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Basics of Insurance

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Licensure Insurance (Quizzes) Quiz sobre Basics of Insurance, criado por Heather Donaldson em 20-07-2016.
Heather Donaldson
Quiz por Heather Donaldson, atualizado more than 1 year ago
Heather Donaldson
Criado por Heather Donaldson quase 8 anos atrás
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Resumo de Recurso

Questão 1

Questão
A monoline policy:
Responda
  • Is a property that is written to cover property only
  • Is any insurance written as a single line policy
  • Is a policy that covers only lines of insurance which cannot be part of package policies
  • There is no such thing

Questão 2

Questão
A risk is:
Responda
  • A peril
  • Certainty of loss
  • Proximate cause
  • Uncertainty of loss

Questão 3

Questão
A pure risk involves a chance of:
Responda
  • Gain
  • Loss
  • Both A&B
  • Neither A&B

Questão 4

Questão
A risk management technique that eliminates a loss exposure and reduces the chance of loss to zero is:
Responda
  • Loss prevention
  • Retention
  • Loss reduction
  • Avoidance

Questão 5

Questão
When suffering is a covered loss, an insured individual should do which of the following?
Responda
  • Send a list of items damaged stating the quantity and receipts of purchase
  • Submit to an interview with the insurers representative without any other person present
  • Notify the police if there is a theft loss
  • All of the above

Questão 6

Questão
How many days does an insurer hve to return unearned premiums to an insured?
Responda
  • 10 days
  • 15 days
  • 25 days
  • 30 days

Questão 7

Questão
The amount to replace property with like property of the same quality and construction is the:
Responda
  • Replacement cost
  • Actual cash value (ACV)
  • Market value
  • Stated value

Questão 8

Questão
What is actual cash value (ACV)?
Responda
  • ACV = replacement cost + depreciation
  • ACV = market value - depreciation
  • ACV = replacement cost - depreciation
  • ACV = stated cost - depreciation

Questão 9

Questão
If an individual or a family suffers a loss due to death or disability of a member, what type of loss is it?
Responda
  • Personal loss
  • Personnel loss
  • Human loss
  • Needs loss

Questão 10

Questão
Insurance has a number of characteristics. Which of the following is not one of them?
Responda
  • If there is ambiguous language i an insurance contract, it will be resolved in the favor of the insured
  • Parties to a contract should be able to rely upon the honest representations of the other party
  • It involves a catastrophic exposure
  • The insurer is bound to perform under the contract

Questão 11

Questão
Which of the following is an example of loss retention?
Responda
  • Buying health insurance
  • Not purchasing collision insurance on your auto
  • Placing a watercraft endorsement on your homeowner's policy
  • Removing dried brush from your house's premises

Questão 12

Questão
If it is proven that another person's negligence contributed to an injury, what gives the injured party the right to seek compensation?
Responda
  • Case law
  • Contract law
  • Criminal law
  • Tort law

Questão 13

Questão
Which of the following statements is true regarding compensatory damages?
Responda
  • General damages have specific economic value
  • Punitive damages are awarded to a person for actual pain and suffering
  • Special damages do not have a specific economic value
  • There is usually no direct correlation between the amount of general and special damages awarded to the victim

Questão 14

Questão
Liability losses are referred to as:
Responda
  • First party losses
  • Second party losses
  • Third party losses
  • None of the above

Questão 15

Questão
In an insurance contract, D. I. C. E. refers to:
Responda
  • Declarations, insurable interest, conditions, and exclusions
  • Declarations, insurable interest, conditions, and endorsements
  • Declarations, insuring clause, conditions and endorsements
  • Declarations, insuring clause, conditions, and exclusions

Questão 16

Questão
An insured purchased new furniture for $6,000. At the time of a fire loss, it had depreciated $2,000. At current rates, the same furniture will cost $7,000 to replace. The actual cash value of the destroyed furniture is:
Responda
  • $7,000
  • $8,000
  • $6,000
  • $5,000

