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All of the following pieces of information can be found in the conditions section of an insurance
policy EXCEPT: correct answers Causes of loss that are not covered
Which of the following best defines the principle of indemnity? correct answers After a loss, the
insured should be restored to his approximate financial condition before the loss
SureTrust Insurance was founded and operates in Texas. In Texas, Suretrust is considered correct
answers a domestic insurer
What is a reserve, in insurance terms? correct answers A pool of collected premiums that the
insurer sets aside to pay claims
Which of the following would you find in the Conditions section of an insurance policy? correct
answers The insured's duty after a loss
Which of the following is found in the declarations page of an insurance policy? correct answers
The name of the insured party
Which of the following refers to being restored to the financial condition you were in before a
loss? correct answers Indemnification
Dr. Nelson routinely schedules her patients for lab tests that they dont need so she can charge
their insurers for more money. Dr. Nelson is: correct answers committing health insurance fraud
Six Starts Development Company has just purchased several large properties in Las Vegas. As a
result of this large purchase, they are a little short on money and decide to save money by not
purchasing insurance on their new properties. Six Stars is practicing: correct answers Risk
retention
Which of the following people committed soft fraud? correct answers Rafael accidentally slipped
on a wet floor at the supermarket. Although his only injury was a sprained ankle, he claimed he
had back and neck pain when he sued the supermarket in an effort to get more money in the
settlement.
When a car stops short in front of Mike's car, he manages to hit the brakes in time and avoids a
collision. To Mike's surprise, the other driver then throws the car into reverse and backs into
Mike's car! The other drivers actions are an example of: correct answers Hard fraud
When Louise goes online and fills out phony applications with XYZ Auto Insurance in order to
print the temporary insurance cards and sell them for a profit on the black market, she is: correct
answers Committing hard fraud
,Lucy has insurance on an expensive necklace she likes to wear to work every day. After work,
she takes it off and leaves it in her car's cupholder so she can put it back on in the morning on her
way to work. Lucy's behavior would be considered a: correct answers Morale hazard
When an insurer issues an insurance policy, the actual item, person, or organization that is being
insured is called the: correct answers Risk
Which of the following situations does not involve an instance of "pure risk" correct answers
Loss of money invested in the stock market
Which of the following is an example of how some insurers are fighting back against insurance
fraud? correct answers Starting fraud busting units staffed with former detectives and police
officers
Which of the following is NOT a form of insurance fraud? correct answers Increasing your
insurance coverage when you think a loss is likely
Steve has just purchased a wedding ring for his new bride. If something were to happen to the
ring, he'd be out of a lot of money, so he purchases an insurance policy. He is able to do this
because: correct answers The ring is a pure risk
Haley takes a bottle of water into a store, pours some of it on the floor when no one is looking,
and then pretends to slip and fall. She cries out for help in apparent pain until someone comes to
her aid. She then sues the store for her fake injury in an effort to collect an insurance settlement.
What has Haley committed? correct answers Hard fraud
After an earthquake, Jake's home is still standing, but it is a little shaken. The damage is not
extensive but Jake wants to cash in on the situation, so he takes a sledgehammer to some of his
extra belongings and adds them to his claim. Jake has committed: correct answers Property
insurance fraud
Which of the following is an example of a hazard? correct answers Sandra's home is in an area of
Los Angeles that is often hit by earthquakes
Risk avoidance is a risk management technique that: correct answers Eliminates risk
An "occurrence" is defined as: correct answers An unexpected event that causes loss
When Sally applies for an auto policy, her agent issues her a _______ so that she can benefit
from insurance protection while he underwrites the policy. correct answers Binder
Jane's shed burns to the ground during a tornado, when the high winds break a wall of the shed,
knocking over a lantern inside. What is the proximate cause of the loss? correct answers Wind
During a storm, lightning strikes a tree in Harry's yard and starts a fire that spreads to his shed
where he keeps all his equipment for his landscaping business. In addition to the shed, Harry has
, to purchase all new equipment to stay in business. The cost to replace the equipment would be
considered: correct answers A direct loss
Clark is filling out an application for an insurance policy. The application asks for his birth date,
and Clark writes 1/24/67. His actual birthday is 1/24/63, but he likes to appear younger so he
uses a different date. This would be called: correct answers Misrepresentation
Jason's auto policy states that the insurer may cancel coverage if a premium is more than 30 days
late. However, Jason is currently more than 30 days late, and has been so five times in the last
year, and his insurer has done nothing about it. When Jason gets into an accident and files a
claim, which of the following is most likely to happen? correct answers The insurer will pay the
claim because of the implied waiver they have made by not canceling Jason's policy the previous
times he was late with his payments.
