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Insurance Basics

50 Questions  I  By Gnickens
Insurance Quizzes & Trivia
The purpose of this quiz is to test your knowledge of personal lines home and auto policies. Please carefully read the question in full then select the best response.  

  
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Question Excerpt

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1.  Which of the following terms is most closely related to the concept of insurable interest?
A.
B.
C.
D.
2.  Replacement cost minus depreciation best describes which of the following?
A.
B.
C.
D.
3.  All of the following are required as elements of a legal contract except:
A.
B.
C.
D.
4.  An answer to an insurance question on an application that is guaranteed to be true best defines:
A.
B.
C.
D.
5.  Which of the following statements is true regarding binders?
A.
B.
C.
D.
6.  In order to broaden or amend coverage in property and casualty policies, which of the following is used:
A.
B.
C.
D.
7.  If an insured decides to stop paying premiums on his or her policy and returns the contract to the insurer mid-term, the insured would receive which of the following premium refunds?
A.
B.
C.
D.
8.  An insured purchases a fire policy for $150,000 and takes a policy with an 80% co-insurance clause. The building is worth $250,000. The insured has a kitchen fire and the damages are $30,000 and he carries a $500 deductible. What will the insurer pay?
A.
B.
C.
D.
9.  All of the following are essential elements of negligence except:
A.
B.
C.
D.
10.  Which of the following policies provides open perils coverage?
A.
B.
C.
D.
11.  Special limits of liability in a Homeowners contract include all but the following:
A.
B.
C.
D.
12.  Auto insurance premiums for a Personal Auto Policy are based on all of the following except:
A.
B.
C.
D.
E.
13.  An insured with auto policy limits of 100/300/50 hits another vehicle injuring two people. They are awarded $15,000 and $90,000. How much will the insured’s automobile policy pay?
A.
B.
C.
D.
14.  A basic fire policy will pay for all of the following EXCEPT:
A.
B.
C.
D.
15.  By entering into an insurance contract, a policyholder transfers the right of legal action against a responsible third party to the insurer. This is known as:
A.
B.
C.
D.
16.  After a loss has occurred, an insured has all of the following duties EXCEPT:
A.
B.
C.
D.
17.  Uninsured motorist coverage in an auto policy provides payments to which of the following?
A.
B.
C.
D.
18.  Lynn has an auto policy with limits of 50/100. She injures two people in an accident and one is left with $25,000 in injuries and the other with $75,000. How much will Lynn’s policy pay?
A.
B.
C.
D.
19.  A driver loses control of his auto and damages his next door neighbor’s fence. The damages will be paid by the driver’s:
A.
B.
C.
D.
20.  Which of the following is excluded from a flood policy?
A.
B.
C.
D.
21.  Henry is sued for negligence and the jury awards the injured party $175,000. Henry’s policy has a limit of up to $100,000 per occurrence. In addition, his insurance carrier is charged $17,000 for defending the suit. How Henry’s his policy pay?
A.
B.
C.
D.
22.  Which of the following statements regarding medical payments coverage in a personal auto policy is true?
A.
B.
C.
D.
E.
23.  If an insured and insurer disagree as to whether there is coverage under a policy, which of the following would be used to determine a resolution?
A.
B.
C.
D.
24.  What term best describes a building that does not have any contents and there are no normal activities taking place?
A.
B.
C.
D.
25.  An insurance contract does which of the following?
A.
B.
C.
D.
26.  The Smiths are concerned about the burglaries that have recently been on the rise in their apartment complex. They now decide its time to buy renter’s insurance. This describes which of the following?
A.
B.
C.
D.
27.  All of the following statements regarding umbrella policies are true except:
A.
B.
C.
D.
28.  Which of the following principles describes liability resulting from the negligence of a person who uses an auto with the insured's permission?
A.
B.
C.
D.
29.  The relinquishment of a known right is called:
A.
B.
C.
D.
30.  The limits of liability are found in which section of a casualty policy?
A.
B.
C.
D.
31.  A property and casualty insurer pays claims that have been submitted out of which kind of fund?
A.
B.
C.
D.
32.  Who would use a HO-6 Homeowners form?
A.
B.
C.
D.
33.  Jeff and his family want to move to the West Coast but are concerned about earthquakes. Jeff called Frank, an insurance agent with the ABC Company. What advice should Frank give Jeff about earthquake coverage and how to protect his home?
A.
B.
C.
D.
34.  A policyholder has a homeowners policy for $60,000 on the dwelling. The home is completely destroyed after a fire loss. The cost to replace the home is $40,000. How much will the insured receive?
A.
B.
C.
D.
35.  Trees, shrubs, and other plants are covered as additional coverage, but they are limited to certain perils. All of the following perils are covered when causing damage to a tree or shrub EXCEPT:
A.
B.
C.
D.
36.  Which of the following bests describes the law of large numbers?
A.
B.
C.
D.
37.  Who would use a HO-4 Homeowners form?
A.
B.
C.
D.
38.  In which section of the homeowners policy will I find an insured's duties after a loss has occurred?
A.
B.
C.
D.
39.  Coverage A in a homeowners policy refers to:
A.
B.
C.
D.
40.  The homeowners policy Coverage C Personal Property applies to all the following but one, which one does not apply.
A.
B.
C.
D.
41.  Dorothy borrows her neighbor's car because her daughter took hers to college for a week. In this situation, the car that Dorothy has borrowed from her neighbor is a(n):
A.
B.
C.
D.
42.  An automobile policy will provide coverage for an auto being driven in all of the following areas EXCEPT:
A.
B.
C.
D.
43.  In order to motivate a buyer to sign an application for insurance, a producer offers to give the applicant one half of his commission. This is an example of:
A.
B.
C.
D.
44.  All of the following are considered family members in a personal auto policy EXCEPT:
A.
B.
C.
D.
45.  Select the example of where an insurance producer has demonstrated questionable ethical standards?
A.
B.
C.
D.
46.  John and Susan were painting their new nursery, John knock over a ladder, paint spilled and the ladder damaged the drywall. Which item would NOT be covered under the HO-3?
A.
B.
C.
D.
47.  Michelle purchases a Homeowners policy for $70,000 which contains an 80% co-insurance clause. The home is worth $125,000. Michelle is just learning to cook and accidentally causes fire damage to her new kitchen. The damages total $10,000. What will the insurer pay?  
A.
B.
C.
D.
48.  Which of the following supplementary payments is NOT provided under bodily injury coverage in a personal auto policy?
A.
B.
C.
D.
49.  Deductibles are used for a variety of reasons. Select the reason below that does NOT apply.
A.
B.
C.
D.
50.  In addition to the Limits of Liability under Part I of the auto policy the company will pay for which of the following.
A.
B.
C.
D.
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