Questão 17

Questão
When an insurer cancels a policy and only retains earned premium, this is:
Responda
  • Flat cancellation
  • Short rate cancellation
  • Pro-rata cancellation
  • Continuous cancellation

Questão 18

Questão
An insurers loss reserve for a claim is:
Responda
  • Equal to claims paid divided by earned premium reserve, not including loss adjustment expense
  • The maximum amount the insurer wil have to pay to close the claim
  • The exact amount the insurer will have to pay to close the claim
  • An estimate of the amount that the insurer will pay

Questão 19

Questão
What is the process called whereby insurers decide which customers to insure and what coverage to offer?
Responda
  • Adverse selection
  • Rate making
  • Marketing
  • Underwriting

Questão 20

Questão
A reduction in the value of property that results immediately from damage to the property is known as:
Responda
  • Additional living expense
  • Consequential loss
  • Extra expense
  • Direct loss

Questão 21

Questão
The process whereby an insured suffers a loss and is paid to return him to his prior financial condition is:
Responda
  • Insurable interest
  • Pure risk
  • Indemnity
  • Ceding

Questão 22

Questão
What is a hazard?
Responda
  • Anything that increases the chance of loss
  • A broken promise
  • Any possibility of financial loss
  • A peril or loss of property

Questão 23

Questão
A policy may not be transferred to another without:
Responda
  • Oral consent of the insured
  • Oral consent of the insurer
  • Written consent of the insured
  • Written consent of the insurer

Questão 24

Questão
Which of the following is a true statement about insurance?
Responda
  • It is a method of transferring risk
  • It is for the low income/high risk persons
  • It is sold by government officials
  • It is a method of retention

Questão 25

Questão
Grouping people by similar characteristics is:
Responda
  • Unfair discrimination
  • Prejudice
  • Fair discrimination
  • A basic principle of insurance

Questão 26

Questão
A peril is defined as:
Responda
  • A cause of loss
  • Increases the chance of loss
  • A hazard
  • An accident

Questão 27

Questão
The main purpose of insurance is to:
Responda
  • Transfer the risk
  • Reduce perils
  • Avoid hazards
  • Reduce the risk

Questão 28

Questão
The insured should be compensated for his loss, returning him to the condition that existed prior to the loss. The is the principle of indemnity. Which of the following is correct?
Responda
  • It is based on the law of small numbers
  • It is a basic principle of insurance
  • It is based on the law of supply and demand
  • It involves the principle of adhesion

Questão 29

Questão
Which of the following is an example of loss retention?
Responda
  • Buying life insurance
  • Not purchasing collision insurance on your auto
  • Placing a motorcycle endorsement on your homeowners policy
  • Removing dried brush from your house's premises

Questão 30

Questão
Which of the following is an example of reducing risk probability?
Responda
  • Buying OTC
  • Reducing premium payments
  • Increasing deductibles
  • Putting a fence around a pool

Questão 31

Questão
Which of the following is not a benefit of insurances?
Responda
  • It can be a source of investment funds
  • It transfers loss
  • It reduces risk exposure
  • It reduces out of pocket expenses

Questão 32

Questão
A house located next to a dynamite plant is considered what kind of hazard?
Responda
  • Moral
  • Legal
  • Physical
  • Liability

Questão 33

Questão
Where is a policy personalized to say who is covered, what is covered, limit of insurance, and policy period?
Responda
  • Insuring clause
  • Declarations
  • Conditions
  • Endorsements

Questão 34

Questão
An insured suffers a loss caused by a third party. How will the insured's insurance company handle the claim?
Responda
  • The company will not cover the loss
  • The company will have to seek reimbursement himself from the third party
  • The insurer will cover a portion of the loss
  • The insurer will pay the insured for a covered loss and seek reimbursement from the party at fault with the cooperation of the insured

Questão 35

Questão
The insurer's right to recover its claim payment to an insured from a negligent third party is known as:
Responda
  • Arbitration
  • Liberalization
  • Subrogation
  • Assignment

