Deck 50: Insurance

Question 1

An insurable interest is created when an insurer has ownership of the item being insured.

Answer 1

True

Question 2

If an insured does not have an insurable interest in the property being insured, the contract is treated as a wager.

Answer 2

True

Question 3

Shippers can purchase comprehensive insurance to cover the risk of loss to their goods during shipment.

Answer 3

False

Question 4

An insurance policy, once made, cannot be modified.

Question 5

________ is a means for persons and businesses to protect themselves against the risk of loss.

A) Abatement
B) Ademption
C) Insurance
D) Easement

Question 6

An insurance contract is called a policy.

Question 7

In the context of insurance, what does the term premium refer to?

A) the money received from the defaulting party
B) the money paid to the insurance company
C) the money paid to insured after an accidental damage
D) the money paid to insurance brokers as fee

Question 8

Who is an underwriter?

A) a lawyer who represents an insurance company
B) an agent who works for only one insurance company
C) a broker who works on behalf of many insurance companies
D) an insurance company that provides coverage to the insured

Question 9

Insurance is a form of coverage for loss that is initiated after the loss has occurred.

Question 10

An insurance broker is an agent of an insurer.

Question 11

________ is a requirement that a person who purchases insurance has a personal stake in the insured item or person.

A) Delivery of possession
B) Endorsement
C) Adverse possessory interest
D) Insurable interest

Question 12

Which of the following is an insurer's duty?

A) to pay back the insured's money on demand
B) to pay back the premiums paid by the insured upon an endorsement of insurance
C) to pay legitimate claims up to the insurance policy limits
D) to pay interest for the premiums paid by insured on a monthly or yearly basis

Question 13

Which of the following statements is true of insurance?

A) It has to be paid after the risk has been encountered.
B) It can be obtained even if one has no insurable interest in the property being insured.
C) It is a means of transferring and distributing the risk of loss.
D) It cannot be modified once issued.

Question 14

Insurance policies can only be sold by direct agents of an insurer.

Question 15

Insurance coverage is typically suspended during grace periods for payments.

Question 16

An insurance contract is called a ________.

A) policy
B) premium
C) lien
D) writ

Question 17

For a life insurance, insurable interest is necessary at the time of loss.

Question 18

The ________ is a duty of the insurer to protect the insured against lawsuits or legal proceedings that involve a claim within the coverage of the insurance policy.

A) duty of strict liability
B) duty to pay
C) duty of reasonable care
D) duty to defend

Question 19

Premiums are based on an estimate of the number of parties within the pool who will suffer the risks insured against.

Question 20

What is the difference between an insurance broker and an insurance agent?

A) An insurance agent works exclusively for one company, while an insurance broker works for a number of insurance companies.
B) An agent requires a commission payment after a deal is made, while a broker requires a service charge to be paid before the deal is made.
C) An agent represents the insured, while a broker represents the company.
D) An agent is authorized to sell insurance directly, while a broker can only mediate an insurance contract.

Question 21

A(n) ________ is a clause in an insurance policy that provides that insurance proceeds are payable only after the insured has paid a specified amount toward the damage or loss.

A) incontestability clause
B) coinsurance clause
C) exclusions from coverage clause
D) deductible clause

Question 22

Which of the following statements is true of a life insurance?

A) The insurable interest need not exist at the time of insurance.
B) The insurable interest need not exist at the time of death or loss.
C) The beneficiary and the insured cannot be the same person.
D) The beneficiary and the insured must be bound by a relationship of blood.

Question 23

The owner of the policy in a life insurance without exception is the ________.

A) insurance company that issues the policy
B) person who pays the premiums
C) next of kin of the insured person
D) person who receives the insurance proceeds

Question 24

For a life insurance, the owner and beneficiary cannot be the same person.

Question 25

What is the copay clause in an insurance policy?

A) a clause in a life insurance contract that provides no coverage if the insured commits suicide before a stipulated date
B) a clause in an insurance policy that expressly stipulates the risks that are not covered by the insurance policy
C) a clause that prevents insurers from contesting statements made by insureds in applications after the passage of a stipulated number of years
D) a clause that requires the insured to pay a percentage of an insured loss along with the remainder being paid by the insurer

Question 26

A(n) ________ is a document that modifies an insurance policy and becomes part of the insurance policy.

A) endorsement
B) easement
C) injunction
D) convention

Question 27

Helen has a $40,000 automobile collision policy with a $750 deductible. If her car is involved in an accident costing her $15,000 to repair the damages, ________ is the amount she will have to pay to receive coverage for the damages from the insurer.

A) $750
B) $39,250
C) $40,000
D) $14,250

Question 28

Who are the different parties to a life insurance contract? How is a beneficiary determined for a life insurance?

