Intro to Risk Management and Insurance
The declarations page of an insurance policy includes all of the following
Name and mailing address of the insured, name of the insurer issuing the policy, and policy period
Sports, Inc is looking to obtain a commercial property policy on its building for $400,000. If their insurer decides to charge them a rate of $.5 per $100 of building insurance, what premium must Sports, Inc pay?
$2,000
If a manufacturer has $1 million in annual sales, its liability insurance is priced per 1,000 of sales, and the per-unit rate is $.50, what is the manufacturers liability insurance premium
$500
The retention ratio is the
% of expiring policies that an insurer renews
Which one of the following best describes the compensation method of sales representative of direct writers
A salary, a bonus, a commission, or a combination of the three
Carla, an insurance agent, sent a bill to a customer two weeks ago and just received a check for the bill at her office. She then forwards the check to the insurer, less her commission for selling the insurance to the client. This is an example of
Agency bill premium collection
A claim manager typically reports to
An assistant vice president of claims
Claim turnover is
Average time it takes for open claims to close
A homeowners insurance policy typically includes
Both property and liability coverage
Francesca has a property loss of $3,000 and immediately notifies her insurance agent. The qualified agent adjusts the loss and mails a check to Francesca for $2,500. What producer function is the agent performing
Claim handling
Which one of the following best describes a common property loss exposure
Collision damage to an auto caused by an auto accident
Which one of the following indicates an underwriting profit
Combined ratio less than 100%
The premium charged for an insurance policy should be
Commensurate with the exposure
A description of the property insured, a list of mortgagees, and the applicable coinsurance percentage are shown on which one of the following documents
Commercial Property Declarations
The claim handling process includes
Concluding the claim, identifying the policy, acknowledging the claim
Timely notice of a loss to the insurer is an element examined in which step of the DICE method
Conditions
Martin is a claim representative reviewing a recent auto loss for an insured who recently purchased her first policy with his company. Martin noticed that the accident occurred two days before policy inception. Martin will recognize that the loss is not covered during which step of the DICE method of policy analysis
Declarations
The property casualty insurance policy provisions that indicate who or what is covered, and where and when coverage applies, are found in the
Declarations
Law Firm asked Insurance Company to provide both a commercial liability policy and a professional liability policy to meet its coverage needs. Insurance company believes that there could be some types of losses that would be covered under both policies, a situation is wishes to avoid. What type of policy provisions could insurance company use to address this problem?
Exclusions
When a policy is sold through an independent agent, the insurer pays a commission to the agent. This payment comes from which one of the following principal allocations of insurance premium
Expenses
Produce, such as apples or grapes, may be priced by the unit or by the pound. In insurance, these measures are similar to
Exposure units
An Ohio insurer that is licensed to sell insurance in Michigan is known as what in Michigan?
Foreign insurer
What is the primary reason insurers allocate premiums for invesment
Future losses cannot be predicted with complete accuracy
The underwriting process consists of all of the following activities
Gathering the necessary information, implementing the underwriting decision, and monitoring the underwriting decision
Which one of the following types of risk arises from property, liability, or personnel loss exposures and is generally managed through property-casualty insurance?
Hazard risk
Which one of the following is an example of a state's insurance policy form regulation?
Insurance policies must contain a specific form or provision.
Which one of the following is a key focus of states' insurance regulation
Insurer licensing
Which one of the following is most likely to be directly involved in promoting risk control
Insurers
Pooling is essential to insurance because
It spreads the costs of loss among a large group of individuals
In what was does the society benefit when losses are controlled
Lives are saved, and property is preserved
In what way does society benefit when losses are controlled
Lives are saved, and property is preserved
Standard forms
May result in different insurers issuing identical policies
A commercial package policy is an example of a
Modular policy
Which of the following is true regarding a homeowners policy
Most include coverage for theft of contents within the home
Example of real property
Office Building
The premises and operations liability loss exposure includes accidents that occur away from an insured's premises, but only if the accident arises out of the insured's
Ongoing operations
A breakdown in an organization's internal processes is an example of which one of the following types of risk?
Operational
Adverse selection can best be defined as the tendency of
People with the greatest probability of loss to purchase insurance
The causes of loss covered by insurance policies are also known as
Perils
A yacht policy
Provides several types of coverage in one policy.
