Insurance MCQ

How may an insurer pay a claim settlement? a. The Actual Cash Value only b. The insurer may pay to repair, to replace, or pay the Actual Cash Value c. The cost to repair only d. The cost to replace only Answer: B

The notification for cancelling a homeowner's policy requires which of the following? a. 45 days notification b. 90 days notification c. 60 days notification d. 30 days notification Answer: A

In which situation can the insurer not settle a lawsuit without the permission of the insured? a. When the insured is covered under an Errors and Omissions policy. b. When the insured is guilty. c. When the lawsuit is for more than the policy limits. d. When the insured is covered under a property policy. Answer: A

Vicarious Liability arises out of which type of negligence? a. Strict Negligence b. Proximate Cause c. Absolute Negligence d. Imputed Negligence Answer: D

When more than one company insures a risk, how is a claim paid? a. Limit of liability b. Excess insurance c. Primary insurance d. Pro rata Answer: D

Which section of the insurance policy identifies the insurance company's responsibilities? a. Exclusions & Endorsements b. Conditions c. Declarations d. Insuring Agreement Answer: D

Which of the following are NOT part of the insured's duties after a loss? a. Provide proof of loss. b. Pay for a police investigation into the loss. c. Take reasonable steps to prevent further loss. d. Fully cooperate with the insurance investigation, settlement, or defense of a claim. Answer: B

Which of the following federal laws provides a backstop for defined acts of terrorism and imposes certain obligations on insurers? a. Terrorism Risk Insurance Act of 2002 b. Fair Credit Reporting Act c. Gramm Leach Bliley Act d. Workers Compensation Act Answer: A

Which legal doctrine states that an individual can be held liable even if negligence does not exist or cannot be proven? a. Absolute/Strict Liability b. Employer Liability c. Proximate Cause d. Vicarious Liability Answer: A

Which of the following is the best description of subrogation? a. The insurer has the responsibility to defend the insured against lawsuits or liability claims. b. The insurer has the right to pursue legal action against a third party who is liable for a loss that has been paid to an insured by the insurer. c. The insured cannot declare something a total loss and turn it over to the insurer and demand payment without the insurer's consent. d. The insurer can change the same type of policy the insured owns in any way, providing for more coverage without additional premium. The insured's original policy will be extended for those coverages without need for additional forms or premium. Answer: B

Which of the following individuals/groups CAN be held negligent? a. The mentally ill b. A college student c. Charitable institutions d. Infants Answer: B

The Standard Fire Policy insures against all of the following perils except: a. lightning. b. removal of property to protect from further damage. c. fire. d. hail. Answer: D

Which of the following best describes statutes of limitations? a. The injured party would collect damages even if he/she had contributory negligence. b. The time limit set on how long an injured person can sue the insurer for damages c. The defendant who is least at fault is not required to pay for any of the damages. d. Any defendant who is partly at fault must pay in proportion to their share of the fault. Answer: B

Which of the following best describes Proximate Cause? a. Employers being held liable for the negligent acts of employees while those employees are acting within the scope of their employment b. An event in which one individual becomes liable for the negligent behavior of another c. An event considered to be the primary cause of a loss d. A legal doctrine that states that an individual can be held liable even if negligence does not exist or cannot be proven Answer: C

An act of terrorism must be certified as such by: a. The President of The United States. b. The U.S. Secretary of the Treasury, as approved by the U.S. Congress. c. The U.S. Secretary of the Treasury, the Secretary of State and the U.S. Attorney General. d. The Secretary of State and the U.S. Attorney General. Answer: C

Alice's insurance policy only provides coverage for the perils specifically listed in her policy. What type of policy does she have? a. Named Peril Policy b. Special Peril Policy c. Open Peril Policy d. Title Peril Policy Answer: A

Which of the following is an example of Experience Rating? a. Separating risks into category groupings or classes b. Evaluating the individual risk to determine probability of loss, the extent of that possible loss, and the premium that would need to be charged to cover any possible claims c. Taking the individual's past three years of risk history and comparing it to the average claim experience for similar risks d. Modifying a manual rating by taking the individual's risk into account Answer: C

Before Shelly's insurance will pay for her loss, she has to pay a small amount toward the loss. This amount is known as: a. Primary insurance b. Limit of liability c. Excess insurance d. The deductible Answer: D

With what coverage does the federal government share the risk of loss due to Acts of War? a. Life Insurance b. Workers' Compensation c. Liability Insurance d. Property Insurance Answer: B