The absence of people and property from a location best describes
a) occupied
b) tenancy in common
c) unoccupied
d) vacany
d) vacancy
Which stemming regarding property recovered after a claim has been paid is FALSE?
a) at the insured's option, the property will be returned to the insured
b) at the insurer's option, the property will be returned to the insured
c) the insured must notify
b) at the insurer's option, the property will be returned to the insured
Many commercial liability policies are written with an aggregate policy limit, which is the most the insurer will pay?
a) for all claims during the policy period
b) for any one occurrence
c) on behalf of any one insured
d) to any one person
a) for all claims during the policy period
A policy modification that may be added to an insurance policy for an extra premium charge to the insured is called
a) additional coverage
b) endorsement
c) extended coverage
d) rider
b) endorsement
The part of an insurance contract that sets forth the rules of conduct, duties, and obligations of the insured and the insurer is the
a) conditions
b) declarations
c) exclusions
d) insuring agreement
a) conditions
Melissa Jones has two property policies covering the same house. Company A's policy is written for $75,000. Company B's policy is written for $25,000. In the event of a $10,000 loss, how much will Company B pay?
a) $2,500
b) $10,000
c) $25,000
d) $75,000
a) $2,500
A policy ending in the middle of the term has been
a) cancelled
b) non renewed
c) renewed
d) voided
a) cancelled
A sudden and unforeseen event is known as
a) accident
b) concurrent causation
c) occurence
d) surprising peril
a) accident
Thirty days prior to the end of his policy, Bill's insurer informs him that they will not continue his insurance. Bill's policy is considered to be
a) cancelled with no return of premium
b) cancelled with return of unearned premium
c) non renewed with no
c) non renewed with no return of premium
Which of the following is NOT considered a consequential loss?
a) damage to personal property
b) extra expenses incurred while rebuilding damages property
c) loss of business income while a building is closed for repairs
d) loss of rental value
a) damage to personal property
In property insurance, actual cash value means
a) original cost
b) replacement cost
c) replacement cost less depreciation
d) replacement cost plus depreciation
c) replacement cost less depreciation
Furniture destroyed when a building burns down is an example of a _______ loss
a) consequential
b) direct
c) indirect
d) proximate
b) direct
Upon notice of a claim, Linda's insurer requests a _______ to be submitted within 60 days
a) affidavit
b) photograph of damage
c) proof of loss
d) waiver of subrogation
c) proof of loss
The purpose of the co-insurance clause is to
a) eliminate coverage for small claims
b) reinforce the principle of indemnity
c) require the client to carry proper coverage
d) require the client to pay part of every claim
c) require the client to carry proper coverage
A liability policy has limits of $200,000 per occurrence, $1,000,000 aggregate limit. At different times during the policy period, four persons are injured to the extent of $250,000 each. What would each person recover?
a) $100,000
b) $200,000
c) $800,000
b) $200,000
Data regarding the premium, limits, name and address of the insured and the policy period are found in the ______ of the contract
a) conditions
b) declarations
c) exclusions
d) insuring agreement
b) declarations
What part of an insurance contract specifies the perils insured against?
a) conditions
b) declarations
c) exclusions
d) insuring agreement
d) insuring agreement
What part of an insurance contract describes the perils that NOT covered in an all-risk policy?
a) conditions
b) declarations
c) exclusions
d) insuring agreement
d) exclusions
The area of tort law that addresses the issue of unintentional wrongful acts, other than crimes and breach of contract is called
a) assumed liability
b) negligence
c) no fault
d) waiver and estoppel
b) negligence
Which of the following is NOT required to be present to prove negligence?
