Question 1

Under an automobile insurance policy,what does comprehensive coverage protect against?

Accepted Answer

A)  All types of loss in connection with the ownership and operation of a vehicle. 
B)  All types of losses caused by the insured to other parties. 
C)  All types of damage to the covered vehicles of the insured. 
D)  All types of damage to the covered vehicles of the insured except for damage caused by collision. 
E)  Coverage for all losses in connection with the vehicle of the insured that are caused by other parties. 
A)  All types of loss in connection with the ownership and operation of a vehicle. 
B)  All types of losses caused by the insured to other parties. 
C)  All types of damage to the covered vehicles of the insured. 
D)  All types of damage to the covered vehicles of the insured except for damage caused by collision. 
E)  Coverage for all losses in connection with the vehicle of the insured that are caused by other parties.

Question 2

An insurable interest can best be described as:

Accepted Answer

A)  the insured having paid the premiums of an insurance policy as called for in the policy 
B)  the insurance covering an item that,if damaged or destroyed,would cause a loss for the party if it were damaged or destroyed in the absence of insurance 
C)  the item in question being fully covered under a valid insurance policy 
D)  the item in question being fully capable of identification at the time of a loss,even if it could not have been identified at the time that the insurance policy was taken out 
A)  the insured having paid the premiums of an insurance policy as called for in the policy 
B)  the insurance covering an item that,if damaged or destroyed,would cause a loss for the party if it were damaged or destroyed in the absence of insurance 
C)  the item in question being fully covered under a valid insurance policy 
D)  the item in question being fully capable of identification at the time of a loss,even if it could not have been identified at the time that the insurance policy was taken out

Question 3

An insurance contract is one where one party indemnifies another against loss from an unknown event.

Accepted Answer

A) True 
 B)False

Question 4

In a life insurance policy,the insured is the party who is to receive the insurance proceeds upon the death of the insured.

Accepted Answer

A) True 
 B)False

Question 5

The primary coverage of renters insurance is for the possessions of the insured.

Accepted Answer

A) True 
 B)False

Question 6

The basic difference between whole life insurance and universal life insurance is which of the following?

Accepted Answer

A)  Universal life includes health insurance and whole life does not. 
B)  The universal life investment portion pays interest at a variable rate and whole life does not. 
C)  Universal life is a single premium payment plan and whole life is not. 
D)  There is no difference because they are two terms for the same type of policy. 
E)  Universal life is usually purchased by corporations on its employees and whole life is usually purchased by individuals for family members. 
A)  Universal life includes health insurance and whole life does not. 
B)  The universal life investment portion pays interest at a variable rate and whole life does not. 
C)  Universal life is a single premium payment plan and whole life is not. 
D)  There is no difference because they are two terms for the same type of policy. 
E)  Universal life is usually purchased by corporations on its employees and whole life is usually purchased by individuals for family members.

Question 7

The insured owes a duty to defend against any suit brought against him or her that involves a claim within the coverage of the policy.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following best describes an umbrella insurance policy?

Accepted Answer

A)  It is a policy that covers more than one type of risk. 
B)  It is a policy that provides coverage beyond the dollar limits of the insured's other policies. 
C)  It is a policy that covers damage only if it was caused by rain. 
D)  It is a policy that covers risks to a business. 
E)  It is a policy that combines life insurance and fire insurance protection. 
A)  It is a policy that covers more than one type of risk. 
B)  It is a policy that provides coverage beyond the dollar limits of the insured's other policies. 
C)  It is a policy that covers damage only if it was caused by rain. 
D)  It is a policy that covers risks to a business. 
E)  It is a policy that combines life insurance and fire insurance protection.

Question 9

Kirk was recently visited by a life insurance salesperson.The salesperson did an especially good job of selling,and Kirk decided to buy several policies.In addition to a policy on himself,Kirk purchased one policy each on the life of his wife,his mother,his son,his aunt,his uncle,and the old man who lives next door.Kirk has been married for 12 years.His mother is 62 years old and provides no support to Kirk.In fact,Kirk has very little contact with her.His aunt provides no support,but had provided support when Kirk was young and his parents had difficulty making ends meet.Kirk receives $10,000 each year as a gift from his uncle,but otherwise receives nothing from him.Kirk has known the old man next door for 11 years and often assists the old man when he needs help.For which of these policies does Kirk have an insurable interest?

Accepted Answer

Kirk has an insurable interest in close

Question 10

What is the effect of an incontestability clause?

