are being made are an example of what Answers: indirect loss direct loss exclusions additional coverage

indirect loss

The insurer will only insure the risk if the risk is known to the insurer is best defined by which of the following? Note on the bottom of page Answers: Insurable interest Indemnity Predictable loss Exposure

insurable interest

To be in a position to lose something of value is defined by which of the following terms Answers: Exposure Insurable interest Indemnification Transfer

insurable interest

Which of the following factors are used to set insurance rates Selected Answer: Correct loss costs Answers: insured's ability to pay producer commission insurer profitability Correct loss costs

loss costs

All of the following information is found in the insuring clause except Answers: pronoun designations coverage/ perils provided the insurer's promise to pay loss payment options

loss payment options

A producer will have all of the following duties except Answers: make sure the client clearly understands what they have purchased help their clients file claims and follow up with those claims represent the insurer and help negotiate insurance policies make the final decision as to whether a risk is acceptable

make the final decision as to whether a risk is acceptable

Someone is texting while driving and runs into a tree, the collision would be which of the following Answers: hazard risk exposure peril

peril

Bodily injury is most accurately described in which of the following statements Answers: physical injury to the body only physical injury to the body, including sickness, death and mental anguish physical injury to the body including sickness and death physical injury to the body as well as mental anguish

physical injury to the body including sickness and death

The effective date and the expiration date define which of the following? Answers: Insurer's accounting cycle Policy period Who is an insured Coverage territory

policy period

If an insurance policy is canceled and the insurer returns the unearned premium without any reduction it would be which of the following cancellations Answers: Full Pro Rata Short rate Direct

pro rata

Which of the following items would not be found on a declarations page Answers: name of the insured address of the insured limits of insurance pronoun designations

pronoun designations

A liability policy could pay for all of the following EXCEPT Answers: medical payments punitive general compensatory special compensatory

punitive

The 2 types of risk are Answers: pure and speculative liability and pure property and liability property and pure

pure and speculative

If an insured has purchased a homeowners policy and their home is damaged, what legal principle would guide the insurer's actions Answers: warranties fiduciary duty reasonable expectations estoppel

reasonable expectations

If the owner of the building installs a sprinkler system which method of risk management have they used Answers: Avoidance Retention Reduction Transfer

reduction

In the contract of insurance the principal would be which of the following Answers: the agency The insurer The producer The insured

the insurer

A building is insured by 2 property policies that are the same type of insurance, Company A has a limit of $50,000 and Company B has a limit of $100,000. The building suffers a covered loss in the amount of $12,000. Which of the following accurately describes how the loss will be paid Answers: Company A pays $8,000 and Company B pays $4,000 Company A pays $6,000 and Company B pays $6,000 Company A pays $12,000 and Company B pays nothing Company A pays $4,000 and Compnay B pays $8,000

Company A pays $4,000 and Compnay B pays $8,000

Which of the following best defines the law of large numbers Answers: A small group of different risks A large group of similar risks A large group of different risks A small group of similar risks

a large group of similar risks

The liability in which the person is automatically liable if damages arise from the proximate cause of their actions is which of the following Answers: strict liability absolute liability negligence vicarious liability

absolute liability

The concept in contract law which states the receiver of the contract must accept or reject the contract in its entirety. Answers: Conditional aleatory Unilateral Adhesion

adhesion

The concept in contract law which states that one party could gain an economic advantage over the other party based on the outcome of some unknown future event is which of the following Answers: Unilateral Adhesion Conditional Aleatory

aleatory

The authority a producer has based upon the public's perception of what he can do is which of the following Answers: Expressed authority Apparent authority Governmental authority Implied authority

apparent authority

In the following example who would have insurable interest; Bob buys a car from Ford in which he took out a car loan from Comerica bank. Bob drives his car to his place of work, the mega Corporation Answers: Bob and Ford Bob, Ford, Comerica and the mega Corporation Bob only Bob and Comerica

bob and comerica

Bob eats chicken salad from Smith's deli and dies. This is an example of which of the following? Answers: Personal Injury Property damage Bodily injury Bad consumer choice

bodily injury

When 2 perils occur at the same time and one of them is excluded, this is referred to as Selected Answer: Correct concurrent causation Answers: hazardous risk double jeopardy Correct concurrent causation pro rata

concurrent causation

A contract not only has to be for a legal purpose but it must also have Answers: a notary written instrument an attorney consideration

consideration

Which section of the policy would you find a complete explanation of the terms used through out the contract Answers: Declarations Definitions Conditions Exclusions

definitions

Bob buys a car and finances through his credit union. Which of the following would NOT have an insurable interest in the car? Answers: Titleholder Credit union Owner Driver

driver

Which of the following would be an accurate description of the exchange of value that takes place during an insurance transaction Selected Answer: Correct insurer makes a promise and the insured pays money Answers: Correct insurer makes a promise and the insured pays money insurer makes a promise, the insured makes a promise insurer pays money and the insured makes a promise insurer gives a policy, the insured pays money

insurer makes a promise and the insured pays money

The perils insured against would be found in which section of the insurance policy Answers: Declarations page Conditions Exclusions Insuring agreement

insuring agreement

Which of the following would not be considered a competent party Answers: An 18-year-old Intoxicated 35-year-old The 35-year-old child of an insane mother An 80-year-old who acts like a child

intoxicated 35 year old

Losses over a specific period is known, who specifically will suffer a loss is not known. Which of the following accurately describes this sentence? Answers: Law of large numbers Indemnity Predictable losses Insurable interest

law of large numbers

Which of the following perils would not be found in broad form cause of loss Answers: falling objects weight of ice, snow and sleet water damage leaking roof

leaking roof

Which of the following is not a type of hazard for property insurance Answers: morale moral mental physical

mental

If an insured purposely gives a wrong answer on an application they have done which of the following Answers: Concealment Join the club with every other insured Misrepresentation Guaranteed the policy will be voided

misrepresentation

The type of insurer which pays dividends to its policyholders is Answers: Mutual Stock Risk retention group Fraternal

mutual

A homeowner stores property in a storage unit and the storage unit catches on fire. The owner of the storage unit facility will not receive any payment under the homeowners policy because of which of the following Answers: intentional exclusions no benefit to bailee provision insurable interest care, custody and control exclusion

no benefit to bailee provision

Statements made by an insured on an application are best described as Answers: Promises Guarantees Warranties Representations

representations

The uncertainty of loss could best be described as which of the following Answers: Hazard Peril Risk Exposure

risk

The insured has purchased agreed value on their property policy. If their property suffers a covered loss, which of the following would the insured be paid? Answers: Actual cash value Replacement cost Set limit Appraised value

set limit

The type of insurer which has shareholders is which of the following Answers: Risk retention group Stock Fraternal Mutual

stock

A contract has an offer and an acceptance which of the following is also required Answers: written instrument invitation to make an offer an attorney consideration

written instrument