Jan was injured in a work-related auto accident. She sued the other driver, and the case
went to court. While questioning Jan, the defendant’s lawyer asked if her injuries and
lost earnings were covered under workers compensation. Jan’s lawyer objected to the
question. The judge ruled the question was improper and instructed the jury to disregard
the question. Based on the judge’s reaction to the question, we can conclude that which
of the following rules is in force where this trial took place?
A) the joint and several liability rule
B) the last clear chance rule
C) the comparative negligence rule
D) the collateral source rule
Which of the following statements about the financial status of Medicare Part A is (are)
true?
I. Part A has serious financial problems.
II. Reforms instituted by Congress have reduced total Part A expenditures in recent
years.
A) I only
B) II only
C) both I and II
D) neither I nor II
Which of the following statements is (are) true regarding cash-balance pension plans?
I. Cash balance plans are defined contribution plans.
II. Under a cash balance plan, the employer creates an investment account for each
employee into which the employer makes actual contributions and allocates investment
gains and losses.
A) I only
B) II only
C) both I and II
D) neither I nor II
ABC Insurance Company’s investment income ratio last year was 4.2 percent. The
company’s combined ratio last year was 102.6 percent. What was ABC’s overall
operating ratio?
A) 96.8 percent
B) 98.4 percent
C) 103.2 percent
D) 106.8 percent
Which of the following persons is (are) eligible for benefits under medical payments to
others (Coverage F) of the homeowners policy?
I. A friend who slips and falls on a wet patio while visiting the named insured
II. A neighborhood child who is severely scratched by a cat in the care of the named
insured
A) I only
B) II only
C) both I and II
D) neither I nor II
Which of the following statements about the payment of defense costs by the PAP is
(are) true?
I. They are paid in addition to the policy limits.
II. They are payable even after the limit of liability is exhausted.
A) I only
B) II only
C) both I and II
D) neither I nor II
An employee of Nelson Manufacturing was injured by a defective machine Nelson
purchased from Clark Corporation. The employee’s tort action against Clark was
successful. Clark, in turn, sued Nelson, alleging that Nelson failed to provide proper
operating instructions to the employee. This claim (Clark vs. Nelson) is covered under
Part Two of Nelson’s worker compensation and employer liability policy. Such claims
are called
A) third-party over cases.
B) absolute liability cases.
C) joint-and-several liability cases.
D) mass tort cases.
The leaders of a religious group decided to start a life insurance organization to insure
members of the religious group. The insurer will operate as a nonprofit organization,
thus receiving favorable tax treatment. The insurer formed will be a
A) health maintenance organization.
B) stock insurer.
C) fraternal insurer.
D) reciprocal exchange.
Which of the following types of insurance policies can usually be assigned without the
insurer’s consent?
I. Life insurance
II. Property insurance
A) I only
B) II only
C) both I and II
D) neither I nor II
Which of the following is (are) covered under a claims-made policy?
I. Claims arising out of occurrences which take place during the policy period,
regardless of when the claim is made
II. Claims first reported during the policy period, provided the event occurred after a
retroactive date stated in the policy
A) I only
B) II only
C) both I and II
D) neither I nor II
Which of the following statements is (are) true concerning the self-insured retention
(SIR) under a commercial umbrella liability policy?
I. The SIR applies to claims covered by the umbrella policy but not by any underlying
insurance.
II. The SIR only applies to those claims for which the underlying policy has paid first,
and the umbrella policy is paying on an excess basis.
A) I only
B) II only
C) Both I and II
D) Neither I nor II
When using the needs approach, several ‘special needs” should be considered. One
special need is money to cover unexpected events, such as major car repairs, dental
bills, or home repairs. Money set aside for this purpose is called a(n)
A) estate clearance fund.
B) emergency fund.
C) readjustment period fund.
D) mortgage redemption fund.
Tom and Nancy Boyle provide financial support for their two children. In addition, they
provide financial support for Tom’s aged father and Nancy’s aged mother. The Boyle
family can be described as a
A) blended family.
B) single-parent family.
C) two-income earner family.
D) sandwiched family.