Intro to Risk Management and Insurance

The declarations page of an insurance policy includes all of the following

Name and mailing address of the insured, name of the insurer issuing the policy, and policy period

Sports, Inc is looking to obtain a commercial property policy on its building for $400,000. If their insurer decides to charge them a rate of $.5 per $100 of building insurance, what premium must Sports, Inc pay?

$2,000

If a manufacturer has $1 million in annual sales, its liability insurance is priced per 1,000 of sales, and the per-unit rate is $.50, what is the manufacturers liability insurance premium

$500

The retention ratio is the

% of expiring policies that an insurer renews

Which one of the following best describes the compensation method of sales representative of direct writers

A salary, a bonus, a commission, or a combination of the three

Carla, an insurance agent, sent a bill to a customer two weeks ago and just received a check for the bill at her office. She then forwards the check to the insurer, less her commission for selling the insurance to the client. This is an example of

Agency bill premium collection

A claim manager typically reports to

An assistant vice president of claims

Claim turnover is

Average time it takes for open claims to close

A homeowners insurance policy typically includes

Both property and liability coverage

Francesca has a property loss of $3,000 and immediately notifies her insurance agent. The qualified agent adjusts the loss and mails a check to Francesca for $2,500. What producer function is the agent performing

Claim handling

Which one of the following best describes a common property loss exposure

Collision damage to an auto caused by an auto accident

Which one of the following indicates an underwriting profit

Combined ratio less than 100%

The premium charged for an insurance policy should be

Commensurate with the exposure

A description of the property insured, a list of mortgagees, and the applicable coinsurance percentage are shown on which one of the following documents

Commercial Property Declarations

The claim handling process includes

Concluding the claim, identifying the policy, acknowledging the claim

Timely notice of a loss to the insurer is an element examined in which step of the DICE method

Conditions

Martin is a claim representative reviewing a recent auto loss for an insured who recently purchased her first policy with his company. Martin noticed that the accident occurred two days before policy inception. Martin will recognize that the loss is not covered during which step of the DICE method of policy analysis

Declarations

The property casualty insurance policy provisions that indicate who or what is covered, and where and when coverage applies, are found in the

Declarations

Law Firm asked Insurance Company to provide both a commercial liability policy and a professional liability policy to meet its coverage needs. Insurance company believes that there could be some types of losses that would be covered under both policies, a situation is wishes to avoid. What type of policy provisions could insurance company use to address this problem?

Exclusions

When a policy is sold through an independent agent, the insurer pays a commission to the agent. This payment comes from which one of the following principal allocations of insurance premium

Expenses

Produce, such as apples or grapes, may be priced by the unit or by the pound. In insurance, these measures are similar to

Exposure units

An Ohio insurer that is licensed to sell insurance in Michigan is known as what in Michigan?

Foreign insurer

What is the primary reason insurers allocate premiums for invesment

Future losses cannot be predicted with complete accuracy

The underwriting process consists of all of the following activities

Gathering the necessary information, implementing the underwriting decision, and monitoring the underwriting decision

Which one of the following types of risk arises from property, liability, or personnel loss exposures and is generally managed through property-casualty insurance?

Hazard risk

Which one of the following is an example of a state's insurance policy form regulation?

Insurance policies must contain a specific form or provision.

Which one of the following is a key focus of states' insurance regulation

Insurer licensing

Which one of the following is most likely to be directly involved in promoting risk control

Insurers

Pooling is essential to insurance because

It spreads the costs of loss among a large group of individuals

In what was does the society benefit when losses are controlled

Lives are saved, and property is preserved

In what way does society benefit when losses are controlled

Lives are saved, and property is preserved

Standard forms

May result in different insurers issuing identical policies

A commercial package policy is an example of a

Modular policy

Which of the following is true regarding a homeowners policy

Most include coverage for theft of contents within the home

Example of real property

Office Building

The premises and operations liability loss exposure includes accidents that occur away from an insured's premises, but only if the accident arises out of the insured's

Ongoing operations

A breakdown in an organization's internal processes is an example of which one of the following types of risk?

Operational

Adverse selection can best be defined as the tendency of

People with the greatest probability of loss to purchase insurance

The causes of loss covered by insurance policies are also known as

Perils

A yacht policy

Provides several types of coverage in one policy.

