Personal lines insurance || ELITE-LEVEL QUESTIONS
WITH CORRECT SOLUTIONS.
Risk _________ is when one takes action to prevent or reduce potential loss. correct answers
Reduction
When the number of similar units increases, the predictability of the loss improves according to
the rule of _____ ________. correct answers Large Numbers
The insuring of risks that are more prone to losses than average risks is known as? correct
answers Adverse Selection
A ___________ contract is an arrangement where one insurer transfers or shares risks with
another insurer. correct answers Reinsurance
_____________ Reinsurance is accepted or rejected by a case by case basis. correct answers
Facultative
The fact that an insured would profit from a loss, would be a violation of the principle of
___________. correct answers Indemnity
The determination of acceptable risks is the primary function of the ___________ . correct
answers Underwriter
Underwriters like to select insureds who's actual losses will be similar to expected losses. True or
False? correct answers True
When rates cannot be used until they are improved by the department or division of insurance,
they are called ____ ________ rates. correct answers Prior Approval
The termination of a policy by either the insured or insurer before its expiration date is known as
___________. correct answers Cancellation
When the insurer cancels a property policy, the unearned premium is returned ___ ____. correct
answers Pro Rata
When an insured requests cancellation of a policy, the unearned premium is refunded to the
insured on a _____ _____. correct answers Short Rate
A fire is considered to be a _____ of a potential loss. correct answers Cause
A document that provides temporary insurance coverage until a policy is issued is known as a
______. correct answers Binder
,The process by which a disputed claim is decided by a neutral third party is known as
___________. correct answers Arbitration
_________ _________ is a situation where there are two causes resulting in a loss, with one of
the causes excluded and the other cause of loss not excluded. correct answers Concurrent
Causation
If two or more policies provide identical coverage for the same risk, the policies are deemed to
be __________. correct answers Concurrent
Policy A is written for $100,000, and an excess Policy B is written for $200,000 on the same
property. In the event of a $20,000 loss, how much will each policy pay? correct answers A=
$20,000 ; B= $0
A building that has neither occupants nor personal property is ______. correct answers Vacant
When property is damaged by fire, the loss is said to be a(n) ______ loss. correct answers Direct
If a fire on a premises caused a power outage, which caused meat in the freezer to spoil, would
the meat spoilage be considered a direct loss or indirect loss? correct answers Indirect Loss
Open peril policies include losses caused by theft. True or False? correct answers True
If a property owner does not desire any deduction for depreciation following a covered loss,
he/she should purchase a ___________ ____ policy. correct answers Replacement Cost
For replacement cost coverage to apply in dwelling policies, the insured must carry insurance at
least equal to ____% of the cost of replacement of the building. correct answers 80
Would a stated amount method of valuation likely be used when insuring gold bullion? correct
answers No
An ____ policy is one that the value of the subject matter is not agreed upon, but is left to be
ascertained in case of loss. correct answers Open
A valued policy is one that expresses on it's face an agreement that the thing insured is valued at
a specific sum. True or False? correct answers True
Insuring more than one property on one policy for a single amount of insurance that applies to all
properties covered under the policy is known as _______ coverage. correct answers Blanket
The name of the insured is found on the declarations page of the policy. True or False? correct
answers True
What part or portion of a property policy contains the effective or expiration dates of the policy?
correct answers Declarations
, Are the insurer's limits of insurance amount stated in the conditions part or portion part of the
policy? correct answers No
The __________ part or portion of a property policy sets forth the rights, rules, duties, and
obligations of the insurer and insured to be followed throughout the policy period. correct
answers Conditions
The ______________ Clause allows insurers to automatically broaden coverage without
endorsement on existing policies with no increase in premium. correct answers Liberalization
When a property policy has been in effect less than 60 days and the insurer cancels for the
nonpayment of premium, the insurer must give the insured ____ days written notice. correct
answers 10
Could an order to vacate the property possibly cause an insurer to cancel a commercial property
policy? correct answers Yes
An insurer may nonrenew a homeowners policy with oral notice to the insured. True or False?
correct answers False
The insured's transfer of right of ownership or interest in an insurance policy to another party
with the insurer's written consent is known as an __________. correct answers Assignment
___________ transfers an insured's legal right of recovery to the insurer that paid the claim.
correct answers Subrogation
When an insured suffers a loss, they are required to prepare an inventory of the damaged
property at the ________ request. correct answers Insurers
In the event of a loss under a homeowners policy, a proof of loss must be signed and sworn by
the _______. correct answers Insured
Company A has issued a policy in the amount of $200,000, and company B has issued a policy
in the amount of $300,000. under the other insurance or pro rata liability condition or provision,
how much will company A pay of a $100,000 loss? correct answers $40,000
The _________ portion of the policy specifies the causes of loss perils not covered, or property
not covered. correct answers Exclusions
An amendment that is attached to a property insurance policy to broaden or restrict coverage, or
further define certain policy provisions is known as a(n) ___________. correct answers
Endorsement
Under a commercial lines property policy, who is responsible for making the premium payments
in a timely manner? correct answers First Named Insured
WITH CORRECT SOLUTIONS.
