Fire & Casualty Practice Exam 5

Reviewed by Editorial Team
The ProProfs editorial team is comprised of experienced subject matter experts. They've collectively created over 10,000 quizzes and lessons, serving over 100 million users. Our team includes in-house content moderators and subject matter experts, as well as a global network of rigorously trained contributors. All adhere to our comprehensive editorial guidelines, ensuring the delivery of high-quality content.
Learn about Our Editorial Process
| By Pchinna
P
Pchinna
Community Contributor
Quizzes Created: 7 | Total Attempts: 78,553
| Attempts: 3,807
SettingsSettings
Please wait...
  • 1/71 Questions

    A physician may have misdiagnosed a patient for terminal cancer.  what type of insurance would protect the physician for this type of mistake ?

    • Personal liability
    • Professional liability
    • Health insurance
    • Allied lines insurance
Please wait...
About This Quiz

Fire & Casualty Practice Exam 5 - For personal use only

Fire & Casualty Practice Exam 5 - Quiz

Quiz Preview

  • 2. 

    What gives an insured party the right to seek compensation if it is proven that another person with negligence contributed to the injury ?

    • Statutory code

    • Tort law

    • Criminal code

    • Case law

    Correct Answer
    A. Tort law
    Explanation
    Tort law gives an insured party the right to seek compensation if it is proven that another person with negligence contributed to the injury. Tort law is a branch of civil law that deals with personal injuries and provides a legal framework for individuals to seek compensation for harm caused by the negligence or wrongdoing of others. It allows the injured party to file a lawsuit against the responsible party and seek damages for their injuries or losses.

    Rate this question:

  • 3. 

    What is one of the principle rating factors under Proposition 103 allowed for personal auto policies ?

    • Credit record

    • Year of the auto

    • Safety driving record

    • Make of the auto

    Correct Answer
    A. Safety driving record
    Explanation
    One of the principle rating factors under Proposition 103 allowed for personal auto policies is the safety driving record. This means that insurance companies consider an individual's history of safe driving, including factors such as accidents, traffic violations, and claims history, when determining the premium for their auto insurance policy. A good safety driving record indicates responsible and cautious driving behavior, which is seen as less risky by insurance companies and therefore may result in lower premiums.

    Rate this question:

  • 4. 

    The insurer's right to recover its claim payment to an insured from a negligent 3rd party is known as:

    • Arbitration

    • Liberalization

    • Subrogation

    • Assignment

    Correct Answer
    A. Subrogation
    Explanation
    Subrogation is the insurer's right to recover the claim payment made to an insured from a negligent third party. This means that the insurer can step into the insured's shoes and pursue legal action against the responsible party to recover the amount paid out for the claim. Subrogation allows the insurer to mitigate its losses and prevent the insured from benefiting from both the claim payment and any additional compensation received from the negligent party.

    Rate this question:

  • 5. 

    The term "subrogation" refers to

    • The insured's right to receive broadened coverage at no extra charge

    • The insurance policy applies separately to each insured

    • The insurer's right to recover payment from a responsible 3rd party

    • The insurance firm insured's interest in a policy to another party

    Correct Answer
    A. The insurer's right to recover payment from a responsible 3rd party
    Explanation
    Subrogation refers to the insurer's right to recover payment from a responsible third party. This means that if the insurer has paid out a claim to the insured, they have the right to seek reimbursement from any party that may be responsible for the loss or damages. This allows the insurer to recoup their expenses and helps prevent the insured from benefiting from both the insurance payout and any potential compensation from the responsible party.

    Rate this question:

  • 6. 

    Which of the following is eligible for a business owner's policy

    • An auto repair shop

    • A credit union

    • A furniture store

    • A sports bar

    Correct Answer
    A. A furniture store
    Explanation
    A furniture store is eligible for a business owner's policy because it is a type of small business that typically requires coverage for property damage, liability, and business interruption. A business owner's policy combines these coverages into one package, making it convenient and cost-effective for small businesses to obtain comprehensive insurance protection.

    Rate this question:

  • 7. 

    If an insured purchases an all-terrain vehicle (ATV), what endorsement can be added to the personal auto policy to insure the vehicle ?

