RMI 4224- Test 1, RMI 4224 test 2,
Schriefer Exam 3, Schriefer Exam 3 fully
solved
All of the following are true concerning hazard Except:
-A hazard is a condition that increases the probability of loss.
-A hazard is a condition that increases severity of loss.
-"Hazard" is synonymous with "peril."
-Building a home in a remote, arid area increases the probability of a loss due to wildfires. In
this example, the decision to build in a remote, arid area is the hazard that leads to a greater
probability of loss due to wildfires. - correct answer ✔✔-"Hazard" is synonymous with "peril."
Joe owns a bar on the edge of the FSU campus. Joe is concerned about the risk of liability
associated with over-serving patrons with too much alcohol. Joe has several risk management
techniques available to manage this risk. Joe decides the best way to manage this risk is to sell
his bar to another person. The risk management technique Joe utilized is known as:
Retention
Avoidance
Transfer
Reduction - correct answer ✔✔avoidance
An element of a legally-binding contract includes which of the following?:
Offer and Acceptance
,Competent Parties
Legal Purpose
Legal Consideration
All the above - correct answer ✔✔all the above
One characteristic of an insurance contract is the "take-it-or leave" nature of the contract's
contents. That is, the insurance company drafts all the contract provisions with little or no input
from the potential insured. This characteristic makes an insurance contract a/an:
Aleatory Contract
Unilateral Contract
Contract of Adhesion
Personal Contract - correct answer ✔✔contract of adhesion
Shavon's home is insured for loss under a standard HO-3 policy. She reports the theft of her 5
year-old TV to her insurance company. Although Shavon paid $1,500 for the TV five years ago,
she was only paid the actual cash value (ACV) of her TV ($750) by her insurer. What principle of
insurance does this example illustrate?:
Indemnity
Reasonable Expectations
Utmost Good Faith
Waiver - correct answer ✔✔Indemnity
Which of the following statements is/are true?
I. The insurance company's duty to defend is broader than its duty to pay covered losses.
II. Endorsements always provide additional coverage.
,I only.
II only.
Both I and II.
Neither I nor II. - correct answer ✔✔I. only
All of the following are examples of an insurable interest EXCEPT:
-Jane borrowed $25,000 from Chase Bank to buy a new car. Chase Bank is listed as an additional
insured under Jane's personal auto policy.
-Roger wants to purchase an HO-5 policy to insure against loss to his next-door neighbor's
home.
-Wells Fargo has an insurable interest in Keith's home by virtue of the $300,000 Keith borrowed
from Wells Fargo in order to purchase this home.
-Heather purchased a 10 year term life insurance policy on the life of her husband, Steve. -
correct answer ✔✔Roger wants to purchase an HO-5 policy to insure against loss to his next-
door neighbor's home.
All of the following statements concerning insurance policy provisions are true EXCEPT:
-Most property insurance policies have provisions that allow an insured to abandon damaged
property they no longer want to the insurance company.
-Subrogation is the right of the insurance company to recover indemnity payments made to an
insured from the third party legally responsible for the loss.
-Salvage is damaged or recovered stolen property taken over by the insurance company; salvage
often reduces the net payment an insurer makes for a loss.
-Since an insurance policy is a personal contract, an insurance company typically only allows an
insured to transfer ownership of the policy to another party with the insurer's prior
consent/permission. - correct answer ✔✔-Most property insurance policies have provisions
that allow an insured to abandon damaged property they no longer want to the insurance
company.
, Tommy has a Personal Auto Policy (PAP) with bodily injury limits of $50,000 per person and
$100,000 per accident. Tommy was recently involved in an auto accident causing the following
bodily injuries:
Injuries to Steve = $60,000
Injuries to Barbara = $10,000
Injuries to Valerie = $25,000
What is the total amount of money all three claimants collectively will receive from Tommy's
insurance company?
$50,000
$85,000
$95,000
$100,000 - correct answer ✔✔$85,000
Which of the following statements concerning coinsurance is/are true?
I. Coinsurance is an underwriting concept designed to encourage an insured to purchase
insurance nearly equal or equal to the full value of the property being insured.
II. The majority of insured property losses are partial losses. Consequently, many insureds may
not feel it necessary to ensure their property to its full value.
I only.
II only.
Both I & II.
Neither I nor II. - correct answer ✔✔Both I & II.
