Question 1

The only person covered under an insurance contract is the person named as the insured.

Accepted Answer

A) True 
 B)False

Question 2

If Claudia has a $500 disappearing deductible with a 5 percent recapture factor on her property policy and has a $1,000 covered loss, she will receive from her insurer

Accepted Answer

A)  $525, 
B)  $450, 
C)  $400. 
A)  $525, 
B)  $450, 
C)  $400.

Question 3

It is common to exclude war loss from insurance contracts.

Accepted Answer

A) True 
 B)False

Question 4

Match the descriptions with their terms:
-The person or organization holding a mortgage is the _____________.

Accepted Answer

A)  Actual cash value 
B)  Aggregate dollar limits 
C)  coinsurance 
D)  disappearing deductible 
E)  franchise deductible
F) insuring agreement
G) mortgagee
H) mortgagee clause
I) named insured
J) named peril
K) open-perils agreement
L) pro-rata clause
M) pure premium
N) replacement cost
O) Specific dollar limits 
A)  Actual cash value 
B)  Aggregate dollar limits 
C)  coinsurance 
D)  disappearing deductible 
E)  franchise deductible
F) insuring agreement
G) mortgagee
H) mortgagee clause
I) named insured
J) named peril
K) open-perils agreement
L) pro-rata clause
M) pure premium
N) replacement cost
O) Specific dollar limits

Question 5

Match the descriptions with their terms:
-_________________ means replacement cost minus depreciation.

Accepted Answer

A)  Actual cash value 
B)  Aggregate dollar limits 
C)  coinsurance 
D)  disappearing deductible 
E)  franchise deductible
F) insuring agreement
G) mortgagee
H) mortgagee clause
I) named insured
J) named peril
K) open-perils agreement
L) pro-rata clause
M) pure premium
N) replacement cost
O) Specific dollar limits 
A)  Actual cash value 
B)  Aggregate dollar limits 
C)  coinsurance 
D)  disappearing deductible 
E)  franchise deductible
F) insuring agreement
G) mortgagee
H) mortgagee clause
I) named insured
J) named peril
K) open-perils agreement
L) pro-rata clause
M) pure premium
N) replacement cost
O) Specific dollar limits

Question 6

The contents of a building are included under the usual property insurance policy.

Accepted Answer

A) True 
 B)False

Question 7

All insurance contracts may be canceled at the option of the insurer.

Accepted Answer

A) True 
 B)False

Question 8

Black has three policies from three companies as follows: Company X = $1,000, Company Y = $3,000, and Company Z = $6,000. If he has a $3,000 loss, he will receive from each policy on an equal shares basis

Accepted Answer

A)  $1,000, $3,000, $6,000, 
B)  $1,000, $2,000, $3,000, 
C)  $1,000, $1,000, $1,000. 
A)  $1,000, $3,000, $6,000, 
B)  $1,000, $2,000, $3,000, 
C)  $1,000, $1,000, $1,000.

Question 9

Match the descriptions with their terms:
-_________________ restrict payments to some maximum amount on any one definite item of property.

Accepted Answer

A)  Actual cash value 
B)  Aggregate dollar limits 
C)  coinsurance 
D)  disappearing deductible 
E)  franchise deductible
F) insuring agreement
G) mortgagee
H) mortgagee clause
I) named insured
J) named peril
K) open-perils agreement
L) pro-rata clause
M) pure premium
N) replacement cost
O) Specific dollar limits 
A)  Actual cash value 
B)  Aggregate dollar limits 
C)  coinsurance 
D)  disappearing deductible 
E)  franchise deductible
F) insuring agreement
G) mortgagee
H) mortgagee clause
I) named insured
J) named peril
K) open-perils agreement
L) pro-rata clause
M) pure premium
N) replacement cost
O) Specific dollar limits

Question 10

The cancellation clause gives the insurer the right of post-selection of risks.

Accepted Answer

A) True 
 B)False

Question 11

Match the descriptions with their terms:
-A/An _________________ covers all losses except those excluded.

Accepted Answer

A)  Actual cash value 
B)  Aggregate dollar limits 
C)  coinsurance 
D)  disappearing deductible 
E)  franchise deductible
F) insuring agreement
G) mortgagee
H) mortgagee clause
I) named insured
J) named peril
K) open-perils agreement
L) pro-rata clause
M) pure premium
N) replacement cost
O) Specific dollar limits 
A)  Actual cash value 
B)  Aggregate dollar limits 
C)  coinsurance 
D)  disappearing deductible 
E)  franchise deductible
F) insuring agreement
G) mortgagee
H) mortgagee clause
I) named insured
J) named peril
K) open-perils agreement
L) pro-rata clause
M) pure premium
N) replacement cost
O) Specific dollar limits

Question 12

Stoller has a building worth $100,000 and has $70,000 in property insurance with an 80 percent coinsurance clause. If she suffers a $10,000 loss, she will receive from her insurer

Accepted Answer

A)  $1,250, 
B)  $10,000, 
C)  $8,750. 
A)  $1,250, 
B)  $10,000, 
C)  $8,750.