    • ATV endorsement

    • Recreational vehicle endorsement

    • There is no endorsement available for this exposure

    • Miscellaneous type vehicle endorsement

    Correct Answer
    A. Miscellaneous type vehicle endorsement
    Explanation
    A miscellaneous type vehicle endorsement can be added to the personal auto policy to insure the all-terrain vehicle (ATV). This endorsement provides coverage for vehicles that do not fit into the standard categories covered by the policy, such as motorcycles or motorhomes. By adding this endorsement, the insured can ensure that their ATV is protected in case of accidents, damage, or theft.

    Rate this question:

  • 8. 

    Surplus lines brokers

    • Are always employees of insurance companies

    • Transact business only with admitted insurers

    • Specialize in marine insurance

    • Transact business only with non-admitted insurers

    Correct Answer
    A. Transact business only with non-admitted insurers
    Explanation
    Surplus lines brokers are insurance intermediaries who specialize in placing coverage with non-admitted insurers. Non-admitted insurers are not licensed or regulated by the state and typically provide coverage for high-risk or unique risks that admitted insurers are unwilling or unable to cover. Surplus lines brokers have the expertise and connections to access these non-admitted insurers and find coverage solutions for clients that may not be available through traditional insurance channels. Therefore, they exclusively transact business with non-admitted insurers.

    Rate this question:

  • 9. 

    What coverage is available under the named non-owner coverage endorsement ?

    • Physical damage and uninsured motorist

    • Liability, medical payments, and uninsured motorist

    • Liability and physical damage

    • Liability only

    Correct Answer
    A. Liability, medical payments, and uninsured motorist
    Explanation
    The named non-owner coverage endorsement provides coverage for liability, medical payments, and uninsured motorist. This means that if the insured person is driving a vehicle that they do not own and is involved in an accident, this endorsement will cover their liability for any damages or injuries caused to others, provide medical payments coverage for their own injuries, and also provide coverage for any damages or injuries caused by an uninsured or underinsured motorist.

    Rate this question:

  • 10. 

    Which of the following statements is true regarding insurers with admitted status in California ?

    • They may use race, color, religion or national origin as a condition to use higher rates

    • They may use any rating methods that are actuarially sound in rating the policy

    • They may not use race, color, religion or national origin as a condition to use high rates

    • They must file for an exemption with the insurance commisioner if they wish to use race, color, religion or national origin as a rating condition

    Correct Answer
    A. They may not use race, color, religion or national origin as a condition to use high rates
    Explanation
    Insurers with admitted status in California are not allowed to use race, color, religion, or national origin as a condition to use higher rates. This means that they cannot discriminate against individuals based on these factors when determining the rates for their policies. Admitted insurers must adhere to anti-discrimination laws and treat all policyholders fairly and equally.

    Rate this question:

  • 11. 

    Which homeowners form is best for use on a brand-new single family dwelling

    • HO-4

    • HO-5

    • HO-6

    • HO-8

    Correct Answer
    A. HO-5
    Explanation
    The HO-5 homeowners form is the best for use on a brand-new single family dwelling. This form provides the most comprehensive coverage, including coverage for both the dwelling and personal property on an open perils basis. It offers higher coverage limits and includes additional coverage options such as replacement cost coverage for personal property. This form is typically recommended for homeowners who want the highest level of protection for their new home.

    Rate this question:

  • 12. 

    Every admitted insurer in the state of California is required to maintain a unit or disivion to investigate which of the following ?

    • Possible non-justifiable discrimination

    • Possible fraudulent claims made by insureds

    • Possible non-compliance with CA rate laws

    • Possible arson claims

    Correct Answer
    A. Possible fraudulent claims made by insureds
    Explanation
    Every admitted insurer in the state of California is required to maintain a unit or division to investigate possible fraudulent claims made by insureds. This is because fraudulent claims can result in financial losses for the insurer and can also lead to higher premiums for other policyholders. By investigating possible fraudulent claims, insurers can ensure that only legitimate claims are paid out and deter individuals from making false claims. This helps to maintain the integrity of the insurance system and protect the interests of both insurers and policyholders.

    Rate this question:

  • 13. 

