Insurance- Property section 1

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Author:
h_scott
ID:
292119
Filename:
Insurance- Property section 1
Updated:
2014-12-27 17:15:09
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Insurance
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Insurance property 1 section
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  1. In the property and casualty insurance field, insurable interest must exist:
    A: At the time the application is made for insurance
    B: For at least 5 years
    C: At the time of application or at the time of loss
    D: At the time of loss
    D: At the time of loss
  2. Insurable interest exists only when a number of conditions are met. Which of the following is not one of the requirements for insurable interest?
    A: The applicant must have an interest in protecting what is insured
    B: The applicant must not have a potential for gain because of the insurance
    C: The applicant must face a risk of loss
    D: The applicant must not share the interest with anyone else
    D: The applicant must not share the interest with anyone else
  3. In which of the following would a person have an insurable interest?
    A: Neither "The house she owned but has rented out to a tenant" nor "The car on which she is still paying"
    B: The house she owned but has rented out to a tenant
    C: Both "The house she owned but has rented out to a tenant" and "The car on which she is still paying"
    D:The car on which she is still paying
    C: Both "The house she owned but has rented out to a tenant" and "The car on which she is still paying"
  4. All of the following are true about speculative risk EXCEPT:
    A: Speculative risk is a feature of insurance
    B: Speculative risk involves a possibility of gain
    C: Speculative risk is a feature of gambling
    D: Speculative risk involves an uncertainty of loss
    A: Speculative risk is a feature of insurance
  5. All of the following are true about insurance EXCEPT:
    A: It involves the pooling of large numbers of individual risks
    B: It is a form of gambling because it may or may not pay off
    C: It transfers risk from one party to a group
    D: It is a social device for spreading loss over large numbers of people
    B: It is a form of gambling because it may or may not pay off
  6. Insurable risks must involve:
    A: Certain and uncertain losses
    B: The possibility of loss only
    C: Gambling
    D: Certain losses only
    B: The possibility of loss only
  7. In property, casualty and medical-expense insurance, the principle of making someone whole again after a loss by paying only for actual losses is called:
    A: Warranty
    B: Estoppel
    C: Subrogation
    D: Indemnity
    D: Indemnity
  8. Which of the following is an insurable risk?
    A: Hail damage to the roof of a car
    B: All answer options are an insurable risk
    C: Wear and tear on a valuable oriental rug
    D: Theft of a paperback book
    A: Hail damage to the roof of a car
  9. The uncertainty about loss that exists whenever more than one outcome is possible is called:
    A: Hazard
    B: Insurable interest
    C: Risk
    D: Indemnity
    C: Risk
  10. A moral hazard:
    A: Arises from the condition, occupancy, or use of the property itself
    B: Is not a consideration in insurable risk
    C: Arises through an individual's carelessness or irresponsible action
    D: Is the tendency to create a loss on purpose, to collect from the insurance company
    D: Is the tendency to create a loss on purpose, to collect from the insurance company
  11. A client can provide insurable interest via:
    A: Lie detector test
    B: Checking account statements
    C: Police report
    D: Physical inspection
    B: Checking account statements
  12. A property and casualty insurance agent frequently has the authority to provide temporary insurance coverage known as a:
    A: Certificate
    B: Policy
    C: Binder
    D: Quotation
    C: Binder
  13. Something that may increase the seriousness of a loss if loss occurs, or that increases the likelihood that a loss will occur, is called a:
    A: Catastrophe
    B: Peril
    C: Hazard
    D: Risk
    C: Hazard
  14. A binder:
    A: Is always a written agreement
    B: May only be issued by the insurance company
    C: May be oral or written
    D: Guarantees that a policy will be issued
    C: May be oral or written
  15. The law of large numbers states that:
    A: The predictions become more accurate as the number of units being considered increases
    B: All losses are predictable
    C: Small losses are predictable
    D: Large losses are easier to predict
    A: The predictions become more accurate as the number of units being considered increases

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