a) actual injury or damage
b) intervening cause
c) legal duty
d) proximate cause
b) intervening cause
Requiring advance notice is sent to the lender in the event of a policy canceling is an example of
a) claim procedures
b) duties of the insured
c) mortgagee rights
d) mortgagor duties
c) mortgagee rights
When a direct chain of events resulting from a negligent act causes injury or damage that act is considered to be
a) the direct cause
b) the intervening cause
c) the proximate cause
d) strict liability
c) the proximate cause
______ is used to eliminate coverage for small claims and to control the cost of insurance
a) an aggregate limit
b) co-insurance
c) a deductible
d) pro rata liability
c) a deductible
Tom is involved in an auto accident in which bill was at fault. Tom's insurer pays to fix his car and now would like to go back after Bill, the negligent party. This is known as
a) collision reimbursement
b) contract of indemnity
c) excess coverage
d) rig
d) right of subrogation
When a policy pays the full replacement cost at today's prices without any deduction for depreciation coverage has been written on the basis of
a) actual cash value
b) replacement cost
c) stated amount
d) valued amount
b) replacement cost
Mary can transfer her auto policy to the person that bought her car if her insurer will agree to it. This is also known as the right of
a) assignment
b) estoppel
c) subrogation
d) waiver
a) assignment
Libel, slander and false arrest are examples of
a) bodily injury
b) personal injury
c) personal malfeasance
d) tort law
b) personal injury
If an insured is found to be responsible for the negligent acts of others, it is known as _____ liability
a) absolute
b) general
c) strict
d) vicarious
d) vicarious
In the property and casualty insurance field, insurable interest must exist at the time
a) application is made for the insurance
b) the loss occurs
c) of application and at the time of loss
d) of application or at the time of loss
b) the loss occurs
Physical injury to someone is known as ______ whereas ________ is known as causing physical destruction or loss of use of tangible property
a) bodily injury/property damage
b) financial loss/emotional losses
c) personal injury/property damage
d) punitive
a) bodily injury/property damage
A policy that combines the maximum limit available for BI and/or PD for any one occurrence is ______ limit
a) aggregate
b) occurence
c) per person
d) single
d) single
All of the following are duties of the insured after a loss EXCEPT
a) allow the insurer to inspect the damaged property
b) protect the property from further damage
c) repair the damaged property and submit an itemized bill
d) submit a notice of claim to t
c) repair the damaged property and submit itemized bill
Demonstrating an insurable interest in the preservation of property is the basis to be a
a) bailee
b) insured
c) insurer
d) mortgagor
b) insured
In liability policies, the insurer has a duty to defend the insured and pay the costs of that defense. The insurer will settle the suit in its best interest. In professional liability policies, the insurer must obtain
a) approval from the Department of In
b) the consent of the insured to settle the case
Consumer investigative reports maybe used in the underwriting process but are subject to
a) consumer protective act
b) fair credit reporting act
c) graham-leech-billet act
d) pre-screening through the BMV
b) fair credit reporting act
The taking of property by visible signs of a forced entry or exit is called
a) breaking and entering
b) burglary
c) mysterious disappearance
d) robbery
b) burglary
After a loss, all of the following are obligations of the insurer EXCEPT to
a) provide all necessary forms for completion by the insured
b) repair the property
c) replace the property
d) send the loss to the appraisal process for settlement
d) send the loss to the appraisal process for settlement
Disputes in the settlement of property claims will be settled by the ____ whereas liability disputes will use the
a) appraisal clause/arbitration clause
b) arbitration clause/appraisal clause
c) salvage clause in both cases
d) waiver clause/estoppel claus
a) appraisal clause/arbitration clause
Extra coverage added to a property policy at no cost to the insured is known as
a) additional coverage
b) endorsements
c) extended coverage
d) supplementary coverage
a) additional coverage
Which of the following is NOT a permitted defense in a negligence lawsuit?
a) assumption of the risk
b) comparative negligence
c) contributory negligence
d) strict liability
d) strict liability
States that have adopted limited forms of no-fault auto insurance coverage are relying on the concept of
a) assumption risk
b) contributory negligence
c) intervening cause
d) proximate cause
a) assumption of risk
All of the following are part of the underwriting process EXCEPT
a) claim history
b) credit scores
c) loss costs
d) payment plans
d) payment plans
Roy wants to insure his 1957 Corvette valued at $50,000 on his current auto policy. He should ask the insurer to insure the vehicle for
a) actual cash value
b) functional replacement cost
c) replacement value
d) stated value
d) stated value
Insurable interest exists only when a number of conditions are met. The applicant has an insurable interest if she
a) does not face a risk of loss
b) does not share the interest with anyone else
c) has an interest in protecting what is insured
d) has a po
c) has an interest in protecting what is insured