Property and Liability Basics

Bob surrenders his policy. What return of premium will he receive?

Prorated premium for the insured days in the future that he has already paid for, minus other deductions related to losses If Bob's policy was created for a definite period of time and he ends coverage early, he can receive a prorated refund (refund for the amount of time that he paid for but will not be insured), minus any claim for loss or damage.

What type of policy only establishes the value of an insured object when a loss occurs?

Open

If an object's value is not specified until a loss occurs, it is insured under a(n)

Open Policy

When an auto insurance policy is cancelled for nonpayment of premium, how many days' notice must the insurer provide to the policyowner?

10 days Notice of policy cancellation may be effective only if mailed or delivered by the insurer to the policyowner at least 20 days prior to the effective date of cancellation, or 10 days' notice when cancellation is for nonpayment of premium, accompanied by the reason for cancellation.

Any risk retention group must submit to an examination upon the request of the Commissioner within

60 days Upon a request by the Commissioner to determine its financial condition, a risk retention group must submit to an examination if, after 60 days, the Commissioner in the jurisdiction in which the group is chartered and licensed has not initiated the examination.

An unincorporated, nonprofit association representing all insurance companies in the State of California licensed to transact workers compensation insurance is known as

California Workers Comp Inspection Rating Bureau (WCIRB). The California Workers Comp Inspection Rating Bureau (WCIRB) is an unincorporated, nonprofit association comprised of all companies licensed to transact workers compensation insurance in California and has over 400 member companies.

California prohibits a risk retention group from engaging in?

Contributing to the California Guarantee Association Soliciting insurance to a person who is not eligible for membership California Joint Underwriters Association Risk retention group may not contribute to any insurance insolvency Guarantee Association funds, nor are its member protected by such plans. They are also not participants in any of the insurance residual markets in the state.

Which of the following was designed to regulate the operation of risk retention groups and purchasing groups in California?

Federal Liability Risk Retention Act The Federal Liability Risk Retention Act regulates both the formation and operation of risk retention groups and purchasing groups.

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?

If the insured has no insurable interest, the contract is void. The person or entity making a claim for the damaged property must have an insurable interest in the property. In most property insurance losses, the insured is the owner of the property. However, others might also have an insurable interest in the property; such as, a mortgagee has an insurable interest in real property to the extent of the outstanding mortgage.

Which of the following is a characteristic of a purchasing group?

It purchases liability insurance covering all members on a group basis.

Risk retention groups are prohibited from engaging in all of the following types of insurance, EXCEPT

Liability. Risk retention groups may only engage in the activity of assuming and spreading all or a portion of the liability exposure of its members.

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

Offer the insured to renew the policy at a different rate. Notice of policy cancellation may be effective only if mailed or delivered by the insurer to the policyowner at least 20 days prior to the effective date of cancellation, accompanied by the reason for cancellation. The insurer must also notify the insured about the existence of the automobile liability assigned risk plan.

A risk retention group must include which of the following words in its name?

Risk retention group All risk retention groups must include in their name the words "risk retention group."

Which of the following information would NOT be included in property insurance policies?

The insured's address

A policy that expresses an agreement that the thing insured will be valued at a specified sum is what kind of policy?

Valued

Which type of policy specifies the value of the insured object in the policy itself?

Valued Valued policies specify that the insured property will be valued at a specific sum. Open policies, on the other hand, do not specify a value up-front. The value is not determined until a loss occurs.

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)

Valued policy. A valued policy provides for payment of the full policy amount in the event of a total loss WITHOUT regard to actual value or depreciation.

An insurer cancels an insurance policy. Within what period of time must a premium refund be issued?

Within 25 days