To make a risk acceptable, the underwriter might require that the deductible be increased. this modification
Reduces the insurers exposure to loss
Documents that can become part of an insurance policy include all of the following
Relevant statutory terms and provisions, completed application, insurer's bylaws
In determining whether a policy covers a loss, a claim representative compares investigatory information to the
Terms of the policy
financial tools to evaluate claim results include
Reserving Accuracy
The uncertainty of the possible financial consequences of a loss is known as
Risk
A jewelry store that displays its most valuable pieces by spreading them among three separate locations is employing the risk management technique of
Separation.
Responding to billing inquiries is an example of which one of the following producer functions?
Serving customers
A type of formal, written laws that are enacted by state legislatures or passed by the United States Congress and signed into law by the president are called
Statutory laws.
Owners of reciprocal insurance exchanges are also known as
Subscribers
Classification is
The grouping of similar loss exposures into categories for rating purposes.
The insuring agreement of a homeowners policy specifies that
The insurer will provide policy coverage in return for the premium and compliance with policy provisions
Which one of the following best describes the loss ratio?
The loss ratio indicates how much of the premium dollar is used to pay losses and loss adjustment expenses.
Examples of areas where specialized claim representatives may have expertise
Workers Compensation, General Liability, Commercial Building Physical Damage
An independent adjusting firm is
a business that contracts with insurers to handle claims
Pooling in insurance works by
accumulating many small premium payments to pay for infrequent larger losses
Self-contained policies
address complete coverage needs
Property claims
are generally straightforward and can be settled promptly
Property and liability insurance policies
can include coverage for parties other than those shown as named insureds
property and liability insurance policies
can include coverage for parties other than those shown as named insureds
Personal auto insurance is most likely rate using
class rates
One way for claim managers to help maintain an insurer's underwriting profit is to
establish appropriate spending policies
a wedding photographer uses his camera equipment at several dozen different locations each year. In insurance terminology, the camera equipment is considered to be
floating property
A stock insurer is different from a mutual insurer by the fact that
owners are not necessarily insureds
An insurance premium is calculated by
rate X number of exposure units
Transfer
reduces uncertainty
The size of an employer's loss exposure for workers compensation insurance is based on
the amount of its payroll
A decreasing loss ratio may be a sign of
An insurer becoming more profitable
The value of an insurance contract in the event of a claim
Includes peace of mind
What term refers to the ability of an insurer to meet its obligations as they become due
Solvency
As part of the claim handling process, the claim representative typically first contacts the insured or the insured's representative
Soon after establishing reserves
Some insurance rating laws allow rates to be put into use immediately but require insurers to file the rates with the states within a specific period of time. These types of laws are known as
Use-and-file laws
A type of insurance rate that applies to all insureds in the same rating category is known as
a class rate
The best description of a first-party claim is a claim
made by the policyholder against the insurer
if an account is unprofitable over an extended period of time, the underwriter might take all of the following corrective actions
Recommend additional risk control measures, modify the terms of coverage, and mark the policy for nonrenewal
if an account is unprofitable over an extended period of time, the underwriter might take all the following corrective actions
Recommend additional risk control measures, modify the terms of coverage, and mark the policy for nonrenewal
What aspect of the insurance mechanism justifies the investment of a portion of premium collected
The policyholder pays the premium at the start of the policy period, before any losses have happened
subrogation is
The process by which an insurer can recover the amount it paid on a claim from any party, other than the insured, who is legally liable for the loss
Which one of the following is based solely on liability imposed by statute
Workers compensation liability
Best describes a type of loss covered under a personal UMB policy
a catastrophic auto accident that exceeds an insured's auto liability limit
Which one of the following best describes how insurers pay independent agents and brokers
a commission, which is typically a percentage of the premium
Which one of the following statements about policy sections is true
a condition clarifies an insurer's promise or an insured's duty
When a loss exposure is so unique that the insurer has no established system to determine a premium, an insurer will use
a judgement rate
For liability claims
a large portion of the premium is allocated to paying losses and expenses related to claim settlement
Under a CGL coverage form, the purpose of coverage C - medical payments is to provde
a modest amount of medical expense coverage for settling minor injury cases
Property insurance policies typically exclude loss
From inherent vice and latent defect.
