Property & Casualty
Glenn's insurance policy was cancelled by the insurer on the effective date. This is called A) flate cancellation B) cancellation C) nonrenewable D) expiration
A) Flate cancellation
According to the Gramm-Leach Bliley Act, anyone who has an ongoing relationship with a financial institution is considered to be A) a customer B) a consumer C) an insurer D) an insured
A) a customer
All of the following statements about the Fair Credit Report Act are true EXCEPT A) a notice to the applicant must be sent within 45 days after the report is requested B) reports on consumers are prohibited unless the consumer is made aware that an investigative consumer report may be made C) consumers that feel that something in their files is inaccurate may dispute the information D) the maximum penalty for obtaining consumer information reports under false pretenses is $5,000 or imprisonment for 1 year, or both
A) a notice to the applicant must be sent within 45 days after the report is requested
The penalty for early cancellation of an insurance policy by the insured is applied on A) a short rated basis B) a cancellation basis C) a discounted basis D) a prorated basis
A) a short rated basis
All of the following statements about aleatory contracts are true EXCEPT A) aleatory contracts have an equal value B) aleatory contracts have an unequal value C) in an aleatory contract, the insured may pay premiums for many years and never receive any money from the insurer D) in an aleatory contract, the insured my pay only a few premiums and the insurer will be paying much more for the claim
A) aleatory contracts have an equal value
Edward is applying for an auto insurance policy for him and his son Bradley. Edward knows that Bradley has had three speeding tickets in the past year, but he did not tell the agent this while filling out the application. This is an example of A) concealment B) material misrepresentation C) misrepresentation D) fraud
A) concealment
A bulk mail insurance advertising brochure sent by the insurer to every home in one zip code is an example of A) direct response marketing B) personal advertising C) agent marketing D) producer marketing
A) direct response marketing
Casualty insurance is often known as A) liability insurance B) life insurance C) property insurance D) fire insurance
A) liability insurance
All of the following are examples of an indirect loss EXCEPT A) living room furniture and artwork destroyed by a fire B) costs of a rental car after a car accident C) loss of income in a business after the building burns down D) cost of hotel rooms after a home is destroyed by a fire
A) living room furniture and artwork destroyed by a fire
All of the following statements about waiver and estoppel are true EXCEPT A) once a waiver has been created, it can be changed B) once a right has been waived, it cannot be used against the insured C) waiver is the intentional and voluntary giving up of known right D) once a waiver has been created, it cannot be changed
A) once a waiver has been created, it can be changed
Appliances, clothing, tools, furniture, and electronics are examples of A) personal property B) appraisal property C) blanket property D) real property
A) personal property
Which of the following is the equation for calculating actual cash value (ACV)? A) Replacemnt - depreciation B) replacement - repair cost C) repair cost - depreciation D) market values - deductible
A) replacement- depreciation
All of the following statements regarding surplus lines insurers are correct EXCEPT A) surplus lines insurance is placed with a non admitted carrier by a surplus lines agent B) surplus lines insurance is place with an admitted carrier by a surplus lines agent C) states keep a list of acceptable surplus lines insurers D) surplus lines insurance covers high risk exposures
A) surplus lines insurances is placed with a nonadmitted carrier by a surplus lines agent
Bernie and his insurer came up with a price value of his grandfathers baseball card collection that he now owned. If a loss occurs to this collection, what will be the amount that the insurer will pay? A) the agreed value B0 the actual cash value C) the market value D) the replacement cost value
A) the agreed value
The person or business that has temporary possession of someone else property is known as A) the bailee B) the insurer C) the consumer D) the customer
A) the bailee
Insurance policies are personal contracts between the insured and A) the insurance company B) the beneficiary C) the department of insurance D) the agent
A) the insurance company
All of the following statements about unilateral contracts are our EXCEPT A) the insured cannot stope paying premiums or abandon the insurance without approval from the insurer B) as long as insured pays premiums, the insurer is required to pay for the loss C) the insured can stop paying premiums and abandon the insurance at any time D) insurance policies are unilateral
