Insurance
In insurance, an offer is usually made when
An applicant submits an application to the insurer
Exclusions
An exclusion is a peril or property, not covered
alien
An insurer in another country, not another planet
domestic
An insurer that is incorporated/domiciled in arkansas
What is subrogation?
An insurer's legal right to seek damages from third parties after reimbursing insureds for a loss
Which of the following is NOT covered under accounts receivable coverage form?
Any loans required to offset uncollectible amounts
Which inland marine form would provide the best protection for a dry cleaning company against loss or damage to their customers property, while in the care custody in control of the dry cleaners?
Bailee's customer policy
An insurance contract must contain all of the following to be considered legally binding except-
Beneficiary's consent
The liability coverage of the business owners policy is written on a
Business owners liability coverage form
What term best describes the active withholding material information would be crucial to an underwriting decision
Concealment
Because an insurance policy is a legal contract. It must include all the following, except.
Conditions
An insurance business is damage because of a fire, and he was forced to close the business temporarily for repairs as a result of the insured lost income. What type of loss is this?
Consequential loss, also known as indirect loss
What protects consumers against the circulation of inaccurate or obsolete personal information?
Consumer, privacy act
Which of the following is not necessary to form a valid contract?
Counteroffer
Which insurance principle states that if a policy allows for greater compensation in the financial loss incurred, the insured may only receive benefits for the amount lost?
Indemnity
foreign
Insurer that is incorporated in another state, not another country
All of the following are condition, commonly found in the insurance policy, except-
Insuring agreement
All of the following are true, regarding deposit, premium, except-
It is 50% of the actual premium
The insured was mowing the lawn in his yard with the lawnmower borrowed from his brother. The fuel line ruptured and the lawnmower was destroyed in the fire. How will the insured's homeowners liability policy respond?
It will cover the damage.
If an employer in a state with elective, Worker's Compensation laws chooses not to be subject to those laws, What does the employer lose?
It's common law defenses against liability suits
For a contract to be enforceable by law, the purpose of the contract must be
Legal and not against public policy
Which of the following personal auto coverages would pay for the insurance, travel expenses and loss of earnings while involved in the settlement process of a covered loss?
Liability coverage, including $200 per day for attending trials or hearings.
Indirect Loss
Loss that is a result or consequence of a direct loss
Arson would be considered what type of hazard
Moral
Binder
Not technically part of a policy. A binder is a temporary agreement to provide insurance coverage.
The causes of loss insured against an insurance policy or known as
Perils
B&B market was sued when an employees detained a person. He believed to be a shoplifter, but the person turned out to be the meter reader which coverage would apply to this suit?
Personal and advertising injury liability
When ABC appliances marketing stated that it's mowing machine was the only safe mower available for purchase in town, ABC was sued by XYZ lawn and garden. ABC's coverage would come from which part of its general liability coverage?
Personal and advertising injury liability
Which professional liability form provides coverage for liability, arising out of errors or mistakes, made in rendering medical services?
Physicians, surgeons and dentists malpractice
Gramm-Leach-Bliley Act was passed to
Protect private customer information filed with a financial institution.
The Federal Fair Credit Reporting Act
Regulates consumer reports
Which of the following is used in the formula for calculating the actual cash value of a property
Replacement cost
In property insurance, actual cash value is defined as which of the following
Replacement cost at the time of the loss, less depreciation
Principle of Indemnity
Restores the insured person in whole or in part to the condition they enjoyed prior to the loss.
What is the deductible of a personal liability umbrella policy called?
SIR (self-insured retention)
Which of the following is a included under the physical damage coverage of a personal auto policy?
Sound reproduction equipment permanently installed in the covered auto
Property insurance that provides $100,000 coverage for a building that cost $50,000 coverage for personal property at a single location is called
Specific coverage
Events in which a person has both the chance of winning or losing are classified as
Speculative risk
A property insurance policy that is not subject to coinsurance requirements, but has a set amount of insurance scheduled for the property would use what loss valuation method?
Stated amount.
A warranty is a
Statement of absolute fact
Giving the right to sue a negligent, third-party to the insurance company after they have paid, a claim is an example of
Subrogation
The policy provision found in property insurance policies that prevents the insured from collecting twice for the same loss is called
Subrogation. This prevents the insured from collecting twice for the same loss.
Which of the following is not the consideration in a policy?
The application given to a prospective insured
The claims made trigger is based on which of the following?
The date the claim is first made
Negligence is defined as
The failure to do what a reasonable prudent person would do under given circumstances.
Named insured
The individual(s) whose name appears on the policy's declaration.
Which of the following statements would be correct if an insured's failed to maintain underlying limits as required by a personal umbrella policy?
The insured would be responsible for the amount required as underlying limits in the event of the claim. The policy will not be canceled.
In terms of parties to a contract, which of the following does not describe a competent party?
The person must have at least completed secondary education.
mutual
These companies are owned by the policyholders.
Flat rate
This occurs at a non-renewal, no penalty
Earned Premium
Total premium divided by the number of days in the policy equals EP per day
An insured covered under a mobile homeowners policy, wants to move the location of the covered mobile home. Which of the following must the insured obtained from the insurer?
Transportation/permission to move endorsement
Which of the following best describes the amount of loss assessment coverage included under a homeowners policy liability coverage section?