    An organization will cease to exist as an entity eligible to hold a license for all of the following reasons, except:

    • Termination of key employee

    • Dissolution of a co-partnership

    • Dissolution of a corporation

    • Termination of an association

    Correct Answer
    A. Termination of key employee
    Explanation
    An organization will cease to exist as an entity eligible to hold a license for all of the given reasons except the termination of a key employee. While the termination of a key employee may have an impact on the organization's operations and success, it does not directly result in the organization losing its eligibility to hold a license. On the other hand, the dissolution of a co-partnership, dissolution of a corporation, or termination of an association can lead to the organization ceasing to exist as a legal entity and therefore losing its eligibility for a license.

    Rate this question:

  • 14. 

    If an individual does not own an auto nor have a regular use of an auto, what endorsement to a personal auto policy could be used to properly protect that individual ?

    • Named non-owned coverage endorsement

    • No coverage available

    • Extended non-owned liability coverage endorsement

    • Miscellaneous type vehicle endorsement

    Correct Answer
    A. Named non-owned coverage endorsement
    Explanation
    The named non-owned coverage endorsement is the correct answer because it provides coverage for individuals who do not own a car or have regular use of a car. This endorsement extends liability coverage to the individual when they are driving a non-owned vehicle, such as a rental car or a friend's car. It is a way to ensure that the individual is properly protected in case of an accident or damage while driving a vehicle that they do not own.

    Rate this question:

  • 15. 

    An insured has a personal auto policy but does not pay the initial insurance premium when it is due.  The insurer cancels the policy for non-payment.  How many days notice must the insurer give ?

    • 5

    • 10

    • 15

    • 20

    Correct Answer
    A. 10
    Explanation
    The insurer must give 10 days notice before canceling the policy for non-payment. This allows the insured enough time to pay the outstanding premium and prevent the cancellation of their policy.

    Rate this question:

  • 16. 

    What is the limit per day for transportation expenses in under -an unendorsed personal auto policy

    • $10

    • $15

    • $20

    • None

    Correct Answer
    A. $20
    Explanation
    The correct answer is $20. Under an unendorsed personal auto policy, the limit per day for transportation expenses is $20. This means that if your vehicle is in the shop for repairs due to a covered loss, your policy will cover up to $20 per day for alternate transportation such as renting a car or using public transportation. This limit helps to ensure that you have access to transportation while your vehicle is being repaired.

    Rate this question:

  • 17. 

    Which of the following would be considered special damages ?

    • Scarring

    • Loss of an index finger

    • Lost wages

    • Pain and suffering

    Correct Answer
    A. Lost wages
    Explanation
    Special damages refer to the specific financial losses that a person incurs as a result of an injury or harm caused by someone else. Lost wages, mentioned in the answer, are a clear example of special damages. When a person is unable to work due to an injury, they may lose income and wages, which can be quantified and claimed as special damages in a legal case. Scarring and loss of an index finger can be considered as general damages, while pain and suffering are non-economic damages.

    Rate this question:

  • 18. 

    A home is damaged minutes after an earthquake, first by fire, then by fuel pipes bursting and causing an explosion.  Under an HO-3 form:

    • There is no coverage unless the homeowner has made an earthquake coverage endorsement a part of the policy

    • The policy covers all of the damage since explosion is an insured peril

    • There is coverage, but only for the damage caused by the fire and explosion

    • The policy does not cover the damage since the HO-3 provides only named peril coverage

    Correct Answer
    A. There is coverage, but only for the damage caused by the fire and explosion
    Explanation
    The correct answer is that there is coverage, but only for the damage caused by the fire and explosion. This is because the HO-3 form typically provides coverage for named perils, and in this case, the fire and explosion are considered insured perils. However, earthquake damage is not typically covered under the HO-3 form unless the homeowner has specifically added an earthquake coverage endorsement to their policy. Therefore, the damage caused by the earthquake itself would not be covered.

    Rate this question:

  • 19. 

    Which of the following is considered special damages ?

    • Compensation for a person's emotional suffering

    • Compensation for time away from work

    • Compensation for loss of a foot

    • Compensation for a scar

    Correct Answer
    A. Compensation for time away from work
    Explanation
    Special damages refer to the specific financial losses or expenses incurred as a direct result of an injury or harm. Compensation for time away from work falls under special damages because it refers to the wages or income that an individual has lost due to their injury. This type of compensation is quantifiable and can be calculated based on the individual's salary or earnings. On the other hand, compensation for emotional suffering, loss of a foot, or a scar may fall under general damages, as they are more subjective and not easily quantifiable in monetary terms.

