Insurance MCQ

All of the following coverages are typically included in the supplementary payments of a liability policy EXCEPT: A) loss of earnings. B) property damages the insured is found legally liable for. C) defense costs. D) first aid to others at the time of the accident. Answer: B

Liability policies provide certain supplementary payments that are: A) included in the policy's aggregate limits. B) paid only if the insured is found to be legally liable. C) paid in addition to the policy's regular limit of liability. D) included in the policy's occurrence limits. Answer: C

Common exclusions with a liability policy would typically include all of the following EXCEPT: A) damage to property in the insured's care, custody, or control. B) injuries or damages caused unintentionally by the insured. C) damage to property owned by the insured. D) injuries or damages caused intentionally by the insured. Answer: B

What is meant by aggregate limit of liability? A) The most the insurance company will pay for defense costs. B) The maximum amount payable in any one occurrence. C) The maximum amount the policy will pay per policy period regardless of the number of claims. D) The most the insurance company will pay to one person. Answer: C

An occurrence is best described as something that: A) is expected. B) is intentional. C) happens when no one is present. D) may take place over time. Answer: D

Bob has a liability policy in the amount of 300/500/100. How much coverage does he have per occurrence for property damage liability? A) $100,000.00 B) $50,000.00 C) $300,000.00 D) $500,000.00 Answer: A

Which of the following events is NOT considered an occurrence for insurance purposes? A) Wearing out clothing. B) Being struck by a falling object. C) Slipping and falling on icy pavement. D) Long-term exposure to chemicals. Answer: A

Which one of the following would be classified as a general damage? A) Medical bills. B) Damaged property. C) Lost wages. D) Pain and suffering. Answer: D

An employee is delivering packages for her employer but is using her own vehicle. The employee hits a pedestrian. The employer may be held liable because of the doctrine of: A) employer liability. B) workers' compensation. C) vicarious liability. D) gross negligence. Answer: C

Several unsupervised young children wander about your neighborhood. Although you have fenced your yard and pool, they climb both fences and swim in your pool. You've called their parents to complain and tell them that you will not be responsible if one of the children is injured or killed. When a child drowns in the pool, what type of liability would apply to you? A) Vicarious liability. B) Premises liability. C) Strict liability. D) None, because you have shifted liability to the parents. Answer: C

An insured owns a pet lion that is caged on the homeowner's property. The owner takes great care to warn neighbors of the possible danger by posting signs, fencing the yard, and locking the cage at all times. When a neighbor's child manages to open the cage and is bitten, what type of liability would apply to the lion owner? A) Contractual liability. B) Premises liability. C) Absolute liability. D) Vicarious liability. Answer: C

A person becomes seriously ill after eating unrefrigerated raw oysters from a street vendor. When the vendor is sued for negligence, what defense might best be used? A) Assumption of risk. B) Comparative negligence. C) Immunity. D) Last clear chance. Answer: A

A repairperson knowingly uses faulty parts when he repairs a boiler. The court awards special, general, and punitive damages amounting to several million dollars. How will the repairman's comprehensive general liability policy respond? A) Special, general, and punitive damages are covered unless excluded. B) Special damages are covered. C) General damages are covered. D) Special and general damages are covered. Answer: A

Payments for losses that cannot be precisely measured, such as the loss of companionship of spouse from another, are called: A) special damages. B) spousal damages. C) general damages. D) punitive damages. Answer: C

The insured is in a hurry to get to work, fails to stop at a stop sign, speeds through an intersection, and strikes another vehicle. That vehicle hits another car that then jumps a curb and injures a pedestrian. What is the proximate cause of the accident? A) Failing to avoid an accident. B) Leaving late for work. C) Failing to stop at a stop sign. D) Speeding. Answer: C

An insured speeds through a residential neighborhood, almost striking several children. Under the insurance definition of negligence, such an insured would be held: A) negligent. B) strictly liable. C) not legally liable. D) legally liable. Answer: C

An insured owns a small neighborhood grocery store. During a storm, a piece of the roof falls on the sidewalk. Several people are in the store at the time, but no one is injured. Under the insurance definition of negligence, such an insured would be held: A) negligent. B) strictly liable. C) not legally liable. D) legally liable. Answer: C