Accepted Answer

A)  The insured cannot file a claim more than a specified time following the insured event. 
B)  The insurer cannot challenge the information in the application after a specified time. 
C)  The insured is required to not challenge the statements made by its own insured. 
D)  The state is prevented from challenging any claim payment decisions of the insurer. 
E)  The insurer is prevented from canceling an insurance policy due to nonpayment. 
A)  The insured cannot file a claim more than a specified time following the insured event. 
B)  The insurer cannot challenge the information in the application after a specified time. 
C)  The insured is required to not challenge the statements made by its own insured. 
D)  The state is prevented from challenging any claim payment decisions of the insurer. 
E)  The insurer is prevented from canceling an insurance policy due to nonpayment.

Question 11

The McCarran-Ferguson Act provides that insurance is regulated by the states.

Accepted Answer

A) True 
 B)False

Question 12

In a life insurance policy,it is possible for the owner of the policy and the insured to be the same person.

Accepted Answer

A) True 
 B)False

Question 13

With disability insurance,the payments are generally made to the insured even though the insured does not document actual expenses.

Accepted Answer

A) True 
 B)False

Question 14

Business interruption insurance was designed to reimburse the insured whose business is severely destroyed or damaged during the time it takes to repair or reconstruct the damaged property.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is true about insurable interest regarding property insurance?

Accepted Answer

A)  Only one party can have an insurable interest in the same item at the same time. 
B)  A party has an insurable interest in any item for which the party can establish a value. 
C)  The insurable interest in the property must exist at the time there is a loss. 
D)  The insurable interest in the property must exist at the time of the policy issuance. 
E)  Both A and C. 
A)  Only one party can have an insurable interest in the same item at the same time. 
B)  A party has an insurable interest in any item for which the party can establish a value. 
C)  The insurable interest in the property must exist at the time there is a loss. 
D)  The insurable interest in the property must exist at the time of the policy issuance. 
E)  Both A and C.

Question 16

Should an insurance company have a duty to defend the insured when the defense will cost the insurance company more than it will cost to simply pay the claim? For example,should an auto insurance company have a duty to spend $10,000 to defend an insured when the claim is under $10,000? What ethical problems arise when the outcome would affect the insured's driving record,and therefore the rates that the insured would charge? What ethical problems can arise with this duty to defend when both drivers are covered by the same insurance company?

Accepted Answer

A conflict can arise here because the on

Question 17

Because there are so many professionals in today's workforce,professional malpractice premiums are reasonably priced.

Accepted Answer

A) True 
 B)False

Question 18

The usual time period for the validity of a suicide clause is 10 years.

Accepted Answer

A) True 
 B)False

Question 19

A coinsurance clause requires the insured to pay a percentage of an insured loss.

Accepted Answer

A) True 
 B)False

Question 20

What can an insured do under a homeowners policy to provide insurance coverage for specific valuable items,such as a rare and valuable painting?

Accepted Answer

A)  Nothing in particular; it will be covered within the overall policy limits,but that might leave less coverage for other items. 
B)  Execute an appurtenant structure substitution agreement in which the coverage for the rare item will take the place of coverage for appurtenant structures. 
C)  Add a personal effects floater to the policy covering the artwork. 
D)  Add the standard artwork addendum to the policy. 
E)  Obtain an independent appraisal and submit it to the insurer. 
A)  Nothing in particular; it will be covered within the overall policy limits,but that might leave less coverage for other items. 
B)  Execute an appurtenant structure substitution agreement in which the coverage for the rare item will take the place of coverage for appurtenant structures. 
C)  Add a personal effects floater to the policy covering the artwork. 
D)  Add the standard artwork addendum to the policy. 
E)  Obtain an independent appraisal and submit it to the insurer.

Exam 50: Insurance

Under an automobile insurance policy,what does comprehensive coverage protect against?

An insurable interest can best be described as:

An insurance contract is one where one party indemnifies another against loss from an unknown event.

In a life insurance policy,the insured is the party who is to receive the insurance proceeds upon the death of the insured.

The primary coverage of renters insurance is for the possessions of the insured.

The basic difference between whole life insurance and universal life insurance is which of the following?

The insured owes a duty to defend against any suit brought against him or her that involves a claim within the coverage of the policy.

Which of the following best describes an umbrella insurance policy?

What is the effect of an incontestability clause?

The McCarran-Ferguson Act provides that insurance is regulated by the states.

In a life insurance policy,it is possible for the owner of the policy and the insured to be the same person.

With disability insurance,the payments are generally made to the insured even though the insured does not document actual expenses.

Business interruption insurance was designed to reimburse the insured whose business is severely destroyed or damaged during the time it takes to repair or reconstruct the damaged property.

Which of the following is true about insurable interest regarding property insurance?

Because there are so many professionals in today's workforce,professional malpractice premiums are reasonably priced.

The usual time period for the validity of a suicide clause is 10 years.

A coinsurance clause requires the insured to pay a percentage of an insured loss.

What can an insured do under a homeowners policy to provide insurance coverage for specific valuable items,such as a rare and valuable painting?

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