OKLAHOMA ADJUSTER EXAM #2 WITH
SOLUTIONS
An individual applied for auto insurance and obtained coverage from EMU Insurance Company. Who is
the first party in the contract? - ✔✔The Insured
If a fire hazard causes damage to a building, the fire is? - ✔✔A peril
wearing a seatbelt in a car is an example of which method or managing risk? - ✔✔Reduce
Tiffany leaves her car unlocked when she goes shopping. She figures her car and its contents are insured,
so there is no reason to worry. Which type of hazard is this an example of? - ✔✔Morale
A flood is an example of - ✔✔A peril
An insurance company incorporated in Oklahoma and conducting business in Oklahoma is known as a
domestic company. What kind of company are they considered if they do business in Minnesota? -
✔✔Foreign
Which of the following is true about stock companies - ✔✔a stock company pays dividends
What do insurance companies use to help predict how many losses will occur in a group or class of
individuals - ✔✔The law of large numbers
States require companies to have a license to sell insurance in the state. The license is called - ✔✔A
certificate of authority
What is a requirement of an insurable pure risk - ✔✔Premium must be affordable
Insurers may be classified according to their financial strength. This does NOT include - ✔✔number of
clients
Carl hands out a business card with his company's logo to all new prospects that he meets at a golf
outing. This is an example of - ✔✔implied authority
Agency is a relationship in which one person is authorized to represent and act for another person or
corporations. In insurance, the insurance agent acts on behalf of - ✔✔Principal
Which of the following types of advertising does not involve an agent and is conducted through the mail,
by advertisements in newspapers and magazines, on television and radio, or through the internet? -
✔✔direct response
Which of the following individuals represent only one insurance company - ✔✔A captive agent
,Which of the following terms describes a legal agreement between two competent parties that promises
a certain performance in exchange for a certain consideration? - ✔✔a contract
Which of the following is not an element of a legal contract? - ✔✔Unilateral
Jill is filling out an insurance application with information that she believes to be true. The information
she is providing is considered - ✔✔A representation
A guarantee that something is true is - ✔✔a warranty
The heart of an insurance policy that sates what will be covered is called? - ✔✔The insuring agreement
What can be found on the declaration page? - ✔✔The amount of coverage provided
Nancy purchased an auto policy on her new car. There are no other insureds listed on the declaration
page. Nancy is considered - ✔✔The named insured
The duties following a loss condition lists the insured's responsibilities after a loss. One of these duties
requires that the insured completes an official inventory of the damages. This is known as - ✔✔detailed
proof of loss
Which statement regarding the rights and responsibilities of an insurer or insured when an insurance
contract is canceled or nonrenewed - ✔✔If the insured had paid premiums in advance for future
months, any unused premium (unearned premium) must be returned to the insured upon cancellation
of a policy
Which ratios would an insurer use to evaluate performance? - ✔✔Loss ratio, expense ratio, and/or
combined ratio
Which of the following terms is an oral or written statement made by the agent that gives the insured
immediate coverage for a specified time? - ✔✔a binder
Which of the following is an example of insurable interest? - ✔✔A person's interest in the home they
own
How is the expense ratio calculated ? - ✔✔by dividing the underwriting expenses by the written
premium
What is the primary source of underwriting information? - ✔✔the application
Which of the following premium rating methods is determined by considering the individual risk and
using careful judgement and the experience of the underwriter? - ✔✔the judgement rating
Which of the following is a way to assign rates? - ✔✔manual
, Under the Fair Credit Reporting Act, the maximum penalty for obtaining consumer information reports
under false pretense is? - ✔✔$5,000, imprisonment for one year, or both
An act of terrorism must be certified by the Secretary of Treasury in consultation with the Secretary of
Homeland Security and the - ✔✔US Attorney General
Which of the following acts requires financial institutions; companies that offer consumers financial
products or services like loans, financial, or investment advice; and insurance companies, to explain their
information-sharing practices to their customers and to safeguard sensitive data? - ✔✔Graham Leach
Beach Act
Imprisonment may be ordered for up to how many years if false statements made jeopardized the safety
and soundness of an insurer and were a significant cause of the insurer being placed in conservation,
rehabilitation or liquidation by the courts? - ✔✔15
A person's property can be divided into two classes: real property (buildings) and - ✔✔personal property
What is covered automatically under the basic form (DP) - ✔✔Fire, lightning and internal explosion
The policy limit is known as - ✔✔Limit of liability, limit of insurance, or limit of coverage
Which policy insures against all risk of direct physical loss except those specifically excluded in the
policy? - ✔✔an open peril policy
In a broad peril policy, burglary and accidental discharges of water are not covered if the building has
been vacant for more than - ✔✔60 consecutive days
In a broad peril policy, burglary and accidental discharges of water are not covered if the building has
been unoccupied for more than - ✔✔There is no suspension of coverage for unoccupancy
What would be covered in the broad perils coverage form? - ✔✔weight of snow and ice
Most losses are reimbursed on an actual cash value (ACV) basis. This is calculated by figuring the item's
replacement value cost and subtracting the - ✔✔depreciation
There are six classed of construction that are recognized by underwriters. The class of the buildings is
determined by the types of material used in the building and - ✔✔the roof of the insured structure
What is true regarding the appraisal process? - ✔✔either party may demand an appraisal of a loss
the standard coinsurance clause provides that property must be insured for a specific percentage --
usually 80% of its? - ✔✔replacement cost
What specifies the rights and duties of the mortgagee under the policy? - ✔✔the standard mortgage
