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

Subrogation allows the insurance company to:

Seek damages from a 3rd party after reimbursing the insured

The coinsurance clause is intended to:

Encourage insureds to carry policies for the correct value

The insurance company's duty to defend ends:

When the limit of liability is reached

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

Consult with an attorney before filing a claim

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

Factors that indicate the probability of a loss

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

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