FLORIDA FINAL EXAM 2 20 84 TEST
PAPER QUESTIONS SOLUTIONS
◉ Transfer risk. Answer: Insurance allows individuals or businesses
to transfer financial risks to an insurer, reducing uncertainty and
potential loss.
◉ Law of large numbers. Answer: Allows insurers to predict
expected losses across a group of similar risks with greater accuracy.
◉ Premium notice. Answer: Administrative and not part of the four
essential elements of a contract: agreement, consideration, legal
capacity, and legal purpose.
◉ Moral hazard. Answer: Refers to the increased likelihood of loss
due to the insured's behavior, such as dishonesty or carelessness.
◉ Declarations page. Answer: States the policyholder, insured
property, policy period, and coverage limits.
◉ Coinsurance clauses. Answer: Encourage full coverage by reducing
claim payouts if a property is underinsured at the time of loss.
,◉ Basic DP-1 dwelling forms. Answer: Cover only named perils,
typically including fire, lightning, and internal explosion unless
endorsements are added.
◉ Actual cash value. Answer: Subtracts depreciation from the
replacement cost to reflect wear and tear or age.
◉ HO-3 policies. Answer: Do not cover earth movement unless
specifically endorsed; earthquake coverage is excluded by default.
◉ Uninsured motorist coverage. Answer: Compensates the insured
when they are injured by a driver who has no liability insurance or
in hit-and-run cases.
◉ Personal Auto Policy (PAP) liability coverage. Answer: Includes
bodily injury and property damage caused by the insured to others.
◉ Other structures coverage (Coverage B). Answer: Includes
detached buildings like garages or sheds on the insured's property.
◉ BOP eligibility. Answer: Limited to small to mid-sized businesses,
such as retail stores or offices under specified size and revenue
thresholds.
, ◉ Product liability. Answer: Covered under the 'products-completed
operations' hazard of a Commercial General Liability (CGL) policy.
◉ Part B of a standard workers compensation policy. Answer:
Provides coverage for employer liability, such as lawsuits filed by
employees or their families.
◉ FIGA. Answer: Designed to protect policyholders by paying claims
when a licensed insurer becomes insolvent.
◉ Continuing education for Florida 2-20 licensees. Answer: Must
complete 24 hours every 2 years, including ethics and law
components.
◉ Chapter 626 of the Florida Statutes. Answer: Governs licensing,
trade practices, and ethical conduct of insurance agents.
◉ Twisting. Answer: Involves using misrepresentation to convince a
policyholder to lapse or replace an existing policy with one that may
not be better.
◉ Written comparison. Answer: Agents must give a written
comparison and obtain a signed replacement form when
recommending a policy replacement to ensure the client makes an
informed decision.
PAPER QUESTIONS SOLUTIONS
◉ Transfer risk. Answer: Insurance allows individuals or businesses
to transfer financial risks to an insurer, reducing uncertainty and
potential loss.
◉ Law of large numbers. Answer: Allows insurers to predict
expected losses across a group of similar risks with greater accuracy.
◉ Premium notice. Answer: Administrative and not part of the four
essential elements of a contract: agreement, consideration, legal
capacity, and legal purpose.
◉ Moral hazard. Answer: Refers to the increased likelihood of loss
due to the insured's behavior, such as dishonesty or carelessness.
◉ Declarations page. Answer: States the policyholder, insured
property, policy period, and coverage limits.
◉ Coinsurance clauses. Answer: Encourage full coverage by reducing
claim payouts if a property is underinsured at the time of loss.
,◉ Basic DP-1 dwelling forms. Answer: Cover only named perils,
typically including fire, lightning, and internal explosion unless
endorsements are added.
◉ Actual cash value. Answer: Subtracts depreciation from the
replacement cost to reflect wear and tear or age.
◉ HO-3 policies. Answer: Do not cover earth movement unless
specifically endorsed; earthquake coverage is excluded by default.
◉ Uninsured motorist coverage. Answer: Compensates the insured
when they are injured by a driver who has no liability insurance or
in hit-and-run cases.
◉ Personal Auto Policy (PAP) liability coverage. Answer: Includes
bodily injury and property damage caused by the insured to others.
◉ Other structures coverage (Coverage B). Answer: Includes
detached buildings like garages or sheds on the insured's property.
◉ BOP eligibility. Answer: Limited to small to mid-sized businesses,
such as retail stores or offices under specified size and revenue
thresholds.
, ◉ Product liability. Answer: Covered under the 'products-completed
operations' hazard of a Commercial General Liability (CGL) policy.
◉ Part B of a standard workers compensation policy. Answer:
Provides coverage for employer liability, such as lawsuits filed by
employees or their families.
◉ FIGA. Answer: Designed to protect policyholders by paying claims
when a licensed insurer becomes insolvent.
◉ Continuing education for Florida 2-20 licensees. Answer: Must
complete 24 hours every 2 years, including ethics and law
components.
◉ Chapter 626 of the Florida Statutes. Answer: Governs licensing,
trade practices, and ethical conduct of insurance agents.
◉ Twisting. Answer: Involves using misrepresentation to convince a
policyholder to lapse or replace an existing policy with one that may
not be better.
◉ Written comparison. Answer: Agents must give a written
comparison and obtain a signed replacement form when
recommending a policy replacement to ensure the client makes an
informed decision.