To make a risk acceptable, the underwriter might require that the deductible be increased. this modification

Reduces the insurers exposure to loss

Documents that can become part of an insurance policy include all of the following

Relevant statutory terms and provisions, completed application, insurer's bylaws

In determining whether a policy covers a loss, a claim representative compares investigatory information to the

Terms of the policy

financial tools to evaluate claim results include

Reserving Accuracy

The uncertainty of the possible financial consequences of a loss is known as

Risk

A jewelry store that displays its most valuable pieces by spreading them among three separate locations is employing the risk management technique of

Separation.

Responding to billing inquiries is an example of which one of the following producer functions?

Serving customers

A type of formal, written laws that are enacted by state legislatures or passed by the United States Congress and signed into law by the president are called

Statutory laws.

Owners of reciprocal insurance exchanges are also known as

Subscribers

Classification is

The grouping of similar loss exposures into categories for rating purposes.

The insuring agreement of a homeowners policy specifies that

The insurer will provide policy coverage in return for the premium and compliance with policy provisions

Which one of the following best describes the loss ratio?

The loss ratio indicates how much of the premium dollar is used to pay losses and loss adjustment expenses.

Examples of areas where specialized claim representatives may have expertise

Workers Compensation, General Liability, Commercial Building Physical Damage

An independent adjusting firm is

a business that contracts with insurers to handle claims

Pooling in insurance works by

accumulating many small premium payments to pay for infrequent larger losses

Self-contained policies

address complete coverage needs

Property claims

are generally straightforward and can be settled promptly

Property and liability insurance policies

can include coverage for parties other than those shown as named insureds

property and liability insurance policies

can include coverage for parties other than those shown as named insureds

Personal auto insurance is most likely rate using

class rates

One way for claim managers to help maintain an insurer's underwriting profit is to

establish appropriate spending policies

a wedding photographer uses his camera equipment at several dozen different locations each year. In insurance terminology, the camera equipment is considered to be

floating property

A stock insurer is different from a mutual insurer by the fact that

owners are not necessarily insureds

An insurance premium is calculated by

rate X number of exposure units

Transfer

reduces uncertainty

The size of an employer's loss exposure for workers compensation insurance is based on

the amount of its payroll

A decreasing loss ratio may be a sign of

An insurer becoming more profitable

The value of an insurance contract in the event of a claim

Includes peace of mind

What term refers to the ability of an insurer to meet its obligations as they become due

Solvency

As part of the claim handling process, the claim representative typically first contacts the insured or the insured's representative

Soon after establishing reserves

Some insurance rating laws allow rates to be put into use immediately but require insurers to file the rates with the states within a specific period of time. These types of laws are known as

Use-and-file laws

A type of insurance rate that applies to all insureds in the same rating category is known as

a class rate

The best description of a first-party claim is a claim

made by the policyholder against the insurer

if an account is unprofitable over an extended period of time, the underwriter might take all of the following corrective actions

Recommend additional risk control measures, modify the terms of coverage, and mark the policy for nonrenewal

if an account is unprofitable over an extended period of time, the underwriter might take all the following corrective actions

Recommend additional risk control measures, modify the terms of coverage, and mark the policy for nonrenewal

What aspect of the insurance mechanism justifies the investment of a portion of premium collected

The policyholder pays the premium at the start of the policy period, before any losses have happened

subrogation is

The process by which an insurer can recover the amount it paid on a claim from any party, other than the insured, who is legally liable for the loss

Which one of the following is based solely on liability imposed by statute

Workers compensation liability

Best describes a type of loss covered under a personal UMB policy

a catastrophic auto accident that exceeds an insured's auto liability limit

Which one of the following best describes how insurers pay independent agents and brokers

a commission, which is typically a percentage of the premium

Which one of the following statements about policy sections is true

a condition clarifies an insurer's promise or an insured's duty

When a loss exposure is so unique that the insurer has no established system to determine a premium, an insurer will use

a judgement rate

For liability claims

a large portion of the premium is allocated to paying losses and expenses related to claim settlement

Under a CGL coverage form, the purpose of coverage C - medical payments is to provde

a modest amount of medical expense coverage for settling minor injury cases

Property insurance policies typically exclude loss

From inherent vice and latent defect.

