Utah Property and Casualty Insurance Exam Questions & Answers Graded A+

Specific insurance - Answer This type of insurance designates a particular item to be insured Blanket insurance - Answer This type of insurance covers more than one item of property at a single location or one more items of property at multiple locations. Speculative - Answer possibility of both gain and loss. Not insurable. Pure - Answer only the possibility of loss. Insurable. What are the 5 methods of managing or handling risk? - Answer avoid, control, retain, and transfer risk. Hazard - Answer A condition or situation which increases the chance for loss Physical Hazards - Answer a hazard that arises from the condition, occupancy, or use of the property itself. ex: skateboard left on the steps Moral Hazards - Answer when an individual through carelessness or by irresponsible actions can increase the possibly for a loss. ex: person who drives carelessly just because they know they are insured. Morale Hazards - Answer when a person might create a loss situation on purpose just to collect from the insurance company. ex: Prearranged, faked theft of someone's old vehicle so they can get an insurance payout to buy a new vehicle. Replacement Cost - Answer The amount of money it would take to replace a damaged or destroyed item with one of like kind and quality AT THE TIME OF LOSS. No deduction for depreciation. Actual Cash Value (ACV) - Answer Replacement Cost, minus depreciation. Pair and Set Clause - Answer Loss to one item of a pair or set does not constitute loss to the entire pair or set. Appraisal - Answer A method of resolving disputes between insurers and insureds over the amount owed on a covered loss. -both parties select an appraiser -the two appraisers select an umpire -if the appraisers do not agree, the umpire is consulted -the amount agreed on by 2 out of 3 is the amount that will be paid Subrogation - Answer An insurer's right to recover the amount of its loss payment from the third party who is legally responsible for the loss. Arbitration - Answer this condition is similar to the Appraisal Condition but it is not limited to disputes over the value of the loss. It may also be used to resolve other areas of disagreement between the insured and the insurance company. What does WC SHAVVER stand for? - Answer Windstorm, Civil commotion, Smoke, Hail, Aircraft, Vehicles, Volcanic eruption, Explosion, Riot What does BIG AFFECT stand for? - Answer Burglar damage, Ice & snow weight, Glass breakage, Accidental discharge, Falling objects, Freezing of pipes, Electrical damage, Collapse, Tearing apart. Insolvency - Answer A financial state that occurs if liabilities are greater than assets. Law of Agency - Answer Knowledge of the Agents is Knowledge of the Principal (Insurance Company) Principal - Answer Insurance Company What is the ISO? - Answer Insurance Services Office which is an organization established for the benefit of its member insurance companies. This organization gathers statistics, provides loss costs, drafts policy forms and coverage provisions and conducts inspections for rate making purposes. Coinsurance Clause - Answer Requires the insured to carry a minimum specified amount (generally 80%) of the replacement cost value of the insured property in order for partial losses to be paid in full. Estoppel - Answer A legal bar to changing or denying a fact because of one's own previous actions or words to the contrary. ex: If an insurance company representative intentionally or unintentionally gives the impression that a specific fact exists when it does not and a client relies on that impression and is damaged a result. Binder - Answer A temporary contract of insurance, oral or written, offered by an insurer pending issuance of the policy. Usually written for a period of 30-60 days and remains in force for that period or until a permanent policy is either issued or denied by the insurer. Warranty - Answer A provision in a policy that pledges that a condition does exist or will exist at some time in the future. Deposit Premium - Answer Tentative charge made at the beginning of certain policies and reinsurance agreements to be adjusted when the actual earned charge has been later determined. Audit - Answer Verification of books or accounts to determine their accuracy. Occurrence - Answer An accident, including continuous or repeated exposure to the same harmful conditions, which result in bodily injury or property damage. Special Damages - Answer type of compensatory damages that reimburse the injured part for direct and specific expenses involved in the loss. Such as medical expenses, funeral expenses and loss wages. General Damages - Answer type of compensatory damages that reimburse the injured party for such things as pain and suffering and disfigurement. Punitive Damages - Answer type of damages intended to punish the defendant and make an example out of her to discourage others from behaving the same way. Proximate Cause - Answer An act, through an uniterrupted chain of events, that can be determined to be the immediate or actual cause of a loss. 4 elements of negligence - Answer 1. The existence of a DUTY to act in a certain way 2. A FAILURE to live up to this duty 3. An actual INJURY must occur 4. The failure in duty must be the PROXIMATE CAUSE of the injury. Negligence - Answer An unreasonable or prudent act, A thoughtless or careless act or one committed out of ignorance. It may be a non-act or omission, but it is NEVER an intentional act. Casualty Insurance - Answer Refers to coverage designed to address the liability of individuals and organizations resulting from negligent acts in their personal, business, or professional roles. Overinsurance - Answer Exists if a property or an insurable interest in property is insured by one or more insurance contracts against the same hazard in excess of the fair value of the property or of such interest. Specific Insurance - Answer Coverage on ONE type of property (real or personal) in ONE location. Blanket Insurance - Answer A single policy written on an insured's interest for 2 or more different types of property (dwelling/building and contents) at the same location, or at different locations. Uninsured Motor Vehicle - Answer A motor vehicle or