Insurance Exam Module 5

Why are homeowners policies sometimes referred to as package policies?

Because they combine different types of coverage that were previously provided by several policies and a number of endorsements.

In an auto insurance policy, what is indicated by the limits 150/300/50?

Bodily injury: $150,000 each person, $300,000 each accident; Property damage: $50,000 each accident

This type of law requires automobile registrants to have specified liability insurance in effect at all times.

Compulsory auto liability insurance law

According to the World Economic Forum's Global Risk Report 2020 what are the most frequent and severe types of risks facing the world?

extreme weather and climate action failure

A ___________________ is a loss-control solution that protects the local area network (LAN) or corporate network from unauthorized access. It protects a network from intrusion by preventing access unless certain criteria are met.

firewall

Spyware can gather information about an individual's web browsing activities, including private health and financial data and provide them to a third party without the users knowledge or consent. This is a type of:

malware

Expenses incurred in defending a liability suit covered under Section II part E of the Homeowners policy are:

payable, in addition to the policy limit of liability.

When an email appears to come from a trusted individual or institution but is actually fraudulent, this is known as ___________________ . The email often contains a link to what looks like a familiar website, where the user is asked to enter sensitive information, such as their password, social security number, or bank account information. Another way a user might end up being redirected to a different page than they intended involves ____________________. With this technique a user thinks they are clicking on a link or button but they are actually clicking on another hidden one, To achieve this, an attacker may place transparent layers on top of a webpage.

phishing clickjacking

___________________ is the risk that events or actions in one country (or region) could influence political or social policy or events in another country or region.

geopolitical risk

A(n) ___________________ endorsement increases the amount of insurance automatically every year, or increases the amount of insurance to between 90 and 100 percent of replacement value, and keeps the amount up to date every time the policyholder pays the premium.

inflation guard

Access to a company's computer network, and the knowledge of how to use it, gives this type of malicious actor the potential to cause severe damage to a business.

insider

These types of risks are similar to political risks, in that they often result from political changes, but these risks also exist independently.

legal risks

In _________________ the insured is required to transfer to the insurer any rights to recovery available from a third party. The transfer is made only to the extent of payment made by the insurer.

subrogation

Identify all the following that represent potential sources of malware.

suspicious email attachments software downloaded from unknown sources USB flash drives fake Wi-Fi Hotspots

Who is insured under the liability coverage of the PAP? Select all correct answers.

the insured any person driving the insured's covered auto with the insured's permission family members of the insured household employees of the insured

Aaron has an auto insurance policy with limits of 15/25/15 ($15,000/$25,000/$15,000), the minimum required in the state where he lives. Aaron works in a neighboring state, which requires a minimum of 25/50/20 ($25,000/$50,000/$20,000). If Aaron is involved in an accident near his work (out of state), what level of coverage will his insurer provide? ________________________ What provision in Aaron's policy determines this amount? ________________________________

the minimum required in the state where the accident occurred out of state coverage

Support for the no-fault system in auto insurance is based on the belief that:

the tort system is slow and erratic in its results.

Elaine owns a Subaru Outback and her friend Sadie owns a Mazda Miata. Elaine has coverage from Nationwide and Sadie from Progressive. Both of them have exactly the same coverages and use the PAP. They have a single liability limit of $350,000 and the same limit for uninsured motorist. They have a $500 deductible for collision and a $200 deductible for other-than-collision. They have towing and labor and car rental reimbursement. Sadie borrowed Elaine's Subaru to pick up some building supplies (which would not fit in the Miata) from the home improvement store . While driving the Subaru, Sadie was seriously injured by an uninsured drunk driver. The Subaru was a total loss. Sadie has $670,000 of bodily injury loss. Whose insurance company pays first? 1 Under what coverage? 2 How much? 3 Whose insurance company pays second? 4 Under what coverage? 5 How much? 6

1 Sadie's insurance (Progressive) 2 Part C—Uninsured motorists coverage How much? 3$350,000 3 $350,000 4 Elaine's insurance (Nationwide) 5 Part C—Uninsured motorists coverage 6 $320,000 plus the car loss

1 The policy pays only after another coverage is exhausted 2 Clarifies that the maximum coverage available is the amount shown in the declarations. 3 Provides coverage separately to each insured, although the total available for any one occurrence is the limit shown in the declarations.

