FL Outline P&C General Review Quiz
Toni was injured when his car collided with Owen's at an intersection. In applying the doctrine of comparative negligence, a court determined that Toni sustained damages in the amount of $10,000 and the accident was 70 percent Owen's fault. What amount is Toni entitled to recover from Owen? $7,000 $3,000 $0 $10,000
$7,000 Where comparative negligence applies, a plaintiff can recover the percentage of damages based on the extent of the other party's fault. Because Owen was 70 percent at fault, he is responsible for paying 70 percent of Toni's damages.
During the first six months following the assignment of a claim, how often is an adjuster required to provide claim status reports? At the 14th, 28th, and 45th day after assignment At the 10th, 45th, and 90th day after assignment At the 7th, 30th, and 60th day after assignment At the 30th, 90th, and 180th day after assignment
At the 30th, 90th, and 180th day after assignment During the initial six months of a claim, claim status reports are required at the 30-, 90-, and 180-day increments.
Arturo's business has been burglarized. Which of the following is NOT a duty that is required of Aurelio by his insurance policy? Provide prompt notice of the claim to the insurer or its agent. Cooperate with the insurer in the investigation. Hire a private detective to investigate the burglary. Notify the police.
Hire a private detective to investigate the burglary. Because a crime has been committed, Arturo must notify the police as well as the insurer, and he must cooperate with the insurer in the investigation. However, he is not required to conduct his own investigation or to hire his own investigator.
Exclusions from coverage will NOT Remove unnecessary coverage Increase the premium Encourage loss prevention Eliminate or reduce overlapping coverage
Increase the premium Exclusions help to keep premiums reasonable by removing coverage that might otherwise apply.
What does an insurance company require from an insured before it will determine whether the policy covers a loss? Deposition under oath All evidence related to the loss Proof of Loss statement Police report
Proof of Loss statement An insured's Proof of Loss statement is required by an insurance company before it will determine whether the policy covers the loss.
How do public adjusters primarily differ from staff or independent adjusters? Public adjusters represent insureds, while other adjusters represent insurers. Public adjusters specialize in certain claims. Public adjusters are government employees. Public adjusters work only with claims below a certain value.
Public adjusters represent insureds, while other adjusters represent insurers. Adjusters may be employees of the insurer (staff adjusters) or of independent adjusting bureaus (independent adjusters) that represent insurers and self-insureds on a contract basis. Public adjusters are consultants who specialize in assisting insureds in presenting claims to insurance companies in a manner that will maximize their recovery.
Lorraine was parking her car when her brakes failed, and she struck the car next to her, which was owned by Marty. In this case, all the following statements are correct EXCEPT: The rolling of Lorraine's car into Marty's car was the proximate cause of the damage. Lorraine had a duty to keep her car from striking Marty's car. The accident was a breach of duty on Lorraine's part. The costs to repair Marty's car represent compensable damages.
The rolling of Lorraine's car into Marty's car was the proximate cause of the damage The elements of negligence are duty of care, breach of the duty of car, proximate causation, and compensable damages.
Which are typically NOT among the provisions of a typical property and casualty insurance policy? Conditions Waivers Insuring Agreements Declarations
Waivers Standard policy provisions include declarations, definitions, insuring agreement(s), exclusions, and conditions.
When obtaining information about a claim, an adjuster is interested in collecting information about the claim that is needed to resolve it finding information most helpful to the insurer finding information most helpful to the claimant collecting any and all information about the claim
collecting information about the claim that is needed to resolve it The adjuster collects information, facts, documents, etc., that the adjuster believes are essential to bringing the claim to resolution.
An "ordinance or law" exclusion in a property insurance policy deals with: property damage resulting from vandalism wear-and-tear losses the cost of building permits that might be required before damaged property can be repaired extra expenses required to comply with current building codes when repairing damaged property
extra expenses required to comply with current building codes when repairing damaged property An ordinance or law exclusion eliminates coverage for the extra expenses, over and above the cost of repairing damaged property that might be necessary to comply with current building codes or other ordinances.
