RMIN 5950- Quiz 5 content

Which of the following statements about contractual liability transfers are TRUE?

a. Insurance is not needed if hold-harmless and indemnity agreements are used. b. The ability of the other party to manage risk is not relevant as long as we transfer the risk to that other party. c. Ambiguous provisions in a contract are generally interpreted in favor of the non-drafting party. (Correct Answer)

Which of the following statements regarding key person and business continuation plans is TRUE?

a. The beneficiary of a key person life insurance policy is usually the key person's dependents. b. A company does not need to demonstrate an insurable interest to secure life insurance on one of its employees. c. A buy-sell agreement is unnecessary if a business is organized as a stock company. d. A cross-purchase plan used to finance a buy-sell agreement will normally require that more insurance policies be purchased than under an entity plan. (Correct Answer)

Which of the following statements regarding workers' compensation issues is TRUE?

a. The industry work comp combined ratio in 2019 was 85, which suggests a 15% underwriting loss. b. Most of the state workers' compensation laws in the U.S. are elective. c. On average, medical costs exceed indemnity costs as a percentage of total claim costs. (Correct Answer) d. Georgia has the highest average weekly maximum benefit in the U.S.

Which of the following statements regarding the experience modification (mod) in workers' compensation is TRUE?

a. The insured's future loss experience is used to determine the premium for the next policy period. b. Ballast factors are not part of the experience modification formula. c. In the case of small firms the experience modification formula puts less weight on the firm's actual loss experience than in the case of large firms. (Correct Answer) d. Only one year of the insured's loss experience is used in computing the experience modification.

If a group of shareholders file a lawsuit, on behalf of the corporation, against the directors and officers of the corporation, it is called a

a. derivative lawsuit (Correct Answer) b. direct action lawsuit c. nuisance lawsuit d. indemnity lawsuit

All of the following are examples of intentional torts EXCEPT

a. false arrest b. negligence (Correct Answer) c. defamation d. trespass

All other factors held constant, which vehicle classification covered under the business auto coverage form has the lowest rate?

a. retail b. service (Correct Answer) c. commercial d. mobile equipment