Unfair trade practices acts involve which one of the following insurance company operations

underwriting

A Policy that combines property, crime, and liability coverages into one policy is referred to as a

commercial package policy

The definitions section of the policy

Helps clarify real or perceived ambiguity

A bodily injury claim

Is made when an injured or a sick person files a claim with an insurer.

Bob is shopping for auto insurance. Insurance Company A's rating system determines that Bob should be charge $800 per auto. If Bob is looking to insure four autos, what premium will he be charged by Insurance Company A

$3,200

A customer service representative (CSR)

Is often the insured's or claimant's first contact with the insurer and the claims handling process.

Coverage A - Bodily Injury and Property Damage of a CGL coverage form insures two general categories of loss exposures

1. premises and operations liability 2. products and completed operations liability

The main purpose of UMB liability insurance is to provide

Limits of insurance that apply in addition to those of the insured's primary policies

In the context of property loss exposures, flood is considered to by all of the following

A Peril, a means by which property is damaged or destroyed, & A cause of loss

Which one of the following is a portion of a covered loss that is not paid by the insurer?

A deductible

The liability coverage agreement of the business auto policy states each of the following duties of the insurer

A duty to comply with laws and regulations

An insurance contract is designed to be all of the following in the event of a claim

A financial mechanism that can benefit policyholders and other claimants, a means to afford peace of mind to the insured, and a way to restore a claimant to pre-loss condition

for liability claims

A large portion of the premium is allocated to paying losses and expenses related to claim settlement

The party most likely to be legally liable for a products liability loss is

A manufacturer.

Generally, how often must a foreign insurer's license be renewed?

Annually

For antique and specialty autos, when buyers and sellers in a market are limited by an economic depression, the valuation method that is most accurate is

Actual cash value.

A decision on how much an insurer should pay after a loss must occur

After determining the loss is covered

Which one of the following individuals is most likely to need specialized professional insurance?

An attorney

Which of the following is true with regard to auto liability loss exposures

An auto owner can be held legally liability when someone borrows the auto for his or her own purposes

A flex rating law is

An insurance rating law under which prior approval is required only if the new rates exceed a certain percentage above (and sometimes below) the rates previously filed.

Which most accurately identifies the parties to an insurance transaction

An insured, an insurer, and possibly a producer

Which one of the following most accurately identifies the parties to an insurance transaction?

An insured, an insurer, and possibly a producer

Commercial loss exposures are best described as those that affect

An organizations operation

Ching is a commercial claim representative who has been assigned a large fire loss. Ching suspects that the insured may not have been completely honest in describing the property before the policy was issued such that coverage for the claim may be denied. In which document might Ching find the representations of the insured regarding the property's description?

Application

When identifying the policy, the claims representative establishes loss reserves, which

Are estimates of the amount the insurer will pay for the claim.

Damage from flood is covered under most

Auto policies

other than collision loss exposures under a personal auto policy include all of the following

Auto theft, fire damage, & Contact with a deer

Other than collision loss exposures under a personal auto policy include all of the following

Auto theft, fire damage, contact with a deer

Which one of the following represents the approximate amount an insurer will pay for existing claims

Loss Reserves

Which one of the following causes of loss forms is the lowest-cost version that provides coverage for approximately one dozen named perils

Basic Form

For liability loss exposures, damages are a

Basis for legal liability

Primary difference between an agent and a broker is

Broker represents the insured

Which one of the following is a typical adjuster activity during the claims handling process

Contacting the insured

An insured's first contact with an insurer in the claim handling process is often through a

CSR

When a property underwriter evaluates the external exposure of a property, he or she

Can use the construction, occupancy, protection, and external exposures (COPE) method of evaluating the neighboring properties or the area surrounding the insured property.

Which one of the following is the primary concern of umbrella and excess liability underwriting?

Loss severity

Which one of the following categories of insurance policy provisions outlines what is covered and where and when coverage applies

Declarations

Two objectives of insurance policy form regulation are to ensure that policies are clear and readable and to

Detect and address any policy provisions that are unfair

In premium collection, the insured may be directed to send premium payments to the insurer, bypassing the producer. This is known as the

Direct Bill Process

A loss ratio is calculated by

Dividing the insurer's incurred losses (including loss adjustment expenses) by its earned premiums.

