AD BANKER P&C CHAPTER 1 PRACTICE EXAMS
Which of the following is not true of the Fair Credit Reporting Act? - Answers - A - A
consumer can obtain the information in the reporting agency file
B - Errors in the report can only be changed by court action
C - A consumer must be informed whenever insurance was denied due to an adverse
report
D - A consumer is protected from unwelcome personal information collection practice
Answer: B - Errors in the report can only be changed by court action
Rates that cannot be used until the Department or Division of Insurance approves them
are referred to as: - Answers - A - Use and file rates
B - Prior approval rates
C - File and use rates
D - Open competition rates
Answer: B - Prior approval rates
Which of the following is least likely to be a factor when determining the eligibility of a
person for property insurance? - Answers - A - The nature of the risk, such as the type
of building and the number of families living in the building
B - Existence of any hazards such as a nearby gas station exposure
C - Whether the premium will be paid in full or billed to the insured
D - The claims history showing when prior claims occurred and how much was paid to
settle the claim
Answer: C - Whether the premium will be paid in full or billed to the insured
Where can an insured find insurance coverage after being rejected by Insurer A due to
claims history? - Answers - A - Risk retention insurer
B - Residual market
C - Lloyd's of London
D - Reinsurance market
, Answer: B - Residual Market
An applicant could purchase an insurance policy to cover losses from all the following,
except: - Answers - A - An operation of drug smuggling
B - Sudden and direct damage to property by natural causes
C - Loss of property through burglary or theft
D - Loss of assets through tort actions brought against the person
Answer: A - An operation of drug smuggling
When an individual faces the risk of economic loss in the event of property damage, this
indicates which of the following? - Answers - A - Insurable interest
B - Merit rating
C - Limit of recovery
D - Subrogation
Answer: A - Insurable Interest
Typically, if there is a risk of financial loss, there is an insurable interest.
Which of the following risks may be protected against by insurance? - Answers - A -
Intentional Risk
B - Involuntary risk
C - Pure Risk
D - Catastrophic risk
Answer: C - Pure Risk
A pure risk is one that may only result in a loss or no loss. Because there is no chance
of gain, the risk is insurable. A catastrophic risk (e.g. nuclear explosion) is not generally
insurable because the losses would be too great for a private insurer to underwrite.
Which kind of agent enters into agreements with more than one insurer? - Answers - A -
Exclusive
B - Captive
Which of the following is not true of the Fair Credit Reporting Act? - Answers - A - A
consumer can obtain the information in the reporting agency file
B - Errors in the report can only be changed by court action
C - A consumer must be informed whenever insurance was denied due to an adverse
report
D - A consumer is protected from unwelcome personal information collection practice
Answer: B - Errors in the report can only be changed by court action
Rates that cannot be used until the Department or Division of Insurance approves them
are referred to as: - Answers - A - Use and file rates
B - Prior approval rates
C - File and use rates
D - Open competition rates
Answer: B - Prior approval rates
Which of the following is least likely to be a factor when determining the eligibility of a
person for property insurance? - Answers - A - The nature of the risk, such as the type
of building and the number of families living in the building
B - Existence of any hazards such as a nearby gas station exposure
C - Whether the premium will be paid in full or billed to the insured
D - The claims history showing when prior claims occurred and how much was paid to
settle the claim
Answer: C - Whether the premium will be paid in full or billed to the insured
Where can an insured find insurance coverage after being rejected by Insurer A due to
claims history? - Answers - A - Risk retention insurer
B - Residual market
C - Lloyd's of London
D - Reinsurance market
, Answer: B - Residual Market
An applicant could purchase an insurance policy to cover losses from all the following,
except: - Answers - A - An operation of drug smuggling
B - Sudden and direct damage to property by natural causes
C - Loss of property through burglary or theft
D - Loss of assets through tort actions brought against the person
Answer: A - An operation of drug smuggling
When an individual faces the risk of economic loss in the event of property damage, this
indicates which of the following? - Answers - A - Insurable interest
B - Merit rating
C - Limit of recovery
D - Subrogation
Answer: A - Insurable Interest
Typically, if there is a risk of financial loss, there is an insurable interest.
Which of the following risks may be protected against by insurance? - Answers - A -
Intentional Risk
B - Involuntary risk
C - Pure Risk
D - Catastrophic risk
Answer: C - Pure Risk
A pure risk is one that may only result in a loss or no loss. Because there is no chance
of gain, the risk is insurable. A catastrophic risk (e.g. nuclear explosion) is not generally
insurable because the losses would be too great for a private insurer to underwrite.
Which kind of agent enters into agreements with more than one insurer? - Answers - A -
Exclusive
B - Captive