Question 29

Which of the following clauses protects the insurers from intentional or unintentional material or informative misrepresentation from an insurance applicant?

A) exclusions from coverage clause
B) incontestability clause
C) deductible clause
D) coinsurance clause

Question 30

Henry works as an assembly line worker at MM Corporation. Two weeks back, he suffered multiple fractures while trying to repair a block in the machinery. The doctors have advised him to take two months of rest to recuperate from this accident. However, Henry is reassured that the ________ that he is eligible for will provide him with a monthly income until he is fit to return to work.

A) life insurance
B) disability insurance
C) health insurance
D) homeowner's policy

Question 31

Which of the following types of insurances provides replacement cost insurance?

A) health insurance
B) standard fire insurance
C) disability insurance
D) life insurance

Question 32

Roger Ray runs a motel in a rented property and sublets a part of its garage to the owner of a nearby fuel station. Three months later, the motel catches fire from a fuel leak in the garage and Roger suffers severe damages. If Roger owns a standard fire insurance policy for years, the insurer can use the ________ to refuse covering the damage caused by the fire.

A) deductible clause
B) exclusions from coverage clause
C) incontestability clause
D) copay clause

Question 33

The suicide clause is a clause that states that insurance proceedings will not be paid in case of a suicide at any time during the policy's validity.

Question 34

If no beneficiary is mentioned in a life insurance, then the proceeds of the insurance go to the insured's estate.

Question 35

What are the duties of an insured and insurer?

Question 36

Which of the following statements is true of the suicide clause in a life insurance?

A) The insurer is liable to pay in cases of legitimate suicides even if the life insurance policy had elapsed.
B) The suicide clause has a specified date set.
C) The insurer doesn't have to pay the beneficiary even if the suicide takes place after the specified date.
D) The suicide has to occur within the specified date for payment.

Question 37

A person who is to receive life insurance proceeds when the insured dies is known as a ________.

A) donor
B) bailee
C) beneficiary
D) notary

Question 38

An employee of a company that provides ________ insurance to its employees can receive payments, as provided by the policy, for injuries suffered by employees while working on the job.

A) disability
B) life
C) homeowner's
D) standard fire

Question 39

Hillary had purchased a term life insurance policy and had nominated her mother as the beneficiary, while William, her colleague, had a universal life insurance and had nominated himself as the beneficiary. Hillary and William recently got married and wish to nominate each other as beneficiaries in their individual life insurance policies. In the context of the given scenario, which of the following statements is true?

A) Hillary and William will have to purchase two new policies to nominate each other as beneficiaries.
B) Hillary and William will have to seek an endorsement to make the requisite changes in their current individual life insurance policies.
C) Hillary will be able to nominate William as the beneficiary, but William cannot do so because he did not enlist a beneficiary earlier.
D) William will have to nominate both Hillary and her mother as beneficiaries for his insurance policy because existing beneficiaries cannot be denied coverage.

Question 40

What happens to the life insurance proceeds upon the death of an insured who has not named a beneficiary?

A) The proceeds are given to the state.
B) The proceeds remain with the insurer for the full-term of the insurance.
C) The proceeds are given to charitable organizations.
D) The proceeds go to the insured's estate.

Question 41

A homeowner's policy does not cover theft that takes place at an insured's workplace even if the item is insured.

Question 42

An owner of real property or a mortgagee pays only one premium for title insurance, usually at closing.

Question 43

Under the replacement cost insurance, an insurer has the right to either pay the insured for the loss or pay to have the property restored.

Question 44

Which of the following statements is true of a personal articles floater?

A) The insured can insure specific body parts using this policy.
B) The coverage includes insurance of intangible properties.
C) The coverage does not include loss or damage caused during travel.
D) The insurance company will charge an increased premium based on the articles insured.

Question 45

A personal articles floater provides coverage for loss or damage to the articles while traveling.

Question 46

If Matheson wishes to be covered for the possibility of the chauffeur getting into an accident, he would require a(n) ________.

A) omnibus clause in his automobile insurance
B) collision clause in his automobile insurance
C) deductibility clause in his automobile insurance
D) double indemnity clause in his automobile insurance

Question 47

A personal articles floater helps insure specific items of value.

Question 48

Personal injury is not covered under a standard fire insurance policy.

Question 49

What is an automobile liability insurance?

A) an insurance that covers an insured's automobile from theft
B) an insurance that covers an insured's automobile from collision with another car
C) an insurance that covers damages that an insured causes to third parties
D) an insurance that covers an insured's automobile from natural disasters

Question 50

What is the importance of title insurance in real property?

Question 51

What kind of insurance can help restore Matheson's car after it has been damaged by the hurricane?

