Question 1

Which of the following is typically not covered in crime insurance?

Accepted Answer

A) theft 
B) robbery 
C) burglary 
D) embezzlement 
A) theft 
B) robbery 
C) burglary 
D) embezzlement D

Question 2

The principal in a surety contract owes a duty of performance to the obligee.

Accepted Answer

A) True 
 B)False  True

Question 3

The parties to a suretyship contract are:

Accepted Answer

A) principal, agent 
B) attorney in fact, surety, obligee 
C) surety, principal, obligee 
D) obligee, surety, trustee 
A) principal, agent 
B) attorney in fact, surety, obligee 
C) surety, principal, obligee 
D) obligee, surety, trustee C

Question 4

List some of the reasons why insurance companies engage in the reinsurance transaction.

Accepted Answer

Reasons for insurance companies engaging

Question 5

Which of the following is an example of a judicial bond?

Accepted Answer

A) bonding a construction firm for performance 
B) bond to allow a defendant to appeal a legal decision 
C) bonding the treasurer of the city you live in 
D) bond to make sure tax collections are paid 
A) bonding a construction firm for performance 
B) bond to allow a defendant to appeal a legal decision 
C) bonding the treasurer of the city you live in 
D) bond to make sure tax collections are paid

Question 6

Miika is hired by the City of Poseidon to construct a new public swimming pool. The city requires Miika to purchase a bond guaranteeing her performance on the construction project. In this bond,the city is the:

Accepted Answer

A) Principal 
B) Obligee 
C) Surety 
D) Insured 
A) Principal 
B) Obligee 
C) Surety 
D) Insured

Question 7

What is the difference between pro-rata reinsurance and excess of loss reinsurance?

Accepted Answer

Pro
rata proportionately shares the prem

Question 8

Explain the need for surety bonding. How does it work?

Accepted Answer

The need for the surety transaction rest

Question 9

Judicial bonds are often used to guarantee results in cases involving estates and trusts.

Accepted Answer

A) True 
 B)False

Question 10

In reinsurance,the primary insurer is also known as the:

Accepted Answer

A) retrocessionaire 
B) first layer reinsurer 
C) ceding company 
D) excess reinsurer 
A) retrocessionaire 
B) first layer reinsurer 
C) ceding company 
D) excess reinsurer

Question 11

Rusty is arrested in Manhattan. He calls Saul's Bonding company to post the $25,000 bond required for his release from jail. In this situation,Saul's Bonding is the:

Accepted Answer

A) Principal 
B) Obligee 
C) Surety 
D) Insurer 
A) Principal 
B) Obligee 
C) Surety 
D) Insurer

Question 12

If Fidelity Reinsurance agrees to reinsure all autos that meet the underwriting rules specified in the contract with the primary insurer,this type of arrangement is:

Accepted Answer

A) an automatic treaty 
B) individually negotiated 
C) excess of loss 
D) facultative 
A) an automatic treaty 
B) individually negotiated 
C) excess of loss 
D) facultative

Question 13

The main difference between fidelity bonds and crime coverage is:

Accepted Answer

A) fidelity bonds cover inside dishonesty while crime covers outside dishonesty 
B) fidelity bonds are not insurance, but crime coverage is 
C) fidelity bonds cover both internal and external crimes, while crime insurance only protects against crimes caused by outsiders 
D) fidelity bonds require collateral and crime coverage does not 
A) fidelity bonds cover inside dishonesty while crime covers outside dishonesty 
B) fidelity bonds are not insurance, but crime coverage is 
C) fidelity bonds cover both internal and external crimes, while crime insurance only protects against crimes caused by outsiders 
D) fidelity bonds require collateral and crime coverage does not

Question 14

What is the difference between a surety bond and a fidelity bond?

Accepted Answer

A surety bond is a guarantee of honesty

Question 15

Facultative reinsurance is:

Accepted Answer

A) automatic, on a treaty basis 
B) always revocable for first 30 days 
C) arranged separately for each new exposure 
D) is placed with an alien insurer 
A) automatic, on a treaty basis 
B) always revocable for first 30 days 
C) arranged separately for each new exposure 
D) is placed with an alien insurer

Question 16

The City of Atlanta requires Rick,a construction expert hired to build a new town hall,to purchase a bond guaranteeing his performance on the project. In this bond,Rick is the:

Accepted Answer

A) Principal 
B) Obligee 
C) Surety 
D) Insured 
A) Principal 
B) Obligee 
C) Surety 
D) Insured

Question 17

In reinsurance,the reinsurer is also known as the "ceding" company.

Accepted Answer

A) True 
 B)False

Question 18

Catastrophe reinsurance can be described as a form of excess of loss reinsurance.

Accepted Answer

A) True 
 B)False

Question 19

When a $1 million insured loss occurs and $300,000 of the loss is reinsured,the policy holder of the primary company will receive:

Accepted Answer

A) $1 million from the primary company 
B) $1,000,000 from the primary insurer and $300,000 from the reinsurer 
C) $700,000 from the primary insurer and $300,000 from the reinsurer 
D) fifty percent of the loss from each company 
A) $1 million from the primary company 
B) $1,000,000 from the primary insurer and $300,000 from the reinsurer 
C) $700,000 from the primary insurer and $300,000 from the reinsurer 
D) fifty percent of the loss from each company

Question 20

Reinsurance transactions do not occur in life insurance.

Accepted Answer

A) True 
 B)False

Exam 20: Bonding,Crime Insurance and Reinsurance

Which of the following is typically not covered in crime insurance?

The principal in a surety contract owes a duty of performance to the obligee.

The parties to a suretyship contract are:

List some of the reasons why insurance companies engage in the reinsurance transaction.

Which of the following is an example of a judicial bond?

Miika is hired by the City of Poseidon to construct a new public swimming pool. The city requires Miika to purchase a bond guaranteeing her performance on the construction project. In this bond,the city is the:

What is the difference between pro-rata reinsurance and excess of loss reinsurance?

Explain the need for surety bonding. How does it work?

Judicial bonds are often used to guarantee results in cases involving estates and trusts.

In reinsurance,the primary insurer is also known as the:

Rusty is arrested in Manhattan. He calls Saul's Bonding company to post the $25,000 bond required for his release from jail. In this situation,Saul's Bonding is the:

If Fidelity Reinsurance agrees to reinsure all autos that meet the underwriting rules specified in the contract with the primary insurer,this type of arrangement is:

The main difference between fidelity bonds and crime coverage is:

What is the difference between a surety bond and a fidelity bond?

Facultative reinsurance is:

The City of Atlanta requires Rick,a construction expert hired to build a new town hall,to purchase a bond guaranteeing his performance on the project. In this bond,Rick is the:

In reinsurance,the reinsurer is also known as the "ceding" company.

Catastrophe reinsurance can be described as a form of excess of loss reinsurance.

When a $1 million insured loss occurs and $300,000 of the loss is reinsured,the policy holder of the primary company will receive:

Reinsurance transactions do not occur in life insurance.

Fundamentals and Terminology

Defining the Insurable Event

Risk Management

Financial Services Companies

Insurance Occupations

the Insurance Market: the Economic Problem

Insurance Regulation

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Basic Property and Liability Insurance Contracts

Homeowners Insurance

the Personal Auto Policy

Professional Financial Planning

Life Insurance Policies

Standard Life Insurance Contract Provisions And Options

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Medical Expense and Disability Insurance

Advanced Topics in Risk Management

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