clause
SOLUTIONS
An individual applied for auto insurance and obtained coverage from EMU Insurance Company. Who is
the first party in the contract? - ✔✔The Insured
If a fire hazard causes damage to a building, the fire is? - ✔✔A peril
wearing a seatbelt in a car is an example of which method or managing risk? - ✔✔Reduce
Tiffany leaves her car unlocked when she goes shopping. She figures her car and its contents are insured,
so there is no reason to worry. Which type of hazard is this an example of? - ✔✔Morale
A flood is an example of - ✔✔A peril
An insurance company incorporated in Oklahoma and conducting business in Oklahoma is known as a
domestic company. What kind of company are they considered if they do business in Minnesota? -
✔✔Foreign
Which of the following is true about stock companies - ✔✔a stock company pays dividends
What do insurance companies use to help predict how many losses will occur in a group or class of
individuals - ✔✔The law of large numbers
States require companies to have a license to sell insurance in the state. The license is called - ✔✔A
certificate of authority
What is a requirement of an insurable pure risk - ✔✔Premium must be affordable
Insurers may be classified according to their financial strength. This does NOT include - ✔✔number of
clients
Carl hands out a business card with his company's logo to all new prospects that he meets at a golf
outing. This is an example of - ✔✔implied authority
Agency is a relationship in which one person is authorized to represent and act for another person or
corporations. In insurance, the insurance agent acts on behalf of - ✔✔Principal
Which of the following types of advertising does not involve an agent and is conducted through the mail,
by advertisements in newspapers and magazines, on television and radio, or through the internet? -
✔✔direct response
Which of the following individuals represent only one insurance company - ✔✔A captive agent
,Which of the following terms describes a legal agreement between two competent parties that promises
a certain performance in exchange for a certain consideration? - ✔✔a contract
Which of the following is not an element of a legal contract? - ✔✔Unilateral
Jill is filling out an insurance application with information that she believes to be true. The information
she is providing is considered - ✔✔A representation
A guarantee that something is true is - ✔✔a warranty
The heart of an insurance policy that sates what will be covered is called? - ✔✔The insuring agreement
What can be found on the declaration page? - ✔✔The amount of coverage provided
Nancy purchased an auto policy on her new car. There are no other insureds listed on the declaration
page. Nancy is considered - ✔✔The named insured
The duties following a loss condition lists the insured's responsibilities after a loss. One of these duties
requires that the insured completes an official inventory of the damages. This is known as - ✔✔detailed
proof of loss
Which statement regarding the rights and responsibilities of an insurer or insured when an insurance
contract is canceled or nonrenewed - ✔✔If the insured had paid premiums in advance for future
months, any unused premium (unearned premium) must be returned to the insured upon cancellation
of a policy
Which ratios would an insurer use to evaluate performance? - ✔✔Loss ratio, expense ratio, and/or
combined ratio
Which of the following terms is an oral or written statement made by the agent that gives the insured
immediate coverage for a specified time? - ✔✔a binder
Which of the following is an example of insurable interest? - ✔✔A person's interest in the home they
own
How is the expense ratio calculated ? - ✔✔by dividing the underwriting expenses by the written
premium
What is the primary source of underwriting information? - ✔✔the application
Which of the following premium rating methods is determined by considering the individual risk and
using careful judgement and the experience of the underwriter? - ✔✔the judgement rating
Which of the following is a way to assign rates? - ✔✔manual
, Under the Fair Credit Reporting Act, the maximum penalty for obtaining consumer information reports
under false pretense is? - ✔✔$5,000, imprisonment for one year, or both
An act of terrorism must be certified by the Secretary of Treasury in consultation with the Secretary of
Homeland Security and the - ✔✔US Attorney General
Which of the following acts requires financial institutions; companies that offer consumers financial
products or services like loans, financial, or investment advice; and insurance companies, to explain their
information-sharing practices to their customers and to safeguard sensitive data? - ✔✔Graham Leach
Beach Act
Imprisonment may be ordered for up to how many years if false statements made jeopardized the safety
and soundness of an insurer and were a significant cause of the insurer being placed in conservation,
rehabilitation or liquidation by the courts? - ✔✔15
A person's property can be divided into two classes: real property (buildings) and - ✔✔personal property
What is covered automatically under the basic form (DP) - ✔✔Fire, lightning and internal explosion
The policy limit is known as - ✔✔Limit of liability, limit of insurance, or limit of coverage
Which policy insures against all risk of direct physical loss except those specifically excluded in the
policy? - ✔✔an open peril policy
In a broad peril policy, burglary and accidental discharges of water are not covered if the building has
been vacant for more than - ✔✔60 consecutive days
In a broad peril policy, burglary and accidental discharges of water are not covered if the building has
been unoccupied for more than - ✔✔There is no suspension of coverage for unoccupancy
What would be covered in the broad perils coverage form? - ✔✔weight of snow and ice
Most losses are reimbursed on an actual cash value (ACV) basis. This is calculated by figuring the item's
replacement value cost and subtracting the - ✔✔depreciation
There are six classed of construction that are recognized by underwriters. The class of the buildings is
determined by the types of material used in the building and - ✔✔the roof of the insured structure
What is true regarding the appraisal process? - ✔✔either party may demand an appraisal of a loss
the standard coinsurance clause provides that property must be insured for a specific percentage --
usually 80% of its? - ✔✔replacement cost
What specifies the rights and duties of the mortgagee under the policy? - ✔✔the standard mortgage
clause