Anton is an independent insurance agent. He has noticed that his clients experience a lot of small claims, such as screen doors being damaged by heavy winds. When a client reports a small claim to Anton, he has to in turn report it to the respective insurers for handling. He is looking for a way to streamline this process. Anton should contact the insurers for whom he does business and request that he be given

Draft Authority

Judy, a claim representative, is considering the steps to take in the investigation and documentation of an auto accident claim. Her investigation and documentation may include

Drawing accident scene diagrams

Because of legal requirements, some common activities would be almost impossible to conduct without the availability of insurance, including

Driving

Which one of the following is true about the functions within an insurance organization

Each function contributes or detracts from the overall effectiveness of the insurer

When a loss occurs that workers compensation insurance does not cover, or an employee's spouse files a lawsuit because of an employee's injuries, which one of the following covers the awarded damages?

Employers liability insurance

what is one way in which insurance's reduction of uncertainty benefits society

Entrepreneurs will take the risk of establishing new businesses

One way for claim managers to help maintain an insurer's underwriting profit is to

Establish appropriate spending policies.

Claim adjuster Donna is trying to determine whether there is coverage for a claim submitted under the insured's homeowners policy. The claim concerns the insured injuring a neighbor when the insured accidentally ran over the neighbors foot as he drove his own car into his own driveway. The policy states that it covers bodily injury caused by an accident in one section, but in a later section states that it will not cover liability caused by a motor vehicle. On what step of the DICE method will Donna discover that policy coverage does not apply

Exclusions

Prospective loss costs that have become adjusted for expenses, profits, and contingencies are

Final Rates

Which on the following is true regarding the administration of the insurance regulatory information system (IRIS)

If regulators determine that an insurer is insolvent, the state insurance department places it in receivership

In which one of the following marketing systems does the producer own the policy expirations

Independent agency and brokerage marketing system

Which on of the following state

Insurance regulators review policies to determine if they benefit consumers

Which one of the following statements is correct?

Insurance regulators review policies to determine if they benefit consumers

destructive competition could result in

Insurance shortages

Which one of the following receives the bulk of an insurer's premium dollar?

Insured losses and loss adjustment expenses

Insurance customers' loss exposures arise out of their activities, as well as

Insureds' property

A goal of the claim function is to support the profit goal of the

Insurer

How does flex rating law work

Insurers may adjust rates within a range without prior approval

Why are insurance regulators concerned about the effects of large catastrophes

Insurers may become insolvent

Analyzing definitions occurs in which stage of the DICE method?

Insuring Agreement

Gene is a claim representative reviewing a new auto loss for an insured who experienced an accident in Mexico. The insured's policy states that the insurer will pay damages for bodily injury or property damage for which any insured becomes legally responsible because of an auto accident occurring in the US. Gene will probably recognize that the loss is not covered during which step of the DICE method

Insuring Agreement

A broad statement of an insurer's promises to the insured may be found on the policy's

Insuring agreements

Origin and cause experts

Investigate fire losses to determine what started a fire

Which of the following is true with regard to auto liability coverage under business auto insurance

It covers bodily injury and property damage regardless of whether the insured is legally liable

The main purpose of UMB insurance is to provide

Limits of Insurance that apply in addition to those of the insureds primary policies

All of the following are payable under workers compensation

Lost wages, Medical Costs, & Disability Income

Rachel is an insurance broker. She has received a sales referral from another broker concerning an airport management company, Airport Ltd. The company plans to operate a large, national airport in a major city and has requested a quote for airport liability coverage. Rachel will probably recommend the use of which one of the following types of policy forms?

Manuscript

Through increased productivity and health and safety initiatives, a well-managed risk management program reduces costs and subsequently helps achieve which one of the following other risk management goals for organizations?