A) collision insurance
B) comprehensive insurance
C) automobile liability insurance
D) uninsured motorist coverage

Question 52

The coverage of a standard fire insurance policy cannot be enlarged by adding riders or endorsements to the policy.

Question 53

________ is a form of property insurance that insures an automobile from loss or damage due to causes other than collision.

A) Omnibus insurance
B) Comprehensive insurance
C) Coinsurance clause
D) No-fault automobile insurance

Question 54

Lienholders cannot purchase title insurance on a property on which they have a lien.

Question 55

Most employers pay for disability insurance for their employees in totality.

Question 56

A(n) ________ is a comprehensive insurance policy that includes coverage for the risks covered by a fire insurance policy as well as personal liability insurance.

A) homeowners' policy
B) life insurance policy
C) umbrella insurance
D) omnibus policy

Question 57

Renter's insurance fails to cover an insured for personal liability.

Question 58

Which of the following statements is true of the collision insurance?

A) The coverage is in effect whether the insured's car is moving or standing still.
B) The coverage is in effect even if another car was not involved in damaging the car belonging to the insured.
C) The coverage also gives protection from car thefts, natural calamities, vandalism, and riots.
D) The coverage gives insurance for damages caused by the insured on third parties.

Question 59

Which of the following types of insurances will help an owner of a real property establish clear ownership over that property?

A) comprehensive insurance
B) title insurance
C) omnibus insurance
D) renter's insurance

Question 60

Able Adams has a number of rare paintings at home that he inherited from his paternal family, many of whom were patrons and collectors of art. Able knows that the value of these paintings makes them likely targets of theft and he needs to insure these items specifically by using a ________.

A) homeowner's policy
B) standard fire insurance
C) personal articles floater
D) personal liability coverage

Question 61

A directors' and officers' liability insurance helps an organization sue its directors and officers in case of personal negligence.

Question 62

Automobile liability insurance covers damages that an insured causes to third parties.

Question 63

A workers' compensation insurance allows an employee to sue the employer along with claiming the insurance coverage.

Question 64

Which of the following insurances covers the death of the co-owner's loss to the business?

A) directors' and officers' insurance
B) key-person life insurance
C) business interruption insurance
D) workers' compensation insurance

Question 65

An insurer will issue an umbrella policy only if a stipulated minimum amount of basic coverage on other insurance policies has been purchased by the insured.

Question 66

An insured can cover his automobile under both collision insurance and comprehensive insurance simultaneously.

Question 67

What kind of insurance would protect Lucy from being sued by the injured employees for this damage?

A) business interruption insurance
B) directors' and officers' insurance
C) workers' compensation insurance
D) key-person life insurance

Question 68

A drive-other coverage protects an insured for damages to a rental car caused by the insured.

Question 69

A professional malpractice insurance protects professionals against liability caused by personal negligence.

Question 70

Norah is a single mother who has just taught Janet, her daughter, to drive. Once Janet has a driving permit, Norah intends to let Janet do most of the driving because driving for long stretches usually gives Norah severe pain in her upper back and shoulders. Norah's car is insured in her name. In this scenario, Norah could opt for a(n) ________ to protect the car from damages that could occur while Janet drives the car.

A) collision insurance
B) comprehensive insurance
C) omnibus clause
D) medical payment coverage

Question 71

Insureds who want to increase their liability coverage beyond the original coverage can purchase a(n) ________.

A) umbrella insurance
B) life insurance
C) business insurance
D) fire and homeowners' insurance

Question 72

A(n) ________ is an automobile insurance system used by some states in which the driver's insurance company pays for any injuries or death the driver suffers in an accident irrespective of who caused the accident.

A) no-fault insurance
B) comprehensive insurance
C) automobile liability insurance
D) collision insurance

Question 73

A buy-sell agreement made using proceeds from a key-life insurance is not considered valid.

Question 74

What kind of insurance provides such coverage?

A) product liability insurance
B) key-person life insurance
C) workers' compensation insurance
D) business interruption insurance

Question 75

The uninsured motorist coverage only covers when the accident is an insured's fault.

Question 76

An automobile insurance with the omnibus clause is called an umbrella insurance policy.

Question 77

A no-fault insurance assures an insured party that coverage is available if they are injured in an automobile accident.

Question 78

Give an account of the no-fault automobile liability insurance.

Question 79

Collision insurance covers damages to a car in a natural disaster.

Question 80

Which of the following statements is true of umbrella insurance?

A) It cannot be used for liability coverage.
B) It does not require the insured to have already purchased insurance policies.
C) It cannot be used with other insurance policies.
D) It is only paid if the limits on other insurance policies have been exceeded.