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A wide range of insurance-related concepts and terminology, including property insurance policies, liability coverage, loss exposures, underwriting, claims handling, and more. It provides detailed explanations and examples of various insurance principles and practices, making it a valuable resource for anyone studying or working in the insurance industry. The document delves into topics such as valuation clauses, loss reserves, risk management techniques, insurance contracts, and insurance regulations. It also covers specific insurance coverages like personal auto policies and homeowners insurance. Overall, this comprehensive document offers a thorough understanding of the fundamental aspects of insurance and can be useful for students, insurance professionals, and anyone interested in the field of risk management.
Typology: Exams
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An open peril policy protects against the loss from Correct Answer Any peril, other than those specifically excluded What factor supports the principle of indemnity? Correct Answer Insurable interest All of the following are characteristics of an ideally insurable loss exposure "except" Correct Answer Losses that are catastrophic The amount to replace property with " like property of the same quality and construction" is the properties Correct Answer Replacement value Which of the following coverages' does an open peril policy provide? Correct Answer Perils other than those specifically named as being excluded "risk" is one of the most important terms in the insurance industry. How is it defined Correct Answer the uncertainty of a loss
what would be the result of a lower(250) deductible vs. the selection of a higher deductible ($1000) Correct Answer greater number of smaller claims sent to the insurer of the following which is true characteristic about insurance Correct Answer it is considered a method of transferring risk the amount paid for property damage which is equal to price for which it could have sold is Correct Answer market value which of the following is the best definition of an insurer's loss reserve Correct Answer the approximate dollar amount of an insurer's liability of at least one (or more)open claims for any type of risk exposure to be considered an ideally insurable riskwhich of the following characteristics does not have to exist , there is very little Correct Answer if any chance a loss happening during the policy period during the application process for a personal auto policy. the applicant says that he has not had any tickets or accidents. The insurance company accepts the risk and issues the policy. Shortyly after. the insured's vehicle is stolen resulting in the insurer paying the loss and canceling the policy. This despite the fact that they found out that the insured had received several traffic tickets that he neglected to mention. What is the reason for the course of action of the insurer Correct Answer the traffic tickets
that were not disclosed were not material. This is why the policy was not recinded and the claim was paid under California insurance code marketing department is responsible for all of the following; except Correct Answer bulk mailing A representation as to the past Correct Answer present or future is an ,verified promise The process where by a mutul insurer becomes a stock company is called Correct Answer Demutualization The process whereby a stock company a mutual insurer is called Correct Answer Mutualization The provision in a property policy which states that the insured has been paid up to their insurable interest is Correct Answer Valuation clause The part of the policy that states the amount of coverage the insured property policy period is Correct Answer Declaration Part of the policy that establishes limits upon the insurer and the insured with the insurance policy Correct Answer Conditions Which are the characteristics of negligence Correct Answer Duty, breach, proximate cause, damages
Which of the following is not a federal program Correct Answer Worker' compensation Absolute risk(liability) is imposed Correct Answer When there is negligence whether proven or not X is in an accident with Y. X suffers $5000 of damage but it is determined that X is 60% responsible for the accident. How much would X receive under CONTRIBUTORY negligence rules? Correct Answer $ what is the main purpose of tort law Correct Answer to determine financial responsibility for damage what of the following is not considered an intentional tort? Correct Answer Auto accident Which of the following statements is true regarding compensatory damages? Correct Answer There is usually no direct correlation between the amount of general and special damages awarded to the victim The insurer decides not to renew an insured's personal auto policy. How much notice must the insurer provide to the insured Correct Answer 30 days an insured's loss reserve for a claim isan estimate of the amount insurer will pay for present and future loss, which of the following is an example of loss prevention Correct Answer a homeowner decides not to install a pool in the backyard
All of the following are considered intentional torts Correct Answer except, Assault What is the difference between per accident limit in a split limit policy and single limits Correct Answer There is no difference The intentional relinquishment of known right is Correct Answer Waivier Which type of loss is a business retirement or disability of key employee, exposed to death retirement or disability of key employee, Correct Answer Personnel loss exposure The amount to replace an insured's damaged property Correct Answer less depreciation, is know as the, Actual cash value The commercial property conditions included a condition called " liberalization". The effect of this condition is Correct Answer To automatically apply broader coverage to the commercial property coverage part if a policy form revision would broaden coverage without an addition premium In a commercial lines program policycommon policy condition do not include which of the following as a condition?, Correct Answer Perils insured
A possibility of financially loss resulting from the ownership of property is know as Correct Answer insurable interest laura is driving her own car on behalf of her employer laura's negligent operation of her car injures a member of public. The employer may be held liable because of what is called., Correct Answer Vicarious liability Type of exposure can be best defined as a condition or situation where the exposure to financial loss is presented to a business owner by the injury Correct Answer disability, death, sickness, of valuable employee, Personnel loss exposure Which of the following is also know as a human loss exposure Correct Answer Personal loss exposure Which of the following best characterize a speculative risk? Correct Answer A situation that offers the possibility for a loss or gain In the state of CA no rate will remain in effect if it is considered to be any of the following, EXCEPT, Correct Answer Impartial What course of action does a party to a contract have if the other party is found to be breach of that contract Correct Answer Damage for breach, reasonable attorney fee and cost