Maximizing profitability

The benefits that workers compensation laws require employers to pay include all of the following

Medical Expenses, Disability Income, & Rehabilitation Benefits

The personal auto policy contains two sets of physical damage coverage, which are

Other than collision and collision coverage

Under Section II - Liability Coverage of a homeowners policy all of the following are the insured's duties after an occurence

Pay specified premiums, cooperate with insurer in legal proceedings, report losses promptly

An insured's young son hits a baseball through a neighbors living room window. The damage caused by the child would be covered under which one the following coverages of the insured's homeowners policy

Personal liability coverage

Which one of the following coverages of a homeowners policy provides coverage for bodily injury and property damage for which the insured is legally liable

Personal liability coverage

Charlotte, an insurance agent, cold called Emil to sell him insurance. She then emailed him a questionnaire that helped her to identify Emil's loss exposures and to make suggestions about coverages. Upon Emil's request, Charlotte has her agency assemble his policy and mail it directly to his house. Which one of the following producer functions has Charlotte yet to perform?

Premium collection

Wind damage to a fence surrounding a built-in swimming pool is a

Property loss exposure

Successful underwriting ensures selected applicants

Receive coverage that adequately reflect their loss exposure

Which one of the following is an action an underwriter might take to make a risk acceptable that he or she would otherwise reject?

Require additional risk control measures

Under a CGL coverage form, property damage means physical injury to property and the

Resulting loss of use

Harry and Victor, both insurance agents, have to work with new clients today. Harry works with a family while Victor works with a larger company. Harry is able to complete an interview and gather information about the clients loss exposures. Victor, on the other hand, has to make visits every day this week to meet at various locations of the company. He develops loss exposure information for the multiple locations. What is the producer function that these two agents are performing

Risk management review

Risk management techniques particularly help individuals with which one of the following?

Risk retention identification

Aleski, an insurance agent, formed a proposal and presented it to a prospective client. The policy was accepted with some minor changes, so Aleski issued a binder. Which one of the following is the function bein performed by Aleski

Sales

Market conduct regulation focuses on insurers' treatment of applicants for insurance, insureds, and others who present claims for coverage. Market conduct regulation affects which of the following areas of operation

Sales

Market conduct regulation focuses on insurers' treatment of applicants for insurance, insureds, and others who present claims for coverage. Market conduct regulation affects which one of the following areas of operation

Sales

Insurers are required to submit annual financial statements to

State insurance departments

When deciding to approve or disapprove an insurer's request for a rate, a state insurance commissioner must determine if the rates are adequate. Adequate means that the rates should be

Sufficient to pay all claims and the expenses related to those claims

Which one of the following is generally exempt from state insurance regulations pertaining to policy forms and rates

Surplus line insurers

What is solvency

The ability of an insurer to meet its obligations as they become due

What is the most common reason premium audits are conducted

The amount of the loss exposure is unknown at the start of the policy period

When an insured files a claim with an insurer

The claim department investigates the circumstances of the loss

Prompt and professional loss adjustment services are a responsibility of what part of an insurer's organization?

The claims function

Under the exclusive agency marketing system, who often handles the functions of policy issuance, premium collection, and claim processing

The insurer

Developing and maintaining a profitable book of business is the purpose of what part of an insurer's organization

The underwriting function

All of the following are matters that may appear as best practices for a claim department

Timely loss reserving, Timely claim acknowledgement, Timely payment of claims

Exchanging the possibility of a large uncertain payment for a small certain payment through the purchase of insurance is an example of

Transfer

Customer service standards

Turnaround time on applications received, average number of errors per policy issued, number of referrals for new business received

lou is a claim manager at a small property casualty insurance company. Lou takes pride in the fact that because of his leadership, his company has gained a public reputation for resisting legitimate claims. ultimately, this reputation

Undermines the effectiveness of his company's advertising

Which one of the following statements is correct regarding underwriting construction accounts?

Underwriters must often rely on the insured contractor's ability to hire competent and insured subcontractors.

