Arkansas Property and Casualty Exam Questions And Answers

Endorsements (The wording in an endorsement takes precedence over the wording in the policy to which it is attached. Some add exclusions; others clarify or enlarge the coverage provided in the basic policy) - ANS An attachment to an insurance policy that modifies its coverage in some way. Policy Conditions (Many policies conditions deal with practical issues concerning who is covered, during what periods coverage applies, and where coverage applies. Some address the amount and how the insurer must pay for a covered loss. Others describe the duties of the insured and the duties of the insurer when a covered loss occurs) - ANS The section of the insurance policy that identifies general requirements of an insured and the insurer on matters such as loss reporting and settlement, property valuation, cancellation and nonrenewable, and so forth. Superior Construction (The three types of superior construction are noncombustible, masonry noncombustible, and fire resistive (i.e., the exterior walls, floors, and roof are noncombustible, but the frame may be wood). Fire insurance rates are lowest with superior construction than with any other type of construction) - ANS A type of building construction in which the building's exterior walls, floors, and roof are constructed of noncombustible material. Proximate Cause (The three types of superior construction are noncombustible, masonry noncombustible, and fire resistive (i.e., the exterior walls, floors, and roof are noncombustible, but the frame may be wood). Fire insurance rates are lowest with superior construction than with any other type of construction) - ANS The cause of having the most significant impact in bringing about the loss when two or more independent perils operate at the same time (i.e., concurrently) to produce a lost. Replacement Cost valuation (the replacement cost valuation method is commonly used in the valuing houses and commercial buildings) - ANS A property insurance loss valuation method that bases benefits on the cost to replace the damaged or destroyed property Agency Report (usually required for larger commercial accounts, the agency report describes the applicant's business, personal interests, loss-prevention controls, and other data useful in assessing the applicant's risk) - ANS A report an agent prepares that presents information about the applicant not contained on the application but that the underwriter may find useful Inspection Report (An inspection report summarizes the condition, size, shape, and special features of the personal or real property to be insured. A personal auto report might include information on young drivers and the condition of the vehicle) - ANS A report, by an insurer or one of a number of inspection services available, assessing the moral, financial, and physical aspects of a risk Policy Cancellation (either the insurer or the insured may initiate a cancellation. Policy provisions describe when, how, and by whom the insurance contract may be canceled and for what reasons) - ANS The termination of an insurance policy before its normal expiration date Comparative Negligence (in determining an injury award, the jury compares the negligence of the plaintiff (claimant) against the negligence of the defendant (insured) in an accident. If the jury finds that the plaintiff was 30 percent at fault, then the plaintiff might recover only 70 percent of his damages) - ANS A method by which juries determine the percentage of fault each party bears in an injury-producing accident Loss Valuation (The most commonly used valuation methods are: replacement cost, actual cash value (ACV), functional replacement cost, market value, stated amount, agreed value) - ANS The process by which insurers, using any of several different methods, measure the value of a loss Loss Payable Clause (Under a typical loss playable clause, the insurer is under no obligation to make payment to the loss payee if payment for a loss can be denied to the insured) - ANS A property insurance provision authorizing payment, in the event of loss, to a personal entity having an insurable interest in the covered property other than the named insured Certificate of Insurance (certificates of insurance specify the coverage type and limits and are commonly required in construction contracts to assure property owners that the contractor working on the property has adequate insurance.) - ANS A document issued by an insurance company certifying that insurance is owned by the party being required to prove it has adequate insurance coverage Fair Credit Reporting Act (FCRA) (The FCRA requires insurers seeking a credit report to notify the applicant about the request within three days. The requestor must disclose what the report will cover and must notify the applicant that s/he may request a summary of what the requestor learned in the credit report. The summary must be provided within five business days of the request) - ANS Federal law that's sets forth procedures that credit reporting companies must follow to ensure confidentiality, accuracy of reporting, and proper use of credit information. Peril and Hazard (as the immediate cause of a loss, a peril is the event that insurance protects against. Perils include fire, explosion, flood, theft, and collision. Hazards are categorized into three groups: moral, morale, and physical) - ANS Two related basic insurance terms, the first of which is the immediate cause of a loss and the second of which is any condition that increases the risk of incurring a loss Functional Replacement Cost valuation (functional replacement cost is used with older buildings that have components no longer found in modern buildings) - ANS A property insurance loss valuation method that determines the amount it would cost to repair or replace a damaged building with common (and less costly) construction materials and methods that are functionally equivalent to the obsolete, antique, or custom construction materials and methods originally used. Personal Property (insurance practitioners often use the term "contents" to refer to the personal property. In addition to a building's contents, personal property includes outdoor furniture and buildings that are unattached to the land (e.g., small tool sheds)) - ANS In property insurance, this is any type of property that is not land or buildings permanently attached to the land Agreed Value valuation (the agreed value valuation method typically cover paintings, sculptures, antiques, and one-of-a-kind items for which it is difficult to determine a value. If the item is stolen or destroyed, the insurer pays the listed dollar amount) - ANS A property insurance loss valuation method in which the insurer and the applicant agree on the value of the item when the policy is written, which is then listed in a schedule