Which part of the insurance contract summarize the major promises of the insurer Correct Answer Insuring agreement Under tort law a corporation can be subject to a claim for legal liability on the basis, Correct Answer Absolute liability Risk management technique that eliminates a loss exposure and reduces the chance of loss to zero is Correct Answer Avoidance A situation is which there only the possibility of loss or no loss is considered a Correct Answer Pure risk A reduction in value of property that results immediately from damage to the property is know as Correct Answer Direct loss Items that are paid on replacement cost is defined as the Correct Answer Amount to replace the damage property without a deduction for depreciation A wrongful act other than a crime or breach of contrat is law Correct Answer Tort law The amount to replace property with like property of the same quality and construction is the Correct Answer Replacement cost
Whatis the process whereby insurers decides which customers to insure and what coverage to offer Correct Answer Underwriting The amount paid for damaged propertywhich is equal to the price for which it could have been sold is called Correct Answer Market value A policy may not be transferred to another without Correct Answer Written consent of the insured An insured's loss reserve for a claim is Correct Answer An estimate or the amount that the insurer will pay What is the type of loss exposre that would include land and property attached to it Correct Answer Liability loss exposure What type of policy protect against loss from any peril except those that are specifally excluded Correct Answer All-risk or open peril Who is considered the first party to an insurance contract Correct Answer The insured A written provision that modifies the provisions of the original contracts is know as Correct Answer An endrorsment In a commericial property the insurance claim is deniend because of the insured action's. the mortgage holder will in
most cases., Correct Answer Still have right to receive the full amount of the loss a payment Named insured on a commercial insurance policy is "sam stone and dan Sullivan DBA S&S bar and grill" if the insurer cancels the policy, they are required to mail or deliver written notice to Correct Answer Only san stone Which type of exposure can be best be defined as a condition or situation for any exposure or finanicial loss is presented to an individual or family by such cause as injurydisability, death or sickness Correct Answer Personal loss exposure What is the primary reason for co-insurance clauses in property polices Correct Answer to encourage insurd's to purchase coverages near the value of the property the state laws that regulate insurer practice regarding underwriting sales, rate-making, and claims handling are called, Correct Answer market conduct regulation a common fourmula that is used to establish cash value is Correct Answer ACV=replacement cost minus depreciation The possibility of financial loss resulting from the ownership of property is know as Correct Answer Insurable interest
Which of the following types of loss would result in a claim for monertary damages due to injury to another or damage to another's property Correct Answer Liability loss Which of the following coverage's is a property insurance coverage. Correct Answer Other collision exclusive agents Correct Answer generally represent only one insurer in an unendorsed claims-made general liability policyhow long does an insured have to report a claim which occurred during the policy perio Correct Answer 60 days To determine the fact actual cash value of commercial bulding for coinsurance purposes uses Correct Answer Fair market value What causes is commony used to require's purchase insurance close to the value of the property Correct Answer Coinsurance clause A distinct feature of the alternative funding method know as self-funding is Correct Answer The benefits are tailored to the group Actual cash value is defined as the Correct Answer The amount to replace damage property minus depreciation
Which of the following would be know as the process whereby an insurer determine appropriate changes for its policies Correct Answer Rate-making All of the following would be considered benefits of insurance EXCEPT Correct Answer Retention of the loss by the insured What is the formula for actual cash value (ACV) in determinig loss values Correct Answer Replacement cost less depreciation Which of the followingwould be classified as a property insurance coverage Correct Answer Other-than-collision coverage Which of the following is the reason that an insured should not be making any kind of profit as the result of an insurance claim/loss being paidbut rather, the payment should restore the insured to the financial status that existed prior to the loss with no chance of any type of profit., Correct Answer Basic principle of insurance What is the effect of "concurrent causation" exclusion under the "cause of loss-broad form in a commercial property policy? Correct Answer If there is a loss resulting from two or more perils that occur at the same time to cause a loss then is no coverage is any of the perils are excluded
What will the mortgage holder do in the event that an insurer does not pay claim as the result of the actions of the insured Correct Answer Receive full payment for the loss, if the required premium has been paid What exactly does a policy know as "open peril" protect against Correct Answer Perils not specially named as exclusions in the policy What does a "pure risk" consist of? Correct Answer The chance of loss only The term "proximate clause " is best defined by which of the following? Correct Answer A negligent act that causes bodily injury or property damge that follows a sequence of uninterrupted, but related chains of events Why would an employer be held legally liab;e for the negligent operation by employee who is driving a vehicle on belhalf of the employer and cause an injury to a pedestrian Correct Answer The principle of vicarious liability How would a "peril" best be defined? Correct Answer Reason for the loss event that leads up to loss Which of the following combinations of characteristics should be considered when making a an insurance recommendation to a propective insured that has just purchased a new office building? Correct Answer The structure that is exposed a loss, the perils that may occur,
consequently causing a loss possible financial impact of loss What type of insurance company is owned by individuals that are stockholder in the company; and share in the profits of the company? Correct Answer Stock insurance companies All of the following explain the characterics that are unique to insurance contracts EXCEPT Correct Answer There is an equal exchange of amounts or values within the contract With regards to insurance applicability the word "risk" can be best defined as which of the following? Correct Answer The uncertainty associated with a loss occurring All of the following insurance company are private insurers; EXCEPT Correct Answer Fraternal insurance company What would be the reason(s) for $100 deductible versus a $1000 deductible Correct Answer Neither of these apply An indivual who loves next to nuclear power plant is exposed to which of the following types of hazard Correct Answer Physical Which of these is defined as "exclusive agent' Correct Answer Sells for one insurance company and only that company's products.
