CPCU 500 Chapter 7 and 8 Exam | Questions with
100% Correct Answers | Verified | Latest Update
2026/2027
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Terms in this set (38)
CHAPTER 7 CHAPTER 7
List the distinguishing characteristics -indemnity
of an insurance policy -utmost good faith
-fortuitous losses
-contract of adhesion
-exchange of unequal amounts
-conditional
-nontransferable
identify reasons that an insurance -because most insurance policies contain a dollar
policy might not fully indemnify an amount, deduct, or other provisions or limitation on
insured after a covered loss the amount to be paid
explain the distinction between a contract of indemnity - compensates the insured
contract of indemnity and a valued for the value of the loss
policy valued policy - insurer agrees to pay a
preestablished dollar amount in the event of an
insured total loss, which may overindemnify or
underind an insured
, Identify 2 policy characteristics that -overindemnify the insured
help an insurer reduce or avoid -indemnify insured more than once per loss
moral hazards associated with
indemnification
What are 2 reasons an insurance 1. one party to a contract has information the other
policy might be vulnerable to party does not (info asymmetry)
misrepresentation or opportunism 2. costly verification of info may lead an insurer to
and how the concept of utmost fail to verify info provided by insured
good faith helps prevent -helps prevent because the concept obligates
occurrences of such abuses parties to act with complete honesty and to
disclose all relevant facts
identify factors courts consider when -size of the insured org
determining whether to classify an -size of the org's RM department
insured as a sophisticated insured -use of an insurance broker or legal counsel with
expertise in insurance policies
-relative bargaining power of the insured in relation
to the insurer
Explain how an insurer makes certain - by charing a premium that is directly proportional
that the tangible consideration to the insured expected losses on an actuarially
offered by the insured in an sound basis
insurance contract is quitable
Explain why insurance policies are -because the insurer is obligated to pay for losses
conditional contracts incurred by the insured only if the insured has
fulfilled all of the policy conditions
100% Correct Answers | Verified | Latest Update
2026/2027
Save
Terms in this set (38)
CHAPTER 7 CHAPTER 7
List the distinguishing characteristics -indemnity
of an insurance policy -utmost good faith
-fortuitous losses
-contract of adhesion
-exchange of unequal amounts
-conditional
-nontransferable
identify reasons that an insurance -because most insurance policies contain a dollar
policy might not fully indemnify an amount, deduct, or other provisions or limitation on
insured after a covered loss the amount to be paid
explain the distinction between a contract of indemnity - compensates the insured
contract of indemnity and a valued for the value of the loss
policy valued policy - insurer agrees to pay a
preestablished dollar amount in the event of an
insured total loss, which may overindemnify or
underind an insured
, Identify 2 policy characteristics that -overindemnify the insured
help an insurer reduce or avoid -indemnify insured more than once per loss
moral hazards associated with
indemnification
What are 2 reasons an insurance 1. one party to a contract has information the other
policy might be vulnerable to party does not (info asymmetry)
misrepresentation or opportunism 2. costly verification of info may lead an insurer to
and how the concept of utmost fail to verify info provided by insured
good faith helps prevent -helps prevent because the concept obligates
occurrences of such abuses parties to act with complete honesty and to
disclose all relevant facts
identify factors courts consider when -size of the insured org
determining whether to classify an -size of the org's RM department
insured as a sophisticated insured -use of an insurance broker or legal counsel with
expertise in insurance policies
-relative bargaining power of the insured in relation
to the insurer
Explain how an insurer makes certain - by charing a premium that is directly proportional
that the tangible consideration to the insured expected losses on an actuarially
offered by the insured in an sound basis
insurance contract is quitable
Explain why insurance policies are -because the insurer is obligated to pay for losses
conditional contracts incurred by the insured only if the insured has
fulfilled all of the policy conditions
