Download Michigan Property & Casualty Exam rated A questions and answers and more Exercises Insurance law in PDF only on Docsity!
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FIO - correct answer ✅( Federal Insurance Office ) Monitors insurance industry and identifies issues and gaps in the state regulation of insurers. It also monitors access to affordable insurance by underserved communities and consumers Fire Resistive - correct answer ✅Which construction classification uses materials that can withstand fire for at least two hours? Declaration Page - correct answer ✅The location of the insured risk can be found in which part of an insurance policy? An endorsement - correct answer ✅In property and casualty insurance when a form, is attached to alter or add to policy, provisions or conditions It is known as Loss Payable Clause - correct answer ✅Which of the following clauses protects the interest of the loss payee Direct losses include additional living expenses - correct answer ✅Which of the following statements regarding types of property loss is false? Mediator - correct answer ✅When the insured does not agree with the insurance companies value of his property, damaged as a result of his recent property laws, which of the following establishes the procedure, the insurance company, must use to settle this issue A binder specifies the premium amount - correct answer ✅All of the following statements about binders are true, except
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Replacement cost minus depreciation - correct answer ✅Which of the following is the best definition of actual cash value in property insurance? Endorsements - correct answer ✅Which of the following they brought in the coverage found in an insurance policy? The policy limit - correct answer ✅An insured owns a home with a replacement cost of $300,000 and a Market value of $250,000. What is the most valued policy will pay in the event of a total loss without a deductible Insuring Agreement - correct answer ✅Which of the following is not found on the declarations page? Prior approval forms - correct answer ✅This is when insurance companies must obtain official approval before using new forms and rates This type of insurance designates a particular item to be insured - correct answer ✅Specific insurance Blanket insurance - correct answer ✅This type of insurance covers more than one item of property at a single location or one more items of property at multiple locations. speculative - correct answer ✅Possibility of both gain and loss not insurable
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Subrogation - correct answer ✅An insurer's right to recover the amount of its loss payment from the third party who is legally responsible for the loss Arbitration - correct answer ✅This condition is similar to the appraisal condition but it is not limited to disputes over the value of the loss it may also be used to resolve other areas of disagreement between the insured and the insurance company Insolvency - correct answer ✅A financial state that occurs if liabilities are greater than assets Law of agency - correct answer ✅Knowledge of the agents is knowledge of the principal (insurance company) Principal - correct answer ✅Insurance company Coinsurance Clause - correct answer ✅Requires the insured to carry a minimum specified amount (generally 80%) of the replacement cost value of the insured property in order for partial losses to be paid in full Estoppel - correct answer ✅A legal bar to changing or denying a fact because of one's own previous actions or words to the contrary Binder - correct answer ✅A temporary contract of insurance oral or written offered by an insurer pending issuance of the policy usually written for a period of 30-60 days and remains in force for that period or until a permanent policy is either issued or denied by the insurer
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Warranty - correct answer ✅A provision in a policy that pledges that a condition does exist at some time in the future Audit - correct answer ✅Verification of books or accounts to determine their accuracy occurrence - correct answer ✅An accident including continuous, or repeated exposure to the same harmful conditions, which result and bodily injury or property damage Special damages - correct answer ✅Type of compensate Tori damages are reimbursing, injured part for direct and specific expenses involved in the loss, such as medical expenses, funeral expenses, and loss wages General damages - correct answer ✅Type of converse, satori damages are reimburse the injured party for such things as pain and suffering and disfigurement Proximate clause - correct answer ✅An act through an uninterrupted chain of events that can be determined to the media or actual cause of a loss Four elements of negligence - correct answer ✅1. the existence of a duty to act in a certain
- A failure to live up to this duty
- An actual injury must occur
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Uninsured motorist coverage - correct answer ✅This coverage compensates the insured for a bodily injury, only as a result of an accident with an uninsured motorist Medical payments - correct answer ✅Insurance company agrees to pay for reasonable expenses and cared for necessary medical and funeral services because of bodily injury covers first party stays in the car three years is the time limit for incurring medical expenses Supplementary payments - correct answer ✅Payments made in addition to the limits of liability up to $200 a day for a loss of earnings up to $250 for the cost of bail bonds required because of an accident Excess - correct answer ✅Any insurance that is provided for a vehicle you do not own Shall be excess over any collectible insurance Liability coverage - correct answer ✅Provides payment for bodily injury and property damage resulting from the injured use of an automobile for which the injured becomes legally liable covers third-party only pays for both special and general damages Loss of use - correct answer ✅The inconvenience caused to an individual for the inability to use property Underinsured motorist coverage - correct answer ✅Covers the insured when involved in an accident with a driver who has auto liability insurance, but the limit of this insurance is insufficient to pay for the insurance damage
