Chapter 2

1. 1. All of the following statements describe the concept of strict liability EXCEPT

• A. It is imposed regardless of fault.

• B. It is imposed on defendants engaged in hazardous activities

• C. It is applied in product liability cases

• D. Claimants may need to provide proof that a product defect caused an injury.

Answer explanation

Strict liability is commonly applied in product liability cases. The business is then liable for defective products, regardless of fault or negligence.

2. 2. Under contributory negligence, when an individual is found to have contributed to their own loss in any way, another party...

• A. May be held liable, but to a reduced extent.

• B. May be held liable only in the case of vicarious liability.

• C. May not be held liable

Answer explanation

Contributory negligence is a common law defense that denies recovery to an injured party who contributed to the loss by failing to meet standards required for self-protection.

3. 3. A couple bought tickets to a college hockey tournament. At the game, a stray puck hits the wife in the face, breaking her nose. Which legal defense may bar her from recovering damages for the injury she received at the hockey game?

• A. Assumption of risk

• B. Comparative Negligence

• C. Contributory Negligence

• D. Vicarious Risk

Answer explanation

This defense of an action for recovery for injuries attests that if a person recognizes and understands that there is danger involved in an activity and voluntarily chooses to encounter it, this assumption of risk may bar recovery for injury caused by negligence.

4. 4. What type of liability would a person who owns wild animals have?

• A. Implied

• B. Direct

• C. Absolute

• D. Vicarious

Answer explanation

Any conduct that is inherently dangerous, such as using explosives or keeping wild animals, imposes absolute liability. The claimant does not have to prove anything.

5. 5. Which of the following lists all the required elements for establishing a charge of negligence?

• A. Legal duty owed, deliberate attempt to cause harm, damages.

• B. Legal duty owed, standard of care, proximate cause, damages.

• C. Breach of reasonable person rule and proximate degree of care.

• D. Legal duty owed, proximate cause, intervening cause, damages.

Answer explanation

These the 4 elements. May have different names. Like unbroken chain of events= proximate cause.

6. 6. The declarations page of the homeowners policy provides all of the following information EXCEPT

• A. the insured's address

• B. A statement that earthquake damage is not covered.

• C. The amount of premium charged for each coverage.

• D. What deductible amount applies to each loss covered by the policy.

7. 7. Replacement cost is defined as..

• A. Full replacement of property at its current cost, new and without reduction from depreciation.

• B. Payment of the full policy limits in the event of a total loss

• C. The market value of property of like kind and quality.

• D. Full replacement of property with like kind and quality, less an allowance for physical deterioration and depreciation.

5. 8. A person who is not named as an insured on the declaration page of a policy but is protected by the policy is known as the

• A. Policyowner

• B. Named Insured

• C. First Named Insured

• D. Additional Insured

9. 9. Which part of an insurance policy covers claims-related expenses, reasonable expenses incurred by an insured to protect damaged property from further loss, or defense expenses?

• A. Additional Coverage

• B. Exclusions

• C. Declarations

• D. Insuring Agreement

10. 10. Which rating method provides an insurer with that portion of a rate that does not include provisions of expenses (other than adjusting expense) or profit that is based on historical aggregate loss and loss adjustment expenses projected through development to their ultimate value and through trending to a future point in time?

• A. Loss costs rating

• B. Components rating

• C. Provision rating

• D. Profit rating