A) the insured cannot stop paying premiums or abandon the insurance without approval from the insurer
According to the law of large numbers, A) the larger the number of risks combined into one group, the less uncertainty there will be as to the amount of loss that will be incurred B)the larger the number of risks combined into one group, the smaller the loss will be any one individual in that group C) the smaller the number of risks combined into one group, the larger the loss will be to any one individual in that group D) the smaller the number of risks combined into one group, the less uncertain there will be as the amount of loss that will be incurred
A) the larger the number of risks combined into one group, the less uncertainty there will be as to the amount of loss that will be incurred
All of the following are requirements of a legal contract EXCEPT A) waiver and estoppel B) competent parties C) legal purpose D) offer and accpetance
A) waiver and estoppel
Which of the following is NOT covered by broad peri coverage? A) Rhonda had ceiling damage in her basement after her upstairs faucet had been leaking for over 2 months B) David had damage to his roof and the siding after a large tree fell on his home C) Amys home was robbed and burglars caused a lot of damage to doors and windows D) Timothys roof collapsed from the weight of snow after a huge storm
B) David had damage to his roof and the siding after a large tree fell on his home
All of the following statements regarding mutual insurers are correct EXCEPT A) a mutual insurer is owned by its policyholders B) a mutual insurer has stock and stockholders C) mutual insurers pay dividends to policyholders D) mutual insurers do not guarantee dividends
B) a mutual insurer has stock and stockholders
A fiduciary is A) an account for funds B) a person in a position of financial trust C) another name for commingling D) a beneficiary
B) a person in position of financial trust
Intentional misrepresentation and withholding material information is known as A) concealment B) fraud C) waiver D) estoppel
B) fraud
In an insurance contract, the insured provides consideration in the form of A) making a counteroffer B) paying a premium C) signing an application D) making truthful statements on the application
B) paying a premium
All of the following segments about property insurance are correct EXCEPT A) property insurance provides protection on belongings B) property insurance provides coverage for "the other guy" C) property insurance pays the insured for covered losses to a property D) property insurance provides protection on damage to your belongings for a theft
B) property insurance provides coverage for "the other guy"
At the state level, the government is involved in A) providing federal crop insurance B)providing unemployment insurance C) providing flood insurance D) providing war risk insurance
B) providing unemployment insurance
If an insured's insurance company steps in and pays for damages that were caused by an uninsured persons, the insurance company may file suit or a claim on the insured'd behalf. This is also know as A) declaration B) subrogation C) insurable interest D) liberalization
B) subrogation
Which of the following conditions is used to resolve other areas of disagreement besides value of loss between the insured and insurance company and is typically used before an insured seeks legal advice? A) the appraisal condition B) the arbitration condition C) the alternate dispute condition D) the umpire condition
B) the arbitration condition
Which party of the policy states the rules of conduct, duties, and obligations that are required for coverage? A) the insuring agreement B) the conditions section C) the declarations section D) the endorsements
B) the conditions section
The amount of money that the insurance company makes by providing insurance for the designated period is called A) the written premium B) the earned premium C) the expenses ratio D) the combined ratio
B) the earned premium
The person that is listed first on the declarations page when there is more than one person insured in a policy is known as A) the beneficiary B) the first named insured C) the named insured D) the additional insured
B) the first named insured
Which of the following statements about the appraisal condition is NOT correct A) if the appraisers do not agree on the loss, they submit the differences to an umpire B) the insurer chooses an appraiser for each party C) the parties choose their own appraiser D) the two appraisers choose an umpire
B) the insurer chooses an appraiser for each party
A promise to pay and covered perils is described in A) the exclusions section B) the insuring agreement C) the conditions section D) the decorations section
B) the insuring agreement