Which one of the following best describes applicable coverage under a personal auto policy if an insured incurs serious bodily injuries caused by a driver whose insurer is insolvent

Uninsured motorists coverage

When insurance allows a family to invest discretionary income for childrens education, rather than reserving a large fund to cover catastrophes, this is an example of the insurance benefit of

Using resources efficiently

For an insurer to be considered solvent, states require it to have financial reserves

Well in excess of its ordinary expenses

The dwelling program is often used to insure

a two-family rental dwelling owned by an insured who lives elsewhere in a primary home

Businesses in high crime areas are more likely to purchase crime insurance than those in low crime areas. From an underwriters perspective, this situation is best described as

adverse selection

Which one of the following is true with regard to automobile liability loss exposures

an auto owner can be held legally liable when someone borrows the auto for his or her own purposes

Personal liability loss exposures often arise from

an individual's actions

The best description of a telephone claim representative is

an inside claim representative

flood insurance provides

building and contents coverage

Personal property coverage as provided on a homeowners policy typically protects against damages to all of the following

clothing, furniture, appliances

The claim handling process includes which one of the following activities

contacting the insured

All commercial package policies begin with two components, namely, common policy conditions and common

declarations

Overall purpose of underwriting is to

develop and maintain a profitable book of business

Which one of the following best describes what is insured under dwelling coverage, as provided by a homeowners policy

dwelling and any structures attached to the house only

Which one of the following provides an indication of an insurance company's relative cost of producing business

expense ratio

which one of the following is the fundamental measure of loss exposure used in insurance rating

exposure unit

which one of the following is considered to be personal property as opposed to real property

furniture

example of personal property

household appliances

Liability coverage under a personal auto policy applies to vehicles shown in the declarations and also applies to insureds

if they rent a car while on vacation

Which one of the following is true regarding mutual insurance companies

include some large national insurers

in which one of the following marketing systems does the producer own the policy expirations

independent agency and brokerage marketing system

Exclusive agents are

independent contractors and are not employees of an insurer

The success ratio is the percentage of

insurance policies written to those that have been quoted

Class rating relies on

insureds with similar characteristics

Risk control is intended to prevent or reduce losses. When practicing sound risk control, an organization

is likely to use insurance to treat those loss exposures

Which of the following is true regarding commercial insurance

it is available for not-for-profit organizations

Which one of the following is true regarding commercial insurance

it is available for not-for-profit organizations

While driving home from work, a driver loses control of his vehicle and strikes a pedestrian, causing severe injuries. The driver has purchased all primary coverages under a personal auto policy. Which one of the following coverages applies to this accident

liability coverage

In order to determine the insurance policies required to meet an insurance customer's needs, insurance producers must identify the customer's

loss exposures

In order to determine the insurance policies required to meet an insurance customer's needs, insurance producers must identify the customers

loss exposures

The combined ratio is the

loss ratio plus the expense ratio

The best description of a third-party claim is a claim

made against the policyholder by someone to whom the policyholder may be liable

When uncertainty is reduced through insurance, person are more likely to

make purchases they would be unable to replace if they suffered a large loss

When uncertainty is reduced through insurance, persons are more likely to

make purchases they would be unable to replace if they suffered a large loss

A medical consultant assigned to a claim department

may arrange independent medical exams

When underwriters screen applicants to avoid those who present loss potentials not adequately reflected in the price being charged, they

minimize adverse selection

If a line of insurance is class rated, with all insureds possessing similar characteristics and paying the same rate, what determines the difference in premiums insureds pay

number of exposure units

if a line of insurance is class rated, with all insureds possessing similar characteristics and paying the same rate, what determines the difference in premiums insureds pay

number of exposure units

Within the personal auto policy, the name of lender, loss payee or lienholder is usually shown

on the declarations page

The retention ratio is the

percentage of expiring policies that an insurer renews

Success ratio

percentage of insurance policies written to those that have been quoted

The causes of loss covered by insurance policies are also known as

perils

Which one of the following best describes an insurance premium

periodic payment in exchange for insurance premium

Under a homeowners policy, loss of use coverage provides coverage to an insured for

periods during which the insured residence is uninhabitable by a covered loss

a delivery person trips and falls over the insured's uneven sidewalk. The delivery person sues the insured for his medical bills. This claim falls under which one of the following coverages of the insured's homeowners policy

personal liability coverage

To refer to items such as furniture and stock, most property insurance policies use the term

personal property

In the independent agency and brokerage marketing system

producers are not employees of any insurer and are usually free to work with as many insurers as they want

