Insurance Quizzes And Solutions Verified 100%
Correct
An insured carries a property policy on her home in the amount of $250,000. A bank is
shown as the mortgagor in the policy. Last month the insured made her final mortgage
payment, but did not remove the bank from the policy. In the event of a covered loss to
her home, how much will the bank receive? - answer Nothing.
Because the bank does not have a financial interest in the house at the time of loss,
they will receive nothing.
An insured's business is damaged because of a fire, and he is forced to close the
business temporarily for repairs. As a result, the insured lost income. What type of loss
is this? - answer Consequential loss, also known as indirect loss, is a second financial
loss caused by a covered direct loss.
All of the following are examples of risk retention EXCEPT... - answer Premiums
Retention is a planned assumption of risk, or acceptance of responsibility for the loss by
an insured through the use of deductibles, copayments, or self-insurance.
Sally has a property insurance policy that is not subject to any coinsurance
requirements. Her policy has a set amount of insurance scheduled for her property.
What loss valuation method does her policy use? - answer A stated amount is an
amount of insurance scheduled in a property policy which is not subject to any
coinsurance requirements in the event of a covered loss.
Peril is most easily defined as... - answer The cause of loss insured against.
Three years ago, an insured moved to an unfurnished apartment. She bought new
furniture that cost $9,000. Last week, there was a fire in the apartment that destroyed
the furniture. Replacement cost is $10,500. The adjuster told the insured her furniture
depreciated $2,500. If insurance is written on an actual cash value basis, how much will
it pay for the loss? - answer $8,000.
If an insurance company wishes to order a consumer report on an applicant to assist in
the underwriting process, and if a notice of insurance information practices has been
provided, the report may contain all of the following information EXCEPT the applicant's
- answer Ancestry.
The Fair Credit Reporting Act regulates what information may be collected and how the
information may be used. Consumer Reports include written and/or oral information
regarding a consumer's credit, character, reputation, and habits collected by a reporting
agency from employment records, credit reports, and other public sources. Ancestry is
not a relevant factor assessed in these reports.
,Which of the following is a method of claim settlement used when the insured
and
insurer cannot agree on how to settle a claim? - answer
Arbitration.
A method of claim settlement used when the insured and insurer cannot agree on
how
to settle a claim. The arbitrator's decision is binding to both
parties.
An insurer neglects to pay a legitimate claim that is covered under the terms of the
policy. Which of the following terms best describes what the insurer has violated? -
answer Consideration.
The binding force in any contract is consideration. Consideration on the part of the
insured is the payment of premiums and the health representations made in the
application. Consideration on the part of the insurer is the promise to pay in the event of
loss.
In insurance, an offer is usually made when... - answer The application is submitted.
When a disagreement occurs as to how to settle a loss in a "fender bender" between
two cars, what procedure is followed? - answer Arbitration through the court.
Arbitration is a low-cost alternative to a full-blown lawsuit.
All of the following are conditions commonly found in the insurance policy EXCEPT... -
answer Insuring agreement provides information on the policy's coverages. Conditions
state the legal obligations and duties of the parties to the contract.
Which of the following is a statement that is guaranteed to be true, and if untrue, may
breach an insurance contract? - answer A warranty in insurance is a statement
guaranteed to be true. When an applicant is applying for an insurance contract, the
statements he or she makes are generally not warranties, but representations.
Representations are statements that are true to the best of the applicant's knowledge.
Under what conditions would a contract between an insurer and prospective insured be
legal? - answer The applicant has been convicted of a felony.
When an insurer and insured enter into a contract, both parties must be of legal age
and mentally competent. It is legal for a person convicted of a felony to buy an
insurance contract. An intoxicated person, however, may not be mentally competent,
and a 12-year-old student is considered to be underage in most states.
Termination of an in-force insurance policy prior to the expiration date shown in the
policy is known as... - answer Cancellation is the termination of an in-force insurance
,policy by either the insured or the insurer prior to the expiration date shown in the policy.
Termination may be voluntary, involuntary, or in mutual accordance with provisions
contained in the policy.
The section of an insurance policy that details what perils are not insured against and
what persons are not insured is known as the... - answer Exclusions.
An insured stated on her application for life insurance that she had never had a heart
attack, when in fact she had a series of minor heart attacks last year for which she
sought medical attention. Which of the following will explain the reason a death benefit
claim is denied? - answer Material misrepresentation will affect whether or not a policy
is issued. If the insured had been truthful, it is very likely that the policy would not be
issued.
The other insurance provision that limits the liability of the insurer to a portion of the loss
no greater than the amount the insurer bears to all the insurance covering the property
is called... - answer Pro rata liability.
To preserve the principle of indemnity, each policy pays a pro rata share based upon
the share of the coverage. The insured cannot collect the full amount of loss from each
policy.
The part of a policy that clarifies terms in the policy is the... - answer Definitions.
When would a misrepresentation on the insurance application be considered fraud? -
answer A misrepresentation would be considered fraud if it is intentional and material.
Fraud would be grounds for voiding the contract.
Which of the following is NOT consideration on the part of an insured? - answer
Promise to submit timely claims.