Unfair trade practices acts involve which one of the following insurance company operations
underwriting
A Policy that combines property, crime, and liability coverages into one policy is referred to as a
commercial package policy
The definitions section of the policy
Helps clarify real or perceived ambiguity
A bodily injury claim
Is made when an injured or a sick person files a claim with an insurer.
Bob is shopping for auto insurance. Insurance Company A's rating system determines that Bob should be charge $800 per auto. If Bob is looking to insure four autos, what premium will he be charged by Insurance Company A
$3,200
A customer service representative (CSR)
Is often the insured's or claimant's first contact with the insurer and the claims handling process.
Coverage A - Bodily Injury and Property Damage of a CGL coverage form insures two general categories of loss exposures
1. premises and operations liability 2. products and completed operations liability
The main purpose of UMB liability insurance is to provide
Limits of insurance that apply in addition to those of the insured's primary policies
In the context of property loss exposures, flood is considered to by all of the following
A Peril, a means by which property is damaged or destroyed, & A cause of loss
Which one of the following is a portion of a covered loss that is not paid by the insurer?
A deductible
The liability coverage agreement of the business auto policy states each of the following duties of the insurer
A duty to comply with laws and regulations
An insurance contract is designed to be all of the following in the event of a claim
A financial mechanism that can benefit policyholders and other claimants, a means to afford peace of mind to the insured, and a way to restore a claimant to pre-loss condition
for liability claims
A large portion of the premium is allocated to paying losses and expenses related to claim settlement
The party most likely to be legally liable for a products liability loss is
A manufacturer.
Generally, how often must a foreign insurer's license be renewed?
Annually
For antique and specialty autos, when buyers and sellers in a market are limited by an economic depression, the valuation method that is most accurate is
Actual cash value.
A decision on how much an insurer should pay after a loss must occur
After determining the loss is covered
Which one of the following individuals is most likely to need specialized professional insurance?
An attorney
Which of the following is true with regard to auto liability loss exposures
An auto owner can be held legally liability when someone borrows the auto for his or her own purposes
A flex rating law is
An insurance rating law under which prior approval is required only if the new rates exceed a certain percentage above (and sometimes below) the rates previously filed.
Which most accurately identifies the parties to an insurance transaction
An insured, an insurer, and possibly a producer
Which one of the following most accurately identifies the parties to an insurance transaction?
An insured, an insurer, and possibly a producer
Commercial loss exposures are best described as those that affect
An organizations operation
Ching is a commercial claim representative who has been assigned a large fire loss. Ching suspects that the insured may not have been completely honest in describing the property before the policy was issued such that coverage for the claim may be denied. In which document might Ching find the representations of the insured regarding the property's description?
Application
When identifying the policy, the claims representative establishes loss reserves, which
Are estimates of the amount the insurer will pay for the claim.
Damage from flood is covered under most
Auto policies
other than collision loss exposures under a personal auto policy include all of the following
Auto theft, fire damage, & Contact with a deer
Other than collision loss exposures under a personal auto policy include all of the following
Auto theft, fire damage, contact with a deer
Which one of the following represents the approximate amount an insurer will pay for existing claims
Loss Reserves
Which one of the following causes of loss forms is the lowest-cost version that provides coverage for approximately one dozen named perils
Basic Form
For liability loss exposures, damages are a
Basis for legal liability
Primary difference between an agent and a broker is
Broker represents the insured
Which one of the following is a typical adjuster activity during the claims handling process
Contacting the insured
An insured's first contact with an insurer in the claim handling process is often through a
CSR
When a property underwriter evaluates the external exposure of a property, he or she
Can use the construction, occupancy, protection, and external exposures (COPE) method of evaluating the neighboring properties or the area surrounding the insured property.
Which one of the following is the primary concern of umbrella and excess liability underwriting?
Loss severity
Which one of the following categories of insurance policy provisions outlines what is covered and where and when coverage applies
Declarations
Two objectives of insurance policy form regulation are to ensure that policies are clear and readable and to
Detect and address any policy provisions that are unfair
In premium collection, the insured may be directed to send premium payments to the insurer, bypassing the producer. This is known as the
Direct Bill Process
A loss ratio is calculated by
Dividing the insurer's incurred losses (including loss adjustment expenses) by its earned premiums.
