Property and Casualty Arizona

The loss is payable to the insured and the mortgagee

A Mortgage company is named as a loss payee on the insureds homeowners policy, under the standard mortgage clause. If the insured suffers a loss due to a fire, which of the following is true?

Direct

A beauty parlor burns to the ground. What type of loss is this to the owner?

Pay to defend the policyowner in the lawsuit because liability coverage contains a duty-to-defend provision

A deli owner has a businessowners liability policy. When a customer slipped and hurt herself at the deli, the liability policy paid for medical expenses. The customer, however, is now suing the business owner because she claims there was no caution sign warning her that the floor was wet. What is the insurer obligated to do?

Blanket

A policy that insures all property at multiple locations for a single amount is referred to as

Pure Risk

A situation in which a person can only lose or have no change

Exclusions

All of the following are found in the declarations section of a policy EXCEPT the

Apparent

An agent is using a stationary with the logo of an insurance company, applicants for insurance assume that the agent is authorized to transact on behalf of that insurer. what type of agent authority does this describe?

Each policy will pay $25,000

An insured has four separate but identical policies written by different insurers to cover her $100,000 building. Each policy is written for $100,000, and each has the pro rata liability other insurance clause. In the event of a total loss to the building, what would each insurer pay?

The application given to a prospective insured

Which of the following is NOT the consideration in a policy?

Declarations

Which of the following is a mandatory part of an insurance policy that varies with each individual policy

Driving recklessly

Which of the following is considered to be a morale hazard?

Counteroffer

Which of the following is not an essential element of an insurance contract

nonconcurrency

Which of the following terms refers to other insurance that is written on the same risk, but not on the same coverage basis

Insureds

Persons covered under an insurance policy, whether named or not, are known as the

Insuring agreement

all of the following are conditions commonly found in the insurance policy EXCEPT

Legal duty owed, breach of legal duty owed, proximate cause, damages

Which of the following lists all the required elements for establishing a charge of negligence

Liberalization

Which of the following policy provisions would automatically broaden coverage under a policy without requiring additional premium?

A house

Which of the following would NOT be classified as personal property for insurance purposes?

A mutual insurer

Insurance companies may be classified according to the legal form of their ownership. This type of company organized to return any surplus money to their policyholder is

Libel

Melt away diet, INC circulates a flyer that falsely reports that is competitor, See Food Diet, markets a product that causes hair loss and skin rashes. This is an example of

Purchase of insurance

Most common way to transfer risk

The failure to do what a reasonable prudent person would do under given circumstances

Negligence is defined as

The failure to use reasonable and prudent care

Negligence may be defined as

His policy has been in effect for at least 60 days

Otto fails to pay the premium on a personal lines property policy. Ottos policy can be canceled if

His policy has been in effect for 60 days

Otto fails to pay the premium on a personal lines property policy. Ottos policy can be cancelled if

Special

Payment for medical expenses, loss of wages, funeral expenses, or the cost to repair or replace damaged property are known as what type of compensatory damages?

The policy that pays first in the event of a covered loss is known as the

Primary policy

Specific Coverage

Property insurance that provides $100,000 coverage for a building and $50,000 coverage for personal property at a single location is called

A statement that earthquake damage is not covered

The declarations page of the homeowners policy provides all of the following information EXCEPT

The insured cannot collect but the mortgage holder will still be paid

The insured has violated the contract without the knowledge of the mortgage holder. After a loss

Unilateral

The insured is not legally bound to any particular action in the insurance contract, but the insurer is legally obligated to pay losses covered by the policy. What contract element does this describe?

Declarations

The part of a property policy that shows the amount of insurance, premium, and the policy term is

Conditions

The part of the policy that sets forth the rules of conduct, duties, and obligations of the parties is called the

Subrogation

The policy provision found in property insurance policies that prevents the insured from collecting twice for the same loss is called

Indemnity

The pro rata liability clause is designed to protect the principal of

Loss valuation

The process of determining the premium charged and how much insurance is required for a particular loss is called

Abandonment

The property condition that precludes the insured from simply turning over damaged property to the insurer and claiming a total loss is called

Avoidance

The risk management technique that is used to prevent a specific loss by not exposing oneself to that activity is called

Exclusions

The section of an insurance policy that details what perils are not insured against and what persons are not insured is known as the

Cancellation

The termination of an in-force insurance policy by either the insured or the insurer prior to the expiration date shown in the policy is known as

Adhesion

Type of contract that is prepared bu only the insurer causing the insureds only options to accept or reject the policy

Special and general

What are the two types of compensatory damages

Insurance

What do individuals use to transfer their risk of loss to a larger group

Other insurance

What insurance policy provision defines how the policy will respond if there is more than one insurance policy written on the same risk?

A statement by the applicant that upon discovery, would affect the underwriting decision of the insurance company

What is material misrepresentation?

to encourage insureds to insure property close to its value

What is the purpose of the coinsurance clause found in property insurance policies

Reinsurance

What method do insurers use to protect themselves against catastrophic losses?

renewal dates

What type of information would be found in a policys insuring agreement

Renewal dates

What type of information would be found in a policys insuring agreement?

Open peril policy

What type of insurance policy insures against all risks of loss that are not specifically excluded by the policy?