trailer to which: - No liability coverage at the time of accident -has liability coverage but not enough to meet the state's financial responsibility requirement - Operated by a hit and run driver - Has invalid liability insurance at the time of the accident because the insurer is insolvent or denies coverage Part C: Uninsured Motorist Coverage - Answer this coverage compensates the insured for bodily injury ONLY as a result of an accident with an uninsured motorist. Medical Payments - Answer Insurance company agrees to pay for reasonable expenses incurred for necessary medical and funeral services because of bodily injury. - Covers first party. - "Stays in the car" - 3 years is time limit for incurring medical expenses Supplementary Payments - Answer Payments made in addition to the Limits of Liability. - Up to $200/day for loss of earnings - Up to $250 for the cost of bail bonds required because of an accident. Excess - Answer Any insurance that is provided for a vehicle you do not own, shall be excess over any other collectible insurance. Example: If you borrowed your friend's car, your own liability coverage will act as excess to your friend's primary coverage. Single Limit Basis - Answer One amount representing the total (aggregate) limit for all claims arising from any one accident. (1 amount for Bodily Injury and Property Damage) Split Limit Basis - Answer This limit has separate limits for BI and PD. For example: 20/50/10 - $20,000 for per person bodily injury, $50,000 total per accident bodily injury, $10,000 per accident for property damage. Split/ Combined Single Limit - Answer This limit has only one limit that applies to both BI and PD. Part A - Liability Coverage - Answer Provides payment for Bodily Injury (BI) & Property Damage (PD) damage resulting from the injured's use of an automobile for which the insured becomes legally liable. - Covers Third Party Only - Pays for both $pecial and General Damages Loss of Use - Answer The inconvenience caused to an individual for the inability to use property. Underinsured Motorist Coverage (UIM) - Answer Covers the insured when involved in an accident with a driver who has auto liability insurance, but the limit of this insurance is insufficient to pay for the insured's damage. Collision - Answer The upset of a covered auto or its impact with another motor vehicle . Comprehensive - Answer Addresses property damage losses to the insured vehicle involving losses other than collisions. Examples: - Contact with birds or animals - Theft or larceny - Fire - Hair, water, or flood - Vandalism or malicious mischief (VMM) - Breakage of glass Nonowned Auto - Answer Any private passenger vehicle not owned by the insured being operated by the insured. Examples: - Rental Car - Temporary Substitute APIP - Answer Additional Personal Injury Protection (optional) OBEL - Answer Optional Basic Economic Loss Additional $25,000 to be assigned to any combination of Medical Expenses, Loss Wages, Rehab. Red Lining - Answer No insurer may refuse to issue or renew an auto policy because of age, sex, race, occupation or principal place of garaging of the named insured. Stacking - Answer The practice of adding (stacking) the limits of all applicable policies to address a given loss. Flood - Answer A general or temporary condition of partial or complete inundation of normally dry land areas. Must affect: - 2 or more acres or - 2 or more properties Vicarious Liability - Answer liability situation where someone is held responsible for the actions or omissions of another person. ex: an employer can be liable for the acts or omissions of its employees, provided it can be shown that they took place in the course of their employment. Write Your Own (WYO) - Answer Program instituted by the Federal Government which enables private insurers (Allstate, State Farm, etc) to write, service, bill and settle claims directly with insureds while being backed financially by the federal government. Tort - Answer Fault A civil wrong that violates the rights of another person. Can be intentional or unintentional Fair Credit Reporting Act - Answer Mandates confidential, fair and accurate reporting of information on consumers by reporting organizations as well as organizations (such as insurers) which use the services of reporting organizations. Consumers must be informed if a credit report is needed in order to underwrite a particular line of insurance. Express Authority - Answer Authority specifically given to an agent, either orally or in writing, by the principal -Written authority is typically provided under the agency agreement which allows the agent to countersign, issue and deliver policies. Implied Authority - Answer authority given by the insurance company to the agent that is not formally expressed or communicated. -This allows the agent to perform all of the usual and necessary tasks to sell and service insurance contracts and to full exercise the agents express authority. Apparent Authority - Answer Authority that states that an agent may have whatever authority a reasonable person would assume the agent has. General Rule of Agency - Answer Any knowledge of the agent is presumed to be knowledge of the insurer (principal). Producer (Agent) - Answer general term used to describe someone who sells insurance. -represents the insurance company Broker - Answer An individual, partnership, or corporation who, for a commission, acts or aids in any manner in the sale of insurance as the representative of the insured. In an insurance transaction, this person represents the insured. Consultant - Answer Someone who, for a fee, offers advice on the benefits, advantages, and disadvantages of various insurance policies. -They don't actually sell insurance, only advice. Solicitor - Answer like an agent, sells insurance and may even be authorized to collect premiums. However, they cannot issue or countersign policies, only agents can do this. -they represent the insurance company Excess or Surplus Lines - Answer an agent licensed by the state to handle highly specialized insurance coverages such as auto racing liability and tuition refund insurance. Non-Admitted Companies - Answer are companies that are not authorized to conduct business in the state under ordinary circumstances.