Anton is an independent insurance agent. He has noticed that his clients experience a lot of small claims, such as screen doors being damaged by heavy winds. When a client reports a small claim to Anton, he has to in turn report it to the respective insurers for handling. He is looking for a way to streamline this process. Anton should contact the insurers for whom he does business and request that he be given
Draft Authority
Judy, a claim representative, is considering the steps to take in the investigation and documentation of an auto accident claim. Her investigation and documentation may include
Drawing accident scene diagrams
Because of legal requirements, some common activities would be almost impossible to conduct without the availability of insurance, including
Driving
Which one of the following is true about the functions within an insurance organization
Each function contributes or detracts from the overall effectiveness of the insurer
When a loss occurs that workers compensation insurance does not cover, or an employee's spouse files a lawsuit because of an employee's injuries, which one of the following covers the awarded damages?
Employers liability insurance
what is one way in which insurance's reduction of uncertainty benefits society
Entrepreneurs will take the risk of establishing new businesses
One way for claim managers to help maintain an insurer's underwriting profit is to
Establish appropriate spending policies.
Claim adjuster Donna is trying to determine whether there is coverage for a claim submitted under the insured's homeowners policy. The claim concerns the insured injuring a neighbor when the insured accidentally ran over the neighbors foot as he drove his own car into his own driveway. The policy states that it covers bodily injury caused by an accident in one section, but in a later section states that it will not cover liability caused by a motor vehicle. On what step of the DICE method will Donna discover that policy coverage does not apply
Exclusions
Prospective loss costs that have become adjusted for expenses, profits, and contingencies are
Final Rates
Which on the following is true regarding the administration of the insurance regulatory information system (IRIS)
If regulators determine that an insurer is insolvent, the state insurance department places it in receivership
In which one of the following marketing systems does the producer own the policy expirations
Independent agency and brokerage marketing system
Which on of the following state
Insurance regulators review policies to determine if they benefit consumers
Which one of the following statements is correct?
Insurance regulators review policies to determine if they benefit consumers
destructive competition could result in
Insurance shortages
Which one of the following receives the bulk of an insurer's premium dollar?
Insured losses and loss adjustment expenses
Insurance customers' loss exposures arise out of their activities, as well as
Insureds' property
A goal of the claim function is to support the profit goal of the
Insurer
How does flex rating law work
Insurers may adjust rates within a range without prior approval
Why are insurance regulators concerned about the effects of large catastrophes
Insurers may become insolvent
Analyzing definitions occurs in which stage of the DICE method?
Insuring Agreement
Gene is a claim representative reviewing a new auto loss for an insured who experienced an accident in Mexico. The insured's policy states that the insurer will pay damages for bodily injury or property damage for which any insured becomes legally responsible because of an auto accident occurring in the US. Gene will probably recognize that the loss is not covered during which step of the DICE method
Insuring Agreement
A broad statement of an insurer's promises to the insured may be found on the policy's
Insuring agreements
Origin and cause experts
Investigate fire losses to determine what started a fire
Which of the following is true with regard to auto liability coverage under business auto insurance
It covers bodily injury and property damage regardless of whether the insured is legally liable
The main purpose of UMB insurance is to provide
Limits of Insurance that apply in addition to those of the insureds primary policies
All of the following are payable under workers compensation
Lost wages, Medical Costs, & Disability Income
Rachel is an insurance broker. She has received a sales referral from another broker concerning an airport management company, Airport Ltd. The company plans to operate a large, national airport in a major city and has requested a quote for airport liability coverage. Rachel will probably recommend the use of which one of the following types of policy forms?
Manuscript
Through increased productivity and health and safety initiatives, a well-managed risk management program reduces costs and subsequently helps achieve which one of the following other risk management goals for organizations?