The premises and operations liability loss exposure included accidents that occur away from an insured's premises, but only if the accident arises out of the insured's

products

property being shipped by aircraft is considered to be

property in transit

Wind damage to a fence surrounded a built-in swimming pool is a

property loss exposure

For underwriting to achieve its purpose, insurers must

protect available capacity

One role of the insurer is to

provide ongoing customer service

extra expense insurance covers additional expenses incurred to

reduce the length of business interruption

People and businesses purchase insurance to

reduce uncertainty

Under a CGL coverage form, medical payments coverage pays

regardless of whether the insured is legally liable

under a CGL coverage form, medical payments coverage pays

regardless of whether the insured is legally liable

The primary benefit of insurance to society is

reimbursing the costs of covered losses

Which one of the following is employed by an insurer to inspect insurance applicants' premises and review their operations

risk control representative

To be eligible for coverage as an other structure under a homeowners policy, the other structure must be

separated from the house by a clear space or fence

Which one of the following is true about collision coverage under the personal auto policy

typically available only when other than collision coverage also is provided

A self-insured retention is

the amount that is deducted from claims that are payable under an umbrella liability policy and that are not covered at all by any primary policy

what aspect of the insurance mechanism justifies the investment of a portion of premium collected

the policyholder pays the premium at the start of the policy period, before any losses have happened

When underwriters price coverage, in addition to considering the value of what the insured wants to protect from loss, underwriters estimate

the probable severity of a loss if it occurs

when underwriters price coverage, in addition to considering the value of what the insured wants to protect from loss, underwriters estimate

the probable severity of a loss if it occurs

which one of the following best describes applicable coverage under a personal auto policy if an insured incurs serious bodily injury caused by a hit and run driver

uninsured motorists coverage

In developing insurance rates, a state mandatory rate law requires the insurer to

use state developed rates

Which of the following is most likely to be considered real property as opposed to personal property

wall-to-wall carpeting

Under the building and BPP coverage form, personal property of others is covered

while in the insured's care, custody, or control

Loss exposures covered under an unendorsed dwelling policy include which one of the following consequences

wind damage to an insured's roof

which one of the following is based solely on liability imposed by statute

workers comp liability

When an employee is injured on the job, coverage for his or her medical care and lost wages will be provided by the insureds

workers compensation policy

Which one of the following usually includes provisions regarding vehicle use, driver selection, vehicle maintenance, and accident reporting?

A fleet safety program

Ron is an underwriter who works daily with producers, providing them with quotations for coverage, processing endorsements, and explaining coverages. Which one of the following is Ron?

A line underwriter

Accurate classification ensures

A pooling of loss exposures with similar expected loss frequencies and loss severity.

Which one of the following is a standard form often developed by an advisory organization?

A preprinted form

The basis of a completed operations loss exposure is

A service or an operation performed by the insured.

Under Coveraqe A of the CGL coverage form, the insurer agrees to pay those sums that the insured becomes legally obligated to pay as damages because of property damage or

Bodily Injury

Crystal, a claims manager, has been told to reduce her claims processing staff by one person within the next month. Erin, the last person hired on Crystal's team, likely most needs the job: she initially applied for it because her husband passed away suddenly, after Erin had stayed home the previous six years to care for the couple's four young children. The other members of Crystal's processing staff have worked together for the past five years and developed close professional and personal ties. Laying off any one of them would disrupt harmony within the team and may cause animosity toward Erin. Crystal's ethical dilemma is an example of

Community versus individual.

ABC Company manufactures welding torches and sells them to contractors. One of the torches used by a contractor malfunctions and causes a fire that destroys a building under construction. Which on the the following would cover ABC against a subsequent products liability claim for the fire loss?

Coverage A - Bodily injury and Property Damage liability of ABC's commercial GL policy

An architect makes false statements about one of his competitors, who sues him for slander. Which one of the following would cover the architect for a loss arising out of this situation

Coverage B - Personal and Advertising Injury Liability of the CGL Coverage Form

An architect makes false statements about one of his competitors, who sues him for slander. Which one of the following would cover the architect for a loss arising out of this situation?

Coverage B - Personal and Advertising injury liability of the CGL coverage form

In a larger insurance organization, claims supervisors assist managers in claims management, but they may be likely to perform some roles that the managers do not. For example, some duties of a claims supervisor often include

Evaluating claims representatives' performance, directing daily activities of a claims unit, developing strategies for solving problems, and determining staff training needs.

The homeowners policy form designed for tenants in apartment buildings is the

HO-4 Contents Broad Form.