    Rate this question:

  • 20. 

    After a collision loss, the personal auto policy requires the insured to:

    • Submit a written notice of the loss to the company

    • Promptly notify the police of the accident

    • Press charges against the other party

    • Allow the company to inspect the damaged property before it is repaired.

    Correct Answer
    A. Allow the company to inspect the damaged property before it is repaired.
    Explanation
    After a collision loss, the insured is required to allow the insurance company to inspect the damaged property before it is repaired. This is important because the insurance company needs to assess the extent of the damage and determine the cost of repairs. By inspecting the damaged property, the company can ensure that the repairs are necessary and reasonable. It also helps prevent fraudulent claims and ensures that the insured receives proper compensation for the loss. Promptly notifying the police of the accident and submitting a written notice of the loss are also important steps, but they are not specifically mentioned in the question as requirements of the personal auto policy. Pressing charges against the other party is not a requirement in this situation.

    Rate this question:

  • 21. 

    If the named insured is not the owner of the building, improvements and betterments are covered under the

    • Agreed value

    • Newly constructed property

    • Business personal property

    • Building

    Correct Answer
    A. Business personal property
    Explanation
    If the named insured is not the owner of the building, improvements and betterments are covered under the category of business personal property. Business personal property refers to movable items owned by the business, including furniture, equipment, inventory, and any improvements made to the property that are not permanent fixtures. Since the named insured is not the owner of the building, any improvements or betterments they make to the property would be considered part of their business personal property and would be covered under this category.

    Rate this question:

  • 22. 

    All of the following are areas that market regulation covers, except:

    • Employee training

    • Underwriting

    • Sales

    • Rate-making

    Correct Answer
    A. Employee training
    Explanation
    Market regulation covers various aspects of the market to ensure fair and efficient practices. Employee training is not typically considered an area of market regulation as it pertains more to internal operations and human resources. Market regulation usually focuses on areas such as underwriting, sales, and rate-making, which directly impact the functioning and fairness of the market.

    Rate this question:

  • 23. 

    Which of the following is considered an intentional tort?

    • Auto accident

    • Blasting operations

    • Unauthorized release of confidential information

    • Ownership of a pet rattlesnake

    Correct Answer
    A. Unauthorized release of confidential information
    Explanation
    Unauthorized release of confidential information is considered an intentional tort because it involves the deliberate disclosure of sensitive or private information without consent. This action is done intentionally and can cause harm or damage to the person or entity whose information is released. It is a violation of privacy rights and can lead to legal consequences for the person responsible for the unauthorized release.

    Rate this question:

  • 24. 

    When does a personal auto policy require the insured to notify the police?

    • For thefts only

    • There is no requirement to notify the police

    • For hit and run accidents and thefts

    • For all accidents and thefts

    Correct Answer
    A. For hit and run accidents and thefts
    Explanation
    A personal auto policy requires the insured to notify the police for hit and run accidents and thefts. This is because in these situations, a police report is necessary to document the incident and provide evidence for insurance claims. Notifying the police helps in investigating the incident, identifying the responsible party, and ensuring that proper legal procedures are followed. Additionally, it helps in preventing fraudulent claims and ensures that the insurance company has accurate information about the incident.

    Rate this question:

  • 25. 

    What coverage is available under the extended non-owned liability coverage ?

    • Liability, medical payments, and uninsured motorist

    • Liability and physical damage

    • Liability and medical payments

    • Liability only

    Correct Answer
    A. Liability, medical payments, and uninsured motorist
    Explanation
    The extended non-owned liability coverage provides coverage for liability, medical payments, and uninsured motorist. This means that if the insured person causes an accident while driving a non-owned vehicle, this coverage will pay for any damages or injuries caused to others involved in the accident, as well as any medical expenses for the insured person and any passengers in the vehicle. Additionally, it will provide coverage if the other driver involved in the accident is uninsured or underinsured.

    Rate this question:

  • 26. 

    What will happen when an agent's appointment to an insurance company is terminated and the agent has no other appointments with any other insurance company ?