Maximizing profitability
The benefits that workers compensation laws require employers to pay include all of the following
Medical Expenses, Disability Income, & Rehabilitation Benefits
The personal auto policy contains two sets of physical damage coverage, which are
Other than collision and collision coverage
Under Section II - Liability Coverage of a homeowners policy all of the following are the insured's duties after an occurence
Pay specified premiums, cooperate with insurer in legal proceedings, report losses promptly
An insured's young son hits a baseball through a neighbors living room window. The damage caused by the child would be covered under which one the following coverages of the insured's homeowners policy
Personal liability coverage
Which one of the following coverages of a homeowners policy provides coverage for bodily injury and property damage for which the insured is legally liable
Personal liability coverage
Charlotte, an insurance agent, cold called Emil to sell him insurance. She then emailed him a questionnaire that helped her to identify Emil's loss exposures and to make suggestions about coverages. Upon Emil's request, Charlotte has her agency assemble his policy and mail it directly to his house. Which one of the following producer functions has Charlotte yet to perform?
Premium collection
Wind damage to a fence surrounding a built-in swimming pool is a
Property loss exposure
Successful underwriting ensures selected applicants
Receive coverage that adequately reflect their loss exposure
Which one of the following is an action an underwriter might take to make a risk acceptable that he or she would otherwise reject?
Require additional risk control measures
Under a CGL coverage form, property damage means physical injury to property and the
Resulting loss of use
Harry and Victor, both insurance agents, have to work with new clients today. Harry works with a family while Victor works with a larger company. Harry is able to complete an interview and gather information about the clients loss exposures. Victor, on the other hand, has to make visits every day this week to meet at various locations of the company. He develops loss exposure information for the multiple locations. What is the producer function that these two agents are performing
Risk management review
Risk management techniques particularly help individuals with which one of the following?
Risk retention identification
Aleski, an insurance agent, formed a proposal and presented it to a prospective client. The policy was accepted with some minor changes, so Aleski issued a binder. Which one of the following is the function bein performed by Aleski
Sales
Market conduct regulation focuses on insurers' treatment of applicants for insurance, insureds, and others who present claims for coverage. Market conduct regulation affects which of the following areas of operation
Sales
Market conduct regulation focuses on insurers' treatment of applicants for insurance, insureds, and others who present claims for coverage. Market conduct regulation affects which one of the following areas of operation
Sales
Insurers are required to submit annual financial statements to
State insurance departments
When deciding to approve or disapprove an insurer's request for a rate, a state insurance commissioner must determine if the rates are adequate. Adequate means that the rates should be
Sufficient to pay all claims and the expenses related to those claims
Which one of the following is generally exempt from state insurance regulations pertaining to policy forms and rates
Surplus line insurers
What is solvency
The ability of an insurer to meet its obligations as they become due
What is the most common reason premium audits are conducted
The amount of the loss exposure is unknown at the start of the policy period
When an insured files a claim with an insurer
The claim department investigates the circumstances of the loss
Prompt and professional loss adjustment services are a responsibility of what part of an insurer's organization?
The claims function
Under the exclusive agency marketing system, who often handles the functions of policy issuance, premium collection, and claim processing
The insurer
Developing and maintaining a profitable book of business is the purpose of what part of an insurer's organization
The underwriting function
All of the following are matters that may appear as best practices for a claim department
Timely loss reserving, Timely claim acknowledgement, Timely payment of claims
Exchanging the possibility of a large uncertain payment for a small certain payment through the purchase of insurance is an example of
Transfer
Customer service standards
Turnaround time on applications received, average number of errors per policy issued, number of referrals for new business received
lou is a claim manager at a small property casualty insurance company. Lou takes pride in the fact that because of his leadership, his company has gained a public reputation for resisting legitimate claims. ultimately, this reputation
Undermines the effectiveness of his company's advertising
Which one of the following statements is correct regarding underwriting construction accounts?
Underwriters must often rely on the insured contractor's ability to hire competent and insured subcontractors.
