Subrogation allows the insurance company to:

Seek damages from a 3rd party after reimbursing the insured

The insurance company's duty to defend ends:

When the limit of liability is reached

Often used in auto insurance, merit rating is based on:

Factors that indicate the probability of a loss

When multiple policies are in effect, a policy that is Excess Insurance will pay:

After a primary policy has paid the limit of its benefits

Negligence is the failure to:

Use the care that a reasonable and prudent person would use

The coinsurance clause is intended to:

Encourage insureds to carry policies for the correct value

Which of these IS NOT one of the insured's duties after a loss.

Consult with an attorney before filing a claim

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Property and Casualty Basics

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Basic concepts in property and casualty insurance

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Questions 20

Answers

1
Underwriting is the process of:
Establishing premium amounts
Reviewing risk selections
Underlining words in manuals
Rejecting applications
2
Current replacement cost minus depreciation equals:
Functional Replacement Cost
Agreed Value
Market Value
Actual Cash Value
3
Subrogation allows the insurance company to:
Seek damages from a 3rd party after reimbursing the insured
Change the contract to the insured's benefit anytime
Help the insured collect twice for a loss
Assign a monetary value to a loss
4
The insurance company's duty to defend ends:
When it is clear the case will not end in the insureds favor
After 180 days
When the limit of liability is reached
Only when all appeals have been exhausted
5
Which of the following IS NOT an element of an insurable risk:
Business / Partner
Emotional / Familiarity
Financial / Monetary
Blood / Relative
6
A peril is:
A specific cause of loss
Something that increases the likelihood of loss
Something that can be predicted
The chance of a loss
7
The loss of profits to a business as the result of damage to its buildings is called a(n):
Ancillary Loss
Indirect loss
Concurrent Causation
Direct Loss
8
Often used in auto insurance, merit rating is based on:
Adding and subtracting from tables created by actuaries
Actual loss records of other policyholders
Factors that indicate the probability of a loss
Actual loss records of the insured
9
If a structure has had no one living or working in it for over 60 days, it is considered:
Unoccupied
Lonely
Seasonal Dwelling
Vacant
10
To establish liability, there must be an actual loss
True
False
11
The part of the insurance policy that outlines the rules and procedures each party follows is:
Definitions
Coverages
Conditions
Insuring Agreement
12
In a liability policy, a ceiling on a payment for all claims in a single accident is called:
Pro Rata Clause
Split Limit
Per Person Limit
Per Occurrence Limit
13
Printed addendums to the insurance contract that change the original terms are called:
Enforcements
Endorsements
Supplemental Benefits
Exclusions
14
When multiple policies are in effect, a policy that is Excess Insurance will pay:
After a primary policy has paid the limit of its benefits
A proportional amount of the loss
In addition to all other policies in effect
For losses that exceed the market value
15
(Incurred Losses + Expenses) / Earned Premium =
Big Money
Fidelity Rating
Loss Ratio
Actuarial Table
16
Negligence is the failure to:
Provide the best possible care in all situations
Pay all insurance premium bills on a timely basis
Keep insurance premiums affordable
Use the care that a reasonable and prudent person would use
17
The coinsurance clause is intended to:
To limit the amount of loss the insured assumes
Discourage misrepresentation and fraud
Make you do hard math in the event of a loss
Encourage insureds to carry policies for the correct value
18
Which of these IS NOT one of the insured's duties after a loss.
Protect the property from further damage
Notify the police in the event of theft
Prepare an inventory of damaged property
Consult with an attorney before filing a claim
19
Applicants who demonstrate a careless attitude to increase the chance of loss are called
Morale Hazards
Dukes of Hazards
Physical Hazards
Moral Hazards
20
In Property and Casualty Insurance, insurable interest must exist:
Only at the time of application
Both at application and time of loss
Only at the time of the loss
Sometime between the time of application and loss

Property and Casualty Basics Flashcards | StudBud