Property and Liability Basics Multiple Choice

Any risk retention group must submit to an examination upon the request of the commissioner within? A) 10 days B) 30 days C) 60 days D) 180 days

C) 60 days

When an auto insurance policy is cancelled for nonpayment of premium, how many days' notice must the inusrer provide to the policyowner? A) 10 days B) 15 days C) 20 days D) 30 days

A) 10 days

Which of the following was designed to regulate the operation of risk retention groups and purchasing groups in California? A) Federal Liability Risk Retention Act B) The California Guarantee Association C The Federal Risk Retention Association D) Risk Retention Regulation Act

A) Federal Liability Risk Retention Act

When an insurer cancels an automobile insurance policy for a reason other than nonpayment of premium, the insurer must meet all of the following requirements EXCEPT A) Offer the insured to renew the policy at a different rate B) Send a 20-day notice C) Inform the policyowner about the automobile liability assigned risk plan D) Explain the reason for policy cancellation

A) Offer the insured to renew the policy at a different rate

What type of policy only establishes the value of an insured object when a loss occurs? A) Open B) Flexible C) Latent D) Valued

A) Open

Bob surrenders his policy. What return of premium will he receive? A) Prorated premium for the insured days in the future that he has already paid for, minus other deductions related to losses B) Nothing C) His last premium payment D) All premiums that he has paid up to this point

A) Prorated premium for the insured days in the future that he has already paid for, minus other deductions related to losses

In property and casualty insurance, insurable interest is defined as the right of a person or entity to property in that such a loss to that property would cause a direct monetary loss to the person or entity. Which of the following statements is TRUE regarding insurable interest in property and casualty insurance? A) Insurable interest also includes indirect monetary loss to the person or entity B) If the insured has no insurable interest, the contract is void C) The insurable interest must exist only at the time of application of insurance D) Only the owner of the property has insurable interest

B) If the insured has no insurable interest, the contract is void

Risk retention groups are prohibited from engaging in all of the following types of insurance EXCEPT A) Auto B) Liability C) Health D) Life

B) Liability

A policy that expresses an agreement that the thing insured will be valued at a specified sum is what kind of policy? A) Defined B) Valued C) Closed D) Open

B) Valued

A type of policy that is used to provide a specific amount of replacement cost for a given risk after an insured property has been destroyed is called a(n) A) Specific risk policy B) Valued policy C) Pro-forma appraisal policy D) Equitable sum policy

B) Valued policy

Which of the following is a characteristic of a purchasing group? A) A purchasing group must be domiciled in California B) It assumes and spreads the liability exposure of each member among all of the members C) It purchases liability insurance covering all members on a group basis D) It is considered a self-insured group

C) It purchases liability insurance covering all members on a group basis

If an object's value is not specified until a loss occurs, it is insured under a(n) A) Appraised policy B) Valued policy C) Open policy D) Flexible policy

C) Open policy

A risk retention group must include which of the following words in its name? A) Authorized association B) Underwriters C) Risk retention group D) Limited association

C) Risk retention group

Which of the following information would NOT be included in property insurance policies? A) A list of coverages B) The insured's name C) The insured's address D) A list of policy provisions

C) The insured's address

Which type of policy specified the value of the insured object in the policy itself? A) Limited B) Open C) Valued D) Specified

C) Valued

California prohibits a risk retention group from engaging in which of the following? A) Contributing to the California Guarantee Association B) Soliciting insurance to a person who is not eligible for membership C) California Joint Underwriters Association D) All of these

D) All of these

An unincorporated, nonprofit, association representing all insurance companies in the State of California licensed to transact workers compensation insurance is known as A) Inspection Bureau of California Workers Compensation (IBCWC) B) California Workers Compensation Rating Association (WCRA) C) Rating Bureau of California D) California Workers Inspection Rating Bureau (WCIRB)

D) California Workers Inspection Rating Bureau (WCIRB)

All of the following are examples of insurable interest in property insurance EXCEPT A) Fred and Ethel's personally owned vacation home B) Sally's own personal automobile C) Joe who is a partner in a thriving business D) Harry who is waiting for his distant cousin's beach-front property as part of his inheritance

D) Harry who is waiting for his distant cousin's beach-front property as part of his inheritance

A type of policy of policy that is used to provide a specific amount of replacement cost for a given risk after an insured property has been destroyed is called a(n) A) Pro-forma appraisal policy B) Equitable sum policy C) Specific risk policy D) Valued policy

D) Valued policy

An insurer cancels an insurance policy. Within what period of time must a premium refund be issued? A) Within 10 days B) Within 15 days C) Within 20 days D) Within 25 days

D) Within 25 days