NEW YORK PROPERTY AND CASUALTY 2024 NEWEST
EXAM 2 VERSIONS AND PRACTICE QUESTIONS 300
EXAM QUESTIONS WITH DETAILED VERIFIED ANSWERS
(100% CORRECT) /A+ GRADE ASSURED
What is a Broker? - ANSWER: A broker is someone who acts on behalf of the insured
in negotiating insurance, their for a broker has no binding authority , however
brokers are considered to be a collector of premiums.
What is an agent (producer)? - ANSWER: An agent is a person who acts on behalf of
an insurance company with whom they are contracted. Agents have binding
authority, this authority stems from 3 separate authority.
Expressed Authority - ANSWER: This is the actual written agency contract.
Apparent Authority - ANSWER: Authority created when the producer exceeds the
authority expressed in the agency contract. This occurs when insurer does nothing to
counter the public impression that such authority exist.(Ex: company supplied signs,
business cards and letter head.)
Implied Authority - ANSWER: Authority the public assumes the producer has. An
example would be the business activities of providing quotes, completing
applications and accepting premiums on behalf of the insurer.
Captive Agent - ANSWER: Also known as exclusive agent, this means they represent
only one company.
Independent Agent - ANSWER: This means they can represent more than one
company.
Producer's responsibility to the insurer: - ANSWER: 1) Fiduciary duty to the insurer in
all respects, especially when handling premium funds.
2) Must keep premium funds in a trust account separate from other funds and
forward to insurer promptly.
3) Must report any material facts that may affect underwriting.
4) Responsible for soliciting, negotiating, selling, and cancelling the insurance policies
with the insurer.
5) Duty to only recommend the purchase of only suitable policies.
Producer's responsibilities to the insured: - ANSWER: 1) Forward premiums to
insurer on a timely basis.
2) Seek and gain knowledge of the applicants insurance needs.
3) Review and evaluate the applicant's current insurance coverage, limits and risks.
4) Serve the best interests of the applicant or insured, although producers represent
the insurer.
, 5) Recommend coverage from the perspective of the producer.
Federal Regulations Under The Fair Credit Reporting Act: - ANSWER: 1) Protects
consumer privacy- A. Ensures data collected is confidential, accurate, relevant and
used for a proper and specific purpose. B. Protects the public from overly intrusive
information collection practices.
2) When an application is taken, it must inform applicant a credit report (from
consumer reporting agency) will be obtained. The purpose of this to determine the
financial and moral status of an applicant ( for variety of purposes such as
employment screening, insurance underwriting or loan approvals).
3) Applicant has the right to review the report.
4) Insurer obligations - A. insurer is not responsible for correcting inaccuracies on any
reports. B. If an applicant is denied coverage because of inaccurate information they
are entitled to certain rights.
Risk - ANSWER: A. A condition where the chance, likelihood, probability or potential
for a loss exist.
B. Uncertainty Concerning a loss.
*Their are 2 types of risk*
Speculative Risk - ANSWER: Situations where there is a chance for loss, gain; or
neither loss nor gain to occur. An example of speculative risk is gambling. Speculative
risk cannot be insured.
Pure Risk - ANSWER: Situations where there is no chance for gain; the only outcome
is for nothing to occur or for a loss to occur. Pure risk can be insured. (Ex: The
possibility of damage to property caused by a fire or other natural disaster.)
Loss - ANSWER: Reduction, decrease, or disappearance of value of value. The basis of
a claim for damages under the terms of an insurance policy.
Peril - ANSWER: The cause of loss
Hazard - ANSWER: A specific condition that increases the probability, likelihood, or
severity of a loss from a peril.
* Their are 3 types of Hazard*
Physical Hazard - ANSWER: A physical condition that increases the probability of loss;
use, condition, or occupancy of property. (Ex: Flammable material stored near a
furnace.
Moral Hazard - ANSWER: Dishonest tendencies that increase the probability of a
loss; certain characteristics and behaviors of people. (Ex: An insured burns down
his/her own house to collect the insurance payout.)
Morale Hazard - ANSWER: Attitude that increases the probability of loss. (Ex:
indifference or carelessness of leaving one's house or vehicle unlocked.)