Up to $1,000 per occurrence
Extended coverages-
WC SHAVVER •WINDSTORM • civil commotion • smoke • hail •aircraft • vehicle damage • volcanic eruption • explosion • riot
Short Rate
When an insured cancels midterm, the company will keep some of the unearned premium
pro rata
When an insurer cancels midterm, all an urn premium is refunded to the insured
INFORMING AN INSURANCE CONTRACT WHEN DOES ACCEPTANCE USUALLY OCCUR
When the insurer's underwriter approves coverage
Direct Loss
a financial loss that results from the physical damage, destruction, or theft of the property
Additional Insured
a person or party who is added to the named insured's policy by an endorsement
What type of liability would a person who owns wild animals have?
absolute ( the claimant does not have to prove anything)
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?
additional coverage
A contract for the transport of goods between the shipper in the carrier is called?
bill of lading
peril
cause of loss
What term best describes the act of withholding material information that would be crucial to an underwriting decision?
concealment
A beauty parlor burns to the ground. What type of loss is this to the owner?
direct
To purchase insurance, the policy owner must have financial interest in the property being insured this is known as
insurable interest
Who is responsible for filling out a notice of claim form?
insured
Valuable papers and records form provides coverage for the reconstruction of all of the following types of records, except
prepackaged software
Arbitration
settling a dispute by agreeing to accept the decision of an impartial outsider
Consideration
something of value exchanged for something else of value. (Glue that holds the policy together
Which of the following would be covered under the film coverage form?
soundtracks
Coinsurance
the sharing of expenses by the policyholder and the insurance company
Which of these is defined as the maximum limit of coverage available under a liability policy during a policy here regardless of the number of claims that may be made, or the number of accidents that may occur ?
Aggregate limit. Aggregate limit is the maximum limit of coverage available under a liability policy during a policy year.
Endorsements
Adding or deleting coverages.
Persons covered under a policy, weather names, or not or known as
Additional insured
Under which of the following conditions can broad theft coverage be added to a dwelling policy?
If the insured is the owner-occupant of the dwelling
In a liability insurance policies, supplementary payments are made
In addition to the limit of liability
CGL Coverage B (Personal and Advertising Injury) will cover
Inadvertent injury to others caused in the course of advertising the insured's product
Which of the following statements is true regarding the premium computation for workers compensation insurance?
A premium auditor has the right to examine the insured's compensation records at the end of the policy period to determine the actual premium basis.
Proof of Loss
A statement of facts about a loss for which the insured is making a claim.
Which of the following definitions best defines the term accident?
A sudden, unplanned and unexpected event, not under the control of the insured, resulting in injury or damage neither expected nor intended
What are common carrier is required to issue to every shipper that it transports goods for?
A uniform bill of lading
A $100,000 house insured on a policy with an 80% coinsurance requirement has a fire that cost $40,000 of damage. The owner has a policy with $60,000 coverage. How much can the owner collect for his loss?
$30,000 in this case because the house is insured for only $60,000.75 percent of the minimum requirement the policy will only pay 75% of the loss.
The property/casualty, guarantee act protects losses due to insolvency of an insurer up to how much per claim
$300,000
An insured has an auto liability policy with limits of 25/50/15. The insured is involved in an accident caused by her negligence and is held legally liable for bodily injuries of three persons in the other auto. How much will her insurer pay in total for all injuries?
$50,000. The second limit is the most the policy will pay tor all injuries if more than one person is injured in a single accident.
An insured hit a deer and crashes his car into a tree. The total damage to the vehicle is $6000. How will his lost be covered?
$6000 would be paid under the other-than- collision coverage.
DP3 (Special Form)
1. The dwelling and other structures are covered for all direct physical damage (open peril), except for perils specifically excluded. 2. Theft of property that is part of the dwelling or other structures is covered as long as the dwelling or other structures are not under construction or have not been vacant for more than 30 days immediately preceding the loss. Example: Built-in appliances. 3. Personal property or contents are covered for the Broad Form (DP-2) perils. 4. Losses to the dwelling and other structures are paid on a replacement cost basis, and losses to contents are paid on an actual cash value basis to the insured.
DP2 (Broad Form)
1. The perils that are covered by the Broad Form are those included under the DP-1 with the ECE and optional VMM endorsement attached, plus: damage by burglars; falling objects; weight of snow, ice, and sleet; accidental discharge or overflow of water or steam; sudden and accidental tearing apart, cracking, burning or bulging of a steam or hot water heating system, or an air conditioning or automatic fire protective sprinkler system, or an appliance for heating water; freezing of a plumbing, heating, air conditioning, or automatic fire protective sprinkler system, or of a household appliance; and sudden and accidental damage from artificially generated electrical current. 2. The burglary damage peril includes damage to the covered property caused by the burglars, but not theft of property. The vehicle peril does not include loss to a fence, driveway, or walk caused by a vehicle owned or operated by the insured. The smoke peril does not include loss caused by smoke from agricultural smudging or industrial operations. 3. Losses to the dwelling and other structures are paid on a replacement cost basis, and losses to contents are paid on an actual cash value basis to the insured.
Under business owners, policy section one, if an insurer wants to non-renew a policy for nonpayment of premium how many days before the expiration date must the insurer notify the mortgage holder?
10 days before the policy expires
How long is the waiting period after the application has been accepted before flood coverage goes into effect?
30 days
A good example of proximate cause would be
Damage caused in an attempt to put out a fire
Which of the following is a mandatory part of an insurance policy that varies with each individual policy?
Declarations
Which of the following terms describes making false statements about other agents, companies, or clients with the intent to injure?
Defamation
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 insure pay?
Each policy will pay $25,000 of the loss.
Something added to a policy that either ads deletes or modifies coverages is called
EndorsementS
The section of an insurance policy that details what perils are not insured against and what persons are not insured is known as the
Exclusions
The section of the policy that describes what payrolls or property or not insured is called
Exclusions
What method of premium computation relates an employers losses, payroll, and premiums to the rating bureau's classification of operations?
Experience modification factor. These are calculations .
Which of the following statements would be an example of a product liability claim?
Faulty packaging of a cereal caused spoilage that resulted in someone getting sick.
Events or conditions that increase the chance of an insured loss occurring are referred to as
Hazards
