All of the following requirements must be met to satisfy the doctrine of res ipsa
loquitur EXCEPT
A) The injured party has not contributed to the accident in any way.
B) The injured party must prove negligence on the part of the defendant.
C) The event is one that normally does not occur in the absence of negligence.
D) The defendant has exclusive control over the instrumentality causing the accident.
William would like to insure his home. He does not want theft or personal liability
coverage; however, he would like “open perils” (all-risks) coverage on the dwelling.
William should purchase a
A) Homeowners 3 Policy.
B) Dwelling Property 1 Form.
C) Dwelling Property 2 Form.
D) Dwelling Property 3 Form.
One commercial crime policy condition is “termination as to any employee.” This
condition terminates crime coverage
A) on any employee once he or she is no longer employed by the company.
B) on any employee once it is learned that he or she has committed a theft or dishonest
act.
C) on any employee who does not wish to be covered under the policy.
D) on a selected category of employees (e.g. cashiers or clerical employees).
Which of the following statements about nonforfeiture options found in life insurance
policies is true?
A) Under the reduced paid-up option, the paid-up policy is term insurance.
B) Under the extended term option, the amount of term insurance is less than the face
value of the surrendered cash value policy.
C) Under the reduced paid-up option, no additional premiums must be paid.
D) Unless the policyowner has selected another nonforfeiture option, the cash value
option goes into effect automatically.
Which of the following statements about the federal flood insurance program is true?
A) Under the write-your-own program, each insurer services the policies it writes.
B) The regular portion of the program does not allow the purchase of higher amounts of
coverage than are available under the emergency portion of the program.
C) No coverage is available for property owners in areas where flooding has occurred
previously.
D) The maximum amount of coverage that can be written on any single dwelling is
$25,000.
One tort reform proposal is capping noneconomic damages. Noneconomic damages
include
A) payment for time missed from work.
B) payment for the cost of a hospital stay.
C) payment for pain and suffering.
D) payment for the cost of care provided by a physical therapist.
Which of the following statements about Keogh plans is correct?
A) They can be used by owners of incorporated businesses only.
B) Investment income accumulates on a tax-deferred basis.
C) The maximum annual contribution for any one participant is limited to $2,000.
D) Plan distributions must start prior to age 59.5.
Renee is risk manager of XYZ Company. She purchased a Commercial Package Policy
for her company and added one of the optional coverages. This option suspends the
coinsurance clause and substitutes a new agreement covering any loss in the same
proportion that the limit of insurance purchased bears to a value specified in the
declarations. This provision is known as
A) waiver of inventory coverage.
B) inflation guard coverage.
C) agreed value coverage.
D) replacement cost coverage.
ABC Insurance has always used the exclusive agency system to market coverages.
ABC, however, cannot afford full-time agents in sparsely-populated areas. To reach
customers in these areas, ABC enters into agreements with local independent agents.
Using more than one marketing system is called employing a
A) direct response system.
B) general agency system.
C) multiple distribution system.
D) branch office system.
ABC Company insured its building on a replacement cost basis for $700,000 under a
property insurance policy that included an 80 percent coinsurance clause. The building
had a replacement cost of $1 million when it sustained a $40,000 loss. How much will
ABC Company receive from its insurer, assuming no deductible applies?
A) $33,333
B) $35,000
C) $36,000
D) $40,000
Connie has a major medical policy with a $200 deductible. She is required to pay 25
percent of covered expenses in excess of the deductible. The insurer will pay 75 percent
of expenses in excess of the deductible. If Connie has eligible medical expenses of
$10,000, how much will be paid by her insurer?
A) $7,300
B) $7,350
C) $7,500
D) $9,800
Frank is doing some life insurance planning. A financial advisor said, “be sure to
consider Social Security when examining sources of funds available for family support
if you die.” The financial advisor was referring to which Social Security benefit?
A) retirement benefits
B) survivor benefits
C) disability benefits
D) health insurance benefits
The gross premium for life insurance is equal to
A) the present value of the future death claim plus an expense loading.
B) the present value of the future death claim less the sum of the premiums paid when
death occurs.
C) the present value of the future death claim less the present value of the expected
dividends.
D) the net premium less the expense loading.