EXAM 2 VERSIONS AND PRACTICE QUESTIONS 300
EXAM QUESTIONS WITH DETAILED VERIFIED ANSWERS
(100% CORRECT) /A+ GRADE ASSURED
What is a Broker? - ANSWER: A broker is someone who acts on behalf of the insured
in negotiating insurance, their for a broker has no binding authority , however
brokers are considered to be a collector of premiums.
What is an agent (producer)? - ANSWER: An agent is a person who acts on behalf of
an insurance company with whom they are contracted. Agents have binding
authority, this authority stems from 3 separate authority.
Expressed Authority - ANSWER: This is the actual written agency contract.
Apparent Authority - ANSWER: Authority created when the producer exceeds the
authority expressed in the agency contract. This occurs when insurer does nothing to
counter the public impression that such authority exist.(Ex: company supplied signs,
business cards and letter head.)
Implied Authority - ANSWER: Authority the public assumes the producer has. An
example would be the business activities of providing quotes, completing
applications and accepting premiums on behalf of the insurer.
Captive Agent - ANSWER: Also known as exclusive agent, this means they represent
only one company.
Independent Agent - ANSWER: This means they can represent more than one
company.
Producer's responsibility to the insurer: - ANSWER: 1) Fiduciary duty to the insurer in
all respects, especially when handling premium funds.
2) Must keep premium funds in a trust account separate from other funds and
forward to insurer promptly.
3) Must report any material facts that may affect underwriting.
4) Responsible for soliciting, negotiating, selling, and cancelling the insurance policies
with the insurer.
5) Duty to only recommend the purchase of only suitable policies.
Producer's responsibilities to the insured: - ANSWER: 1) Forward premiums to
insurer on a timely basis.
2) Seek and gain knowledge of the applicants insurance needs.
3) Review and evaluate the applicant's current insurance coverage, limits and risks.
4) Serve the best interests of the applicant or insured, although producers represent
the insurer.
, 5) Recommend coverage from the perspective of the producer.
Federal Regulations Under The Fair Credit Reporting Act: - ANSWER: 1) Protects
consumer privacy- A. Ensures data collected is confidential, accurate, relevant and
used for a proper and specific purpose. B. Protects the public from overly intrusive
information collection practices.
2) When an application is taken, it must inform applicant a credit report (from
consumer reporting agency) will be obtained. The purpose of this to determine the
financial and moral status of an applicant ( for variety of purposes such as
employment screening, insurance underwriting or loan approvals).
3) Applicant has the right to review the report.
4) Insurer obligations - A. insurer is not responsible for correcting inaccuracies on any
reports. B. If an applicant is denied coverage because of inaccurate information they
are entitled to certain rights.
Risk - ANSWER: A. A condition where the chance, likelihood, probability or potential
for a loss exist.
B. Uncertainty Concerning a loss.
*Their are 2 types of risk*
Speculative Risk - ANSWER: Situations where there is a chance for loss, gain; or
neither loss nor gain to occur. An example of speculative risk is gambling. Speculative
risk cannot be insured.
Pure Risk - ANSWER: Situations where there is no chance for gain; the only outcome
is for nothing to occur or for a loss to occur. Pure risk can be insured. (Ex: The
possibility of damage to property caused by a fire or other natural disaster.)
Loss - ANSWER: Reduction, decrease, or disappearance of value of value. The basis of
a claim for damages under the terms of an insurance policy.
Peril - ANSWER: The cause of loss
Hazard - ANSWER: A specific condition that increases the probability, likelihood, or
severity of a loss from a peril.
* Their are 3 types of Hazard*
Physical Hazard - ANSWER: A physical condition that increases the probability of loss;
use, condition, or occupancy of property. (Ex: Flammable material stored near a
furnace.
Moral Hazard - ANSWER: Dishonest tendencies that increase the probability of a
loss; certain characteristics and behaviors of people. (Ex: An insured burns down
his/her own house to collect the insurance payout.)
Morale Hazard - ANSWER: Attitude that increases the probability of loss. (Ex:
indifference or carelessness of leaving one's house or vehicle unlocked.)