    • The agent's permanent license becomes inactive

    • The agent's permanent license remains fully active until expiration

    • The agent's permanent license remains in force for only 60 more days unless the agent becomes reappointed or receives a new appointment letter from another insurer

    • The agent's permanent license will be terminated simultaneously

    Correct Answer
    A. The agent's permanent license becomes inactive
    Explanation
    When an agent's appointment to an insurance company is terminated and the agent has no other appointments with any other insurance company, their permanent license becomes inactive. This means that they will no longer be authorized to sell insurance or perform any activities related to their license. The agent will need to either become reappointed or receive a new appointment letter from another insurer in order to activate their license again.

    Rate this question:

  • 27. 

    Which of the following is covered by a building and personal property coverage form (BPP) ?

    • A patio

    • A bridge

    • A light pole

    • A dock

    Correct Answer
    A. A light pole
    Explanation
    A light pole is covered by a building and personal property coverage form (BPP) because it is considered a part of the building structure. BPP provides coverage for physical damage to the building and its contents, including fixtures such as light poles.

    Rate this question:

  • 28. 

    Insurance which covers ship owners against vicarious liability claims due to operating the insured vessel is:

    • A voyage policy

    • Hull insurance

    • The sue and labor laws

    • Protection and indemnity insurance

    Correct Answer
    A. Protection and indemnity insurance
    Explanation
    Protection and indemnity insurance is a type of insurance that provides coverage to ship owners against vicarious liability claims arising from the operation of the insured vessel. This insurance protects the ship owner from financial losses resulting from third-party claims, such as claims for bodily injury, property damage, or pollution caused by the vessel. It also covers legal expenses incurred in defending against such claims. Hull insurance, on the other hand, covers physical damage to the vessel itself. A voyage policy is a type of marine insurance that provides coverage for a specific voyage or journey. The sue and labor laws refer to the legal principle that requires ship owners to take necessary measures to minimize damage to the vessel and its cargo in the event of an accident or peril.

    Rate this question:

  • 29. 

    Which advisory organization(s) develop forms for the standard market

    • National Association of Insurance Commissioners and the American Association of Insurance Services

    • Insurance Services Office

    • National Association of Insurance Commissioners and the Insurance Services Office

    • Insurance Services Office and the American Association of Managing General Agents

    Correct Answer
    A. Insurance Services Office
    Explanation
    The correct answer is Insurance Services Office. The Insurance Services Office (ISO) is responsible for developing forms for the standard market. The National Association of Insurance Commissioners (NAIC) is a regulatory organization that sets standards and provides guidance for insurance companies, but they do not develop forms for the standard market. The American Association of Insurance Services (AAIS) and the American Association of Managing General Agents (AAMGA) are not directly involved in developing forms for the standard market.

    Rate this question:

  • 30. 

    If an insured discovers an occurrence 75 days after the expiration of a claims-made commercial general liability policy, what must the insured have in order for the loss to be covered ?

    • Supplemental standard reporting period endorsement

    • Umbrella Policy

    • The loss will not be covered because it was not reported during the policy period

    • Nothing; as long as the loss occurred during the policy period

    Correct Answer
    A. Supplemental standard reporting period endorsement
    Explanation
    The insured must have a supplemental standard reporting period endorsement in order for the loss to be covered. This endorsement provides an extended reporting period after the expiration of the policy, allowing the insured to report occurrences that happened during the policy period but were discovered after the policy expired. Without this endorsement, the loss would not be covered because it was not reported during the policy period.

    Rate this question:

  • 31. 

    An agent who diverts premium dollars for the agent's own use is guilty of

    • Theft

    • Fraud

    • Forgery

    • Misrepresentation

    Correct Answer
    A. Theft
    Explanation
    An agent who diverts premium dollars for their own use is guilty of theft. This means that the agent is unlawfully taking the money intended for insurance premiums and using it for personal gain without the policyholder's knowledge or consent. This action is considered theft because it involves the unauthorized appropriation of someone else's property, in this case, the premium dollars.

    Rate this question:

  • 32. 

