Missed Quiz Questions

A participating insurance policy may do which of the following? A Pay dividends to the policyowner B Provide group coverage C Pay dividends to the stockholder D Require 80% participation

A participating insurance policy will pay dividends to the owner based upon actual mortality cost, interest earned and costs.

An insurance company receives an application with some information missing and issues the policy anyway. What is this called? A Estoppel B Subrogation C Aleatory D Waiver

In insurance policies, a waiver is giving up one's known right or privilege.

Insurance is the transfer of A Hazard. B Peril. C Risk. D Loss

Insurance is a transfer of risk from an individual/business to an insurance company.

All of the following are considered parts of the policy structure EXCEPT A Conditions. B Provisions. C Exclusions. D Insuring clause

Provisions is a broad term used to refer to the sections or clauses of an insurance policy that communicate the policy's benefits, conditions, etc. The essential parts of the policy are declarations, insuring clause, conditions

When the insured's car was totaled in a recent accident, the ownership of the car was transferred to the insurer. The insurer then sold off the wrecked car to recover some of the loss it paid to the insured. What is the term for this action? A Liberalization B Duty to defend C Subrogation D Salvage

A salvage clause in insurance policies allows the insurer to sell the damaged property as salvage to recover part of the paid loss.

Which of the following is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract? A Concealment B Indemnity C Representation D Warranty

A warranty in insurance is a statement guaranteed to be true. When an applicant is applying for an insurance contract, the statements he or she makes are generally not warranties but representations. Representations are statements that are true to the best of the applicant's knowledge.

When would a misrepresentation on the insurance application be considered fraud? A Never: statements by the applicant are only representations. B When the application is incomplete C Any misrepresentation is considered fraud. D If it is intentional and material

A misrepresentation would be considered fraud if it is intentional and material. Fraud would be grounds for voiding the contract.

In insurance, an offer is usually made when A An applicant submits an application to the insurer. B The insurer approves the application and receives the initial premium. C The agent hands the policy to the policyholder. D An agent explains a policy to a potential applicant

In insurance, the offer is usually made by the applicant in the form of the application. Acceptance takes place when an insurer's underwriter approves the application and issues a policy.

A $100,000 house insured on a policy with an 80% coinsurance requirement has a fire that caused $40,000 of damage; the owner has a policy with $60,000 coverage. How much can the owner collect for his loss? A $20,000 B $30,000 C $40,000 D $60,000

For the total amount of a partial loss to be paid, a house must be insured for at least 80% of its value on the date of loss. In this case, because the house is insured for only $60,000 (75% of the minimum requirement), the policy will pay only 75% of the loss, or $30,000.

Which of the following is the correct formula for computing a loss ratio? A (Incurred losses - loss adjusting expense)/earned premium B Loss adjusting expenses - incurred expenses C (Incurred losses + loss adjusting expense)/earned premium D (Incurred expenses + loss adjusting expenses)/earned premium

Loss ratio equals (incurred losses + loss adjusting expense)/earned premium

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? A Additional coverage B Exclusions C Declarations D Insuring agreement

The additional coverage portion of a policy provides an additional amount of coverage for specific loss expense, at no additional premium.