Insurers must keep records of their insurance transactions for how many years after the transaction was completed? four three five Two
five Licensees and insurers must keep records of their insurance transactions at their place of business for at least five years after the transaction was completed.
Adjusters, agents, and insurers must maintain records of their insurance transactions for at least how long? two years five years one year three years
five years Adjusters, agents and insurers must keep records of their insurance transactions at their place of business for at least five years after the transaction was completed.
Which of the following is commonly listed as an excluded cause of loss in an open perils property insurance policy? vandalism flood explosion windstorm
flood An open (special) perils policy typically lists flood as an excluded peril, necessitating the need for flood insurance or a difference-in-conditions (D-I-C) policy to cover that risk.
Which of the following is a peril? flood rain snow ice
flood A peril is a cause of loss. Flood is normally an excluded peril. Weather conditions by themselves do not cause a property loss, but they increase the likelihood of a loss resulting from some covered peril such as "weight of ice, sleet, or snow." Ice, sleet, or snow are considered to be hazards because they increase the likelihood of a loss.
While driving, Terri ran a red light and broadsided Victor's pickup. Victor was hospitalized for a week and spent another month recovering from injuries he suffered from the accident. In addition to paying his medical bills and reimbursing his lost wages, Terri's insurer was required to pay additional damages for Victor's pain and suffering, which are considered: punitive damages special damages compensatory damages general damages
general damages General damages involve a money award designed to compensate an injured person for his or her pain and suffering.
Ivy's personal auto policy provides primary liability coverage with a $100,000 limit, while her personal umbrella policy provides excess coverage with a $1 million limit. If Ivy must pay $55,000 in damages because she is responsible for an auto accident: her personal auto policy will pay $55,000 her personal auto policy and her umbrella policy will both pay $27,500 her personal auto policy will pay $5,000 and her personal umbrella policy will pay $50,000 her personal umbrella policy will pay $55,000
her personal auto policy will pay $55,000 Because Ivy's personal auto policy provides primary coverage, it will pay first until its limits are exhausted. In this case, the $55,000 claim is within the personal auto policy's $100,000 limit, so the umbrella policy's excess coverage will not be involved.
Property insurance policies covering buildings and contents commonly exclude all the following causes of loss EXCEPT: lightning leakage or seepage earth movement mechanical breakdown
lightning Lightning is a covered peril in nearly all property insurance policies. However, earth movement, leakage and seepage, and mechanical breakdown are usually excluded.
To avoid the appearance of practicing law, a claims adjuster's communications with an insured should always be supported by references to the law limited to interpretations of the policy limited to the wording of the policy reviewed by an attorney
limited to the wording of the policy To avoid practicing law, a claims adjuster's communications with an insured that deal with coverage issues should be limited to the wording of the policy and the insured's claim.
When considering depreciation in adjusting a claim, an adjuster considers all of the following factors EXCEPT: future life expectancy loss of value for accounting purposes functional obsolescence physical deterioration
loss of value for accounting purposes The depreciation used is true depreciation, not depreciation for accounting purposes. True depreciation must consider physical deterioration, functional obsolescence, economic obsolescence due to causes independent of the property, effective age as compared with other properties considering renovations and reconstruction, and future life expectancy.
If an insurance applicant submits an application to an insurer without a premium payment, the applicant has: formally requested a proposal from the insurer made an offer to the insurer made a counteroffer to the insurer invited the insurer to make an offer to the applicant
made an offer to the insurer When an applicant submits an application without the first premium, the applicant is inviting the insurer to make an offer.
The basic purpose of the liberalization clause in a property and casualty insurance policy is to: provide the policy with broadened coverage that may be introduced in subsequent editions of that policy form, without requiring further underwriting permit the insurer to modify the policy without the policyholder's permission require the insurer to apply a liberal interpretation to policy provisions that are deemed too stringent allow the policyholder to increase coverage of an existing policy without providing evidence of insurability
provide the policy with broadened coverage that may be introduced in subsequent editions of that policy form, without requiring further underwriting The liberalization clause provides existing policies with broadened coverage features that may be introduced in subsequent editions of that policy form, without requiring further underwriting.
