INS21: Mock Exam! Trivia Quiz

75 Questions | By Project21 | Updated: Mar 22, 2022 | Attempts: 28944

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1.

Brown Company's Policy includes a liberalization clause. Brown's insurer introduces a policy change that broadens coverage at no additional premium. How will this change apply to Brown's existing policy?
- A.
  
  The broadened coverage does not apply to Brown Company's policy.
- B.
  
  The broadened coverage automatically applies to Brown Company's policy.
- C.
  
  The broadened coverage will apply to Brown Company's policy with an endorsement.
- D.
  
  The broadened coverage will apply to Brown Company's new policies as they are issued.
2.

The use of standard forms by insurers leads to a more
- A.
  
  Consistent interpretation of insurance policies
- B.
  
  Creative interpretation of insurance policies.
- C.
  
  Conservative interpretation of insurance policies.
- D.
  
  Coordinated interpretation of insurance policies.
3.

If the insurer cancels the policy, the return premium will be calculated usually on a
- A.
  
  Short-rate basis.
- B.
  
  Flat Basis.
- C.
  
  Pro-rata basis.
- D.
  
  Penalty basis.
4.

Jim canceled his auto policy 315 days after the inception date. The one-year premium is $1,095. Assuming that a year is 365 days, what is Jim's pro rata premium refund?
- A.
  
  $50
- B.
  
  $150
- C.
  
  $780
- D.
  
  $945
5.

A policy in which the insurer pays a stated amount in the event of a specified loss (usually a total loss), regardless of the actual value of the loss is known as a
- A.
  
  Replacement policy.
- B.
  
  Valued policy.
- C.
  
  Conditional policy.
- D.
  
  Specified policy.
6.

Which one of the following statements is true regarding types of rates used by insurers?
- A.
  
  Class rates apply to all insureds in the same rating category.
- B.
  
  Merit rating plans are also called manual rating plans.
- C.
  
  Class rates are not based on loss statistics.
- D.
  
  Class rates reflect loss characteristics of a particular insured.
7.

Why would an underwriter modify the rate charged for the coverage provided when evaluating an application for insurance?
- A.
  
  Because treaty reinsurance in unavailable for the exposures indicated
- B.
  
  To address the moral hazards the underwriter identified during investigation
- C.
  
  To better match the rate to the characteristics of the risk
- D.
  
  Because the applicant is not acceptable for coverage
8.

In insurance terminology, which of the following refers to a book of business?
- A.
  
  All policies sold by an insurance company or agency
- B.
  
  All policies in a particular territory
- C.
  
  All policies providing a particular type of insurance
- D.
  
  All the above
9.

In evaluating an application, an underwriter thinks that the class of business is not one that the company wishes to write, but he would need to physically inspect it to be certain. He also realizes that the business is located in an undesirable section of the city. Based on the location alone, the underwriter decides not to issue the policy. According to many state insurance laws, this would be an example of
- A.
  
  Diversification.
- B.
  
  Unfair discrimination.
- C.
  
  Fair discrimination.
- D.
  
  Regulated discrimination.
10.

Some insurers now use expert systems in the underwriting process. The primary purpose of these expert systems is to
- A.
  
  Reduce claim expenses and loss adjustment expenses.
- B.
  
  Replace underwriting decision-making and enhance accuracy.
- C.
  
  Emulate the underwriting decision-making process as it would be performed by expert underwriters.
- D.
  
  Modernize insurance company information systems.
11.

Select the Correct statement with respect to Auto Insurance in America
- A.
  
  Men Pay more for Insurance than Women due to their aggessiveness behind wheels
- B.
  
  Women Pay more for Insurance than men due to their soft behind wheels
- C.
  
  Premium cannot be different for men and women
- D.
  
  None of the above
12.

Roadside assistance plans provides services EXCEPT
- A.
  
  24 Hours emergency towing services
- B.
  
  24 Hours lost key and lockout services
- C.
  
  24 Hours battery services
- D.
  
  24 Car higene services
13.

Being a owner of house in US
- A.
  
  It is mandatory to buy homeowner's Insurance
- B.
  
  It is not mandatory to buy homeowner's Insurance
- C.
  