Which one of the following best describes applicable coverage under a personal auto policy if an insured incurs serious bodily injuries caused by a driver whose insurer is insolvent
Uninsured motorists coverage
When insurance allows a family to invest discretionary income for childrens education, rather than reserving a large fund to cover catastrophes, this is an example of the insurance benefit of
Using resources efficiently
For an insurer to be considered solvent, states require it to have financial reserves
Well in excess of its ordinary expenses
The dwelling program is often used to insure
a two-family rental dwelling owned by an insured who lives elsewhere in a primary home
Businesses in high crime areas are more likely to purchase crime insurance than those in low crime areas. From an underwriters perspective, this situation is best described as
adverse selection
Which one of the following is true with regard to automobile liability loss exposures
an auto owner can be held legally liable when someone borrows the auto for his or her own purposes
Personal liability loss exposures often arise from
an individual's actions
The best description of a telephone claim representative is
an inside claim representative
flood insurance provides
building and contents coverage
Personal property coverage as provided on a homeowners policy typically protects against damages to all of the following
clothing, furniture, appliances
The claim handling process includes which one of the following activities
contacting the insured
All commercial package policies begin with two components, namely, common policy conditions and common
declarations
Overall purpose of underwriting is to
develop and maintain a profitable book of business
Which one of the following best describes what is insured under dwelling coverage, as provided by a homeowners policy
dwelling and any structures attached to the house only
Which one of the following provides an indication of an insurance company's relative cost of producing business
expense ratio
which one of the following is the fundamental measure of loss exposure used in insurance rating
exposure unit
which one of the following is considered to be personal property as opposed to real property
furniture
example of personal property
household appliances
Liability coverage under a personal auto policy applies to vehicles shown in the declarations and also applies to insureds
if they rent a car while on vacation
Which one of the following is true regarding mutual insurance companies
include some large national insurers
in which one of the following marketing systems does the producer own the policy expirations
independent agency and brokerage marketing system
Exclusive agents are
independent contractors and are not employees of an insurer
The success ratio is the percentage of
insurance policies written to those that have been quoted
Class rating relies on
insureds with similar characteristics
Risk control is intended to prevent or reduce losses. When practicing sound risk control, an organization
is likely to use insurance to treat those loss exposures
Which of the following is true regarding commercial insurance
it is available for not-for-profit organizations
Which one of the following is true regarding commercial insurance
it is available for not-for-profit organizations
While driving home from work, a driver loses control of his vehicle and strikes a pedestrian, causing severe injuries. The driver has purchased all primary coverages under a personal auto policy. Which one of the following coverages applies to this accident
liability coverage
In order to determine the insurance policies required to meet an insurance customer's needs, insurance producers must identify the customer's
loss exposures
In order to determine the insurance policies required to meet an insurance customer's needs, insurance producers must identify the customers
loss exposures
The combined ratio is the
loss ratio plus the expense ratio
The best description of a third-party claim is a claim
made against the policyholder by someone to whom the policyholder may be liable
When uncertainty is reduced through insurance, person are more likely to
make purchases they would be unable to replace if they suffered a large loss
When uncertainty is reduced through insurance, persons are more likely to
make purchases they would be unable to replace if they suffered a large loss
A medical consultant assigned to a claim department
may arrange independent medical exams
When underwriters screen applicants to avoid those who present loss potentials not adequately reflected in the price being charged, they
minimize adverse selection
If a line of insurance is class rated, with all insureds possessing similar characteristics and paying the same rate, what determines the difference in premiums insureds pay
number of exposure units
if a line of insurance is class rated, with all insureds possessing similar characteristics and paying the same rate, what determines the difference in premiums insureds pay
number of exposure units
Within the personal auto policy, the name of lender, loss payee or lienholder is usually shown
on the declarations page
The retention ratio is the
percentage of expiring policies that an insurer renews
Success ratio
percentage of insurance policies written to those that have been quoted
The causes of loss covered by insurance policies are also known as
perils
Which one of the following best describes an insurance premium
periodic payment in exchange for insurance premium
Under a homeowners policy, loss of use coverage provides coverage to an insured for
periods during which the insured residence is uninhabitable by a covered loss
a delivery person trips and falls over the insured's uneven sidewalk. The delivery person sues the insured for his medical bills. This claim falls under which one of the following coverages of the insured's homeowners policy
personal liability coverage
To refer to items such as furniture and stock, most property insurance policies use the term
personal property
In the independent agency and brokerage marketing system
