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WorksheetsInsurance Terms and Related Concepts '25
Total questions: 25
Worksheet time: 20mins
Insurable interest in a property policy must be proven:
At the time of application
When a claim is paid
At the time of loss
When a policyowner is changed
If a liability policy had split limits of 50/100/30, what is the maximum amount that would be payable in the event of injury to a single person?
$30,000
$180,000
$100,000
$50,000
Which of the following is used in the formula for calculating the actual cash value of a property?
Replacement cost
Stated value
Fair market value
Agreed value
In case of a loss, the indemnity provision in insurance policies:
Pays the insured a percentage of the loss above and beyond the loss
Allows the insured to collect 20% more than the actual loss
Restores an insured person to the same financial state as before the loss
Pays the insured as much as 95% of the loss
Replacement cost is defined as:
Full replacement of property with like kind and quality, less an allowance for physical deterioration and depreciation
The market value of property of like kind and quality
Payment of the full policy limits in the event of a total loss
Full replacement of property at its current cost, new and without reduction for depreciation
A Certificate of Insurance is a written document that:
Allows the insurer to inspect the insured’s books
Obligates the insurer to the person to whom the insurance was issued
Names the insured’s beneficiary
Shows the types and amounts of insurance issued to the insured
The risk of loss may be classified as:
High risk and low risk
Certain risk and uncertain risk
Named risk and un-named risk
Pure risk and speculative risk
Negligence is defined as:
Conduct that is so hazardous that the individual engaging in it will be held fully responsible for any resulting injury or damage
An unbroken chain of events that results in bodily injury or property damage to another person
An intentional act that results in bodily injury or property damage to another person
The failure to do what a reasonable prudent person would do under given circumstances
All of the following are true regarding deposit premium EXCEPT:
It must be paid in advance
It could be adjusted by the audit
It is an estimated premium paid at the policy issue
It is 50% of the actual premium
Losses caused by continuous or repeated exposure to conditions resulting in injury to persons or damage to property that is neither intended nor expected is the definition of which of the following terms?
Accident
Hazard
Peril
Occurrence
In commercial crime insurance, what is the term that includes both burglary and robbery?
Theft
Stealing
Extortion
Disappearance
The legal process that gives the insurer, after payment of a loss, the right to seek recovery from a third party that was responsible for the loss is known as:
Right of rescission
Subrogation
Principle of indemnity
Adverse selection
For the reported losses of an insured group to become more likely to equal the statistical probability of loss for that particular class, the insured group must become:
Larger
More active
Older
Smaller
One driver makes a left turn on a red light and is hit by another driver who is speeding through the intersection. The driver who was making an illegal turn is found to be 80% guilty of the accident, while the speeding driver is 20% at fault. According to the principle of comparative negligence that is applied in auto accident claims, how much will the speeding driver be able to collect on the claim?
100%
80%
20%
50%
The insured’s house is located one mile from the county’s new landfill and across the road from the entrance of a rock quarry. It would cost $150,000 to rebuild the house if something happened to it, but when the insured tried to sell it, the best offer he received was $80,000. The insurance company will insure the house for only $80,000. What method of valuation is used to insure this property?
Functional replacement cost
Market value
Replacement cost
Actual cost value
Which method of loss valuation is contrary to the basic concept of indemnity?
Functional replacement cost
Replacement cost
Agreed value
Market value
Which of the following best describes negligence?
The inability to meet the burden of proof
A situation that creates a probability of loss
The failure to use reasonable and prudent care
A latent defect or fault in property
Insurance is a contract by which one seeks to protect another from:
Uncertainty
Loss
Exposure
Hazards
Most insurance policies exclude losses by:
Mysterious disappearance
Theft
Robbery
Burglary
A property insurance policy that is not subject to any coinsurance requirements but has a set amount of insurance scheduled for the property would use what loss valuation method?
Replacement cost
Actual cash value
Reproduction cost
Stated amount
What type of insurance policy insures against all risks of loss that are not specifically excluded by the policy?
Specified peril policy
Named peril policy
Open peril policy
Binder policy
Property insurance that provides $100,000 coverage for a building and $50,000 coverage for personal property at a single location is called:
Schedule coverage
Blanket coverage
Described coverage
Specific coverage
An insured owns a building that is valued at $400,000. To comply with the 80% coinsurance provision of his insurance policy, how much should he insure the property for?
$32,000
80% of the property's replacement cost or more
100% of the market value
$400,000
Which of the following is most likely to occur if it is determined by the audit that the deposit premium was too high?
Additional benefits will be added
The insured will receive a return premium
Nothing; the premium cannot be adjusted
The insurer will have to pay a fine
What is the point of the Fair Credit Reporting Act
Stops the circulation of money laundering between insureds and insurers
To stop the circulation of inaccurate or obsolete personal and financial information
Gives the insurer access to all information involving the insured without their knowledge
Protects the circulation of incorrect insurance company information