  State automatically provides homeowner's Insurance
- D.
  
  The bank which loaned should buy homeowners's Insurance
14.

If an Insured is Sued(Dragged to court) does the Insurance Company defend the Insured in court?
- A.
  
  Insurance company defends the Insured until final judgement is given
- B.
  
  Insurance company defends the Insured until the limits of the coverage is expended for the defence
- C.
  
  Insurance company does washes of hands as it is not their responsibility to go to court
- D.
  
  None of the above
15.

If an insurance company refuses to pay a claim that should be paid or offers to settle a claim for less than it knows the claim is worth or denies a claim without adequate investigation, this could give rise to
- A.
  
  Bad faith claim against the Insurance company
- B.
  
  Unfair descrimination by Insurance company
- C.
  
  Long term profit for the Insurance company
- D.
  
  Cancellation of Liscence doing business by the Insurance company
16.

A "___________" letter from your insurer is a notice that even though the company is proceeding to handle your claim, depending on what happens, certain losses might not be covered by the terms of the policy. By such a letter, the company preserves its right to deny coverage at a later date based on the terms of the policy.
- A.
  
  Preservation of rights
- B.
  
  Reservation of rights
- C.
  
  Denial of rights
- D.
  
  None of the above
17.

Insurance companies are exempted from Consumer protection laws in some states
- A.
  
  Yes
- B.
  
  Yes, becuase Insurance is not consumable product
- C.
  
  No
- D.
  
  No, because Insurance customers are consumers
18.

You have bought a flame red high performance engine car. You were surprised that despite your car has so many great safety features similar to other brand cars, your insurance company charged you more than what it was charging for other brand cars. What could be the reason?
- A.
  
  The red color cars are alway percieved to recieved more traffic tickets
- B.
  
  The high performance engine makes your car engine more prone to theft
- C.
  
  The Insurance company battling a case against your car brand company
- D.
  
  The Insurance company had some secret dealings with the rival company
19.

Ideally insurable loss exposures include:
- A.
  
  Losses those are accidental.
- B.
  
  Losses those are definite and measurable
- C.
  
  A large number of similar exposure units.
- D.
  
  All of the above.
20.

Most liability insurance policies exclude coverage for losses intentionally caused by the insured because such losses do not meet which one of the following characteristics of an ideally insurable exposure?
- A.
  
  Large number of similar exposure units
- B.
  
  Accidental
- C.
  
  Not catastrophic
- D.
  
  Not economically feasible to insure
21.

Which of the following statements best describes the way in which “support for credit” is a benefit of insurance?
- A.
  
  Insurance is required to get a drivers license.
- B.
  
  Insurance satisfies lenders that their loans will be repaid.
- C.
  
  Insurers lend money to fund new construction and other projects.
- D.
  
  People who are indemnified by insurance don’t have to borrow money to replace damaged property.
22.

All of the following are correct, EXCEPT:
- A.
  
  Insurance works as a system of transferring and sharing the costs of losses
- B.
  
  The law of large numbers assists the insurance mechanism by improving the relative accuracy of prediction.
- C.
  
  Property loss exposures include negligence, real property, and personal property.
- D.
  
  A liability loss exposure presents the possibility of a claim alleging legal responsibility.
23.

State insurance departments:
- A.
  
  Regulate insurance rates to protect consumers from inadequate, excessive, or unfairly discriminatory rates.
- B.
  
  Are located in most but not all states
- C.
  
  Provide a source of investment funds.
- D.
  
  Answer to the federal government insurance department.
24.

Reinsurance is a contractual agreement:
- A.
  
  In which one insurer transfers some or all of its loss exposures to another insurer.
- B.
  
  That is formed as a subsidiary of its parent company for the purpose of writing insurance on the parent company.
- C.
  
  That ideally insures large numbers of similar exposure units.
- D.
  
  That insures through an attorney-in-fact.
25.

A guaranty fund is:
- A.
  
  Created by the federal government for the purpose of providing insurance for the social good.
- B.
  
  The primary funding for the Fair Access to Insurance Requirements program.
- C.
  
  A state fund that provides a system to pay the claims of insolvent insurers.
- D.
  
  Managed by the National Association of Insurance Commissioners.