The concept of "pure risk" involves the possibitly of chance of which of the following? Correct Answer A loss only An employee is operating their own car for their employer. The individual injures a person in a area as result of negligent drivng. The reson why the employer would be held liable is because of which of the following? Correct Answer Vicarious liability which of the following describes the act of making a false entry in any book statement of report of any insurer with the intent to device any examiner lawfully appointed to examine the insured's Correct Answer an unfair practice a person can base his/her claim for liability on the basis of all of the following EXCEPT Correct Answer breach of liability the term "assignment"refers to Correct Answer the transfer of the insured's interest in a policy to another party the term "subrogation" refers to Correct Answer the insured's right to recover payment from a responsible 3rd party insur's right to recover the payment of the claim after they paid the insured for their property losses a negligent 3rd party is know as, Correct Answer subrogation
an insurance deductible is Correct Answer the amount of covered expense that the insured pays before the insurer pays, all of the following are requirements for a notice by mail to an insured by insurer except Correct Answer notice must be sent with return receipt required which of the following is considered special damages Correct Answer Compensation for time away from work Which advisory organization(s) develop forms for the standard market? Correct Answer Insurane service office and American association of insurances Which of the following would be considered special dmamges? Correct Answer Lost wages What do the initials S.tA.R.R reperesent? Correct Answer Methods of risk mamagement All of the following would be considered benfits of insurance except Correct Answer Retention of loss by the insured What gives an insured party the right to seek compensation if it is proven that another person with negligence contributed to the injury Correct Answer Tort law
What of the following is NOT one the three main types of insurance losses Correct Answer Financial loss Under a special cause of loss form if a landslide is caused by an unnatural flow of water due to improper grading, the loss is, Correct Answer Excluded under the concurrent causation When must insurance records for insurance agents and insurance broker be made available to the insurance commissioner? Correct Answer all times When may a representation be withdrawn? Correct Answer only before the insurance is in effect RW and associates is an agency which represents BLG insuaracne corporation. RW and associates may leave the name BLG insurance corporation in its advetertisments by clearly stating the relationship between the two business in any of the following ways ; EXCEPT Correct Answer RW And Associates underwriting for Blg insurance Corporation Which of the following describes an insurer who has enough financial resources only to provide for all its liabilities and for all reinsurance of all outstanding risk? Correct Answer insolvent Represention as to the future is considered which of the following Correct Answer promise
An insurer that has a certificate of authority in California is Correct Answer amitted The execution of a policy involes which of the following? Correct Answer signing a covering note The negotiation of a policy involes which of the following Correct Answer sending the propect an email suggesting that they buy a certain type of policy An applicant of insurance does not reveal information that the insurer would rely upon to issue the policy this is/an Correct Answer consealment The method that the California DOI uses to approve or disapprove rate filing for various types of insurance such as homeowners and automobile is know as? Correct Answer prior approval method An organization will cease too exsit as an entity eliglble to hold a liceense for all of the following reasons EXCEPT Correct Answer termination of key employee All of the following are areas that market regulation cover EXCEPT Correct Answer Employee training Which of the following statement is true regading insurer with admitted status in California? Correct Answer they may not use race color, religion, or national origin as condition to use higher rate
All of the following are requirements for a notice by mail to an insured by an insurer EXCEPT Correct Answer notice must be sent with return receipt reuired What is one the main factors that the insuruce commissioner uses while detereming whether a rate excessive or unfairly discriminatory? Correct Answer wheter the rate mathematically reflects the insurance company's investment income An agent who divert/comingles premium dollars for the agents's own use is guilty of Correct Answer theft Every admitted insurer in the state of California is required to maintain a unit or division to investigate which of the following? Correct Answer possible fraudulent claims made by insured's What will happen when an agent's appointment to an insurance company is terminated and the agent has no other appointment with any other insurance company? Correct Answer The agent's permanent license becomes inactive The CA insurance code requires property insurance polices specify all of the following EXCEPT Correct Answer the insured address What steps need to taken to terminate a licensee's license that is in the possession of an employer? Correct Answer