    What is one of the main factors that the insurance Commissioner uses while determining whether a rate is excessive or unfairly discriminatory

    • Whether the rate mathematically reflects the insurance company's investment income

    • How long the insurer has been admitted to do business in the state

    • Complaint history of the insurer by insureds

    • The degree of competition

    Correct Answer
    A. Whether the rate mathematically reflects the insurance company's investment income
    Explanation
    The insurance Commissioner uses whether the rate mathematically reflects the insurance company's investment income as one of the main factors to determine whether a rate is excessive or unfairly discriminatory. This means that the Commissioner assesses whether the rate takes into account the company's investment income and if it is reasonable in relation to the risks and costs associated with providing insurance coverage. By considering this factor, the Commissioner can ensure that insurance rates are fair and not excessively high or discriminatory.

    Rate this question:

  • 33. 

    Which of the following perils is covered by a causes of loss - basic form

    • Governmental action

    • War

    • Riot or civil commotion

    • Ordinance or law

    Correct Answer
    A. Riot or civil commotion
    Explanation
    The causes of loss - basic form provides coverage for riot or civil commotion. This means that if there is damage to the insured property as a result of a riot or civil commotion, the insurance policy will cover the cost of repairing or replacing the damaged property. This coverage is important as it protects the insured against any potential financial losses that may occur due to such perils.

    Rate this question:

  • 34. 

    All of the following are requirements for a notice by mail to an insured by an insurer, except

    • Notice must be mailed to the residence or principal place of business

    • Notice must be sent with return receipt required

    • Notice must be addressed to the person being notified

    • Postage must be prepaid

    Correct Answer
    A. Notice must be sent with return receipt required
    Explanation
    The requirement that notice must be sent with return receipt required means that the insured must sign and return a receipt acknowledging that they have received the notice. This ensures proof of delivery and helps to protect both the insurer and the insured. However, this is not a requirement for a notice by mail to an insured by an insurer. Therefore, the correct answer is that notice does not need to be sent with return receipt required.

    Rate this question:

  • 35. 

    Which of the following is an example of loss prevention?

    • A homeowner decides not to install a pool in the backyard

    • A homeowner decides not to restore water damage to basement

    • A homeowner installs a home sprinkler system

    • A homeowner installs a home security system

    Correct Answer
    A. A homeowner decides not to install a pool in the backyard
    Explanation
    Installing a pool in the backyard can increase the risk of accidents and potential liabilities for the homeowner. Therefore, by deciding not to install a pool, the homeowner is taking a preventive measure to avoid potential losses associated with accidents, injuries, and legal issues that could arise from having a pool on their property.

    Rate this question:

  • 36. 

    All of the following are typical exclusions in an inland marine policy, except:

    • Insects or vermin

    • Earth movement

    • Wear and tear

    • Electrical breakdown

    Correct Answer
    A. Earth movement
    Explanation
    Earth movement is not typically excluded in an inland marine policy. Inland marine policies usually cover property that is in transit or temporarily located away from the insured's premises. Exclusions such as insects or vermin, wear and tear, and electrical breakdown are commonly included in these policies to limit coverage for specific risks. However, earth movement, which refers to events like earthquakes or landslides, is not typically excluded and may be covered under an inland marine policy.

    Rate this question:

  • 37. 

    Which of the following collapse losses would be covered under an HO-3

    • Known insect damage

    • Weight of contents

    • Defective workmanship completed two years ago

    • Earth movement from a volcanic eruption

    Correct Answer
    A. Weight of contents
    Explanation
    The HO-3 insurance policy typically covers losses related to the weight of contents. This means that if any damage or loss occurs due to the weight of the contents in the insured property, such as heavy furniture or appliances, it would be covered under the policy. However, it is important to note that this coverage may have certain limitations and exclusions, so it is always recommended to carefully review the policy terms and conditions.

    Rate this question:

  • 38. 

    Which of the following is an insurer's option when making a loss settlement with the insured under a personal auto policy ?

    • Return stolen property to the address shown in the policy

    • Have the insured purchaser place the auto at an auto auction

    • Demand that the insured first attempt to settle with the responsible party

    • Instruct the insured to repair the vehicle at a designated shop

    Correct Answer
    A. Return stolen property to the address shown in the policy
    Explanation
    When making a loss settlement with the insured under a personal auto policy, an insurer's option can be to return stolen property to the address shown in the policy. This means that if the insured's vehicle is stolen and later recovered, the insurer may choose to return the stolen vehicle to the insured's address as stated in the policy. This option allows the insured to regain possession of their stolen property.