Questão 36

Questão
If an insured voluntarily relinquishes his rights, this is an example of:
Responda
  • Estoppel
  • Coercion
  • Waiver
  • Warranty

Questão 37

Questão
The amount to replace property with like property of the same quality and construction is the:
Responda
  • Replacement cost
  • Actual cash value
  • Market value
  • Stated value

Questão 38

Questão
When an insurance policy is cancelled by the insured, and the company retains premium for the protection provided plus expenses, cancellation is said to be on a:
Responda
  • Flat basis
  • Short rate basis
  • Pro rata basis
  • Fixed basis

Questão 39

Questão
An insurer cancels a policy and returns the entire premium. This is:
Responda
  • Short rate
  • Pro rata
  • Flat cancellation
  • No fault

Questão 40

Questão
How many days does an agent have to return unearned premium to an insured?
Responda
  • 25 days
  • 10 days
  • 30 days
  • 15 days

Questão 41

Questão
How many days does an insurance company have to give unearned premium back to an agent?
Responda
  • 10 days
  • 15 days
  • 25 days
  • 30 days

Questão 42

Questão
Insurers may purchase reinsurance for a variety of reasons. Which of the following is not a good example of the use of reinsurance? Insurer purchases reinsurance:
Responda
  • Only on the below average business submitted to them, keeping the good business for themselves.
  • To avoid capacity problems by reducing the amount of unearned premium
  • To more safely insure an exceptionally large account

Questão 43

Questão
Which insurance company is owned and formed for the benefit of its members?
Responda
  • Llloyds of London
  • A mutual insurer
  • Demutualization
  • Captive companies

Questão 44

Questão
What effect does increasing a deductible have on a policy?
Responda
  • Increases the premium payment
  • Reduces the premium payment
  • Increases likelihood of getting insurance
  • Increases insurance policy benefits

Questão 45

Questão
The method in which insurance companies receive approval from the DOI before using certain rates:
Responda
  • Prior approval
  • Underwriting
  • Reinsurance
  • Coinsurance

Questão 46

Questão
Which of the following is not a method for risk management?
Responda
  • Transfer
  • Avoidance
  • Retention
  • Variance

Questão 47

Questão
The system in which insurers determine who to insure and that rates to charge is known as
Responda
  • Insurance
  • Underwriting
  • Indemnity
  • Reinsurance

Questão 48

Questão
Insurance companies transfer part of a particularly large risk through what process:
Responda
  • Reinsurance
  • Indemnity
  • Underwriting
  • Transfer

Questão 49

Questão
Insurance contracts are between how many parties?
Responda
  • 4
  • 3
  • 1
  • 2

Questão 50

Questão
The total amount an insurance company is liable to pay out is:
Responda
  • Policy total
  • Limit of insurance
  • Aggregate limit
  • Indemnity

Questão 51

Questão
A speculative risk, like a pure risk, is insurable:
Responda
  • True
  • False

Questão 52

Questão
To qualify as an insurable risk:
Responda
  • Losses must be definable
  • Losses must be accidental
  • Losses must be enough to cause hardship to the insured
  • All of the above

Questão 53

Questão
Aleatory in nature refers to:
Responda
  • Ambiguous language
  • Enforeable
  • Unequal exchange by two parties
  • Waiver of a promise

Questão 54

Questão
Because insurance is a contract of adhesion, ambiguous language in a contract will show which party at fault:
Responda
  • Insurance company
  • MGA
  • Insured
  • Agent

Questão 55

Questão
Failure to disclose material fact is:
Responda
  • Concealment
  • Fraud
  • Waiver
  • Estoppels

Questão 56

Questão
Misrepresentation, deceit, or trickery can be defined as:
Responda
  • Materiality
  • False warrant
  • Conditional concealment
  • Fraud

Questão 57

Questão
Provisions that deny coverage for certain perils:
Responda
  • Exclusions
  • Declarations
  • Endorsements
  • Conditions

Questão 58

Questão
The insuring agreement contains all of the following except:
Responda
  • Perils insured against
  • Persons/property covered
  • Location
  • Exclusions

