Exam 10: Analysis of Insurance Contracts

Connie has a major medical policy with a $200 deductible and a 75-25 coinsurance clause.If she has eligible medical expenses of $10,000,how much will be paid by her insurer?

Which of the following statements about a calendar-year deductible is (are)true? I.It requires the insured to pay a specified amount of each claim regardless of when the claim occurs during the year and regardless of any previous claims during the year. II.It is used only in policies which cover direct property losses.

Helen and John both own automobiles on which they carry liability insurance.If Helen is negligent and has an accident while driving John's car,how will each insurer respond to any liability judgment against Helen?

Which of the following statements about "all-risks" coverage is (are)true? I.All losses are covered except those losses specifically excluded. II.The burden of proof is on the insured to prove that a loss is covered.

Kate is covered under her employer's group health plan.She is also covered as a dependent under her husband's group health plan.Under the usual coordination-of-benefits provision,how will each company respond to a claim filed by Kate?

The exclusion of flood in a homeowners policy is an example of an

Janet hit a wall causing a large dent in the fender of her car.She was busy at work and delayed reporting the damage to her insurer for 9 months.The insurer denied the claim,stating,"Although such a loss is usually covered,you are required under the terms of the contract to provide prompt notification in case of loss." The prompt notification requirement is an example of a(n)

At what point in time must an insured meet the coinsurance requirement in a property insurance policy in order to avoid having to pay a portion of the loss?

All of the following statements about endorsements and riders are true EXCEPT

ABC Company insured its building on a replacement cost basis for $700,000 under a property insurance policy that included an 80 percent coinsurance clause.The building had a replacement cost of $1 million when it sustained a $40,000 loss.How much will ABC Company receive from its insurer,assuming no deductible applies?

Which of the following statements about the definition of the insured is (are)true? I.In some cases,a person who is not specifically named may be classified as an insured. II.Under no circumstances can more than one person be named as an insured.

Lisa has three fire insurance policies on her office building.The policy from company A is for $400,000,and the policies from companies B and C are for $100,000 each.If Lisa has a $360,000 loss,how much of the loss will be covered by each policy if the loss is settled on a pro rata basis by the insurers?

David owns a commercial building with a replacement cost of $4 million.The building is insured on a replacement cost basis for $3 million under a fire insurance policy that has an 80 percent coinsurance clause.How much will David collect if the building sustains a covered fire loss with a replacement cost of $320,000?

The purpose of a coordination-of-benefits provision in group health insurance plans is to

Shauna hurt her back and was unable to work.She filed a claim under her disability income insurance policy.Under terms of the policy,60 days must pass between the date of the injury and when the insurer begins to replace lost earnings.This 60-day period is called a(n)

XYZ Company insured its building on a replacement cost basis for $450,000 under a property insurance policy that included an 80 percent coinsurance clause.The building had a replacement cost of $500,000 when it sustained a $50,000 loss.How much will XYZ Company receive from its insurer,assuming no deductible applies?

Laura's major medical insurance policy includes a $500 deductible and an 80-20 coinsurance clause.Laura was hospitalized and her covered medical expenses were $10,500.How much of the $10,500 will be paid by the insurer under Laura's major medical policy?

James purchased liability insurance with a $100,000 limit from Insurer A.When Insurer A denied a claim that James thought should be covered,he bought a second liability insurance policy with a $150,000 limit from Insurer B.Before he cancelled the policy with Insurer A,a $60,000 loss occurred.If this loss is settled on a pro rata basis,how much must each insurer pay?

Reasons why a peril may be considered uninsurable and therefore excluded from insurance contracts include which of the following? I.The losses from the occurrence of the peril may be due to a predictable decline in value. II.The losses from the occurrence of the peril may be incalculable and catastrophic.

Which of the following statements about problems arising from the use of a coinsurance clause is (are)true? I.The amount of insurance should be periodically evaluated to avoid a coinsurance penalty because of inflation. II.An agreed value coverage option is one method used to solve the problem of values that fluctuate throughout the policy term.