1 other insurance clause 2 limit of liability 3 severability of insurance

1 Covers false arrest, detention, or imprisonment, or malicious prosecution, libel, slander, and defamation of character. 2 Automatically increases the amount of insurance every year, or increases the amount of insurance to between 90 and 100 % of replacement value. 3 Personal liability coverage for losses arising from business or professional use of a residence 4 Covers valuables such as jewelry or artwork 5 Provides replacement cost of personal property rather than coverage on a cash-value basis (replacement cost minus depreciation).

1 personal injury endorsement 2 inflation guard endorsement 3 business pursuits endorsement 4 scheduled personal personal endorsement 5 personal property replacement cost endorsement

1 A program or code that replicates itself inside a computer or network with the intent to damage, destroy, or hijack an operating system or control program. 2 Malicious, non-self replicating software, disguised to look legitimate in order to trick users into downloading and running it on their systems. 3 Program or code that replicates copies of itself to cause damage in a computer or network and spreads by exploiting vulnerabilities in the systems they target. 4 Malicious software that holds data on a computer or network hostage, making it inaccessible unless a ransom is paid. 5 Programs that covertly record online activities. 6 Malicious software intended to damage a computer or network. 7 Virtual vandal who tries to poke holes in a company's security

1 virus 2 trojan 3 worm 4 ransomware 5 spyware 6 malware 7 hacker

Identify the true statement about no-fault laws:

According to this concept, in a multi-car accident, each injured party would receive compensation from his or her own insurance company.

Which of the following is covered under 'Coverage A—Dwelling' of the homeowners policy?

An attached garage

With this type of plan, if a company writes 10 percent of the auto insurance business in the state, it has to accept 10 percent of the qualified applicants.

Auto insurance plans

Which doctrine holds that if a loss is caused simultaneously by two or more perils, and at least one is not excluded, the loss is covered.

Concurrent causation doctrine

In a homeowners policy, which coverage covers only additional expenses.

Coverage D—Loss of Use

In a homeowners policy the insuring agreement for _____________________________ includes two promises by the insurer: to pay damages for which the insured is legally liable and to "provide a defense at our expense by counsel of our choice, even if the suit is groundless, false, or fraudulent."

Coverage E—Personal Liability

The intend of a this type of law is to induce motorists to buy auto liability insurance. When a driver is involved in an accident or is convicted of a specified offense, such as driving while intoxicated, they must show proof that they can fulfill this requirement. In states that enact these laws the percentage of drivers with auto liability insurance increases.

Financial responsibility law

Select all of the following statements which accurately describe global risks:

Global risks are all the external, uncontrollable risks which could damage a company financially Global risks are risks that cross borders and have the potential to affect everyone. Global risks include all the political, economic, cultural, technological, and environmental risks which exist outside the influence of any single country's government. Global risks can affect a business whether they operate internationally or not.

Which of the following statements about global political risk management is incorrect?

Insurance is the only way firms can protect themselves against loss from global political risks.

Which of the following words best describes global risks.

Interconnected

Select all the following which accurately describe Part A of the Personal Automobile Policy (PAP)

It excludes coverage for rideshare drivers (i.e. Uber, Lyft) intentionally caused (nonfortuitous) harm is always excluded. it provides open perils liability coverage

Which of the following statements about Part D of the PAP is not accurate?

Most states require this type of coverage.

Identify the federal program that provides flood insurance to flood-prone communities.

National Flood Insurance Program

Why do homeowners policies exclude loss caused by flood?

Only those living in flood-prone areas would buy the coverage, resulting in adverse selection.. flood is a catastrophic risk which private insurers will not insure

Your four-year-old flat-screen tv might cost $800 to replace today. If it has depreciated ten percent per year, the insurer will pay you $480 in the event it is stolen or destroyed this year. You will have to find another $320 if you want to replace it. Identify the endorsement that can protect you from this unfavorable event.

Personal property replacement cost endorsement

Why might an American company operating in a foreign country choose to purchase non-admitted coverage?

So, they can utilize terms and conditions familiar to U.S. risk managers.

Which of the following situations would be covered under 'Coverage C—Personal Property' of a homeowners policy?

The hot water heater malfunctions and floods the basement, damaging furniture and other items.

Lars lent his car to his girlfriend Olga. Olga is distracted by her phone and rear ends a minivan, damaging both vehicles and injuring the other vehicle's driver and passengers. Assuming that Olga is at-fault, whose insurance will provide primary coverage for the injuries and damages?