producers are not employees of any insurer and are usually free to work with as many insurers as they want
The premises and operations liability loss exposure included accidents that occur away from an insured's premises, but only if the accident arises out of the insured's
products
property being shipped by aircraft is considered to be
property in transit
Wind damage to a fence surrounded a built-in swimming pool is a
property loss exposure
For underwriting to achieve its purpose, insurers must
protect available capacity
One role of the insurer is to
provide ongoing customer service
extra expense insurance covers additional expenses incurred to
reduce the length of business interruption
People and businesses purchase insurance to
reduce uncertainty
Under a CGL coverage form, medical payments coverage pays
regardless of whether the insured is legally liable
under a CGL coverage form, medical payments coverage pays
regardless of whether the insured is legally liable
The primary benefit of insurance to society is
reimbursing the costs of covered losses
Which one of the following is employed by an insurer to inspect insurance applicants' premises and review their operations
risk control representative
To be eligible for coverage as an other structure under a homeowners policy, the other structure must be
separated from the house by a clear space or fence
Which one of the following is true about collision coverage under the personal auto policy
typically available only when other than collision coverage also is provided
A self-insured retention is
the amount that is deducted from claims that are payable under an umbrella liability policy and that are not covered at all by any primary policy
what aspect of the insurance mechanism justifies the investment of a portion of premium collected
the policyholder pays the premium at the start of the policy period, before any losses have happened
When underwriters price coverage, in addition to considering the value of what the insured wants to protect from loss, underwriters estimate
the probable severity of a loss if it occurs
when underwriters price coverage, in addition to considering the value of what the insured wants to protect from loss, underwriters estimate
the probable severity of a loss if it occurs
which one of the following best describes applicable coverage under a personal auto policy if an insured incurs serious bodily injury caused by a hit and run driver
uninsured motorists coverage
In developing insurance rates, a state mandatory rate law requires the insurer to
use state developed rates
Which of the following is most likely to be considered real property as opposed to personal property
wall-to-wall carpeting
Under the building and BPP coverage form, personal property of others is covered
while in the insured's care, custody, or control
Loss exposures covered under an unendorsed dwelling policy include which one of the following consequences
wind damage to an insured's roof
which one of the following is based solely on liability imposed by statute
workers comp liability
When an employee is injured on the job, coverage for his or her medical care and lost wages will be provided by the insureds
workers compensation policy
Which one of the following usually includes provisions regarding vehicle use, driver selection, vehicle maintenance, and accident reporting?
A fleet safety program
Ron is an underwriter who works daily with producers, providing them with quotations for coverage, processing endorsements, and explaining coverages. Which one of the following is Ron?
A line underwriter
Accurate classification ensures
A pooling of loss exposures with similar expected loss frequencies and loss severity.
Which one of the following is a standard form often developed by an advisory organization?
A preprinted form
The basis of a completed operations loss exposure is
A service or an operation performed by the insured.
Under Coveraqe A of the CGL coverage form, the insurer agrees to pay those sums that the insured becomes legally obligated to pay as damages because of property damage or
Bodily Injury
Crystal, a claims manager, has been told to reduce her claims processing staff by one person within the next month. Erin, the last person hired on Crystal's team, likely most needs the job: she initially applied for it because her husband passed away suddenly, after Erin had stayed home the previous six years to care for the couple's four young children. The other members of Crystal's processing staff have worked together for the past five years and developed close professional and personal ties. Laying off any one of them would disrupt harmony within the team and may cause animosity toward Erin. Crystal's ethical dilemma is an example of
Community versus individual.
ABC Company manufactures welding torches and sells them to contractors. One of the torches used by a contractor malfunctions and causes a fire that destroys a building under construction. Which on the the following would cover ABC against a subsequent products liability claim for the fire loss?
Coverage A - Bodily injury and Property Damage liability of ABC's commercial GL policy
An architect makes false statements about one of his competitors, who sues him for slander. Which one of the following would cover the architect for a loss arising out of this situation
Coverage B - Personal and Advertising Injury Liability of the CGL Coverage Form
An architect makes false statements about one of his competitors, who sues him for slander. Which one of the following would cover the architect for a loss arising out of this situation?
Coverage B - Personal and Advertising injury liability of the CGL coverage form
In a larger insurance organization, claims supervisors assist managers in claims management, but they may be likely to perform some roles that the managers do not. For example, some duties of a claims supervisor often include
Evaluating claims representatives' performance, directing daily activities of a claims unit, developing strategies for solving problems, and determining staff training needs.
The homeowners policy form designed for tenants in apartment buildings is the
HO-4 Contents Broad Form.