Alan used his old truck with bald tires and leaking brake lines to move grain from his farm to the grain elevator. During the trip, his brakes failed, and he ran into a school bus. In addition to paying for damage to the bus, the court also ordered Alan to pay an additional $250,000 as punishment for his grossly negligent behavior. What is this additional payment considered? general damages punitive damages compensatory damages special damages
punitive damages Punitive damages are amounts a defendant is required to pay as punishment in cases where the defendant has acted in an especially outrageous manner.
All of the following are perils EXCEPT: lightning theft windstorm texting while driving
texting while driving A peril is a cause of loss. Texting is a hazard because texting increases the likelihood of a collision.
A dump truck collided with a tall oak tree in Marian's front yard. The tree fell onto her house, breaking a glass picture window and knocking a lamp off the table inside it. Sparks from the lamp started a fire that destroyed half the house. What is the proximate cause of the damage to Marian's house? the falling object the collision the fire the glass breakage
the falling object The proximate cause of a loss is the cause that sets in motion an unbroken chain of events leading to the loss. In this case, the collision led directly to other perils that resulted in the fire loss.
Liability insurance basically involves: criminal law tort law international law contract law
tort law Liability insurance involves tort law, which protects the rights of individuals from civil wrongs.
Harding Paint Store mixed a gallon of paint with the custom color Meghan requested. However, the store clerk failed to tighten the lid on the paint can, which came open while Megan was driving home with the can in her car. Under which type of law was Harding required to pay for the expensive damage to Megan's car that resulted from the paint spill? tort law contract law workers compensation law criminal law
tort law Meghan had a right to freedom from damage to her property. Tort law protects the rights of individuals like Meghan from civil wrongs and provides for the payment of money damages as a remedy.
Olen buys insurance on the inventory in his warehouse, which includes a sizable quantity of watches bearing the "Rolex" label, and Olen pays the insurance premium. After Olen reports a theft, the insurer's investigation reveals that the watches it had agreed to insure were illegal counterfeits. Olen's contract with the insurer is: unenforceable because it was for an illegal purpose unenforceable because Olen is not a competent party enforceable if it has been in force for more than 60 days enforceable because the elements of offer, acceptance, and consideration were present
unenforceable because it was for an illegal purpose For a contracting party to be able to enforce the terms of the contract, the contract must be for a legal purpose, and counterfeit merchandise is illegal.
All of the following causes of loss are commonly listed as excluded perils in open perils property insurance policies, EXCEPT: flood war vandalism wear and tear
vandalism Most excluded perils-such as war, earthquake, and flood-are excluded because of their catastrophic nature. Wear and tear is uninsurable because it is not accidental. Vandalism is generally covered in both open perils and named perils policies.
An insurer that has a history of accepting premiums up to five days beyond their due date cannot deny a claim for a loss occurring the day after a premium was due for which of the following reasons? concealment waiver and estoppel indemnity fraud
waiver and estoppel Estoppel exists when a party cannot enforce a right that it has voluntarily waived by its past conduct-in this case, repeatedly accepting a late premium with no coverage lapse.
An adjuster typically completes his or her initial investigation of a claim within how many days of being assigned the claim? 5 30 15 10
15 Typically, within 15 days from the assignment date, the handling adjuster should have completed most of the initial investigation.
Which of the following correctly explains why insurance policies are contracts of adhesion? The premium is usually greater than the loss exposure. The loss exposure is usually greater than the premium. The insurance company determines the wording of the policy. Federal insurance regulators determine the wording of the policy.
The insurance company determines the wording of the policy. With an insurance contract, the insurer invariably determines the policy's wording, and the insurance buyer who wants that policy has to "adhere," or stick, to the policy's written provisions.
