Utah Property and Casualty Insurance Test Question Notes With Correct Answers

What is a peril? - Answer A Peril is a cause of loss What is a hazard? - Answer Something that increases the chance of a loss What is the difference between a Moral hazard and a Morale Hazard? - Answer Moral Hazard - dishonesty, against the law Morale Hazard - carelessness What is the method of handling risk that involves a deductible? - Answer Retention (loss or portion of loss) If a fire causes damage to a building, what is the fire considered? - Answer A Peril What are the elements of an insurable risk? - Answer CANHAM Calculable, Affordable, Non-Catastrophic, Homogeneous, Accidental, Measurable If an insurance company is housed in Tennessee, what type of insurer are they considered? - Answer Domestic An insurance company incorporated in Wisconsin and conducting business in Minnesota is know as what type of insurer? - Answer Foreign What is it meant by "Express Authority"? - Answer Authorities are written in agent contract What is a term that is typically used to describe an Insurance Agent? - Answer Fiduciary - a person in a position of financial trust What is a contract or device for transferring risk from a persons, business, or organization to an insurance company? - Answer Insurance What is Reinsurance? - Answer When insurance companies purchase insurance to cover their own exposures to loss What is a fiduciary? - Answer A person in a position of financial trust What is it meant by a contract of adhesion? - Answer Policy written by the insurer with the insured having no input What part of the insurance policy shows the premium payment? - Answer Declarations page What are the duties of the insured after a loss? - Answer Notice to insurer, protect property from further damage, Proof of loss, property available for inspection, examination under oath if needed, cooperate with insurer What is the FCRA? - Answer Fair Credit Reporting Act - If the insurer uses credit, must inform insured What are the parts to an insurance contract? - Answer Declarations, Conditions, Insuring Agreements, and Exclusions When an insured decides to cancel an insurance policy before the expiration date, how is the unearned premium returned? - Answer Short-Rate basis What are the three basic perils? - Answer Fire, Lightning, and Internal Explosion What are the extended coverage perils? - Answer WCSHAVVER and V&MM -Wind, Civil commotion, Smoke, Hail, Aircraft, Vehicles, Volcanic Eruption, Explosion, Riot, Vandalism and malicious mischef What is the difference between a direct loss and an indirect loss? - Answer Direct - immediate damage caused by peril Indirect - loss over time as a result of the direct loss How is ACV calculated? - Answer Replacement Cost - depreciation = What is the coinsurance clause and what is the percentage required by the insurer? - Answer Requires the insured to carry the standard coinsurance amount of the insurance policy; 80% What is the method called when the insured and insurance company cannot agree on a settlement? - Answer Appraisal method What is a bailee? - Answer A person or organization that has temporary possession of someone else's personal property What is a tort? - Answer A civil wrong that causes someone else to suffer a loss What is Vicarious Liability? - Answer Liability for the actions of another What are the five property coverages and associated lettering? - Answer A - Dwelling B - Other structured (detached, appurtenant) C - Insured's personal property (off-premises covered up to 10% of C) D - Fair Rental Value E - Additional Living Expense Property coverage B provides coverage for what? - Answer Other structures; 10% of A How much will DP-2 and DP-3 cover for trees, shrubs, and other plants? - Answer $500 for any one tree/shrub/plant Which dwelling form covers collapse? - Answer DP-2 and DP-3 For Dwelling insurance, how long will the insured cover medical payments to others after the policy expires? - Answer 3 years after the accident Which section of the Homeowners policy does not contain a deductible? - Answer Section II - Liability