Review Questions P&C Insurance

A flood will cover

mudslide

Why was the NFIP created?

to fill the gap left by private insurers

How does insurance distribute the financial consequences of individual losses?

transfers risk to all persons insured

Loss valuation is best described as the process of

Determining the premium charged and the amount of insurance required on a specific property

Fire erupts in the kitchen and spread to the upstairs bedroom, resulting in the destruction of furniture, what type of loss has occurred?

Direct Loss

Which of the following would be considered a peril?

Fire

All of the following are components of the NFIP EXCEPT?

Flood Plan Rezoning

Restoring an insured financially after a claim is known as

Indemnity

Statistical probabilities of loss for a particular class of insureds is best predicted when the insured group is

Larger

An insured was involved in an accident that was caused by a tire blowing out. The insured was severely injured and incurred medical expenses of $100,000.

Manufacturer of the tire

Which valuation method takes into consideration what a willing buyer would pay for an insured property?

Market Value

What is the Flood Program called?

NFIP

An insurance policy form that lists specific covered perils provides

Named peril coverage

Which of the following is defined as the failure to use care that an otherwise prudent person would have under similar circumstances?

Negligence

A couple noticed yesterday that several items of personal property were missing from their home. There has not been any apparent robbery committed, the items are merely missing and have seemingly disappeared mysteriously. The couple will

Not be able to make a claim for property since it is considered a mysterious disappearance.

What term includes losses caused by continuous or repeated exposure to conditions resulting in injury to persons or damage to property that is neither intended nor expected?

Occurrence

In reference to insurable interest, which of the following is NOT an element of insurable risk?

Personal

Who issues WYO policies?

Regular insurance companies

When an insurer pays for the cost to exchange damaged property with new property of similar kind an quality, it is called:

Replacement Cost

what is the max amount of flood coverage you can get for a single family dwelling under regular program?

$250,000

In a liability policy with split limits of 25/50/25, which number is the maximum amount that would be payable in the event of damage to a person's property?

$25k the third number

Any structure covered by a flood policy needs what?

2 walls and a roof

What is the waiting period for a flood policy?

30 days

Willie Sellum has recently purchases a used car lot with 50 used vehicles. His insurance agent, Bill Emnow, told Willie that it will take 30 days to get a policy in-force on the cars to be sold. One option that Bill may be able to offer Willie would be

A binder from the planned insurer

Which of the following is NOT considered an insurable peril?

A loss resulting from gambling

What is a sudden, unplanned and unexpected event, not under the control of the insured, resulting in injury or damage that is neither expected nor intended called?

Accident

An insured has a maximum limit coverage available under her liability policy during a policy year, regardless of the number of claims made or the number of accidents. Her limits are restored at the policy anniversary. What type of limit does this insured have ?

Aggregate limit

Which of the following is indicated on a certificate of insurance?

Amounts and types of insurance

When do binders expire?

As soon as the policy is issued

In order to start coverage before a policy is issues, insurers can issue a

Binder

A single property insurance policy can provide coverage for multiple classes of property as one location?

Blanket Coverage

An insured's limit of liability applies to a total of damages for bodily injury and property damage resulting from one accident, which may be used in any combination of amounts, not to exceed the single limit. What type of limit does this insured have?

Combined Single

An insured's home catches fire. As a result, the insured's family must stay in a motel until the home is repaired. This is an example of

Consequential loss

Upon payment for a loss, the insured is obligated to surrender to the insurer the right to sure a negligent third party. This is called

Subrogation

When an insurer acquires the insured's rights against a third party for the purposes of receiving indemnification for loss, this is called

Subrogation

Due to appreciation, the amount of insurance on a business is less than 80$ of its actual Value on the date of the loss. Which of the following is true?

The coinsurance penalty applies

Which method of dealing with risk is applied when insurance is purchased ?

Transfer

A structure that is not inhabited by anyone and stores no property is considered

Vacant

Flood insurance will respond to a flood claim if 2 or more _____ OR ____ are flooded

acres or properties