Question 1

Policies contain cancellation provisions for all the following reasons except:

Accepted Answer

A) the company wants control of the risk after the policy is written in the property liability area 
B) the life insurance company must be able to eliminate the risk in the event the insured accepts a very hazardous job 
C) the insured may no longer need the coverage 
D) a legal method of canceling the contract is needed by both parties in the property liability area 
A) the company wants control of the risk after the policy is written in the property liability area 
B) the life insurance company must be able to eliminate the risk in the event the insured accepts a very hazardous job 
C) the insured may no longer need the coverage 
D) a legal method of canceling the contract is needed by both parties in the property liability area

Question 2

The insured gets a greater refund if he cancels his insurance policy than he would if the insurer canceled the policy.

Accepted Answer

A) True 
 B)False

Question 3

The appraisal procedure is used only when the amount of the loss,not the cause of the loss,is in dispute.

Accepted Answer

A) True 
 B)False

Question 4

Alley Katz cancels her six-month auto policy exactly four months into the policy period. If her six month premium was $900,how much will she receive as a refund of unused premium from her insurer?

Accepted Answer

A) $300 
B) $450 
C) An amount less than $300, to reflect the short-rate cancellation penalty the insurer will impose 
D) None of the above 
A) $300 
B) $450 
C) An amount less than $300, to reflect the short-rate cancellation penalty the insurer will impose 
D) None of the above

Question 5

If an insured cancels her property-liability insurance and asks for a refund,the premium is:

Accepted Answer

A) returned on a short rate basis 
B) returned on a pro rata basis 
C) not returned 
D) returned 100% if the cancellation occurs during the first 10 days of the contract 
A) returned on a short rate basis 
B) returned on a pro rata basis 
C) not returned 
D) returned 100% if the cancellation occurs during the first 10 days of the contract

Question 6

Preston,Alex and George recently purchased a house together,and each person bought their own insurance policy on the house. Preston bought $200,000 of coverage,Alex bought $200,000 of coverage,and George bought $100,000 of coverage. The day after they purchased their insurance policies,George's electric guitar stereo shorted out and started a fire. The resulting damage totaled $40,000. How much of the loss did George's insurance company pay,assuming that all three policies contained pro-rata clauses?

Accepted Answer

A) $8,000 
B) $16,000 
C) $24,000 
D) none of the above 
A) $8,000 
B) $16,000 
C) $24,000 
D) none of the above

Question 7

The term "salvage" as it relates to insurance means the:

Accepted Answer

A) cost of cleaning up after a natural disaster 
B) remaining insurance premium not needed after a peril destroys one's property 
C) amount of the claim the insured is responsible for paying 
D) amount received by the insurance company when damaged property is sold 
A) cost of cleaning up after a natural disaster 
B) remaining insurance premium not needed after a peril destroys one's property 
C) amount of the claim the insured is responsible for paying 
D) amount received by the insurance company when damaged property is sold

Question 8

Which of the following are not likely to be found on a declarations page?

Accepted Answer

A) duties following a loss 
B) identity of the named insured 
C) list of coverages provided by the contract 
D) name of the insurer 
A) duties following a loss 
B) identity of the named insured 
C) list of coverages provided by the contract 
D) name of the insurer

Question 9

What is the purpose of the recovered property clause in dealing with salvage?

Accepted Answer

Salvage reduces the net claim paid by th

Question 10

In property insurance,coinsurance is:

Accepted Answer

A) an agreement between two or more insurance companies to jointly cover a large risk 
B) a contractual agreement to make the insured bear a portion (usually small)of every loss 
C) a contractual agreement to help equalize total claims to reinsurance premiums 
D) a contractual agreement to discourage under insurance 
A) an agreement between two or more insurance companies to jointly cover a large risk 
B) a contractual agreement to make the insured bear a portion (usually small)of every loss 
C) a contractual agreement to help equalize total claims to reinsurance premiums 
D) a contractual agreement to discourage under insurance

Question 11

What are some of the reasons exclusions are found in insurance contracts?

Accepted Answer

Exclusions are found in insurance contra

Question 12

Concealment or fraud before,during,or after a loss generally allows an insurer to contest property insurance contracts.

Accepted Answer

A) True 
 B)False

Question 13

Deductibles serve three major purposes,and two of those are:

Accepted Answer

A) reduce moral hazards; save on claims handling expenses 
B) reveal moral hazards; eliminate morale hazards 
C) reduce morale hazards; save on claims handling expenses 
D) reveal morale hazards, eliminate moral hazards 
E) reduce claims handling expenses; encourage avoidance 
A) reduce moral hazards; save on claims handling expenses 
B) reveal moral hazards; eliminate morale hazards 
C) reduce morale hazards; save on claims handling expenses 
D) reveal morale hazards, eliminate moral hazards 
E) reduce claims handling expenses; encourage avoidance

Question 14

Under the provisions of the Standard Fire Policy,assignment is:

Accepted Answer

A) specifically prohibited 
B) permitted, but requires an additional premium 
C) not mentioned 
D) valid only with the written consent of the company 
A) specifically prohibited 
B) permitted, but requires an additional premium 
C) not mentioned 
D) valid only with the written consent of the company

Question 15

In the course of a claims investigation,the insurer discovers that the warehouse it covers has been used for dynamite storage for the last year. When the policy was first issued four years ago,the insurer agreed to cover it for clothing storage. What does the law typically allow the insurer to do in this situation?

