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Which of the following statements about a worker's primary insurance amount is (are)
true?
I. It is the monthly amount paid to a worker who elects early retirement at age 62.
II. It is equal to 50 percent of the worker's final average pay that was subject to Social
Security taxes.
A) I only
B) II only
C) both I and II
D) neither I nor II
Loss severity is defined as the
A) probable size of the losses which may occur during some period.
B) probable number of losses which may occur during some period.
C) probability that any particular piece of property may be totally destroyed.
D) probability that a liability judgment may exceed a firm's net worth.
Which of the following statements is (are) true with respect to a joint-and-survivor
annuity?
I. Some joint-and-survivor annuities reduce the income payment after the first annuitant
dies.
II. No payments are made after the first annuitant dies.
A) I only
B) II only
C) both I and II
D) neither I nor II
Why does the insured get the benefit of the doubt if an insurance policy contains any
ambiguities or uncertainties?
A) because insurance contracts are aleatory
B) because insurance contracts are unilateral
C) because insurance contracts are conditional
D) because insurance contracts are contracts of adhesion
Lisa has three fire insurance policies on her office building. The policy from company A
is for $400,000, and the policies from companies B and C are for $100,000 each. If Lisa
has a $360,000 loss, how much of the loss will be covered by each policy if the loss is
settled on a pro rata basis by the insurers?
A) each policy: $120,000
B) policy A: $160,000; policies B and C: $100,000 each
C) policy A: $240,000; policies B and C: $60,000 each
D) policy A: $360,000; policies B and C: nothing
Uncertainty pertaining to the organization's goals and objectives and the organization's
strengths, weaknesses, opportunities, and threats is called
A) operational risk.
B) strategic risk.
C) subjective risk.
D) pure risk.
All of the following are considered insured locations for medical payments to others
(Coverage F) under a homeowners policy EXCEPT
A) a new vacation home purchased by an insured during the policy period.
B) a motel room where an insured is temporarily residing.
C) a hall rented by the insured for her daughter's graduation party.
D) farmland owned by the insured.
The basis for current state regulation of insurance is
A) the McCarran-Ferguson Act.
B) Paul v. Virginia.
C) the South-Eastern Underwriters Association case.
D) the National Association of Insurance Commissioners.
Which of the following statements about the additional coverages included in Section II
of the homeowners policy is true?
A) Damage to property of others is covered only if the insured is legally liable.
B) Damage to property arising out of a business engaged in by the insured is covered.
C) Interest that accrues on a judgment after the judgment is awarded but before the
judgment is paid is covered under claims expenses.
D) First aid expenses incurred by the insured for a bodily injury covered under the
policy are not covered.
Which of the following statements about comparative negligence laws is (are) true?
I. Under the pure rule, any negligence by the plaintiff automatically bars recovery for
damages.
II. Under the 50 percent rule, parties who are equally at fault are each allowed to
recover damages.
A) I only
B) II only
C) both I and II
D) neither I nor II