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Collision - correct answer ✅The upset of a covered auto, or is impact with another motor vehicle Comprehensive - correct answer ✅Address is property damage losses to the insured, vehicle involving losses other than collisions examples contact with birds or animals, theft or larceny, fire, hair, water, or flood vandalism or malicious mischief, breakage of glass Nonowned auto - correct answer ✅Any private passenger vehicle not owned by the insured being operated by the insured examples, rental car, temporary substitute Vicarious liability - correct answer ✅Liability situations where someone is held responsible for the acts or omissions of another person Tort - correct answer ✅A civil wrong, the violates the rights of another person can be intentional or unintentional Fair credit reporting act - correct answer ✅Mandates, confidential, fair and accurate reporting of information on consumers by reporting organizations as well as organizations, such as insurers rich use the services of reporting organizations consumers must be informed if a credit report is needed in order to underwrite a particular line of insurance Express authority - correct answer ✅Authority, specifically given to an agent, either orally or in writing by the principal writing authority, is typically provided
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Excess or surplus lines - correct answer ✅An agent license by the state to handle highly specialized insurance coverage is such as auto racing liability and tuition refund insurance Nonadmitted companies - correct answer ✅Companies that are not authorized to conduct business in the state under ordinary circumstances Reinsurance - correct answer ✅A contract under which one insurance company indemnifies another insurance company for part or all it's liabilities Contract of adhesion - correct answer ✅One party has greater power over the party and drafting the contract. The insurer has more power when it comes to preparing the contract, even though the insured can request, provisions, or coverage. Aleatory Contract - correct answer ✅It is a contract that is contingent, or an uncertain event that provides for unequal transfer of value between the parties Unilateral Contract - correct answer ✅Only one of the parties in the contract is legally bound to do anything insurance policies are one-sided, because only the insurance companies legally bound performance part of the agreement Absolute liability - correct answer ✅Imposed on defendants engaged in hazardous activities, such as harboring, wild animals using explosives, etc. the injured party does not have to prove negligence
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Strict liability - correct answer ✅Commonly applied and product liability cases a person or business that manufactures or cells are probably makes an implied warranty that the product is save the businesses, then liable for defective product, regardless of fault or negligence Contract - correct answer ✅A legal agreement between two competent parties that promises a certain performance in exchange for a certain consideration Characteristics of a valid contract include - correct answer ✅Competent parties, legal purposes, offer an agreement and consideration Offer - correct answer ✅I promise that requires an act or another promise and exchange Agreement - correct answer ✅Occurs when the other party agrees to the offer or does what was proposed in the offer Consideration - correct answer ✅I think a value exchange, for the performance promised in the contract Principle of indemnity - correct answer ✅Stacy, I want a loss occurs an individual should be restored to the approximate financial condition he saw she was before the loss no more no less no one will profit from the result of the loss Personal contracts - correct answer ✅Contracts that insure the person who owns the property, not the property itself
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Definitions - correct answer ✅This section clarifies the meaning of certain terms used in the policy Endorsement - correct answer ✅These are documents that modify or change the original policy in any way and are attached to the original policy these changes could be anything from broadening coverage restricting coverage to changing the name of the insured Insurance from the federal government may include - correct answer ✅War risk, insurance nuclear energy, liability, insurance, flood, insurance, and federal crop insurance Insurance from the state government may include - correct answer ✅Employment, insurance, and Worker's Compensation benefits Residual market insurance - correct answer ✅Insurance provided by the government which is not typically available from private insurers, such as war risk flood Worker's Compensation etc Monoline companies - correct answer ✅Insurance companies are only right one type of insurance policy Multi line companies - correct answer ✅Insurance companies that right more than one type of insurance policy Property insurance - correct answer ✅Insurance that includes many types of insurance which is designed to handle property risks risk that will suffer financial
