PERSONAL LINES UPDATED ACTUAL EXAM
QUESTIONS AND CORRECT ANSWERS FULL
SOLUTION GRADED A+
◉ Risk _________ is when one takes action to prevent or reduce
potential loss. Answer: Reduction
◉ When the number of similar units increases, the predictability of
the loss improves according to the rule of _____ ________. Answer:
Large Numbers
◉ The insuring of risks that are more prone to losses than average
risks is known as? Answer: Adverse Selection
◉ A ___________ contract is an arrangement where one insurer
transfers or shares risks with another insurer. Answer: Reinsurance
◉ _____________ Reinsurance is accepted or rejected by a case by
case basis. Answer: Facultative
◉ The fact that an insured would profit from a loss, would be a
violation of the principle of ___________. Answer: Indemnity
,◉ The determination of acceptable risks is the primary function of the
___________ . Answer: Underwriter
◉ Underwriters like to select insureds who's actual losses will be
similar to expected losses. True or False? Answer: True
◉ When rates cannot be used until they are improved by the
department or division of insurance, they are called ____ ________
rates. Answer: Prior Approval
◉ The termination of a policy by either the insured or insurer before
its expiration date is known as ___________. Answer: Cancellation
◉ When the insurer cancels a property policy, the unearned premium
is returned ___ ____. Answer: Pro Rata
◉ When an insured requests cancellation of a policy, the unearned
premium is refunded to the insured on a _____ _____. Answer: Short
Rate
◉ A fire is considered to be a _____ of a potential loss. Answer:
Cause
◉ A document that provides temporary insurance coverage until a
policy is issued is known as a ______. Answer: Binder
,◉ The process by which a disputed claim is decided by a neutral third
party is known as ___________. Answer: Arbitration
◉ _________ _________ is a situation where there are two causes
resulting in a loss, with one of the causes excluded and the other
cause of loss not excluded. Answer: Concurrent Causation
◉ If two or more policies provide identical coverage for the same
risk, the policies are deemed to be __________. Answer: Concurrent
◉ Policy A is written for $100,000, and an excess Policy B is written
for $200,000 on the same property. In the event of a $20,000 loss,
how much will each policy pay? Answer: A= $20,000 ; B= $0
◉ A building that has neither occupants nor personal property is
______. Answer: Vacant
◉ When property is damaged by fire, the loss is said to be a(n)
______ loss. Answer: Direct
◉ If a fire on a premises caused a power outage, which caused meat
in the freezer to spoil, would the meat spoilage be considered a direct
loss or indirect loss? Answer: Indirect Loss
◉ Open peril policies include losses caused by theft. True or False?
Answer: True
, ◉ If a property owner does not desire any deduction for depreciation
following a covered loss, he/she should purchase a ___________
____ policy. Answer: Replacement Cost
◉ For replacement cost coverage to apply in dwelling policies, the
insured must carry insurance at least equal to ____% of the cost of
replacement of the building. Answer: 80
◉ Would a stated amount method of valuation likely be used when
insuring gold bullion? Answer: No
◉ An ____ policy is one that the value of the subject matter is not
agreed upon, but is left to be ascertained in case of loss. Answer:
Open
◉ A valued policy is one that expresses on it's face an agreement that
the thing insured is valued at a specific sum. True or False? Answer:
True
◉ Insuring more than one property on one policy for a single amount
of insurance that applies to all properties covered under the policy is
known as _______ coverage. Answer: Blanket
◉ The name of the insured is found on the declarations page of the
policy. True or False? Answer: True
QUESTIONS AND CORRECT ANSWERS FULL
SOLUTION GRADED A+
◉ Risk _________ is when one takes action to prevent or reduce
potential loss. Answer: Reduction
◉ When the number of similar units increases, the predictability of
the loss improves according to the rule of _____ ________. Answer:
Large Numbers
◉ The insuring of risks that are more prone to losses than average
risks is known as? Answer: Adverse Selection
◉ A ___________ contract is an arrangement where one insurer
transfers or shares risks with another insurer. Answer: Reinsurance
◉ _____________ Reinsurance is accepted or rejected by a case by
case basis. Answer: Facultative
◉ The fact that an insured would profit from a loss, would be a
violation of the principle of ___________. Answer: Indemnity
,◉ The determination of acceptable risks is the primary function of the
___________ . Answer: Underwriter
◉ Underwriters like to select insureds who's actual losses will be
similar to expected losses. True or False? Answer: True
◉ When rates cannot be used until they are improved by the
department or division of insurance, they are called ____ ________
rates. Answer: Prior Approval
◉ The termination of a policy by either the insured or insurer before
its expiration date is known as ___________. Answer: Cancellation
◉ When the insurer cancels a property policy, the unearned premium
is returned ___ ____. Answer: Pro Rata
◉ When an insured requests cancellation of a policy, the unearned
premium is refunded to the insured on a _____ _____. Answer: Short
Rate
◉ A fire is considered to be a _____ of a potential loss. Answer:
Cause
◉ A document that provides temporary insurance coverage until a
policy is issued is known as a ______. Answer: Binder
,◉ The process by which a disputed claim is decided by a neutral third
party is known as ___________. Answer: Arbitration
◉ _________ _________ is a situation where there are two causes
resulting in a loss, with one of the causes excluded and the other
cause of loss not excluded. Answer: Concurrent Causation
◉ If two or more policies provide identical coverage for the same
risk, the policies are deemed to be __________. Answer: Concurrent
◉ Policy A is written for $100,000, and an excess Policy B is written
for $200,000 on the same property. In the event of a $20,000 loss,
how much will each policy pay? Answer: A= $20,000 ; B= $0
◉ A building that has neither occupants nor personal property is
______. Answer: Vacant
◉ When property is damaged by fire, the loss is said to be a(n)
______ loss. Answer: Direct
◉ If a fire on a premises caused a power outage, which caused meat
in the freezer to spoil, would the meat spoilage be considered a direct
loss or indirect loss? Answer: Indirect Loss
◉ Open peril policies include losses caused by theft. True or False?
Answer: True
, ◉ If a property owner does not desire any deduction for depreciation
following a covered loss, he/she should purchase a ___________
____ policy. Answer: Replacement Cost
◉ For replacement cost coverage to apply in dwelling policies, the
insured must carry insurance at least equal to ____% of the cost of
replacement of the building. Answer: 80
◉ Would a stated amount method of valuation likely be used when
insuring gold bullion? Answer: No
◉ An ____ policy is one that the value of the subject matter is not
agreed upon, but is left to be ascertained in case of loss. Answer:
Open
◉ A valued policy is one that expresses on it's face an agreement that
the thing insured is valued at a specific sum. True or False? Answer:
True
◉ Insuring more than one property on one policy for a single amount
of insurance that applies to all properties covered under the policy is
known as _______ coverage. Answer: Blanket
◉ The name of the insured is found on the declarations page of the
policy. True or False? Answer: True