Accepted Answer

A) Pay the claim in full. 
B) Pay only a proportion of the claim 
C) Deny the claim 
D) Prosecute the insured for intentional misrepresentation 
A) Pay the claim in full. 
B) Pay only a proportion of the claim 
C) Deny the claim 
D) Prosecute the insured for intentional misrepresentation

Question 16

The appraisal provision does all the following except:

Accepted Answer

A) provides a mechanism for determining how much will be paid for the loss 
B) outlines who will pay for the expense of the procedure 
C) sets time limits for picking appraisers 
D) provides a mechanism for determining whether a loss should be paid or denied 
A) provides a mechanism for determining how much will be paid for the loss 
B) outlines who will pay for the expense of the procedure 
C) sets time limits for picking appraisers 
D) provides a mechanism for determining whether a loss should be paid or denied

Question 17

Which of the following is not a reason for using deductibles in property insurance?

Accepted Answer

A) they reduce the morale hazard 
B) they eliminate payment for frequent small losses 
C) they allow consumers to customize contracts based on financial considerations 
D) to split large losses in excess of the policy limits equitably between the insured and the insurer 
A) they reduce the morale hazard 
B) they eliminate payment for frequent small losses 
C) they allow consumers to customize contracts based on financial considerations 
D) to split large losses in excess of the policy limits equitably between the insured and the insurer

Question 18

Endorsements may add to or delete coverage in the fire contract.

Accepted Answer

A) True 
 B)False

Question 19

Gerald Tee has a $50,000 property loss. His insurance policy's coverage limit is $35,000,and has a $500 deductible applied to the policy. How much will Gerald collect?

Accepted Answer

A) $50,000 
B) $49,500 
C) $35,000 
D) $34,500 
A) $50,000 
B) $49,500 
C) $35,000 
D) $34,500

Question 20

Which of these is not a condition precedent or subsequent under the "duties after loss" provisions?

Accepted Answer

A) duty to give immediate notice 
B) duty to commence suits within one year of a loss 
C) duty to cooperate with the insurer at trials 
D) duty to hire an attorney to represent you if you challenge denial of your claim 
A) duty to give immediate notice 
B) duty to commence suits within one year of a loss 
C) duty to cooperate with the insurer at trials 
D) duty to hire an attorney to represent you if you challenge denial of your claim

Exam 9: Basic Property and Liability Insurance Contracts

Policies contain cancellation provisions for all the following reasons except:

The insured gets a greater refund if he cancels his insurance policy than he would if the insurer canceled the policy.

The appraisal procedure is used only when the amount of the loss,not the cause of the loss,is in dispute.

Alley Katz cancels her six-month auto policy exactly four months into the policy period. If her six month premium was $900,how much will she receive as a refund of unused premium from her insurer?

If an insured cancels her property-liability insurance and asks for a refund,the premium is:

The term "salvage" as it relates to insurance means the:

Which of the following are not likely to be found on a declarations page?

What is the purpose of the recovered property clause in dealing with salvage?

In property insurance,coinsurance is:

What are some of the reasons exclusions are found in insurance contracts?

Concealment or fraud before,during,or after a loss generally allows an insurer to contest property insurance contracts.

Deductibles serve three major purposes,and two of those are:

Under the provisions of the Standard Fire Policy,assignment is:

The appraisal provision does all the following except:

Which of the following is not a reason for using deductibles in property insurance?

Endorsements may add to or delete coverage in the fire contract.

Gerald Tee has a $50,000 property loss. His insurance policy's coverage limit is $35,000,and has a $500 deductible applied to the policy. How much will Gerald collect?

Which of these is not a condition precedent or subsequent under the "duties after loss" provisions?

Fundamentals and Terminology

Defining the Insurable Event

Risk Management

Financial Services Companies

Insurance Occupations

the Insurance Market: the Economic Problem

Insurance Regulation

Insurance Contracts

Homeowners Insurance

the Personal Auto Policy

Professional Financial Planning

Life Insurance Policies

Standard Life Insurance Contract Provisions And Options

Annuities

Medical Expense and Disability Insurance

Advanced Topics in Risk Management

Commercial Property Insurance

Commercial Liability Insurance

Bonding,Crime Insurance and Reinsurance

Employee Benefits

Social Security

Unemployment and Workers Compensation Insurance

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