Test on Terms/Conditions

Something that increases the chance of a loss occurring is:

Hazard

A cracked sidewalk is considered to be a:

hazard

If someone would suffer economic loss from damage to their property, they have:

insurable interest

An insured owns three rental homes. House A - value of $100,000, House B - $50,000 and House C - $50,000. He purchased one blanket policy covering all three houses for $200,000. If the cost to rebuild House B after a total loss was $60,000, how much would the blanket policy pay?

$60,000

A homeowner collects poisonous snakes. A curious child is bitten by one of the snakes when he came on the property while the owner was away. The owner was not negligent but the nature of owing the snakes makes him liable. What form of liability does this scenario describe?

Absolute or Strict Liability

A 10-year old car was totaled in an auto accident. The claims adjuster determines the claims payment based on the replacement cost of the car less depreciation. Which loss valuation method is the adjuster using to pay the claim?

Actual Cash Value

A classic car might be insured for the amount of a current appraisal. If the car were stolen, the company would pay the amount the car was insured for. What is this type of property loss valuation?

Agreed Value

This policy condition prevents a policyholder from transferring their homeowner policy to the new owner when they sell their house.

Assignment

An oral or written statement providing immediate insurance protection, valid for a specified period. Designed to provide temporary coverage until a policy can be issued or denied.

Binder

Mary's house was broken into while she was away. The intruder damaged the lock, door and door facing. Several items were also stolen. This is an example of which form of theft?

Burglary

All of the following are indirect losses EXCEPT:

Check Mark A hurricane destroys a building Landlord loses rent after a rental home burns A hurricane destroys part of the home. Ordinances require restoration of the entire house. Rental car expense when auto damaged in an accident

Most policies covering real property include a condition requiring the policyholder to insure to at least 80% of the property value. If the insured fails to do so, the condition stipulates they share in any partial losses. What is this condition in the policy?

Co-insurance

A customer doesn't provide information during a claims investigation that they know is relevant to the claim. Which term listed below best describes this customer behavior?

Concealment

Which definition best applies to punitive damages?

Damages awarded as punishment typically when the at-fault party was grossly negligent.

What is the part of the policy that provides the who, what, when, where and how much of the contract?

Declaration

Which company type is Liberty Mutual considered when operating in Texas and organized in Boston?

Foreign

Insurance policies are contracts of adhesion meaning they 'stick' as written. However, if the policy is unclear when it comes to a claim, who will the settlement favor?

Insurable Interest

What is the part of the policy that stipulates the terms of the policy including property coverage and perils insured against?

Insuring Agreement

A defendant may use the defense of _____ when there is a break in the chain of events leading from a negligent act to an injury.

Intervening cause

On an insurance contract, all of the following are true of consideration EXCEPT:

It is an exchange of values It is usually monetary Check Mark It must be equal It is a requirement to make the contract enforceable in court

Liberty Mutual added New Vehicle Replacement Cost coverage to all of their auto policies free of charge. When the benefit was added in a state for policyholders, all customers with personal auto policies in that state had benefit of that added coverage even if not stated in their policy. This is an example of which policy condition?

Liberalization

An agent who includes a statement or omits a statement which, when taken in context of the whole presentation, may tend to mislead or deceive the persons addressed, has committed:

Misrepresentation

Which term best describes a customer's action who tells the agent his teenage children are not licensed and should not be included as operators on the auto policy when in fact they both have operators licenses and regularly drive?

Misrepresentation

Which term best describes insurers that are corporations owned by policyholders?

Mutual

Which term best describes when jewelry is missing without evidence of theft?

Mysterious Disappearance

Failure to act as a reasonable person would under similar circumstances is better known as:

Negligence

A contingency that may cause a loss such as fire or windstorm is known as a:

Peril

A frame home presents a greater fire hazard than a masonry home. Which hazard type is represented?

Physical hazard

All of the following are characteristics of an insurance contract EXCEPT:

Private

Which type of insurance is a policy covering a diamond ring?

Property

A windstorm causes a tree to fall on the roof of a house resulting in water damage to the carpet. Why would the claim be coded and handled as a windstorm claim and not a water claim?

Proximate Cause

Regarding the Doctrine of Comparative Negligence, which of the following is true?

Recovery is based on the percentage of fault determined

What type of coverage will insurance companies like Liberty Mutual purchase to protect themselves against catastrophic losses?

Reinsurance

When you purchase as home, there is a chance that the home could be damaged or destroyed causing you serious financial loss. Insurance refers to this chance as:

Risk

Which term best describes when property is unlawfully taken from someone by threat of bodily harm?

Robbery

Dave and Sherry are insureds under a policy including liability coverage. They are sued for injuries Dave intentionally caused to someone. The policy will deny coverage to Dave because of his intentional act but provide coverage to Sherry. Which term best describes the liability condition impacting this response to the claim?

Severability

Which of the following is the best example of a morale hazard?

Someone who is careless and regularly leaves their car unlocked & parked on the street

Policies issued by this type of insurance company might provide shareholders dividends:

Stock

Which term listed below best describes the condition in the policy where the insured transfers his rights to his company to collect from an at-fault party on his behalf?

Subrogation

When a total property loss occurs, all of the following are true EXCEPT:

The insurer may sell the salvage to offset their expenses Check Mark The value of the land is covered Abandonment is not permitted without the permission of the insurer The insurer will pay the value of the property or the policy limit, whichever is less

Full or limited tort refers to the insured's legal rights to collect on an insurance policy.

True

An agent who knowingly convinces an insured to cancel a policy that offers better benefits and a lower premium than the policy he is selling the customer is guilty of which unfair trade practice?

Twisting

Which term best describes the function of an insurance company that evaluates policyholders to determine eligibility and pricing?

Underwriting

Only the insurance company is bound to perform on the policy contract. The insured may stop paying the premium or cancel the policy at any time. Which term best describes this contract characteristic?

Unilateral

Ben's 14-year old son is caught painting graffiti on a downtown building wall. Ben is found liable for the damages. What is the form of liability that applies in this case?

Vicarious liability

When is an incident a robbery rather than a burglary?

When there is a threat of bodily harm

What is the difference between unoccupied and vacant?

Whether or not there is property on the premises

An insurance contract which may contain a "gray area" or an ambiguity is generally resolved in favor of the insured because insurance is a contract of:

adhesion

If an insured has smoke damage to cabinets in the kitchen after a fire loss, the fire is considered to be what in relation to the smoke damage?

proximate cause

Insurance applies separately to each insured, best describes which of the following?

severability

Under the Doctrine of _____ Liability, an insurer is responsible for the acts of its agents.

vicarious