Insurance License exam set study guide correct and verified A+ latest updates fall 2024

Insurance License exam set study guide correct and verified A+ latest updates fall 2024Insurance License exam set study guide correct and verified A+ latest updates fall 2024 A group-owned insurance company that is formed to assume and spread the liability risks of its members is known as - correct answer-risk retention group Who elects the governing body of a mutual insurance company? - correct answer-Policyholders Who is a mutual insurance company owned by? - correct answer-Its policyholders What type of reinsurance contract involves two companies automatically sharing their risk exposure? - correct answer-Treaty Insurers that are organized in countries outside the United States are referred to as - correct answer-alien An insurance applicant MUST be informed of an investigation regarding his/her reputation and character according to the: - correct answer-Fair Credit Reporting Act At what point must an insurance applicant be informed of their rights that fall under the Fair Credit Reporting Act? - correct answer-Upon completion of the application What type of insurer's company is domiciled in England, but conducts business in the United States? - correct answer-Alien N causea an accident injuring tree people. N's policy has split limits of liability of 250/500/250. What is the maximum amount that all three as a whole could collect in the event of death or injury? - correct answer-$500,000 Which of the following requires insurers to disclose when an applicant's consumer or credit history is being investigated - correct answer-1970 - Fair Credit Reporting Act During the application process, the agent's primary responsibility is to - correct answer-the insurance company In Virginia, an insurer domiciled and incorporated in Virginia is called a(n) - correct answer-domestic insurer Which of these describe a participating insurance policy? - correct answer-Policyowners are entitled to receive dividends A nonprofit incorporated society that does not have capital stock and operates for the sole benefit of its members is known as: - correct answer-a fraternal benefit society A stock insurance company - correct answer-is owned exclusively by its shareholders Who owns a stock company? - correct answer-Its stockholders A mutual insurance company and a stock insurance company have one main difference between them. What is this major contrast? - correct answer-Stock company is owned by its shareholders. Mutual company is owned by its policyholders. D just purchased a warehouse at an auction. When D receives the keys and documents, he arrives at the building to find it completely empty with no people or contents. The warehouse has a - correct answer-Vacancy Y has a policy of split limits of 50/100/50. If Y causes loss, what is the maximum amount that each person would receive? - correct answer-$50,000 B purchased a home five years ago and was issued an HO-3 contract. This year, B wants to add the sump pump overflow rider to her policy. Adding coverage to her policy can best be described as an: - correct answer-Endorsement An unbroken chain of events that begins with negligence and leads to loss is known as: - correct answer-Proximate Cause What is CORRECT regarding cancellation of a policy? - correct answer-If the insured terminated coverage, the insurer is sometimes allowed to deduct administrative costs for processing cancellation before refunding any premiums. H owns a small restaurant that is a local favorite. One night, H's restaurant catches fire which will cause his business to be shut down for the next six months, causing H to lose revenue during repairs. H's loss of revenue because of the fire is known as a. - correct answer-Consequential Loss D just purchased a warehouse at an auction. When D receives the keys and documents, he arrives at the building to finds it completely with no people but there is some miscellaneous office furniture. The warehouse has a: - correct answer-Unoccupancy An insured purchases a rental property for $250,000, its replacement cost. He insures it for $150,000 under a Property Coverage Form with an 80 percent Coinsurance clause with a $100 deductible. In the event of a $100,000 loss how much will the insurer pay on the claim? - correct answer-$74,900 J has a policy that pays a maximum single dollar amount for property damage and death or bodily injury. Which limit of liability does J's policy have? - correct answer-Combined Single Limit Which of the following situations would be best described as a pure risk? - correct answer-An insured purchasing an HO-6 policy to insure their new condo F's toy company has just produced a child's toy that has sharp edges. Although F's toy company guarantees the product is safe, if a child were to get hurt, the company would have: - correct answer-Strict Liability Which of the following would be an example of a peril? • Fire • Lightning • Internal Explosion - correct answer-All of the answers listed. An unintended, unforeseen reduction or destruction of economic value is known as: - correct answer-Loss An event or mindset that greatly increases the change that a peril will actually occur is known as: - correct answer-Hazard A lightning storm that completely destroys an insured's roof is an example of a - correct answer-Direct Loss D purchased an antique muscle car in November with the intent to restore it in the summer. Upon inspection, D decides that the car is in good enough shape to store it in the garage until the weather gets warmer. Although D knows how to fix cars, he misses a very small hole in the gas tank. If the gas were to accumulate over time and cause the car and garage to explode, the event would be defined as - correct answer-Occurrence Which of the following best describes Actual Cash Value loss valuation? - correct answer-Current replacement minus depreciation M owned a factory warehouse that suffered a total loss due to a fire. The insurer discovers that they can scrap some of the metal beams left from the structure to recoup some of their loss paid to the insured. Which method of valuation would allow this to occur? - correct answer-Salvage Value An insurance company insures two million homes under Homeowners coverage and collects $1,500 in premium from each insured. In the next policy year, only 200 homes suffer a total loss. In this event, the insurer still collected enough premium dollars from all insureds to pay the actual losses as well as their overhead and still collected a profit. This is known as - correct answer-Law of Large Numbers An insured purchases an apartment building for $250,000, its replacement cost. He insures it for $150,000 under a Building and Property Coverage Form with an 80 percent Coinsurance clause. In the event of a total loss how much will the insurer pay on the claim? - correct answer-$150,000 V buys a home and has an idea to purposely set it on fire, but will make the loss look like an accident to collect the benefits from the policy. This is an example of a(an) - correct answer-Moral Hazard A contractual term for a person who is responsible for unintentional acts that may cause death or harm to a person or property is known as: - correct answer-Liability Which of the following would be an example of a physical hazard? - correct answer-A person leaves their tools all over the house after completing a home improvement job. If an insured has a policy with split limit liability of 25/40/15, what is the maximum amount the insurer will pay for property damage? - correct answer-$15,000 D has a single family home located at a permanent residency. The type of coverage that D has is considered to be: - correct answer-Specific N owns three homes in two different states. If N wanted to have one policy that covers all of the properties, N should buy: - correct answer-Blanket Coverage One summer day, N waters his front lawn and turns off the hose when he is finished. Although N is done, he decides to leave the hose across the sidewalk until tomorrow, when he will water the lawn again. At night, T is walking their dog, trips over the hose and falls but suffers no injuries. Which of the following provisions will establish N's liability towards T? • Negligence • Proximate Cause • Occurrence - correct answer-None of the answers listed. B owns a home with a Basic Dwelling policy (DP1) and rents it out to a family. One day, a burglar tries to break into the house causing $2,000 of damage. After submitting the claim, B is informed that since burglar damage is not covered under the policy, the damage will not be paid by the policy. B's policy is a: - correct answer-Named Peril Policy Which of the following is CORRECT regarding Stated Value? • The company will valuate loss based upon cost to repair property or stated value, whichever is less at the time the claim is filed. • Stated value will be used to determine premium amount. • The lower the stated value in the contract, the lower the premium will be for the policy. - correct answer-All of the answers listed In 1980, G had a custom home built