Vicarious liability

When a parent is required to pay for damages caused by his or her children, this is an example of

Nonrenewal

When an insurance policy does not offer a continuation at its expiration date, it is considered a

Stated Amount

When the amount of insurance written in a property policy is not subject to any coinsurance provision and that amount is paid in the event of a covered loss, the coverage is said to be written as

On the declarations page of the policy

Where is the policy period stated?

replacement cost

Which method of loss valuation is contrary to the basic concept of indemnity

Domestic

Which of the following best describes an insurance company that has been formed under the laws of this state

Exchange of unequal values

Which of the following best describes the aleatory nature of an insurance contract?

Negligence that leads to an injury

Which of the following does the term proximate cause refer to

Insurance Guaranty Association

Which of the following entities protects policyowners, insureds, and beneficiaries under insurance contracts when insurers fail to perform contractual obligations due to financial impairment?

The loss must be catastrophic.

Which of the following is NOT a characteristic of an insurable risk?

Replacement cost

Which of the following is used in the formula for calculating the actual cash value of a property

Agreed Value

Which of the following types of valuation works best for property whose value does not fluctuate much

First name insured

Which of the following would be named on the declarations of a property or liability policy?

Endorsements

Which of the following would modify the original insurance

additional coverage

Which part of an insurance policy covers claims-related expenses, reasonable expenses incurred by an insured to protect damaged property from further loss, or defense expenses?

Policyholders

Who might receive dividends from a mutual insurer?

$100,000

Bobs home is insured for $100,000 under a dwelling policy. Yesterday his home suffered $20,000 damage from a fire. Today the home was struck by lighting, starting another fire that completely destroyed the structure. Bobs policy will pay

Contracts of Adhesion

Contracts that are prepared by one party and submitted to the other party on a take it or leave it basis are classified as

Hazards

Events or conditions that increase the chances of an insured loss occurring are referred to as

The uncertainty or chance of loss

For the purpose of insurance, risk is defined as

Larger

For the reported losses of an insured group to become more likely to equal the statistical probability of loss for that particular class, the insured group must become

Loss

Reduction, decrease, or disappearance of value of the property insured in a policy by a peril insured against is known as

The insured may not relinquish ownership of damaged property to claim a total loss, but must protect damaged property from further loss

The abandonment provision in property insurance policies states that

No benefit to bailee clause

specifies that the insurer will not recognize any assignment or grant any coverage that benefits a person or organization holding, story, or moving the insured property for a fee.

indemnity

the pro rata liability clause is designed to protect the principal of

Replacing the property with other property of a lesser kind or quality

At the time of loss insured against in a property and casualty policy, the insurers claim settlement options include all of the following EXCEPT:

Consideration

An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which insurance principles has the insurer violated?

Mortgagee

According to the standard mortgage clause, who has the right to bring in a suit in their own name to recover damages, pay policy premiums, and submit a proof of loss?

Concealment

Act of withholding material information that would be crucial to an underwriting decision

Provisions

All of the following are considered parts of the policy structure EXCEPT

Insurance premium paid

All of the following are factors in determination of actual cash value EXCEPT

Combined single

An insured is driving her car through a residential area when she loses control and crashes into a neighbors front porch, The neighbor who was sitting on the porch, is injured. The insured's liability policy has a limit of $500,000. This amount applies to the total of damages for any bodily injury and property damage resulting from one accident. Which type of limit of liability does the insured have?

Material Misrepresentation

An insured stated on her application for life insurance that she had never had a heart attack, when in fact she had a series of minor heart attacks last year for which she sought medical attention. What explains the reason a death benefit claim is denied?

Losses will be paid to the mortgagee and mortgagor as their interest appears

An insureds home is mortgaged by the local bank. The insured is required to carry insurance on the home, showing the bank as the mortgagee. If the home is damaged by a covered peril, which of the following is true?

By their members - authorized insurers

How are state Insurance Guaranty Associations funded?

10

How many days' notice are required for cancellation on a commercial lines property and casualty policy for reason of nonpayment of premium

At a time of loss

INSURABLE INTEREST IN THE PROPERTY COVERED IN A POLICY MUST BE PROVEN WHEN?

Restores an insured person to the same financial state as before the loss

In case of a loss, the indemnity provision in insurance policies

When an insurers underwriter approves coverage

In forming an insurance contract, when does acceptance usually occur?

The completed application is submitted

In insurance, an offer is usually made when

Deductible

In property and casualty insurance, what is the term for the amount of a loss that the insured must cover out of pocket, and the insurer will only pay for the additional amount of the loss above this limit

Replacement cost at the time of the loss, less depreciation

In property insurance, actual cash value is defined as which of the following

Moral Hazard

Individuals tendency to be dishonest would be indicative of a

Risk

Insurance is the transfer of

Ownership

Major difference between a stock company and a mutual company

Market value

The insureds house is located one mile from the counties new landfill and across the road to the entrance of a rock quarry. It would cost $150,000 to rebuild the house if something happened to it, but when the insured tried to sell it, the best offer he received was $80,000. The insurance company will insure the house for $80,000. What method of valuation is used to insure this property?

Utmost Good Faith

The insurer must be able to rely on the statements in the application, and the insured must be able to rely on the insurer to pay valid claims. In the forming of an insurance contract, this is referred to as

Aggregate limit of liability

The maximum limit of coverage available under a liability policy during a policy year regardless of the number of claims that may be made or the number of accidents that may occur.