Practice Test Exam

The fee paid by the insured in exchange for an insurance policy is called a: - Answer- premium. Bobby just purchased an insurance policy for his home from XYZ Insurance. Which of the following would be a reason this policy may not be legally binding? A. Bobby is only 19 years old. B. Bobby paid his first premium when he and his agent agreed on a policy, but he is waiting for the policy documents to be prepared so he can sign them. C. Bobby has an outstanding warrant for selling marijuana. D. Bobby has been diagnosed as mentally incompetent. - Answer- D. Bobby has been diagnosed as mentally incompetent. Greg plays trombone in his school band during football games. During a rally song in the stands one day, Greg annoys one of the opposing team's fans, who grabs his $400 trombone and hurls it down the bleachers, completely destroying it. Greg's insurance pays him $400 to replace the trombone, but then the opposing team's coach also offers to replace the instrument, at whatever the cost. So Greg orders a new $3,200 trombone and has the opposing team's athletic department absorb the cost. Which principle has Greg violated? A. The principle of indemnity B. The principal of the opposing team C. The principle of consideration D. The principle of legal purpose - Answer- A. The principle of indemnity If an adjuster needs to find clarification about what actually constitutes a collision, in which section of an insurance policy would she find that information? A. Declarations B. Conditions C. Exclusions D. Definitions - Answer- D. Definitions Which of the following is NOT a characteristic of insurance contracts? A. Aleatory B. Universal C. Conditional D. Unilateral - Answer- B. Universal In an insurance policy, the summary of what the insurer will do in the event of a covered loss is called: A. the dec page. B. the conditions section. C. the definitions section. D. the insuring agreement. - Answer- D. the insuring agreement.