When must an insurable interest legally exist in property insurance for an insured to receive payment for a loss from the insurer? A) only at the time of the loss B) only at the inception of the policy C) only at the time the loss settlement takes place D) both at the time of the […]
Date: September 19th, 2020
Which of the following statements about subrogation is true? A) It is used primarily for losses paid under life insurance policies. B) It allows the insurer to sue its own insured who is negligent. C) The insured’s right to collect benefits may be forfeited if the insured interferes with the insurer’s subrogation rights after a […]
Date: September 19th, 2020
Fundamental purposes of the principle of indemnity include which of the following? I. To reduce physical hazards II. To prevent the insured from profiting from insurance A) I only B) II only C) both I and II D) neither I nor II ANSWER Answer: B
Date: September 19th, 2020
One method of ensuring the solvency of insurers is a periodic review, every three to five years, of insurers that operate on a multistate basis. This review is coordinated by the NAIC. This review is called a(n) A) annual report. B) early warning system. C) field examination. D) inspection report. ANSWER Answer: C
Date: September 19th, 2020
The major argument in favor of an optional federal charter for insurers is that A) small insurers need a national charter to be competitive with large insurers. B) a federal charter will prevent insurer insolvencies. C) a federal charter will provide greater oversight of insurer market practices. D) national insurers are at a competitive disadvantage […]
Date: September 19th, 2020
The loss settlement under which of the following supports the principle of indemnity? A) life insurance B) valued policies C) replacement cost property insurance D) actual cash value property insurance ANSWER Answer: D
Date: September 19th, 2020
Which of the following is a fundamental purpose of the principle of indemnity? A) to reduce moral hazard B) to minimize physical hazards C) to settle property insurance losses on a replacement cost basis D) to require deductibles in all property insurance policies ANSWER Answer: A
Date: September 19th, 2020
All of the following are arguments in favor of using an applicant’s credit record in personal lines underwriting EXCEPT A) Most consumers have good credit records and benefit when credit history is used as a rating factor. B) Use of credit data in underwriting and rating eliminates price discrimination against minority groups when they purchase […]
Date: September 19th, 2020
Sam’s furniture was destroyed by a fire. The furniture cost $1200 when it was purchased, but similar new furniture now costs $1800. Assuming the furniture was 50 percent depreciated, what is the actual cash value of Sam’s loss? A) $600 B) $900 C) $1200 D) $1800 ANSWER Answer: B
Date: September 19th, 2020
A score derived from an individual’s credit history and other factors that is used by many auto and homeowners insurers for underwriting and rating purposes is called a(n) A) CLUE score. B) insurance score. C) expense ratio score. D) combined ratio score. ANSWER Answer: B
Date: September 19th, 2020
