Utah Property and Casualty Insurance Exam Questions With Correct Answers

Absolute Liability - Answer Liability that arises from an extremely dangerous situation. Absolute liability is often found in cases involving explosives. Also known as "strict" liability. For ex you are absolutely liable if you keep a wild animal as a pet. Accident - Answer A sudden and unexpected event, occurring at a specific time and place. Actual Cash Value (ACV) - Answer The cost to replace an item of property at the time of loss, less an allowance for depreciation. Often used to determine amount of reimbursement for a loss (Replacement Cost minus Depreciation.) Additional Insured - Answer A person, firm, or corporation other than the Named Insured on a policy, or a lender named in a mortgage clause, who is protected against loss by the terms of the policy. Additional Living Expenses - Answer A coverage designed to reimburse the insured for an increase in living expenses necessitated by a loss to the dwelling. This Indirect Loss must be the result of Direct Loss by a covered Peril. Adjuster - Answer Represents the insurance company and acts for the company in working on agreements as to the amount of a loss and the liability of the company. Admitted Company - Answer A company that meets the state insurance department's standards and is authorized by the Director to do business in the state. Agent/Producer - Answer An individual appointed by an insurance company to solicit, negotiate, effect, or countersign insurance contracts on its behalf. Aggregate Limit - Answer A type of policy limit found in Liability policies that limits coverage to a specified total amount for all losses occurring within the policy period. Alien Company - Answer An insurance company incorporated in a country other than the United States Allied Lines - Answer Property coverages that are closely associated with and frequently sold with fire insurance: Dwelling Building and Contents form, Earthquake insurance, Sprinkler Leakage, etc. All-Risk Insurance - Answer Insurance protecting the insured from loss arising from any Peril other than those specifically excluded by name. This contrasts with Named Peril Insurance, which names the Peril or Perils insured against. Application - Answer A questionnaire that is filled out by an agent and the prospect seeking insurance. The form contains rating and underwriting information. The applicant is expected to make representations by answering questions to the best of his knowledge (truthfully). Appraisal - Answer If the insured and insurer cannot agree on the amount of loss, either may demand an appraisal, If demanded, each will select an appraiser, who jointly will select an umpire. The appraisers will appraise the loss and either agree or submit differences to the umpire. Agreement by any two of the three will be binding. Each party will pay its own appraiser and share equally the expenses of the appraisal and the umpire. Appurtenant Structure - Answer A structure belonging to the insured structure, such as a tool shed. Appurtenant structures are provided for in the Homeowners policy and other Dwelling policies. This coverage is often called Other Structures or Out Buildings. Assigned Risk - Answer There are some applicants that underwriters do not care to insure, but because of state law or otherwise, must be provided protection. To become authorized, a Casualty company must agree to participate in the Assigned Risk Pool and take its turn providing Auto insurance to high-risk drivers. Also known as the auto insurance "plan". Audit - Answer A survey of the financial records of the insured conducted to determine exposures, limits, etc., which are needed to calculate the premium. The initial premium is only a deposit. Bailee - Answer A person who has temporary custody of property belonging to another person. An example of a bailee: the dry cleaners. Bailee's Customers Policy - Answer Insurance obtained by a bailee, to cover loss or damage to customers' property in the bailee's custody, without regard to liability. Binders - Answer Binders and other temporary insurance contracts may be made orally or in writing. Each binder is deemed to include all usual terms of the policy for which it was given plus endorsements. Life or Disability insurance utilizes conditional receipts instead of binders. Blanket Position Bond - Answer Fidelity bond that specifies a single limit of Liability applicable to each employee involved in a loss. Bodily Injury - Answer Usually defined to include bodily harm, sickness, disease, including required care, loss of services and resulting in death. Boiler and Machinery Policy - Answer Insurance that covers the insured against loss (Liability and Physical Damage) arising out of the use of steam boilers or other machinery. May be written as a separate policy or as a part of Commercial Package Policy. Bond - Answer An obligation of the insurance company to protect one against financial loss caused by the acts of others. Broker - Answer One who represents an insured in the solicitation, negotiation, or procurement of contracts of insurance, and who may render services incidental to those functions. Brokers may also be licensed as agents. Burglary - Answer As it is defined in Crime insurance policies, the unlawful taking of property by forced entry into the premises, or exit from the premises, while the premises are closed for business. There must be visible evidence of forced entry or exit. Business Owners Policy (BOP) - Answer A commercial package policy designed for certain types of small businesses, combining Property and Liability coverages. Very similar to a Commercial Package Policy (CPP). Cancellation - Answer Termination of a contract of insurance in force mid-term (rather than at the renewal date) by voluntary act of insurance company or insured, effected in accordance with provisions in the contract or by mutual agreement. Casualty Insurance - Answer A type of insurance that is primarily concerned with losses caused by injury to persons and legal liability imposed upon the insured for such injury or damage to property of others. Coinsurance - Answer In Property insurance, a clause under which the insured shares in losses to the extent that she is under insured at the time of the loss. Commercial Package Policy - Answer A multi peril, multiline policy that provides a broad spectrum of Property and Casualty coverages for businesses. In addition to required basic Property and Liability insurance, the insured may add additional Marine, Boiler, and Machinery, Glass, Crime, Business Auto or Farm coverages. Comparative Negligence - Answer Doctrine that a defendant is liable only for the amount of damages allocated to that defendant in direct proportion to the defendant's percentage of fault (if not 51% or more at fault, defendant is not held liable).