What is the max penalty for habitual willful noncompliance with the Fair Credit Reporting
Act? - answer $2,500.
The ABC Corporation has $100,000 of coverage on its building through insurance
Company A, and $50,000 of identical coverage on the same building through insurance
Company B. Assuming coinsurance is not an issue, when a $24,000 loss occurs, how
much will each insurer pay? - answer Company A will pay $16,000; Company B will pay
$8,000
Each policy pays its pro rata share of the loss based upon each policy's share of the
total amount of coverage.
A homeowner sells his house to a friend. The friend wants to keep the homeowner's
current policy in effect. Under the assignment provision, which of the following is most
, likely? - answer The homeowner will need to get written consent from the insurer before
the policy can be reassigned.
In property and casualty insurance, assignments of policies are usually valid only with
the prior written consent of the insurer.
Under the professional liability loss settlement provision, what must an insurer do before
offering to pay a claimant to settle a claim? - answer Get the insured's consent. If a
claim has been filed under a professional liability policy, an insurer MUST get the
consent of the insured before offering to pay to settle a claim. If the insured's
professional reputation is at risk, and the insured feels he or she is not negligent, the
insured can require the insurer to defend the action in court.
What term best describes the act of withholding material information that would be
crucial to an underwriting decision? - answer Concealment.
Concealment occurs when a person withholds a material fact that is crucial to making a
decision. In insurance, this involves withholding information that would be crucial to
underwriting decisions. For instance, if someone omitted a 10-year smoking history from
a health insurance application, this person would be guilty of concealment.
Before an insurer will pay any loss under a policy, what is usually required from the
insured? - answer Proof of loss.
A sworn statement, called proof of loss, must usually be furnished by the insured to an
insurer before any loss under a policy can be paid.
Which of the following would NOT be considered a source of insurability information by
an insurer? - answer The applicant's marital status.
An insurer may inspect, with the applicant's written permission, the following:
application form, motor vehicle records, interviews with neighbors, friends and
employers, inspection of property, and inspection of insurance history.
Within how many days of requesting an Investigative Consumer Report must an insurer
notify the consumer in writing that the report will be obtained? - answer 3 days.
An applicant is denied insurance because of information found on a consumer report.
Which of the following requires that the insurance company supply the applicant with
the name and address of the consumer reporting company? - answer Fair Credit
Reporting Act.
The part of the policy that sets forth the rules of conduct, duties, and obligations of the
parties is called the... - answer Conditions.
When a mortgagee is named in a mortgagee clause attached to a fire or other direct
damage policy... - answer A. The loss reimbursement will be paid to the mortgagee as
their interest may appear.
Correct
An insured carries a property policy on her home in the amount of $250,000. A bank is
shown as the mortgagor in the policy. Last month the insured made her final mortgage
payment, but did not remove the bank from the policy. In the event of a covered loss to
her home, how much will the bank receive? - answer Nothing.
Because the bank does not have a financial interest in the house at the time of loss,
they will receive nothing.
An insured's business is damaged because of a fire, and he is forced to close the
business temporarily for repairs. As a result, the insured lost income. What type of loss
is this? - answer Consequential loss, also known as indirect loss, is a second financial
loss caused by a covered direct loss.
All of the following are examples of risk retention EXCEPT... - answer Premiums
Retention is a planned assumption of risk, or acceptance of responsibility for the loss by
an insured through the use of deductibles, copayments, or self-insurance.
Sally has a property insurance policy that is not subject to any coinsurance
requirements. Her policy has a set amount of insurance scheduled for her property.
What loss valuation method does her policy use? - answer A stated amount is an
amount of insurance scheduled in a property policy which is not subject to any
coinsurance requirements in the event of a covered loss.
Peril is most easily defined as... - answer The cause of loss insured against.
Three years ago, an insured moved to an unfurnished apartment. She bought new
furniture that cost $9,000. Last week, there was a fire in the apartment that destroyed
the furniture. Replacement cost is $10,500. The adjuster told the insured her furniture
depreciated $2,500. If insurance is written on an actual cash value basis, how much will
it pay for the loss? - answer $8,000.
If an insurance company wishes to order a consumer report on an applicant to assist in
the underwriting process, and if a notice of insurance information practices has been
provided, the report may contain all of the following information EXCEPT the applicant's
- answer Ancestry.
The Fair Credit Reporting Act regulates what information may be collected and how the
information may be used. Consumer Reports include written and/or oral information
regarding a consumer's credit, character, reputation, and habits collected by a reporting
agency from employment records, credit reports, and other public sources. Ancestry is
not a relevant factor assessed in these reports.
,Which of the following is a method of claim settlement used when the insured
and
insurer cannot agree on how to settle a claim? - answer
Arbitration.
A method of claim settlement used when the insured and insurer cannot agree on
how
to settle a claim. The arbitrator's decision is binding to both
parties.
An insurer neglects to pay a legitimate claim that is covered under the terms of the
policy. Which of the following terms best describes what the insurer has violated? -
answer Consideration.
The binding force in any contract is consideration. Consideration on the part of the
insured is the payment of premiums and the health representations made in the
application. Consideration on the part of the insurer is the promise to pay in the event of
loss.