Question 13

If Vazques has a $50 straight deductible on his property insurance policy and has a $200 loss, he will receive

Accepted Answer

A)  $200, 
B)  $50, 
C)  $150. 
A)  $200, 
B)  $50, 
C)  $150.

Question 14

In property insurance, the purpose of coinsurance clauses is to prevent underinsurance.

Accepted Answer

A) True 
 B)False

Question 15

Match the descriptions with their terms:
-Insurance that restores a loss without regard to depreciation is coverage on a/an _________________ basis.

Accepted Answer

A)  Actual cash value 
B)  Aggregate dollar limits 
C)  coinsurance 
D)  disappearing deductible 
E)  franchise deductible
F) insuring agreement
G) mortgagee
H) mortgagee clause
I) named insured
J) named peril
K) open-perils agreement
L) pro-rata clause
M) pure premium
N) replacement cost
O) Specific dollar limits 
A)  Actual cash value 
B)  Aggregate dollar limits 
C)  coinsurance 
D)  disappearing deductible 
E)  franchise deductible
F) insuring agreement
G) mortgagee
H) mortgagee clause
I) named insured
J) named peril
K) open-perils agreement
L) pro-rata clause
M) pure premium
N) replacement cost
O) Specific dollar limits

Question 16

It is necessary for insurance contracts to state that fraud will void the policy.

Accepted Answer

A) True 
 B)False

Question 17

Of the following types of insurance, the one that is normally a third party contract is

Accepted Answer

A)  property insurance, 
B)  marine insurance, 
C)  workers' compensation. 
A)  property insurance, 
B)  marine insurance, 
C)  workers' compensation.

Question 18

The problems of insuring business and personal risks are quite common and the same policies can be used for both purposes.

Accepted Answer

A) True 
 B)False

Question 19

An assignment is the transfer of the rights of one person to another.

Accepted Answer

A) True 
 B)False

Question 20

If Company Z in the previous question became insolvent, Black would receive from each policy

Accepted Answer

A)  $300, $900, $0, 
B)  $1,000, $2,000, $0, 
C)  $1,000, $3,000, $0. 
A)  $300, $900, $0, 
B)  $1,000, $2,000, $0, 
C)  $1,000, $3,000, $0.

Exam 7: Insurance As a Risk Management Technique: Policy Provisions

The only person covered under an insurance contract is the person named as the insured.

If Claudia has a $500 disappearing deductible with a 5 percent recapture factor on her property policy and has a $1,000 covered loss, she will receive from her insurer

It is common to exclude war loss from insurance contracts.

Match the descriptions with their terms: -The person or organization holding a mortgage is the _____________.

Match the descriptions with their terms: -_________________ means replacement cost minus depreciation.

The contents of a building are included under the usual property insurance policy.

All insurance contracts may be canceled at the option of the insurer.

Black has three policies from three companies as follows: Company X = $1,000, Company Y = $3,000, and Company Z = $6,000. If he has a $3,000 loss, he will receive from each policy on an equal shares basis

Match the descriptions with their terms: -_________________ restrict payments to some maximum amount on any one definite item of property.

The cancellation clause gives the insurer the right of post-selection of risks.

Match the descriptions with their terms: -A/An _________________ covers all losses except those excluded.

Stoller has a building worth $100,000 and has $70,000 in property insurance with an 80 percent coinsurance clause. If she suffers a $10,000 loss, she will receive from her insurer

If Vazques has a $50 straight deductible on his property insurance policy and has a $200 loss, he will receive

In property insurance, the purpose of coinsurance clauses is to prevent underinsurance.

Match the descriptions with their terms: -Insurance that restores a loss without regard to depreciation is coverage on a/an _________________ basis.

It is necessary for insurance contracts to state that fraud will void the policy.

Of the following types of insurance, the one that is normally a third party contract is

The problems of insuring business and personal risks are quite common and the same policies can be used for both purposes.

An assignment is the transfer of the rights of one person to another.

If Company Z in the previous question became insolvent, Black would receive from each policy

Introduction to Risk

Risk Identification and Evaluation

Property and Liability Loss Exposures

Life, Health, and Loss of Income Exposures

Risk Management Techniques: Noninsurance Methods

Insurance As a Risk Management Technique: Principles

Selecting and Implementing Risk Management Techniques

Risk Management and Commercial Propertypart I

Risk Management and Commercial Propertypart II

Risk Management and Commercial Liability Risk

Workers Compensation and Alternative Risk Financing

Risk Management for Auto Ownerspart I

Risk Management for Auto Ownerspart II

Risk Management for Homeowners

Loss of Life

Loss of Health

Retirement Planning and Annuities

Employee Benefits: Life and Health Benefits

Employee Benefits: Retirement Plans

Financial and Estate Planning

Risk Management and the Insurance Industry

Functions and Organization of Insurers

Government Regulation of Risk Management and Insurance

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