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loss because some thing we own is damaged or destroyed, such as dwelling, homeowners, etc. Liability risk - correct answer ✅Is the risk that we will suffer financial loss as a result of our actions toward others Personal lines - correct answer ✅Our property and casualty coverage that protecting individual or family Commercial lines - correct answer ✅Our coverage is designed for businesses Responsibilities of an insurance agent - correct answer ✅Selling insurance issue in encounter signing policies, collecting premiums, providing a link between the insured and the insurance company and field underwriting risks Field underwriting - correct answer ✅This is one an agent uses preestablish criteria to seek out the type of business that is likely to be acceptable to the company Errors and omissions - correct answer ✅Agent should purchase this type of insurance to protect themselves against legal liability, arising from an advertent errors or omissions Exclusive (captive) agency system - correct answer ✅The insurance company contracts with agencies which are independent businesses to represent and sell insurance only for that insurance company
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Market value - correct answer ✅This is the amount that a property could be sold for at the time of the loss Risk - correct answer ✅The chance or uncertainty of loss Exposure - correct answer ✅Condition or situation that presents a possibility of loss For a message to manage risk - correct answer ✅Avoid risk control, risk, retain risk and transfer risk Loss prevention - correct answer ✅Risk control techniques to reduce loss frequency Risk reduction - correct answer ✅Risk control techniques that limit lost severity Hold harmless agreement - correct answer ✅Contractual agreement were one party, assumes liability of a situation and relieve the other party of responsibility Insurance - correct answer ✅A contract or device for transferring risk from a person, business or organization to an insurance company that agrees and exchange for premium to pay for a losses through and acclamation of premiums Law of large numbers - correct answer ✅Says that more examples used to develop and statistic the more reliable. The statistic will be this is used to predict
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the number of potential losses accurately so that the proper premium can be charged each month in order to acclimate adequate funds. Speculative risk - correct answer ✅Are risks, and which they are exist both the possibility of gain in the possibility of loss insurance cannot be used to protect against these risks Pure risks - correct answer ✅Are risks that involve only the possibility of loss insurance can only be used to manage these risks Insurable interest - correct answer ✅Says that before you can benefit from insurance, you must first have a chance of financial loss or financial interest in your property. It exists when there is an actual economic interest, and the safety or preservation of the subject of the insurance from lost destruction, financer damage, or in Paris. Elements of insurable risk - correct answer ✅Definite must be unexpected, must create a financial hardship. Cost of the laws must be calculable insurance must be affordable must be a large number of Persons with a similar potential loss. Spread of risk - correct answer ✅When an insurance company ensures a large number of people across many towns, to avoid a catastrophic loss, the greater the spread of risk of the less likely, there will be a catastrophic loss for the company Peril - correct answer ✅Cause of loss
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Unfair discrimination - correct answer ✅This means that an insured cannot be given a lower or higher rate than another insured, and and identical circumstance this action violates the law Reinsurance department - correct answer ✅This department helps protect insurance companies from catastrophic losses Loss ratio - correct answer ✅This ratio is used to compare the companies operations from year to year it shows the percentage of losses, the company incurred for every dollar of earned premium. It is calculated by dividing the amount of incurred losses by the amount of earned premium. Incurred losses - correct answer ✅This includes amount, paid on claims for a covered losses in various expenses related to handling claims The expense ratio - correct answer ✅Is a ratio that indicates the cost of doing business Earned premium - correct answer ✅The premium, the company actually earned by providing insurance protection for the designated period Underwriting expenses - correct answer ✅The cost required to acquire and maintain a book of business. It includes expenses for advertising commission salaries, and/or other administrative costs and regulatory cost.
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Written premium - correct answer ✅The gross amount of premium income on the companies books and includes both earned an unearned, premium premiums for new business, renewal and policy endorsements, make up written premiums Underwriting - correct answer ✅This is the process of selecting certain types of risks and rejecting others so the insurance company will have a book of business that will produce the companies desired results Actuaries - correct answer ✅This is the numbers department these people determine the rage to be charge for various types of insurance Legal department - correct answer ✅This apartment interprets the various day insurance laws and helps a Company keep its policies and practices compliant Lost control department - correct answer ✅This department inspects factory certifies boilers, and makes recommendations to insured as to how risks may be avoided or reduced Insurance department - correct answer ✅Each state has one of these departments, which is headed by an official with the responsibility for controlling insurance matters within the state The national Association of insurance commissioners - correct answer ✅This commission is made up of commissioners from each state much of the nations insurance laws are created through the commissions recommendations
