One of the additional coverages under the building and personal property coverage
form is “increased cost of construction.” The coverage is payable if
A) a skilled artisan is needed to duplicate the construction of the damaged property.
B) a labor strike or materials shortage increases construction costs.
C) an ordinance or building code increases the cost of construction.
D) the materials necessary to rebuild the damaged structure are more expensive than
ordinary building materials.
Which of the following statements about an excess insurance plan is true?
A) The insurer does not participate in a loss until it exceeds the amount the firm has
decided to retain.
B) The insurer pays first up to some specified level; the insured then pays all losses
exceeding the insurer’s retention level.
C) Losses in excess of a specified amount are not covered.
D) The insured and insurer share equally in any loss that occurs.
The tendency for unhealthy people to seek life or health insurance at standard rates is an
example of
A) moral hazard.
B) fundamental risk.
C) attitudinal hazard.
D) adverse selection.
Brad started a pest control business. To protect his personal assets against liability
arising out of the business, Brad incorporated the business. Brad’s use of the corporate
form of organization to shield against personal liability claims illustrates
A) fundamental risk.
B) noninsurance transfer.
C) risk retention.
D) objective risk.
In the context of medical malpractice, what is a “never event”?
A) A medical condition that despite the best screening and technology cannot be
detected.
B) A pandemic that quickly spreads and infects many people.
C) A medical error that should never occur.
D) An event for which doctors and medical facilities cannot be held legally responsible.
The Sarbanes-Oxley Act requires which of the following?
I. Accounting firms auditing a company’s books must provide other major services to
the firm besides auditing services.
II. The company’s Chief Executive Officer (CEO) must swear to the accuracy of
quarterly and annual financial reports.
A) I only
B) II only
C) both I and II
D) neither I nor II
A property and casualty insurer’s loss reserve includes estimates for all of the following
EXCEPT
A) claims anticipated but not yet incurred.
B) claims reported and adjusted but not yet paid.
C) claims reported and filed but not yet adjusted.
D) claims incurred but not yet reported to the company.
Which of the following statements is (are) true about savings bank life insurance
(SBLI)?
I. Each depositor at the savings bank receives life insurance equal to his or her savings
account balance.
II. The goal of SBLI is to provide low-cost life insurance to consumers.
A) I only
B) II only
C) both I and II
D) neither I nor II
Under the needs approach, when is the dependency period of a surviving spouse
assumed to end?
A) 1 or 2 years after the breadwinner’s death
B) when the youngest child reaches age 18
C) when the surviving spouse reaches age 65
D) when the surviving spouse dies
Which of the following statements about workers compensation programs is true?
A) Injured workers must prove the employer was responsible for their injuries to collect
benefits.
B) Workers compensation disability income benefits (amount and duration) are uniform
from state to state.
C) Options available for complying with the law may include one or more of the
following: self-insurance, private insurance, or insurance through a state fund.
D) Most states have elective laws whereby the employer can choose whether or not to
provide workers compensation coverage to employees.