Insurance Flashcards
Which of the following best expresses the purpose of a stated value contract?
To pre-establish the amount of coverage available for property items that are difficult to value.
Liability imposed on one party as a result of the actions of another person is known as
Vicarious Liability
What is a Certificate of Insurance?
A written document showing the types and amounts of insurance that have been issued to the insured.
When a parent is required to pay for damages caused by his or her children, this is an example of
Vicarious Liability
Which of the following does the term proximate cause refer to?
Negligence that leads to an injury.
Events or conditions that increase the chances of an insured loss occurring are referred to as
Hazards
Events in which a person has both the chance of winning and losing are classified as
Speculative risk
In property insurance, actual cash value is defined as which of the following?
Replacement cost at the time of the loss, less depreciation.
Which of the following is most likely occur if it is determined by the audit that the deposit premium was too high?
The insured will receive a return premium.
Burglary is defined as
Taking of property from within the premises leaving visible signs of forced entry.
The risk of loss may be classified as
Pure risk and speculative risk
What type of insurance policy insures against all risks of loss that are not specifically excluded by the policy?
Open peril policy
Which of the following coverages in dwelling and homeowners policies is for indirect losses?
Loss of use
Which of the following types of valuation works best for property whose value does not fluctuate much?
Agreed value
Replacement cost is defined as
Full replacement of property at its current cost, new and without reduction for depreciation.
Insurable interest in the property covered in a policy must be proven when?
At the time of loss.
Robbery is
Taking of property by use of force, violence, or fear.
What is defined as the maximum limit of coverage available under a liability policy during a policy year, regardless of the number of claims that may be made or the number of accidents that may occur?
Aggregate limit of liability
What insurance policy provision defines how the policy will respond if there is more than one insurance policy written on the same risk?
Other insurance
A person who is not named as an insured on the declarations page of a policy but is protected by the policy is known as the
Additional insured
The Federal Fair Credit Reporting Act does what?
Regulates consumer reports
Under the professional liability loss settlement provision, what must an insurer do before offering to pay a claimant to settle a claim?
Get the insured's consent
What protects consumers against the circulation of inaccurate or obsolete personal or financial information?
The Fair Credit Reporting Act
The part of the insurance contract that describes the covered perils and the nature of coverage of the contractual agreement between the insurer and insured is called the
Insuring agreement
When forming an insurance contract, when does acceptance usually occur?
When an insurer's underwriter approves coverage.
The part of a property policy that shows the amount of insurance, premium, and policy term is the
Declarations
What is a mandatory part of an insurance policy that varies with each individual policy?
Declarations
What would modify the original insurance contract by either adding or removing coverage?
Endorsement
Termination of an in-force insurance policy prior to the expiration date shown in the policy is known as
Cancellation
In insurance, an offer is usually made when
The completed application is submitted
Which part of an insurance policy covers claims-related expenses, reasonable expenses incurred by an insured to protect damaged property from further loss, or defense expenses?
Additional coverage
The Gramm-Leach-Bliley Act was passed to
Protect private customer information filed with a financial institution.
A sworn written statement that must be furnished by the insured to the insurer before any loss under a policy can be paid is
Proof of loss
The policy conditions define
How parties to the contract must act following a loss
When an insured makes truthful statements on the application for insurance and pays the required premium, it is known as
Consideration
In return for premium, an insurance company must
Be fair in underwriting and pay covered losses.
When would a misrepresentation on the insurance application be considered fraud?
If it is intentional and material.
What is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract?
Warranty
Before an insurer will pay any loss under a policy, what is usually required from the insured?
Proof of loss
In the event of a loss covered by the policy, if the insurer requests a signed sworn proof of loss, the named insured is required to submit it within
A specified time
An advertising company has its annual holiday party for employees and customers, after which a customer who had too much to drink is involved in an automobile accident. Occupants of the other car involved in the accident sue the company for serving the customer too much alcohol. Will the company's businessowners policy provide coverage?
Yes, none of the exclusions will apply.
Under which condition can broad theft coverage be added to a dwelling policy?
If the insured is owner-occupant of the dwelling.