Which of the following forms is used to insure buildings that are under construction?
A) builders risk coverage form
B) floor plan coverage form
C) new construction coverage form
D) labor and materials coverage form
Which of the following statements about the medical payments coverage of the PAP is
true?
A) The amount of the benefit typically is $100,000.
B) Covered expenses must be incurred within 30 days of the accident.
C) Covered expenses include the cost of funeral services.
D) The benefit limit applies on a per-accident basis rather than on a per-person basis.
The terrorism risk in the United States
A) is of no concern to private companies.
B) is limited to attacks by foreign nationals.
C) can be addressed through risk control and insurance.
D) is an uninsurable risk.
Failure to exercise the degree of care required by law to protect others from harm is
called
A) premeditated liability.
B) vicarious liability.
C) punitive damages.
D) negligence.
Which of the following is a characteristic of most inland marine floater policies?
A) The insurance can be tailored to the specific type of personal property insured.
B) Coverage amounts are prespecified by the insurer and cannot be changed.
C) Coverage is normally written on a named-perils basis.
D) Covered property is insured only when it is at a specified location.
Which of the following statements regarding the taxation of individual annuities is (are)
true?
I. The exclusion ratio is the percentage of the annuity income that is taxable.
II. After the net cost of the annuity has been paid to the annuitant, the total annuity
payment is taxable.
A) I only
B) II only
C) both I and II
D) neither I nor II
Which of the following statements about individual disability income policies is true?
A) Benefits are typically paid only for disabilities resulting from sickness.
B) Benefits paid for partial disabilities are usually greater than benefits paid by the
same policy for total disabilities.
C) Most policies pay a benefit equal to 100 percent of the disabled person’s lost income.
D) Newer policies often provide or make available a residual disability benefit for
persons who are able to work but at a reduced income.
Melody’s car was damaged when another driver ran a stop sign and hit her car. Melody
decided to collect from her own insurer and to let her insurer recoup the loss payment
from the negligent driver who hit her. What fundamental legal principle is illustrated in
this scenario?
A) the principle of utmost good faith
B) the principle of insurable interest
C) the principle of subrogation
D) the principle of reasonable expectations
Jane is risk manager of ABC Manufacturing Company. She is trying to decide whether
to self-insure her company’s workers compensation exposure or to purchase insurance.
Jane would like to use regression analysis to predict the number of workers
compensation claims that will occur next year. The number of claims will be the
dependent variable in the regression. All of the following would be reasonable
independent variables to use EXCEPT
A) number of employees.
B) number of hours worked.
C) total assets.
D) payroll.
“No pay, no play” laws
A) restrict uninsured motorists from suing for noneconomic damages.
B) limit recovery by accident victims to the amount of liability coverage that they have
purchased.
C) result in the automatic termination of driving privileges if the vehicle operator is
stopped by the police and does not have liability insurance.
D) require auto insurance purchasers to subsidize state unsatisfied judgment funds.
Which of the following statements concerning the proposed optional federal charter for
life insurers is (are) true?
I. Large insurers operating in many states would more likely prefer a state charter while
smaller, regional, insurers would more likely choose a federal charter.
II. Proponents of the federal charter argue that it would speed the development and
approval of new products.
A) I only
B) II only
C) both I and II
D) neither I nor II
All of the following are reasons why mutual insurance companies convert to stock
insurance companies EXCEPT
A) Stock companies can offer stock options to attract and retain key personnel.
B) Stock companies can raise new capital more easily.
C) Stock companies are exempt from state insurance regulation.
D) Stock companies offer greater flexibility to expand through acquisitions.
Under the traditional net cost method, the net cost of life insurance for a given period
(e.g., 20 years) is determined by which of the following formulas?
A) the total premiums for the period less the policy reserve at the end of the period.
B) the total premiums for the period less the sum of the total dividends received during
the period and the cash value at the end of the period.
C) the sum of the total premiums and dividends for the period less the cash value at the
end of the period.
D) the sum of the total dividends received during the period and the cash value at the
beginning of the period less the total premiums paid for the period.