the licensee needs to give written notice of intent to the insurance commissioner Under California insurance code a surplus lines broker Correct Answer transact business only with non admitted insurers What would the commissioner likely do if an agent induces a client to co sign a loan Correct Answer suspend the agent's license Section 770 of the insurance code is true regardging unfair or trade practice? Correct Answer an entity cannot demand the insurance be placed with a particurl agency Which of the following describes an insurer who has enough financial resources only to provide for all of its liability and for all reinsurance of all outstanding risk? Correct Answer insolvent In California. Excess and surplus lines coverage needs to be placed through Correct Answer a surplus lines broker What must a life agent travel agent, or fire and casualty insurance agent do in order to act as an agent of a particular insurer?, Correct Answer file a notice of appointment with the commissioner In the business of insurance. The act of concealment is defined by all of the following statement EXCEPT Correct Answer concealment does not occur if no inquiry is made
Which of the following statements is NOT true? A fire and casualty agent Correct Answer does not have the authority to collect premiums from producing broker agents. Where would an insured that is in the business of importing exotic animals from Africa most likey go to obtain Correct Answer excess and surplus lines insurer What else must an applicant for a fire and causualty license. life agent license. Or personal lines agent license complete in addition to pre- classroom study? Correct Answer a 12 hour course on ethics and CA code Which rate approval filling system is used in California for most lines of insurance Correct Answer prior approval When is property and causulty agent required to in form an isured of any conditions which may be precedent to coverage regarding a personal auto policy? Correct Answer at time of application The state law that regulates insurer practices regarding underwriting. Sales. rate-making and claims handling are called Correct Answer market conduct regulation The CA insurance code Correct Answer requires agents to keep records of any compensation they may have received for ther services involved with premium financing
It is a violation of CA insurance code to act as a producer for a non- admitted carrier unless Correct Answer the producer is a surplus lines broker You meet with a small furniture manufactuer and make a property and liability insurance recommendation. You have insured many risk of this type in the past and have a good idea of what their needs may be. There are several popular ways of determining business loss exposure. Which of the following ways are the least professional and least likely to correctly identify the loss exposure? Correct Answer get a copy of all current polices and determine what coverages they have been carrying and how much they have been paying Where do most states require insurers to file policy forms? Correct Answer the insurance department What must an isurer do who accept from an agent who is not specifically appointed by the insurer and then issues a policy from that application Correct Answer forward to the commissioner a notice of appointment with 14 days of receipt of application. In the state of CA no rate will reamin in effect if it is considered to be any of the following except Correct Answer impartial What does it mean if an agent's license is inactive? Correct Answer the agent cannot transact any insurance business for valid, active license is required
A representation in an insurance contract qualifies as which of the following? Correct Answer an implied warranty According to the CA insurance code a binder is deemed a valid insurance policy for the purpose of providing that the insurance coverage specified in the binder for each of the following types of insurance EXCEPT Correct Answer life insurance What is required of a broker- agent before appointing an insurance solicitior? Correct Answer must hold a permanent license Company that negotiates and binds ceding reinsurance on behalf of an insurer is considered Correct Answer managing general agent Insurers may purchase reinsurance for a variety of reason which of the following is not a good example of the use of reinsurance? Insurer purchases reinsurance Correct Answer only on the below average business submitted to them keeping the good business for themselves Any person who makes a loan of money using real property as security Correct Answer Shall no make available the information contained in a borrower's fire or causulaty policy if the borrower has filed a statement with the lender that they do not want the lender to disclose this informqation.
What must a licensee do in order to surrender for cancellation a license in their posseion? Correct Answer deliver the document itself to the commissioner If an insurer pays an insured $25000 in lost wages,$45,00o for physically visits and hospital cost and $15,000 for physical therapy treatments and later finds out that the claim was faudlent the insured may be fined as much as 000 in lost wages,$45,00o for physically visits and hospital cost and $15,000 for physical therapy treatments and later finds out that the claim was faudlent the insured may be fined as much as Correct Answer $170000 It is a violation of the CA insurance code to act as a producer for a non admitted carreier unless Correct Answer the producer is a surplus lines broker
is insured by the policy has had license suspended temporarily