    Rate this question:

  • 39. 

    A health insurance deductible is

    • The cost of a covered expense minus a co-payment

    • The portion of the insurance premium paid for coverage by the insured

    • The insurance payment for health care that is not considered a covered expense

    • The amount of covered expense that the insured pays before the insurer pays

    Correct Answer
    A. The amount of covered expense that the insured pays before the insurer pays
    Explanation
    A health insurance deductible is the amount of covered expense that the insured pays before the insurer pays. This means that the insured must first pay a certain amount out of pocket for their medical expenses before the insurance company starts covering the costs. Once the deductible is met, the insurer will then begin to pay for the covered expenses according to the terms of the insurance policy.

    Rate this question:

  • 40. 

    An insurer's loss reserve for a claim is

    • The exact amount the insurer will have to pay to close the claim

    • An estimate of the amount the insurer will pay

    • The maximum amount the insurer will have to pay to close the claim

    • Equal to claims paid divided by earned premium reserve, not including loss of adjustment expense

    Correct Answer
    A. An estimate of the amount the insurer will pay
    Explanation
    The correct answer is "An estimate of the amount the insurer will pay." This is because a loss reserve is a provision made by the insurer to cover the estimated cost of settling a claim. It represents the amount of money that the insurer expects to pay out in order to close the claim. It is not necessarily the exact amount that will be paid, as the final amount may vary based on factors such as negotiations, legal proceedings, or additional information that may arise during the claims process.

    Rate this question:

  • 41. 

    Why is the examination of books and records condition important in a commercial policy ?

    • To ensure that the insurance business is profitable

    • To ensure that the insurer is using generally accepted accounting principles

    • To ensure that the proper amount of premium is charged

    • To ensure that the insurance business is solvent

    Correct Answer
    A. To ensure that the proper amount of premium is charged
    Explanation
    The examination of books and records condition is important in a commercial policy to ensure that the proper amount of premium is charged. By reviewing the books and records of the insured, the insurer can accurately assess the risk and determine the appropriate premium to be charged. This helps to prevent undercharging or overcharging of premiums, ensuring that the insurance business remains fair and sustainable.

    Rate this question:

  • 42. 

    When an employer has a choice to purchase workers compensation insurance from a state fund or a private carrier, the state fund wold be called

    • A competitive state fund

    • A residual fund

    • A monopolistic fund

    • A private fund

    Correct Answer
    A. A competitive state fund
    Explanation
    A competitive state fund refers to a situation where an employer has the option to purchase workers compensation insurance from either a state fund or a private carrier. In this case, the state fund is considered competitive because it is competing with private carriers in the market to provide insurance coverage. This means that employers have the freedom to choose between the state fund and private carriers, creating a competitive environment in which the state fund operates.

    Rate this question:

  • 43. 

    What additional coverage does a DP-2 have compared to DP-1?

    • Additional living expenses

    • Improvements, alterations and additions

    • Personal liability

    • Debris removal

    Correct Answer
    A. Additional living expenses
    Explanation
    A DP-2 insurance policy provides additional coverage for additional living expenses compared to a DP-1 policy. This means that if the insured property becomes uninhabitable due to a covered loss, the policy will cover the cost of temporary living arrangements, such as hotel or rental expenses, until the property is repaired or replaced. This coverage is not included in a DP-1 policy, which only provides coverage for the actual cash value of the property and does not cover additional living expenses.

    Rate this question:

  • 44. 

    All of the following are listed on a commercial general liability declarations page, except

    • Medical expense limit

    • Rent it to you limit

    • Personal advertising injury limit

    • Pollution liability limit

    Correct Answer
    A. Pollution liability limit
    Explanation
    The commercial general liability declarations page lists various limits and coverages related to the liability insurance policy. It provides a summary of the policy's key details. The medical expense limit, rent it to you limit, and personal advertising injury limit are commonly included on this page. However, the pollution liability limit is not typically listed on a commercial general liability declarations page. This limit is specific to pollution-related claims and is often found in a separate pollution liability policy.

    Rate this question:

  • 45. 

    Under an unendorsed personal auto policy, what coverage is available for personal effects ?