Which of the following statements about the deductible in an insurance policy is CORRECT? A) the higher the deductible, the higher the premium B) the lower the deductible, the higher the premium C) the lower the deductible, the lower the premium D) the deductible rate does not influence the premium
B) the lower the deductible, the higher the premium
Randall has an insurance policy that states that his policy began on Jan 17, 2016 at 2:30 pm central standard time and ends on Jan 17, 2017 at 2:30 pm central standard time. These details are known as A) the policy territory B) the policy period C) the policy declarations D) the policy duration
B) the policy period
Insurance is a contract that A) transfers the risk of financial loss from an insurance company to an individual B) transfers the risk of financial loss from an individual to an insurance company C) eliminates all hazards for an individual D) eliminates all risk for an individual
B) transfers the risk of financial loss form an individual to an insurance company
ABC Insurance is headquartered in Wisconsin but doing business in Florida. While in Florida, ABC Insurance is classified as A) a domestic insurer B) an alien insurer C) a foreign insurer D) a nonresident insurer
C) a foreign insurer
Susan decides to drive fast in a horrible snowstorm because she knows that if she gets in an accident that her insurance will cover her. This is an example of A) a situational hazard B) a moral hazard C) a morale hazard D) a physical hazard
C) a morale hazard
ABC Insurance is licensed to sell insurance in Wisconsin. When a company is licensed in a state, it is considered A) unauthorized B) approved C) admitted D) nonadmitted
C) admitted
Adam has a blanket policy on his house. Which of the following best describes the items that are covered under this policy? A) only items with appraisal are covered B) only items in the bedrooms are covered C) all of the contents in his house are covered D) nothing personal is covered
C) all of the contents in his house are covered
Which element of an insurance contract requires that the insured is of legal age, sane, and sober when making the contract? A) consideration B) agreement C) competent parties D) legal object
C) competent parties
Nathan and Allison have two insurance policies on their home. Policy A has a overage limit of $100,000. Policy B has a coverage limit of $200,000. When Nathan and Allison have a house fire and have a $100,000 claim, Policy A paid $50,000 and Policy B paid $50,000. This is an example of which other insurance provision? A) primary and excess B) nonconcurrency C)Contribution by equal shares D) pro rata clause
C) contribution by equal shares
Natalie has an insurance policy that specifically does NOT cover flood damage. This information can be found in which of the following sections of the policy? A) declarations section B) endorsements section C) exclusions section D) conditions section
C) exclusions section
Which of the following levels of agent authority is a written agreement with the insurer? A) assumed authority B) apparent authority C) express authority D) implied authority
C) express authority
All of the following are true about a binder EXCEPT A) it does not guarantee that a policy will be issued B) if it is an oral binder, it must be backed up in writing as soon as possible C) it is a permanent insurance agreement D) it is a temporary insurance agreement
C) it is a permanent insurance agreement
All of the following are included in the duties after loss provision EXCEPT A) cooperate with the insurer as required during the claim investigation B) make the property available for inspection C) leave the property and allow further damage D) prom notice of claim to the insurer or agent
C) leave the property and allow further damage
An insured may be reimbursed on a damaged items repair cost when the repair cost is less than A) the staid amount B) the market value C) the actual cash value D) the agreed value
C) the actual cash value
Which of the following states that a policy may not be transferred to anyone else without the written consent of the insurer? A) the abandonment condition B) the salvage condition C) the assignment condition D) the transfer condition
C) the assignment condition
If a house burns down in a fire, which of the following is the peril? A) the insurer is the peril B) the house is the peril C) the fire is the peril D) the insured is the peril
C) the fire is the peril
The provision that states where a loss must occur for it to be covered is known as A) the loss occurrence provision B) the conditions provision C) the policy territory provision D) the policy period provision
C) the policy territory provision
Which of the following risk management methods is used by insurance companies? A) reduction B) retention C) transfer D) sharing
C) transfer
Which of the following is NOT included on the basic cause of loos form? A) fire B) lightning C) weight of ice, snow, or sleet D) internal explosion
