insurance PRACTICE EXAM 1 Correct Questions & Answers!!

. Insurance is defined as follows: a. A contractual relationship where one party agrees to apply the loss of another. b. An agreement of first party to reimburse the second party for a loss they suffered. c. An agreement between two parties where the losses of one party are paid by the other. d. A contractual relationship where one party for consideration agrees to reimburse another for loss caused by a named peril. - ANSWER D 1. Fiduciary refers to individuals or organizations that occupy positions of special interest or confidence. Which of the following would not be considered to be a position of special trust? a. An insurance broker b. A financial institute c. An insurance company d. A travel advisor - ANSWER D 1. In order for an individual to be compensated by an insurance contract for property damaged by a peril, they must have an insurable interest in the property damaged. Which of the following would not have an insurable interest? a. The mortgagee b. The lienholder c. The individual named as beneficiary of the estate. d. The shareholder. - ANSWER C 1. Under common law, negligence is defined as a. Failure to use care. b. Failing to abide by the statute laws of the country. c. Failure to exercise the degree of care expected of a reasonable and prudent person. d. Failure to understand the Common Laws of the country. - ANSWER C 1. A fire policy issued on the home of an insured and half the annual premium was collected. The balance of the premium to be paid within thirty (30) days. The insured home was totally destroyed 90 days after the inception date. The other half of the premium had still not been received as promised. Which of the following are true: a. The policy was void and the insured was returned the premium he had paid. b. The insured received compensation proportionate to the premium paid. c. The insured was paid in full. d. The policy was terminated for non-payment and the loss was not paid - ANSWER C 1. A licensed insurance broker has a contract that allows him to bind certain risks with his insurer. To ensure that the insured and the insurer are aware that insurance has been placed, the broker will: a. Tell the client that coverage has been placed. b. Tell the client that the policy will be mailed to him when issued by the company. c. Writes a memo to the insurance company. d. Issue a binder as confirmation of coverage prior to issuance of policy. - ANSWER D 1. A contractor for the insured has ren