test bank 10.doc

Chapter 10 Analysis of Insurance Contracts 1) The portion of a property property and liability insurance insurance contract that contains information about the property or activity to be insured is called the A) declarations. B) insuring agreement. C) exclusions. D) conditions. Answer A Question Status: Previous Edition

!) "hat information is contained in the insuring agreement of an insurance policy# A) a description of the property or life to be insured B) a summary of the ma$or promises of the insurer C) a summary of the obligations of the insured D) a list of the property% losses% and perils that are excluded Answer B Question Status: Previous Edition

&) "hich of the following statements about 'all(riss' coverage is *are) true# +. All losses are covered except those losses speci,cally excluded. ++. The burden of proof is on the insured to prove that a loss is covered. A) + only B) ++ only C) both + and ++ D) neither + nor ++ Answer A Question Status: Previous Edition

-) The exclusion of ood in a homeowners policy is an example of an A) excluded activity. activity. B) excluded condition. C) excluded property. property. D) excluded peril. Answer D Question Status: Previous Edition

11! /e$da 0 Principles of Risk Management Management and Insurance % Tenth dition 2) xclusions are used in insurance policies for all of the following reasons 3C4T A) to reduce moral ha5ard. B) to waive policy conditions. C) to eliminate coverage for uninsurable uninsurable perils. D) to eliminate coverage not needed by typical insureds. Answer B Question Status: Previous Edition

6) /easons why a peril may be considered uninsurable and therefore excluded from insurance contracts include which of the following# +. The losses from the occurrence of the peril may be due to a predictable decline in value. ++. The losses from the occurrence of the peril may be incalculable and catastrophic. A) + only B) ++ only C) both + and ++ D) neither + nor ++ Answer C Question Status: Previous Edition

7) The policy provision re8uiring re8uiring the ,ling of proof of loss with the insurer is an example of a*n) A) declaration. B) condition. C) insuring agreement. D) miscellaneous provision. Answer B Question Status: Previous Edition

9) "hich of the following statements about the de,nition of the insured is *are) true# +. +n some cases% a person who is not speci,cally named may be classi,ed as an insured.

++. :nder no circumstances can more than one person be named as an insured. A) + only B) ++ only C) both + and ++ D) neither + nor ++ Answer A Question Status: Revised

Chapter 1; Analysis of +nsurance Contracts 11& elen is negligent and has an accident while driving ohn s car% how will each insurer respond to any liability  $udgment against >elen# A) The insurers will pay the $udgment on a pro rata basis. B) ohns insurer will pay on an excess basis if >elens insurance is insu@cient to cover the  $udgment. C) >elens insurance will pay on an excess basis if ohns insurance is insu@cient to cover the  $udgment. D) The policies will pay the $udgment on the basis of contribution by e8ual shares. Answer C Question Status: Previous Edition

!2) ate is covered under her employers group health plan. Ehe is also covered as a dependent under her husbands group health plan. :nder the usual coordination(of(bene,ts provision% how will each company respond to a claim ,led by ate# A) ates plan is primary% and her husbands plan is excess. B) >er husbands plan is primary% and ates plan is excess. C) The plan of the person with the birthday earliest in the year pays ,rst% and the other plan is excess. D) ach plan will pay 2; percent of the claim. Answer A Question Status: Previous Edition

119 /e$da 0 Principles of Risk Management and Insurance % Tenth dition !6) rics property was damaged in an accident. >e phoned his agent to see if the loss was covered under his property insurance policy. The agent said% 'As long as the cause of loss is not speci,cally excluded in the policy% the loss is covered.' Based on the agents answer% what type of insuring agreement appears in the policy# A) unconditional coverage B) named(perils coverage C) extended(perils coverage D) 'all(riss' coverage Answer D Question Status: Revised

!7) anet hit a wall causing a large dent in the fender of her car. Ehe was busy at wor and delayed reporting the damage to her insurer for < months. The insurer denied the claim% stating% 'Although such a loss is usually covered% you are re8uired under the terms of the contract to provide prompt noti,cation in case of loss.' The prompt noti,cation re8uirement is an example of a*n) A) declaration. B) de,nition. C) insuring agreement. D) condition. Answer D Question Status: Previous Edition

!9) Far reviewed his homeowners policy. >e learned that his personal property was insured on an

actual cash value basis. >e would lie replacement cost coverage on the property. >e contacted his agent who said% '+ll simply add an amendment to your contract that changes the basis of recovery to replacement cost.' The written provision the agent was referring to is called a*n) A) endorsement. B) coinsurance clause. C) binder. D) deductible. Answer A Question Status: Previous Edition

Chapter 1; Analysis of +nsurance Contracts 11< !