Risk _________ is when one takes action to prevent or reduce potential loss. correct answers
Reduction
When the number of similar units increases, the predictability of the loss improves according to
the rule of _____ ________. correct answers Large Numbers
The insuring of risks that are more prone to losses than average risks is known as? correct
answers Adverse Selection
A ___________ contract is an arrangement where one insurer transfers or shares risks with
another insurer. correct answers Reinsurance
_____________ Reinsurance is accepted or rejected by a case by case basis. correct answers
Facultative
The fact that an insured would profit from a loss, would be a violation of the principle of
___________. correct answers Indemnity
The determination of acceptable risks is the primary function of the ___________ . correct
answers Underwriter
Underwriters like to select insureds who's actual losses will be similar to expected losses. True or
False? correct answers True
When rates cannot be used until they are improved by the department or division of insurance,
they are called ____ ________ rates. correct answers Prior Approval
The termination of a policy by either the insured or insurer before its expiration date is known as
___________. correct answers Cancellation
When the insurer cancels a property policy, the unearned premium is returned ___ ____. correct
answers Pro Rata
When an insured requests cancellation of a policy, the unearned premium is refunded to the
insured on a _____ _____. correct answers Short Rate
A fire is considered to be a _____ of a potential loss. correct answers Cause
A document that provides temporary insurance coverage until a policy is issued is known as a
______. correct answers Binder
,The process by which a disputed claim is decided by a neutral third party is known as
___________. correct answers Arbitration
_________ _________ is a situation where there are two causes resulting in a loss, with one of
the causes excluded and the other cause of loss not excluded. correct answers Concurrent
Causation
If two or more policies provide identical coverage for the same risk, the policies are deemed to
be __________. correct answers Concurrent
Policy A is written for $100,000, and an excess Policy B is written for $200,000 on the same
property. In the event of a $20,000 loss, how much will each policy pay? correct answers A=
$20,000 ; B= $0
A building that has neither occupants nor personal property is ______. correct answers Vacant
When property is damaged by fire, the loss is said to be a(n) ______ loss. correct answers Direct
If a fire on a premises caused a power outage, which caused meat in the freezer to spoil, would
the meat spoilage be considered a direct loss or indirect loss? correct answers Indirect Loss
Open peril policies include losses caused by theft. True or False? correct answers True
If a property owner does not desire any deduction for depreciation following a covered loss,
he/she should purchase a ___________ ____ policy. correct answers Replacement Cost
For replacement cost coverage to apply in dwelling policies, the insured must carry insurance at
least equal to ____% of the cost of replacement of the building. correct answers 80
Would a stated amount method of valuation likely be used when insuring gold bullion? correct
answers No
An ____ policy is one that the value of the subject matter is not agreed upon, but is left to be
ascertained in case of loss. correct answers Open
A valued policy is one that expresses on it's face an agreement that the thing insured is valued at
a specific sum. True or False? correct answers True
Insuring more than one property on one policy for a single amount of insurance that applies to all
properties covered under the policy is known as _______ coverage. correct answers Blanket
The name of the insured is found on the declarations page of the policy. True or False? correct
answers True
What part or portion of a property policy contains the effective or expiration dates of the policy?
correct answers Declarations
, Are the insurer's limits of insurance amount stated in the conditions part or portion part of the
policy? correct answers No
The __________ part or portion of a property policy sets forth the rights, rules, duties, and
obligations of the insurer and insured to be followed throughout the policy period. correct
answers Conditions
The ______________ Clause allows insurers to automatically broaden coverage without
endorsement on existing policies with no increase in premium. correct answers Liberalization
When a property policy has been in effect less than 60 days and the insurer cancels for the
nonpayment of premium, the insurer must give the insured ____ days written notice. correct
answers 10
Could an order to vacate the property possibly cause an insurer to cancel a commercial property
policy? correct answers Yes
An insurer may nonrenew a homeowners policy with oral notice to the insured. True or False?
correct answers False
The insured's transfer of right of ownership or interest in an insurance policy to another party
with the insurer's written consent is known as an __________. correct answers Assignment
___________ transfers an insured's legal right of recovery to the insurer that paid the claim.
correct answers Subrogation
When an insured suffers a loss, they are required to prepare an inventory of the damaged
property at the ________ request. correct answers Insurers
In the event of a loss under a homeowners policy, a proof of loss must be signed and sworn by
the _______. correct answers Insured
Company A has issued a policy in the amount of $200,000, and company B has issued a policy
in the amount of $300,000. under the other insurance or pro rata liability condition or provision,
how much will company A pay of a $100,000 loss? correct answers $40,000
The _________ portion of the policy specifies the causes of loss perils not covered, or property
not covered. correct answers Exclusions
An amendment that is attached to a property insurance policy to broaden or restrict coverage, or
further define certain policy provisions is known as a(n) ___________. correct answers
Endorsement
Under a commercial lines property policy, who is responsible for making the premium payments
in a timely manner? correct answers First Named Insured
