PatraCorp Property

The causes of loss insured against in an insurance policy are known as A. losses B. risks C. Hazards D. Perils

D. Perils Perils are the causes of loss insured against in an insurance policy

Three years ago, an insured moved to an unfurnished apartment. She bought new furniture that cost $9,000. Last week, there was a fire in the apartment that destroyed the furniture. Replacement cost is $10,500. The adjuster told the insured her furniture depreciated $2,500. If insurance is written on an actual cash value basis, how much will it pay for the loss? A. 8,000 B. 9,000 C. 10,500 D. 6,500

A. $8,000 When insurance coverage is written on an actual cash value basis, losses paid are for the replacement cost (at the time of loss), minus depreciation

In which of the following types of property valuation will the policy pay the full value as specified on the policy schedule, regardless of the insured property's appreciation or depreciation? A. agreed value B. replacement cost C. stated amount d. market value

A. Agreed value Agreed value is a property policy with a provision agreed upon by the insurer and insured as to the amount of insurance that represents a fair valuation for the property at the time the insurance is written. When a loss occurs, the policy pays the agreed value as specified on the policy, regardless of the insured property's appreciation or depreciation

Which of the following policies does NOT contain an automatic reinstatement provision? A. General liability written with an aggregate limit B. business automobile liability C. personal automobile liability with split limits D. Homeowners

A. General liability written with an aggregate limit An aggregate limit is reduced by the payment of claims. It is possible for an insured to run out of coverage before the expiration of the policy. Aggregate limits are restored on the anniversary date of the policy

Which of the following best expresses the purpose of a stated value contract? A. To pre-establish the amount of coverage available for property items that are difficult to value B. To ensure that the principle of indemnification applies C. To establish eh value of property subject to loss by theft or robbery D. To provide a maximum limit for which the insurance company may become liable in casualty losses

A. To pre-establish he amount of coverage available for property items that are difficult to value The value of the insured items is determined at the time the policy is written, not at the time of loss

Which of the following best expresses the purpose of a stated value contract? A. To pre-establish the amount of coverage available for property items that are difficult to value B. To ensure that the principle of indemnification applies C. To establish eh value of property subject to loss by theft or robbery D. To provide a maximum limit for which the insurance company may become liable in casualty losses

A. To pre-establish the amount of coverage available for property items that are difficult to value The value of the insured items is determined at the time the policy is written, not at the time of loss

Which method of loss valuation is contrary to the basic concept of indemnity? A. Agreed Value B. Replacement cost C. functional replacement cost d. market value

B. Replacement cost The replacement cost method of loss valuation is contrary to the basic concept of indemnity because following a loss it may provide the insured with a settlement in excel of the property's actual cash value

An insured relocated to another state for work. However, she still owns and insures a house in this state, but has had no one living in it for 3 months. She is also storing some of her furniture and clothes in the house. From an insurance standpoint, the insured's house is considered A. under repair b. vacant c. unoccupied d. condemned

C. unoccupied unoccupancy refers to an insured structure in which no people have been living or working within the required period of time, but the structure still contains contents

All of the following statements concerning coinsurance are true EXEPT: A. it is used to help adequacy and equity in rates B. the insured agrees to maintain insurance equal to some specified percentage for the value of the property C. if the insurance carried is less than required, the insurance may not cover the whole loss D. the coinsurance formula will also be applied to total losses

D. In the event of total loss, the coinsurance clause doe not operate and the face amount of the policy is paid

Which insurance principle states that if a policy allows for greater compensation than the financial loss incurred, the insured may only receive benefits for the amount lost? A. Stop-loss B. consideration C. Reasonable expectations D. Indemnity

D. Indemnity The principle of indemnity stipulates that the insured can only collect for the amount of the loss even if the policy is written with greater benefit limits

An insured carries a property policy on her home in the amount of $250,000. A bank is shown as the mortgagor in the policy. Last month the insured made her final mortgage payment, but did not remove the bank from the policy. In the event of a covered loss to her home, how much will the bank receive? A. Up to the amount of debt that the insured has with the bank B. the standard minimum of 10% that is paid to lenders C. All of the payment would be made to the mortgagor shown in the policy D. Nothing

D. Nothing Because the bank does not have a financial interest in the house at the time of loss, they will receive nothing

A property insurance policy that is not subject to any coinsurance requirements but has a set amount of insurance scheduled for the property would use what loss valuation method? A. actual cash value B. replacement cost C. reproduction cost D. stated amount

D. Stated amount A stated amount is an amount of insurance scheduled in a property policy which is not subject to any coinsurance requirements in the event of a covered loss

A Tornado that destroys property would be an example of which of the following? A. A Peril B. A Pure Risk C. A loss D. A physical hazard

A. A peril Peril is the cause of loss insured against in an insurance policy

If a liability policy had split limits of 50/100/30, what is the maximum amount that would be payable in the event of injury to a single person? A. 30,000 B. 50,000 C. 100,000 D. 180,000

B. 50,000 The first limit shown is the most the policy will pay for bodily injury to any one person