Alex sold an insurance policy before his license lapsed and earned a commission on the sale. Is he entitled to a commission if the policy is renewed? No, because only one commission can be paid on a policy sale. Yes, because he was licensed when the policy was sold. Yes, because his license was not revoked or suspended. No, because he is no longer licensed.
Yes, because he was licensed when the policy was sold. Commission earned on the renewal of a policy can be paid to a person for selling, soliciting, or negotiating the policy if the person was licensed to transact insurance at the time of the sale, solicitation, or negotiation of the policy.
While it provides considerable coverage, a property and casualty insurance policy will not pay benefits unless specific actions defined in the policy are taken by the policyholder when submitting a claim, due to the fact that the policy is a(n): conditional contract aleatory contract contract of adhesion unilateral contract
conditional contract An insurance policy is a conditional contract because its force and effect-and often its continuation-depend on certain actions of the policyholder that are expressed in the policy's conditions.
Melanie becomes intoxicated at a party and then Pierre persuades her to sell her car to him for $25. Pierre puts the terms in writing and both of them sign the document. The next day, Pierre goes to Melanie's house with the money and demands that she deliver the car to him. The agreement he made with her is: unenforceable because one of the parties was incompetent enforceable because it was signed by both parties unenforceable because it was made for an illegal purpose enforceable because it was in writing
unenforceable because one of the parties was incompetent To be enforceable, a contract must be made for a legal purpose between competent parties. Since Melanie was intoxicated when she signed the contract, she did not have the capacity to understand the significance of her actions: she was incompetent.
A house is struck by lightning during a thunderstorm, which starts a fire. The house stands in a floodplain and the basement fills with water from the storm. The homeowner files a claim on her homeowners insurance policy, which excludes losses from floods. What is true about her coverage? It will not cover the loss. It will partially cover the loss from the fire and the flood. It will cover the loss. It will cover only the loss from the fire.
It will cover the loss. Under the doctrine of concurrent causation, if a loss involves more than one peril, and at least one of the perils is covered by the policy, then the loss is covered.
When settling a property claim, an insurer may offer the insured a choice of each of the following EXCEPT: reduction in premium to insure the damaged property reparation of the damaged property payment of the insured value of the property replacement of the damaged property
Reduction in premium to insure the damaged property Insurers usually settle property claims by paying some amount of money that reflects the insured value of repairing or replacing the covered property. A settlement option in many insurance policies permits an insurer to repair or replace the damaged property with a similar or equivalent item.
Sasha, Kendall, Adam, and Julio are licensed agents in Florida. The Department of Financial Services would NOT be able to suspend or revoke which agent's license for engaging in the following acts? Sasha, who sold insurance policies to family members and friends this year Adam, who offered season football tickets to prospects who purchased policies Julio, who used insurance premiums he collected to renovate his business office Kendall, who intentionally violated an order issued by the Office of Insurance Regulation
Sasha, who sold insurance policies to family members and friends this year The Department can revoke or suspend the licenses of agents who engage in all of the listed acts but cannot suspend or revoke a license because an agent sells insurance to family and friends.
With a named perils policy, which of the following statements correctly describes the burden of proof with respect to covering a loss? To deny coverage, the insurer has the burden of proof to show the loss was caused by an excluded peril. To deny coverage, the insurer has the burden of proof to show the loss was not caused by a covered peril. To cover the loss, the policyholder has the burden of proof to show the loss was not caused by an excluded peril. To cover the loss, the policyholder has the burden of proof to show the loss was caused by a covered peril.
To cover the loss, the policyholder has the burden of proof to show the loss was caused by a covered peril With a named perils policy, the policyholder has the burden of proving that a loss was caused by a covered peril. If the policyholder can prove that insured property was damaged by a specified peril, the insurer is obligated to pay the claim unless coverage does not apply for some other reason.