What is a binder? correct answers Temporary coverage for an insurance applicant until the policy
is issued
In order to qualify for an insurance policy, Lydia's Fine Jewels must agree to have a security
guard on the premises 24/7. This is called a: correct answers Warranty
Which of the following statements about the principle of estoppel is TRUE? correct answers
Estoppel protects the insured party from an insurer who initially approves coverage, but then
later denies coverage after the insured pays for repairs.
Driving home after a 14-hour shift Sam falls asleep at the wheel and plows into Sandra's home,
causing extensive damage to the East wall and roof. As a result, Sandra and her family must
move into a hotel until the repairs are completed. The cost of staying in a hotel is: correct
answers An indirect loss
When Jim is involved in an accident, he immediately calls his insurer and files a claim. When his
insurer denies the claim, it is required to provide Jim with: correct answers A reason for denying
the claim
Sue decides to get a valued insurance policy on her antique car. She and her insurance company
agree to a value of $85,000. Three years later, the car is destroyed when a tree falls on it in a
parking lot. The car depreciates at $2,000 a year, and its replacement cost is 100,000. Ignoring
any deductible, how much can Sue expect her insurer to indemnify her? correct answers $85,000
When Zach purposefully burned down Matt's restaurant, Matt's insurer paid the claim and then
went after Zach for the damages. Matt is furious about what Zach did and wants to sue him as
well. Why is it NOT possible for Matt to sue Zach? correct answers Matt has already received
indemnification from his insurer
Jesse's home is worth $200,000 and he has a homeowners policy with a $160,000 limit. After a
covered loss, Jesse is left with a total of $10,000 in damages. Assuming the insurer requires the
All of the following pieces of information can be found in the conditions section of an insurance
policy EXCEPT: correct answers Causes of loss that are not covered
Which of the following best defines the principle of indemnity? correct answers After a loss, the
insured should be restored to his approximate financial condition before the loss
SureTrust Insurance was founded and operates in Texas. In Texas, Suretrust is considered correct
answers a domestic insurer
What is a reserve, in insurance terms? correct answers A pool of collected premiums that the
insurer sets aside to pay claims
Which of the following would you find in the Conditions section of an insurance policy? correct
answers The insured's duty after a loss
Which of the following is found in the declarations page of an insurance policy? correct answers
The name of the insured party
Which of the following refers to being restored to the financial condition you were in before a
loss? correct answers Indemnification
Dr. Nelson routinely schedules her patients for lab tests that they dont need so she can charge
their insurers for more money. Dr. Nelson is: correct answers committing health insurance fraud
Six Starts Development Company has just purchased several large properties in Las Vegas. As a
result of this large purchase, they are a little short on money and decide to save money by not
purchasing insurance on their new properties. Six Stars is practicing: correct answers Risk
retention
Which of the following people committed soft fraud? correct answers Rafael accidentally slipped
on a wet floor at the supermarket. Although his only injury was a sprained ankle, he claimed he
had back and neck pain when he sued the supermarket in an effort to get more money in the
settlement.
