Insurance Basics! Ultimate Trivia Quiz

50 Questions | Total Attempts: 661

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Insurance Basics! Ultimate Trivia Quiz - Quiz

Do you know the basics of insurance? Do you suppose you can pass this test? Insurance is a means of safeguard from a monetary deficit. Insurance is a type of risk management mainly used to deter against the risk of a contingent or uncertain loss. It is also useful to know that almost anything can be insured. Take this quiz and see how much you know about the basics of insurance.


Questions and Answers
  • 1. 
    Which of the following terms is most closely related to the concept of insurable interest?
    • A. 

      Loss valuation

    • B. 

      Actual cash value

    • C. 

      Indemnity

    • D. 

      Replacement cost

  • 2. 
    Replacement cost minus depreciation best describes which of the following?
    • A. 

      Direct loss value

    • B. 

      Actual cash value

    • C. 

      Insurable Interest

    • D. 

      Financial risk

  • 3. 
    All of the following are required as elements of a legal contract except:
    • A. 

      Consideration

    • B. 

      Competent parties

    • C. 

      Agreement

    • D. 

      Countersignature

  • 4. 
    An answer to an insurance question on an application that is guaranteed to be true best defines:
    • A. 

      Representations

    • B. 

      Misrepresentations

    • C. 

      Warranties

    • D. 

      Concealments

  • 5. 
    Which of the following statements is true regarding binders?
    • A. 

      A binder is not usually valid for more than 90 days

    • B. 

      A binder may be oral or written

    • C. 

      A binder may be canceled by the insured within 2 days

    • D. 

      Binders are valid for 15 days after the policy is issued

  • 6. 
    In order to broaden or amend coverage in property and casualty policies, which of the following is used:
    • A. 

      Binders

    • B. 

      Amendments

    • C. 

      Endorsements

    • D. 

      Conditions

  • 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. 

      Short rate

    • B. 

      Pro-rate

    • C. 

      Actual cash value

    • D. 

      Specified peril

  • 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. 

      $18,500

    • B. 

      $28,000

    • C. 

      $22,000

    • D. 

      $22,500

  • 9. 
    All of the following are essential elements of negligence except:
    • A. 

      Actual injury

    • B. 

      Legal duty

    • C. 

      Proximate cause

    • D. 

      Criminal act

  • 10. 
    Which of the following policies provides open perils coverage?
    • A. 

      HO-2 Policy

    • B. 

      HO-3 Policy

    • C. 

      HO-4 Policy

    • D. 

      HO-6 Policy

  • 11. 
    Special limits of liability in a Homeowners contract include all but the following:
    • A. 

      Money and securities

    • B. 

      Jewelry and furs

    • C. 

      Firearms

    • D. 

      Clothing

  • 12. 
    Auto insurance premiums for a Personal Auto Policy are based on all of the following except:
    • A. 

      Type and amount of coverage desired

    • B. 

      Individuals who will operate the vehicle

    • C. 

      Where the vehicle is garaged

    • D. 

      Deductible chosen

    • E. 

      Gross total weight of the vehicle

  • 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. 

      $100,000

    • B. 

      $90,000

    • C. 

      $105,000

    • D. 

      $15,000

  • 14. 
    A basic fire policy will pay for all of the following EXCEPT:
    • A. 

      Fire

    • B. 

      Removal

    • C. 

      Lightning

    • D. 

      Explosion

  • 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. 

      Coinsurance

    • B. 

      Insurance Interest

    • C. 

      Subrogation

    • D. 

      Abandonment

  • 16. 
    After a loss has occurred, an insured has all of the following duties EXCEPT:
    • A. 

      Reimburse the mortgagee for its interests in the damaged property

    • B. 

      Protect the property from further damage

    • C. 

      Separate damaged property from undamaged property

    • D. 

      Immediately provide notice

  • 17. 
    Uninsured motorist coverage in an auto policy provides payments to which of the following?
    • A. 

      Bodily injury to the insured

    • B. 

      Bodily injury to the parties at fault

    • C. 

      Physical damage to the auto

    • D. 

      Bodily injury to the uninsured driver

  • 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. 

      $50,000

    • B. 

      $75,000

    • C. 

      $100,000

    • D. 

      $0; the policies of the injured parties provides primary coverage.

  • 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. 

      Collision

    • B. 

      Comprehensive

    • C. 

      Property Damage Liability

    • D. 

      No coverage applies due to driver negligence.

  • 20. 
    Which of the following is excluded from a flood policy?
    • A. 

      Overflow of inland waters

    • B. 

      Surface water run-off

    • C. 

      Sewer backup

    • D. 

      Mudslide

  • 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. 

      $100,000

    • B. 

      $117,000

    • C. 

      $125,000

    • D. 

      $175,000

  • 22. 
    Which of the following statements regarding medical payments coverage in a personal auto policy is true?
    • A. 

      All reasonable medical expenses are covered up to the policy limit.

    • B. 

      Legal liability need not be proven for payment to be made.

    • C. 

      An insured struck by a vehicle while a pedestrian would be covered.

    • D. 

      A neighbor is assisting you in changing your tire and is injured while loosening the lug nuts.

    • E. 

      All of the above.

  • 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. 

      Arbitration

    • B. 

      Appraisal

    • C. 

      Assignment

    • D. 

      Subrogation

  • 24. 
    What term best describes a building that does not have any contents and there are no normal activities taking place?
    • A. 

      Absent

    • B. 

      Vacant

    • C. 

      Unoccupied

    • D. 

      None of the above.

  • 25. 
    An insurance contract does which of the following?
    • A. 

      Eliminates risk by accumulating funds

    • B. 

      Transfers risk by accumulating funds

    • C. 

      Makes risks predictable by transferring funds

    • D. 

      Eliminates risk by transferring funds

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