While shopping for fruit, Walter was injured when he slipped on a banana peel that Geraldine had carelessly allowed to remain on the floor of her store. Walter sued Geraldine to recover damages. In Walter's civil action against Geraldine: Geraldine is the defendant and Geraldine's insurance company is the plaintiff. Walter is the plaintiff and Geraldine's insurance company is the defendant. Walter is the plaintiff and Geraldine is the defendant. Geraldine is the plaintiff and Walter is the defendant.
Walter is the plaintiff and Geraldine is the defendant. In a civil action, the person bringing suit and seeking damages (Walter) is the plaintiff, and the party against whom the suit is brought (Geraldine) is the defendant.
Greg's business is covered by an open perils property insurance policy, but he is concerned that the policy excludes coverage for flood and earthquake losses. What might Greg purchase to obtain flood and earthquake coverage? a special perils policy a difference-in-conditions policy a supplemental perils policy a concurrent causation endorsement
a difference-in-condition
An enforceable contract must involve consideration by both parties. When an insurance company enters into a contract, what is the insurance company's consideration? a promise to pay for losses as stipulated in the insurance contract a written insurance policy signed by the agent who sold it an agreement to refund any unearned premium if the policy is canceled legal status as a licensed insurer in the state where the transaction occurs
a promise to pay for losses as stipulated in the insurance contract The insurer's consideration is its promise to pay for losses as stipulated in the contract.
When Devon sells his boat to Pat, he offers to include not only the boat trailer but also his boatowners insurance policy. If Pat accepts the offer and subsequently submits a claim to the insurer, the insurer will deny the claim because: a property insurance policy is a contract of adhesion a property insurance policy is an aleatory contract a property insurance policy is a personal contract a property insurance policy is a unilateral contract
a property insurance policy is a personal contract Property and casualty policies are personal contracts between the insurer and the policyowner. They cannot be transferred to another party without the insurer's consent.
Which of the following correctly identifies three elements that must be present to create an enforceable contract? written document, acceptance, and consideration acceptance, consideration, and offer offer, written documentation, and acceptance consideration, offer, and written documentation
acceptance, consideration, and offer The creation of a contract must include offer, acceptance, and consideration.
Although Todd and his insurer agree that his property claim is covered, they cannot agree on the damaged property's value. What clause in Todd's property insurance policy provides a method of resolving this dispute? arbitration appraisal other insurance Subrogation
appraisal When the insured and insurer cannot agree on the damaged property's value, the appraisal clause requires that each party chooses an appraiser, the two appraisers select an umpire, and an agreement by any two of the three appraisers establishes the value of the loss.
Gavin was seated behind the goal to watch a hockey game when a member of the visiting team hit a puck that sailed over the top of the goal and struck him, breaking his jaw. Gavin sued the team, but the team's lawyer held that Gavin willingly exposed himself to the possibility of injury, a defense that is based on the doctrine of: contributory negligence assumption of risk comparative negligence absolute liability
assumption of risk The assumption of risk defense is based on the premise that the plaintiff voluntarily exposed himself to the substantial possibility of danger.
Rhonda's parents bought her a car for her sixteenth birthday and made her responsible for maintaining and insuring it. However, when Rhonda applied for auto insurance after getting her driver's license, she was told that she could not enter into a binding insurance contract because, according to the law in her state, a 16-year-old does not qualify as a(n): designated driver offeree offeror competent party
competent party Generally, minors are not considered competent to enter into a contract. However, some states (apparently not Rhonda's) permit minors over a certain age to enter into a binding contract for auto insurance.
With respect to requirements for a valid contract, a policyowner's payment of the policy premium is called a(n): counteroffer offer consideration acceptance
consideration Consideration means something of value that both parties to a contract exchange. With an insurance contract, the applicant's premium payment is the applicant's consideration.
Because the wording of a typical insurance policy is drafted by an insurance company and offered to insurance buyers on a take-it-or-leave-it basis, insurance policies are considered: unilateral contracts aleatory contracts contracts of adhesion conditional contracts
contracts of adhesion Most insurance contracts are contracts of adhesion because the policy is drafted by the insurer and little if any negotiation is normally available with respect to the policy's wording.