Schriefer Exam 3, Schriefer Exam 3 fully
solved
All of the following are true concerning hazard Except:
-A hazard is a condition that increases the probability of loss.
-A hazard is a condition that increases severity of loss.
-"Hazard" is synonymous with "peril."
-Building a home in a remote, arid area increases the probability of a loss due to wildfires. In
this example, the decision to build in a remote, arid area is the hazard that leads to a greater
probability of loss due to wildfires. - correct answer ✔✔-"Hazard" is synonymous with "peril."
Joe owns a bar on the edge of the FSU campus. Joe is concerned about the risk of liability
associated with over-serving patrons with too much alcohol. Joe has several risk management
techniques available to manage this risk. Joe decides the best way to manage this risk is to sell
his bar to another person. The risk management technique Joe utilized is known as:
Retention
Avoidance
Transfer
Reduction - correct answer ✔✔avoidance
An element of a legally-binding contract includes which of the following?:
Offer and Acceptance
,Competent Parties
Legal Purpose
Legal Consideration
All the above - correct answer ✔✔all the above
One characteristic of an insurance contract is the "take-it-or leave" nature of the contract's
contents. That is, the insurance company drafts all the contract provisions with little or no input
from the potential insured. This characteristic makes an insurance contract a/an:
Aleatory Contract
Unilateral Contract
Contract of Adhesion
Personal Contract - correct answer ✔✔contract of adhesion
Shavon's home is insured for loss under a standard HO-3 policy. She reports the theft of her 5
year-old TV to her insurance company. Although Shavon paid $1,500 for the TV five years ago,
she was only paid the actual cash value (ACV) of her TV ($750) by her insurer. What principle of
insurance does this example illustrate?:
Indemnity
Reasonable Expectations
Utmost Good Faith
Waiver - correct answer ✔✔Indemnity
Which of the following statements is/are true?
I. The insurance company's duty to defend is broader than its duty to pay covered losses.
II. Endorsements always provide additional coverage.
,I only.
II only.
Both I and II.
Neither I nor II. - correct answer ✔✔I. only
All of the following are examples of an insurable interest EXCEPT:
-Jane borrowed $25,000 from Chase Bank to buy a new car. Chase Bank is listed as an additional
insured under Jane's personal auto policy.
-Roger wants to purchase an HO-5 policy to insure against loss to his next-door neighbor's
home.
-Wells Fargo has an insurable interest in Keith's home by virtue of the $300,000 Keith borrowed
from Wells Fargo in order to purchase this home.
-Heather purchased a 10 year term life insurance policy on the life of her husband, Steve. -
correct answer ✔✔Roger wants to purchase an HO-5 policy to insure against loss to his next-
door neighbor's home.
All of the following statements concerning insurance policy provisions are true EXCEPT:
-Most property insurance policies have provisions that allow an insured to abandon damaged
property they no longer want to the insurance company.
-Subrogation is the right of the insurance company to recover indemnity payments made to an
insured from the third party legally responsible for the loss.
-Salvage is damaged or recovered stolen property taken over by the insurance company; salvage
often reduces the net payment an insurer makes for a loss.
-Since an insurance policy is a personal contract, an insurance company typically only allows an
insured to transfer ownership of the policy to another party with the insurer's prior
consent/permission. - correct answer ✔✔-Most property insurance policies have provisions
that allow an insured to abandon damaged property they no longer want to the insurance
company.
, Tommy has a Personal Auto Policy (PAP) with bodily injury limits of $50,000 per person and
$100,000 per accident. Tommy was recently involved in an auto accident causing the following
bodily injuries:
Injuries to Steve = $60,000
Injuries to Barbara = $10,000
Injuries to Valerie = $25,000
What is the total amount of money all three claimants collectively will receive from Tommy's
insurance company?
$50,000
$85,000
$95,000
$100,000 - correct answer ✔✔$85,000
Which of the following statements concerning coinsurance is/are true?
I. Coinsurance is an underwriting concept designed to encourage an insured to purchase
insurance nearly equal or equal to the full value of the property being insured.
II. The majority of insured property losses are partial losses. Consequently, many insureds may
not feel it necessary to ensure their property to its full value.
I only.
II only.
Both I & II.
Neither I nor II. - correct answer ✔✔Both I & II.