The liability coverage (Part A) of Lars' PAP.

What are the advantages of packaged insurance policies, such as homeowners policies, which combine several types of coverage into one policy.? Select all that apply.

They eliminate many gaps in coverage. They reduces cost and premiums by reducing administrative and marketing costs. They combine several types of coverage into one policy. They offer broader protection.

This coverage fills in the coverage gap that arises when the negligent party meets the financial responsibility law of the state, but the auto accident victim has losses in excess of the negligent driver's liability limit.

Underinsured motorist coverage

This coverage pays for bodily injuries caused by an accident with another vehicle whose driver is negligent and has no liability insurance or has less than that required by law.

Uninsured motorist coverage

Personal property is covered against direct loss on a named perils basis, including which of the following:

Vandalism Theft Volcanic eruption Fire or lightning Smoke Riot or civil commotion

Businesses can take loss-control steps to reduce their cyber property and business interruption risks by using all of the following, except:

Virtual open network

When a loss occurs, a policyholder is required to do which of the following:

all of the above

A botnet is a network of bot-compromised computers which can be used to ____________ . The infected computers in a botnet are known as _______________________.

all of the above zombies

The HO 3 policy covers personal property you own:

anywhere in the world

All events resulting in automobile liability are:

covered unless specifically excluded

____________ refers to any loss of a technological system

cyber risk

Which of the following is not covered under the 'Additional Coverages' section of a homeowners policy?

damage caused by animals

For each of the following events which might occur in a foreign country, identify the type(s) of global risk it represents. Some events may result in more than one type of risk. Select all that apply. Democratic Election Military Coup Severe Inflation Terrorism

democratic election = political risk military coup = political risk and conflict risk severe inflation = economic risk terrorism = political risk and conflict risk

When an individual or a business reserves a domain name that uses the trademark of a competitor, this is known as:

domain name hijacking

One method to protect e-mails is _____________ , which allows the sender of an e-mail to scramble the contents of the document.

encryption

Some special limits that apply to personal property may be too low. Your jewelry or may be worth far more than the $1,000 limit of a homeowners policy. Such property can be listed and specifically insured to provide adequate coverage against all risks by adding the:

scheduled personal property endorsement.

If you choose a ___________________________ to cover all liability, including both property damage and bodily injury, then the insurer will pay on your behalf for all losses up to this limit for any single accident, whether they are property-related or bodily injury-related. The only limit you are concerned with in this case is the aggregate, limit. Once all losses equal this limit, you will have to bear the burden of any further liability. If you choose a ________________________, a set of two limits will be specifically applied to bodily injury, and a single, aggregate limit will be applied to property damage. For the bodily injury limits, one limit applies per person, per accident, and a second limit is the total the insurer will pay for your liability to all persons injured in an accident.

single limit of liability split limit of liability

_________________ occurs when a single auto policy covers two vehicles, and the court interprets this situation to yield a limit of liability equal to double the amount shown in the policy declarations.

stacking

A number of insurers offer cybersecurity insurance products, either as ____________ policies or part of a packaged coverage.

standalone

A(n) _________________ is a liability insurance policy that protect against catastrophic losses by providing a high limit over underlying coverage. It requires the insured to have specified amounts of underlying coverage and only takes effect once that coverage limit is reached.

umbrella policy

Many states have a(n) _____________________ to provide compensation in situations when an injured motorist obtains a judgment against the party at fault but cannot collect because the party has neither insurance nor resources.

unsatisfied judgement fund

Remote users are able to gain secure access to a corporate network through a ___________________________.

virtual protection network (VPN)

While most flood insurance is written by the federal government, many flood insurance policies are issued by private insurers in partnership with the federal government, as a service and convenience for their policyholders. These ______________________________________ handle the premium billing and collection, policy issuance, and loss adjustment on behalf of the federal government.

write your own (WYO) insurers

Lucinda has her home and personal property insured under an HO-3 policy that covers the actual value of the home of $600,000. She also has coverages E and F under Section II. She has no endorsements. Indicate whether the following loss is covered and indicate what section of the HO-3 policy supports your answer: A fire damaged Lucinda's home, destroying a bed, dresser, and two nightstands in the master bedroom. Is this furniture covered? ____ What section of the HO-3 policy supports your answer? _____________________

yes section 1 coverage C