Under the Building and BPP coverage form, your BPP is covered under all of the following conditions

In the described building, in the open within 100 ft of premise, on the described building

When evaluating a building's occupancy for personal property insurance, the underwriter considers the building's occupancy, which

Includes whether it is privately owned, rented, or vacant; single or multifamily residence; type of usage; the number of families; and the activities conducted in the residence.

Which one of the following types of agents and brokers is not an employee of an insurer and is usually free to work with as many insurers as he or she wants?

Independent

Which one of the following oversee an organization's risk management processes and measure their effectiveness?

Internal auditors

The delay between receiving premiums and having to pay claims gives insurers an opportunity to

Invest premium dollars.

A risk management goal that may be nonnegotiable is

Legal and regulatory compliance.

Which one of the following can be insured by the building and BPP coverage form

Merchandise

Building and contents insurance policies usually provide either a nominal amount of coverage or no coverage for all of the following

Merchandise shipped by railcar, property that moves from site to site, property in possession of others

Property insurance policies usually cover some property that is not contained within the building. For this reason, most property policies use which one of the following terms

Personal Property

Replacement cost can be used to value

Personal property even if it is no longer manufactured.

Which one of the following is likely to be covered by inland marine insurance rather than by the building and BPP coverage form

Personal property situated at the premises of others

Which one of the following do underwriters use to blend historical data based on behaviors and events with multiple variables and to construct models of anticipated future outcomes?

Predictive modeling

An icy parking lost that has not been tended to by the owner is an example of a

Premises liability loss exposure

What the the BPP coverage form usually provide very limited coverage to

Property away from the insured's premises

Which one of the following is excluded under the Building and BPP Coverage Form

Property in Transit

all of the following are financial consequences of property loss exposures

Property value reduction, lost income, extra expenses

The legal form of insurer ownership that refers to its association as subscribers is a

Reciprocal insurance exchange.

A technical specialist who assists claims representatives with investigating auto accidents by duplicating the events surrounding auto accidents and providing testimony in court concerning how an accident occurred, vehicle speeds, braking distances, and so forth is a

Reconstruction expert.

A high percentage of litigated claims and below-average claims turnover are indicators that

Signal larger problems within the claims function or the organization.

Bodily injury claimants can make claims for

Special damages that compensate a victim or his or her family for specific expenses associated with a loss, such as medical expenses, lost wages, and funeral expenses.

Which one of the following should underwriters understand about a commercial account's vehicles being stored inside?

The chance of loss by fire is increased.

The unendorsed dwelling policy provides coverage for

The dwelling, other structures, and personal property

The number and types of documents that the claims representative collects while investigating a claim depends on

The insurer's guidelines for documenting such claims.

Business income insurance covers

The reduction in an organization's net income because of damage by a covered cause of loss to property at the insured location.

Which one of the following is true regarding personal umbrella policies?

The self-insured retention applies only to coverage not provided by primary insurance policies.

All of the following are components of a property loss exposure

The type of property exposed to loss, the financial consequences of a loss, the causes of loss

If a loss is covered, claims representatives determine the amount of the loss based on

The valuation figures recorded in the claims documentation and any appropriate valuation calculations and/or policy deductibles.

All of the following are causes of loss to property

Theft, windstorm, earthquake

all of the following conditions must exist in order for business income insurance to cover a loss

There must be a reduction in the insured's net income, there must be a suspension of the insured's operations, there must be damage by a covered cause of loss at the insured's location

The dimension of timing concerns

When losses occur and payments are made.

Which one of the following is most likely to have a products liability loss exposure

a Washing Machine manufacturer

Damage to property caused by rust is uninsurable because it is

certain to occur over time

Which one of the following is considered to be a maintenance peril

damage by insects, because damage is avoidable by performing regular maintenance and otherwise caring for the property

Most policies that provide coverage on buildings and personal property at fixed locations exclude coverage for

earthquake and flood losses

Which one of the following is a tort

injuring others by reckless driving of a car

Which one of the following is true with regard to auto liability loss exposures

mobile equipment, such as forklifts and bulldozers, is included in the auto liability coverage

Under the BPP form, personal property of others is covered

while in the insured's care, custody, or control