C) weight of ice, snow or sleet
Which of the following is NOT another name for an open peril policy A) special policy B) all risk policy C) comprehensive coverage D) named peril policy
D) named peril policy
The insured has a home with a replacement cost of $200,000 but has insured it for only $100,000. An 80% coinsurance provision is present in the policy. When an $80,000 loss occurs, the policy will pay A) $100,000 B) $80,000 C) $40,000 D) $50,000
D) $50,000
Which of the following represents a pure risk? A) gambling at a casino B) investing money in the stock market C) playing high stakes poker with friends D) a car accident
D) a car accident
Information that is given on an insurance application that is not sure and would affect the insurers decision to accept the contract is known as A) a warranty B) a concealment C) a misrepresentation D) a material misrepresentation
D) a material misrepresentation
Brady and his wife Julie had an insurance policy that was cancelled by the insurer before the effect date. They will receive a portion of the premium back on A) a flate basis B) a short rated basis C) a unearned basis D) a prorated basis
D) a prorated basis
A statement that is guaranteed to be true is A) a misrepresentation B) a concealment C) a representation D) a warranty
D) a warranty
Which of the following elements consists of an offer and an acceptance? A) counteroffer B) consideration C) premium payment D) agreement
D) agreement
An applicant for insurance must accept or reject a contact as written. For this reason insurance policies are A) aleatory contracts B) unilateral contracts C) utmost good faith contracts D) contracts of adhesion
D) contracts of adhesion
The declarations section of a policy contains all of the following information EXCEPT A) current address B) name of the insured C) policy deductibles D) covered perils
D) covered perils
The principle of restoring an insured to her pre-loss financial state is known as A) adhesion B) aleatory C) utmost good faith D) indemnification
D) indemnification
Which of the following is NOT an example of an insurable interest? A) dry cleaner's interest in his customer' clothing in his custody, care, or control B) persons interest in a car that he owns C) persons interest in a home that she owns D) persons interest in property she hopes that her grandparents will leave to her in their will
D) persons interest in property she hopes that her grandparents will leave to her in their will
Statements provided by an applicant for insurance are considered to be A) warranties B) considerations C) misrepresentations D) representations
D) representations
Renee has a policy that covers all risks of direct physical loss except for flooding because it is specifically excluded. Which coverage form does Renee most likely have? A) endorsement coverage B) broad peril coverage C) basic peril coverage D) special (open) peril coverage
D) special (open) peril coverage
Which of the following statements about los value nation is NOT correct? A) the insurance company determines the appropriate amount of claim payment B) loss valuation and claims settlement mean the same thing C) the deductible reduces any amount after the loss has been valued D) the deducible increases any amount after the loss has been valued
D) the deducible increased any amount after the loss has been valued
Which of the following is NOT a factor that determines premium rates? A) operating expenses B) cost of handling claims C) loss reserves D) the insured's credit
D) the insured's credit
In an insurance contract, the second party is A) the underwriter B) the insured C) the beneficiary D) the insurer
D) the insurer
All of the following statements about cancellation and nonrenewable of an insurance policy are true EXCEPT A) when an insured cancels a policy, the insurer is entitled to keep a percentage of the unearned premium B) an insurance policy can be cancelled by the insured before the expiration date C) when an insurer cancels a policy, any used premium must be prorate and returned to the insured D) the numbed insured can only cancel the policy on the renewal or expiration date
D) the named insured can only cancel the policy on the renew or expiration date
According to the law of agency, the person whose behalf the insurance agent is called up A) the agent B) the insured C) the underwriter D) the principal
D) the principal
All of the following are elements of insurable risks EXCEPT A) the premium must be calculable B) the risk must be non catastrophic C)the premium should be affordable D) the risk must be catastrophic for the insurance company
D) the risk must be catastrophic for the insurance company
The department of an insurance company that is concerned about the risk that an applicant for insurances poses is A) the adjuster department B) the sales department C) the actuary department D) the underwriting department
D) the underwriting department