When a car stops short in front of Mike's car, he manages to hit the brakes in time and avoids a
collision. To Mike's surprise, the other driver then throws the car into reverse and backs into
Mike's car! The other drivers actions are an example of: correct answers Hard fraud
When Louise goes online and fills out phony applications with XYZ Auto Insurance in order to
print the temporary insurance cards and sell them for a profit on the black market, she is: correct
answers Committing hard fraud
,Lucy has insurance on an expensive necklace she likes to wear to work every day. After work,
she takes it off and leaves it in her car's cupholder so she can put it back on in the morning on her
way to work. Lucy's behavior would be considered a: correct answers Morale hazard
When an insurer issues an insurance policy, the actual item, person, or organization that is being
insured is called the: correct answers Risk
Which of the following situations does not involve an instance of "pure risk" correct answers
Loss of money invested in the stock market
Which of the following is an example of how some insurers are fighting back against insurance
fraud? correct answers Starting fraud busting units staffed with former detectives and police
officers
Which of the following is NOT a form of insurance fraud? correct answers Increasing your
insurance coverage when you think a loss is likely
Steve has just purchased a wedding ring for his new bride. If something were to happen to the
ring, he'd be out of a lot of money, so he purchases an insurance policy. He is able to do this
because: correct answers The ring is a pure risk
Haley takes a bottle of water into a store, pours some of it on the floor when no one is looking,
and then pretends to slip and fall. She cries out for help in apparent pain until someone comes to
her aid. She then sues the store for her fake injury in an effort to collect an insurance settlement.
What has Haley committed? correct answers Hard fraud
After an earthquake, Jake's home is still standing, but it is a little shaken. The damage is not
extensive but Jake wants to cash in on the situation, so he takes a sledgehammer to some of his
extra belongings and adds them to his claim. Jake has committed: correct answers Property
insurance fraud
Which of the following is an example of a hazard? correct answers Sandra's home is in an area of
Los Angeles that is often hit by earthquakes
Risk avoidance is a risk management technique that: correct answers Eliminates risk
An "occurrence" is defined as: correct answers An unexpected event that causes loss
When Sally applies for an auto policy, her agent issues her a _______ so that she can benefit
from insurance protection while he underwrites the policy. correct answers Binder
Jane's shed burns to the ground during a tornado, when the high winds break a wall of the shed,
knocking over a lantern inside. What is the proximate cause of the loss? correct answers Wind
During a storm, lightning strikes a tree in Harry's yard and starts a fire that spreads to his shed
where he keeps all his equipment for his landscaping business. In addition to the shed, Harry has
, to purchase all new equipment to stay in business. The cost to replace the equipment would be
considered: correct answers A direct loss
Clark is filling out an application for an insurance policy. The application asks for his birth date,
and Clark writes 1/24/67. His actual birthday is 1/24/63, but he likes to appear younger so he
uses a different date. This would be called: correct answers Misrepresentation
Jason's auto policy states that the insurer may cancel coverage if a premium is more than 30 days
late. However, Jason is currently more than 30 days late, and has been so five times in the last
year, and his insurer has done nothing about it. When Jason gets into an accident and files a
claim, which of the following is most likely to happen? correct answers The insurer will pay the
claim because of the implied waiver they have made by not canceling Jason's policy the previous
times he was late with his payments.
What is a binder? correct answers Temporary coverage for an insurance applicant until the policy
is issued
In order to qualify for an insurance policy, Lydia's Fine Jewels must agree to have a security
guard on the premises 24/7. This is called a: correct answers Warranty
Which of the following statements about the principle of estoppel is TRUE? correct answers
Estoppel protects the insured party from an insurer who initially approves coverage, but then
later denies coverage after the insured pays for repairs.
Driving home after a 14-hour shift Sam falls asleep at the wheel and plows into Sandra's home,
causing extensive damage to the East wall and roof. As a result, Sandra and her family must
move into a hotel until the repairs are completed. The cost of staying in a hotel is: correct
answers An indirect loss
When Jim is involved in an accident, he immediately calls his insurer and files a claim. When his
insurer denies the claim, it is required to provide Jim with: correct answers A reason for denying
the claim
Sue decides to get a valued insurance policy on her antique car. She and her insurance company
agree to a value of $85,000. Three years later, the car is destroyed when a tree falls on it in a
parking lot. The car depreciates at $2,000 a year, and its replacement cost is 100,000. Ignoring
any deductible, how much can Sue expect her insurer to indemnify her? correct answers $85,000
When Zach purposefully burned down Matt's restaurant, Matt's insurer paid the claim and then
went after Zach for the damages. Matt is furious about what Zach did and wants to sue him as
well. Why is it NOT possible for Matt to sue Zach? correct answers Matt has already received
indemnification from his insurer
Jesse's home is worth $200,000 and he has a homeowners policy with a $160,000 limit. After a
covered loss, Jesse is left with a total of $10,000 in damages. Assuming the insurer requires the