Under the Building and BPP coverage form, your BPP is covered under all of the following conditions
In the described building, in the open within 100 ft of premise, on the described building
When evaluating a building's occupancy for personal property insurance, the underwriter considers the building's occupancy, which
Includes whether it is privately owned, rented, or vacant; single or multifamily residence; type of usage; the number of families; and the activities conducted in the residence.
Which one of the following types of agents and brokers is not an employee of an insurer and is usually free to work with as many insurers as he or she wants?
Independent
Which one of the following oversee an organization's risk management processes and measure their effectiveness?
Internal auditors
The delay between receiving premiums and having to pay claims gives insurers an opportunity to
Invest premium dollars.
A risk management goal that may be nonnegotiable is
Legal and regulatory compliance.
Which one of the following can be insured by the building and BPP coverage form
Merchandise
Building and contents insurance policies usually provide either a nominal amount of coverage or no coverage for all of the following
Merchandise shipped by railcar, property that moves from site to site, property in possession of others
Property insurance policies usually cover some property that is not contained within the building. For this reason, most property policies use which one of the following terms
Personal Property
Replacement cost can be used to value
Personal property even if it is no longer manufactured.
Which one of the following is likely to be covered by inland marine insurance rather than by the building and BPP coverage form
Personal property situated at the premises of others
Which one of the following do underwriters use to blend historical data based on behaviors and events with multiple variables and to construct models of anticipated future outcomes?
Predictive modeling
An icy parking lost that has not been tended to by the owner is an example of a
Premises liability loss exposure
What the the BPP coverage form usually provide very limited coverage to
Property away from the insured's premises
Which one of the following is excluded under the Building and BPP Coverage Form
Property in Transit
all of the following are financial consequences of property loss exposures
Property value reduction, lost income, extra expenses
The legal form of insurer ownership that refers to its association as subscribers is a
Reciprocal insurance exchange.
A technical specialist who assists claims representatives with investigating auto accidents by duplicating the events surrounding auto accidents and providing testimony in court concerning how an accident occurred, vehicle speeds, braking distances, and so forth is a
Reconstruction expert.
A high percentage of litigated claims and below-average claims turnover are indicators that
Signal larger problems within the claims function or the organization.
Bodily injury claimants can make claims for
Special damages that compensate a victim or his or her family for specific expenses associated with a loss, such as medical expenses, lost wages, and funeral expenses.
Which one of the following should underwriters understand about a commercial account's vehicles being stored inside?
The chance of loss by fire is increased.
The unendorsed dwelling policy provides coverage for
The dwelling, other structures, and personal property
The number and types of documents that the claims representative collects while investigating a claim depends on
The insurer's guidelines for documenting such claims.
Business income insurance covers
The reduction in an organization's net income because of damage by a covered cause of loss to property at the insured location.
Which one of the following is true regarding personal umbrella policies?
The self-insured retention applies only to coverage not provided by primary insurance policies.
All of the following are components of a property loss exposure
The type of property exposed to loss, the financial consequences of a loss, the causes of loss
If a loss is covered, claims representatives determine the amount of the loss based on
The valuation figures recorded in the claims documentation and any appropriate valuation calculations and/or policy deductibles.
All of the following are causes of loss to property
Theft, windstorm, earthquake
all of the following conditions must exist in order for business income insurance to cover a loss
There must be a reduction in the insured's net income, there must be a suspension of the insured's operations, there must be damage by a covered cause of loss at the insured's location
The dimension of timing concerns
When losses occur and payments are made.
Which one of the following is most likely to have a products liability loss exposure
a Washing Machine manufacturer
Damage to property caused by rust is uninsurable because it is
certain to occur over time
Which one of the following is considered to be a maintenance peril
damage by insects, because damage is avoidable by performing regular maintenance and otherwise caring for the property
Most policies that provide coverage on buildings and personal property at fixed locations exclude coverage for
earthquake and flood losses
Which one of the following is a tort
injuring others by reckless driving of a car
Which one of the following is true with regard to auto liability loss exposures
mobile equipment, such as forklifts and bulldozers, is included in the auto liability coverage
Under the BPP form, personal property of others is covered
while in the insured's care, custody, or control