In insurance, an offer is usually made when... - answer The application is submitted.
When a disagreement occurs as to how to settle a loss in a "fender bender" between
two cars, what procedure is followed? - answer Arbitration through the court.
Arbitration is a low-cost alternative to a full-blown lawsuit.
All of the following are conditions commonly found in the insurance policy EXCEPT... -
answer Insuring agreement provides information on the policy's coverages. Conditions
state the legal obligations and duties of the parties to the contract.
Which of the following is a statement that is guaranteed to be true, and if untrue, may
breach an insurance contract? - answer A warranty in insurance is a statement
guaranteed to be true. When an applicant is applying for an insurance contract, the
statements he or she makes are generally not warranties, but representations.
Representations are statements that are true to the best of the applicant's knowledge.
Under what conditions would a contract between an insurer and prospective insured be
legal? - answer The applicant has been convicted of a felony.
When an insurer and insured enter into a contract, both parties must be of legal age
and mentally competent. It is legal for a person convicted of a felony to buy an
insurance contract. An intoxicated person, however, may not be mentally competent,
and a 12-year-old student is considered to be underage in most states.
Termination of an in-force insurance policy prior to the expiration date shown in the
policy is known as... - answer Cancellation is the termination of an in-force insurance
,policy by either the insured or the insurer prior to the expiration date shown in the policy.
Termination may be voluntary, involuntary, or in mutual accordance with provisions
contained in the policy.
The section of an insurance policy that details what perils are not insured against and
what persons are not insured is known as the... - answer Exclusions.
An insured stated on her application for life insurance that she had never had a heart
attack, when in fact she had a series of minor heart attacks last year for which she
sought medical attention. Which of the following will explain the reason a death benefit
claim is denied? - answer Material misrepresentation will affect whether or not a policy
is issued. If the insured had been truthful, it is very likely that the policy would not be
issued.
The other insurance provision that limits the liability of the insurer to a portion of the loss
no greater than the amount the insurer bears to all the insurance covering the property
is called... - answer Pro rata liability.
To preserve the principle of indemnity, each policy pays a pro rata share based upon
the share of the coverage. The insured cannot collect the full amount of loss from each
policy.
The part of a policy that clarifies terms in the policy is the... - answer Definitions.
When would a misrepresentation on the insurance application be considered fraud? -
answer A misrepresentation would be considered fraud if it is intentional and material.
Fraud would be grounds for voiding the contract.
Which of the following is NOT consideration on the part of an insured? - answer
Promise to submit timely claims.
What is the max penalty for habitual willful noncompliance with the Fair Credit Reporting
Act? - answer $2,500.
The ABC Corporation has $100,000 of coverage on its building through insurance
Company A, and $50,000 of identical coverage on the same building through insurance
Company B. Assuming coinsurance is not an issue, when a $24,000 loss occurs, how
much will each insurer pay? - answer Company A will pay $16,000; Company B will pay
$8,000
Each policy pays its pro rata share of the loss based upon each policy's share of the
total amount of coverage.
A homeowner sells his house to a friend. The friend wants to keep the homeowner's
current policy in effect. Under the assignment provision, which of the following is most
, likely? - answer The homeowner will need to get written consent from the insurer before
the policy can be reassigned.
In property and casualty insurance, assignments of policies are usually valid only with
the prior written consent of the insurer.
Under the professional liability loss settlement provision, what must an insurer do before
offering to pay a claimant to settle a claim? - answer Get the insured's consent. If a
claim has been filed under a professional liability policy, an insurer MUST get the
consent of the insured before offering to pay to settle a claim. If the insured's
professional reputation is at risk, and the insured feels he or she is not negligent, the
insured can require the insurer to defend the action in court.
What term best describes the act of withholding material information that would be
crucial to an underwriting decision? - answer Concealment.
Concealment occurs when a person withholds a material fact that is crucial to making a
decision. In insurance, this involves withholding information that would be crucial to
underwriting decisions. For instance, if someone omitted a 10-year smoking history from
a health insurance application, this person would be guilty of concealment.
Before an insurer will pay any loss under a policy, what is usually required from the
insured? - answer Proof of loss.
A sworn statement, called proof of loss, must usually be furnished by the insured to an
insurer before any loss under a policy can be paid.
Which of the following would NOT be considered a source of insurability information by
an insurer? - answer The applicant's marital status.
An insurer may inspect, with the applicant's written permission, the following:
application form, motor vehicle records, interviews with neighbors, friends and
employers, inspection of property, and inspection of insurance history.
Within how many days of requesting an Investigative Consumer Report must an insurer
notify the consumer in writing that the report will be obtained? - answer 3 days.
An applicant is denied insurance because of information found on a consumer report.
Which of the following requires that the insurance company supply the applicant with
the name and address of the consumer reporting company? - answer Fair Credit
Reporting Act.
The part of the policy that sets forth the rules of conduct, duties, and obligations of the
parties is called the... - answer Conditions.
When a mortgagee is named in a mortgagee clause attached to a fire or other direct
damage policy... - answer A. The loss reimbursement will be paid to the mortgagee as
their interest may appear.