Questão 59

Questão
Assignment/transfer cannot be made without written consent from:
Responda
  • Additional insured
  • Agent
  • First named insured
  • Insurer

Questão 60

Questão
A deductible is the portion of a loss retained by the insured before the insurer will cover a claim.
Responda
  • True
  • False

Questão 61

Questão
To what does lapse refer?
Responda
  • The insurer decides not to continue insuring a customer
  • The insured voluntarily cancels their coverage
  • Termination due to non-payment
  • A policy that is cancelled upon its effective date

Questão 62

Questão
Insureds must comply with certain provisions when submitting a claim. These include:
Responda
  • Prompt notice of loss or damage
  • Submitting claims
  • Notifying the police if theft is involved
  • All answers are correct

Questão 63

Questão
Coinsurance refers to the amount of insurance an insured must carry in order to be fully insured
Responda
  • True
  • False

Questão 64

Questão
What is unoccupied?
Responda
  • There are people living in the building but no furniture
  • There may be furniture but no people in a building
  • No people and no furniture
  • The same as vacant

Questão 65

Questão
Which of the following must be on ALL insurance policies?
Responda
  • Parties of the contract
  • Insurable interest
  • Term of the policy
  • All answers are correct

Questão 66

Questão
To what does insurable interest mean?
Responda
  • A loss to the property would have some financial loss for the person
  • A loss that the insured would like to cover through insurance
  • Property taken over by an insurer to reduce loss
  • All of the above

Questão 67

Questão
A term that refers to a situation in which two or more perils cause a loss
Responda
  • Peril
  • Open peril
  • Consequential loss
  • Concurrent causation

Questão 68

Questão
A consequential loss is not directly caused by a peril but assumed as a result of a direct loss
Responda
  • True
  • False

Questão 69

Questão
In order for negligence to exist, which of the following must be present?
Responda
  • Breach of the duty to act
  • Occurrence of injury or damage
  • Duty to act
  • All of the above

Questão 70

Questão
Compensatory damages in a hearing will generally determine the amount of punitive damages
Responda
  • True
  • False

Questão 71

Questão
An event that results in a loss to an insured at a definite time and place or due to repeated exposure can be defined as
Responda
  • Negligence
  • Occurrence
  • Accident
  • None of the above

Questão 72

Questão
Through what kind of liability can a person be held responsible for the actions of others. IE: negligent acts of a child or employee
Responda
  • Strict
  • Absolute
  • Vicarious
  • Intentional

Questão 73

Questão
An insurer organized in a state outside the state of California can be referred to as what kind of insurer?
Responda
  • Domestic
  • Foreign
  • Alien
  • Admitted

Questão 74

Questão
What department is set up in order to regulate insurance rates?
Responda
  • DOI
  • The FAIR plan
  • CAARP
  • ISO

Questão 75

Questão
A person that solicits, negotiates and effects contracts on behalf of an insurer is a:
Responda
  • Agent (Producer)
  • Captive agent
  • Solicitor
  • Independent agent

Questão 76

Questão
A person that sells insurance for only one company is:
Responda
  • Agent
  • Broker
  • Captive agent
  • Independent agent

Questão 77

Questão
A fiduciary must hold funds and property in a position of trust. They must also:
Responda
  • Act in a prudent fashion
  • Act as an agent
  • Commingle money
  • Misappropriate funds

Questão 78

Questão
An illegal practice which occurs when an agent mixes personal funds with the insured's or insurer's funds:
Responda
  • Theft
  • Stealing
  • Commingling
  • Robbery

Questão 79

Questão
An incorporated insurer owned by its policy holders and formed for their benefit is called
Responda
  • Stock insurer
  • Mutual insurer
  • Independent Insurer
  • Broker insurer

Questão 80

Questão
A way for insurers to avoid having to pay for large or catastrophic losses
Responda
  • Claims handling
  • Avoidance
  • Reinsurance
  • Underwriting

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