    • None

    • Luggage and clothing up to $500

    • Luggage up to $200

    • All personal property in the auto up to $500

    Correct Answer
    A. None
    Explanation
    Under an unendorsed personal auto policy, there is no coverage available for personal effects. This means that if any personal belongings such as luggage or clothing are damaged or stolen while in the vehicle, the policy will not provide any compensation or reimbursement for those items. It is important for individuals to be aware of this limitation and consider obtaining additional coverage if they want their personal effects to be protected while in their vehicle.

    Rate this question:

  • 46. 

    Which of the following is a common policy condition for a commercial package policy ?

    • Causes of loss

    • Duty to defend

    • Pro-rata clause

    • Inspections and surveys

    Correct Answer
    A. Inspections and surveys
    Explanation
    Inspections and surveys are a common policy condition for a commercial package policy. This condition requires the insured to allow the insurance company to conduct inspections and surveys of the insured property. These inspections and surveys help the insurance company assess the risk associated with the property and determine the appropriate coverage and premiums. By conducting inspections and surveys, the insurance company can identify any potential hazards or risks that may affect the insured property and take necessary measures to mitigate them. This condition ensures that the insurance company has accurate information about the insured property and can provide adequate coverage.

    Rate this question:

  • 47. 

    What is the purpose of the inspections and surveys condition of the commercial package policy?

    • To determine if the premises comply with ADA requirements

    • To ascertain if the premises has maintained the required building codes

    • To determine the rate to be charged

    • To specify if the premises comply with OSHA requirements

    Correct Answer
    A. To determine the rate to be charged
    Explanation
    The purpose of the inspections and surveys condition of the commercial package policy is to determine the rate to be charged. This means that the insurance company will conduct inspections and surveys of the premises to assess the risk associated with the property and calculate the appropriate premium to be charged for the policy. The inspections and surveys help the insurance company evaluate factors such as the condition of the building, safety measures in place, and any potential hazards that may affect the rate.

    Rate this question:

  • 48. 

    What is one way in which the HO-2, HO4 and HO-6 are similar.

    • Perils insured against under coverage A

    • The limits provided for under coverage B

    • Perils insured against under coverage C

    • The limits provided for under coverage C

    Correct Answer
    A. Perils insured against under coverage C
    Explanation
    The HO-2, HO-4, and HO-6 are similar in that they all provide coverage for perils insured against under coverage C. This means that all three types of insurance policies offer protection against specific risks or hazards that are listed under coverage C. The limits provided for under coverage C may vary depending on the specific policy, but the fact that they all include coverage for these perils is a similarity among these three types of insurance.

    Rate this question:

  • 49. 

    A person can base his/her claim for legal liability on the basis of all the following, except:

    • Absolute liability

    • Breach of contract

    • Intentional tort

    • Negligence

    Correct Answer
    A. Breach of contract
    Explanation
    A person can base their claim for legal liability on the basis of absolute liability, intentional tort, and negligence. However, breach of contract is not a basis for legal liability. Breach of contract refers to the failure to fulfill the terms of a contract, which typically results in a breach of contract claim rather than a claim for legal liability. Legal liability is usually based on actions or omissions that cause harm or injury to another person, such as in cases of absolute liability, intentional torts, or negligence.

    Rate this question:

Quiz Review Timeline (Updated): Oct 19, 2023 +

Our quizzes are rigorously reviewed, monitored and continuously updated by our expert board to maintain accuracy, relevance, and timeliness.

  • Current Version
  • Oct 19, 2023
    Quiz Edited by
    ProProfs Editorial Team
  • Dec 28, 2009
    Quiz Created by
    Pchinna

Recent Quizzes

Fire & Casualty Exam 1B Fire & Casualty Exam 1B
Property And Casualty Broker Quiz Property And Casualty Broker Quiz
Property and Casualty Insurance - Oklahoma Property and Casualty Insurance - Oklahoma
Property And Casualty Insurance Trivia Quiz Property And Casualty Insurance Trivia Quiz
Overview of Property and Casualty Insurance Overview of Property and Casualty Insurance
Fire & Casualty Exam #3 Fire & Casualty Exam #3
Back to Top Back to top
Advertisement
×

Wait!
Here's an interesting quiz for you.

We have other quizzes matching your interest.