Download Arkansas Insurance study exam Property and Casualty. Questions and Answers 2025 and more Exams Advanced Education in PDF only on Docsity!
Arkansas Insurance study exam
Property and Casualty
Insurance - answer is the transfer of risk of loss indemnity - answer Which insurance principle states that if a policy allows for greater compensation than the financial loss incurred, the insured may only receive benefits for the amount lost? It is imposed on defendants engaged in hazardous activities. - answerAll of the following statements describe the concept of strict liability EXCEPT Absolute - answerWhat type of liability would a person who owns wild animals have? consequential - answerAn insured's business is damaged because of a fire, and he is forced to close the business temporarily for repairs. As a result, the insured lost income. What type of loss is this? $30,000 - answerAn insured's building has an actual cash value of $200,000, and he has insured the property for $120,000 with an 80% coinsurance clause. A $40,000 loss occurs. How much will the policy pay? Law of Large Numbers - answerWhich law is the foundation of the statistical prediction of loss upon which rates for insurance are Open Peril Policy - answerWhat type of insurance policy insures against all risks of loss that are not specifically excluded by the p (insurance carried / insurance required) x loss amount = - answerLoss of payment equation Vicarious Liability - answerLiability imposed on one party as a result of the actions of another person is known as Combined Single - answersingle dollar limit of liability applying to the total of damaged for bodily injury and property damage combined resulting from one accident or occurrence Premium - answerA periodic payment to the insurance company to keep the policy in force.
certificate of insurance - answer-Written evidence showing the insurance policy has been issued -Lists amounts and types of insurance provided Deductible - answer-Dollar amount must be met by insured before issuer provides coverage -Higher deductible equals lower premium Proximate Cause - answer-Cause of bodily injury or property damage is natural and reasonably foreseeable -For injured party to collect damaged, negligence must have proximate cause Strict Liability - answeroften applied to product liability cases Limits of liability - answer-Per occurrence (accident) -Per person -Aggregate -Split -Combined Negligence - answerFailure to use Reasonable and prudent care -legal duty -standard of care -unbroken chain of events -actual loss or damage Accident - answersudden, unplanned and unexpected event resulting in injury or damage Occurance - answerincludes losses caused by continuous or repeated exposure to conditions resulting from injury or property damage Subrogation - answer-Insurer's legal right to see damaged from third party -occurs after insurer reimburses insured -prevents insured from collecting twice Indemity - answer-aka reimbursement -insureds or beneficiary are permitted to collect extent of financial loss -insured cannot gain financially from a loss Physical Hazard (3 types) - answera physical condition Moral Hazard (3 types) - answera tendency toward increased risk Morale Hazard (3 types) - answeran indifference to loss
Negligence that leads to an injury - answerwhich of the following does the term proximate cause refer to Deposit Premium Audit - answeran insured is applying for a casualty insurance policy. one of the conditions of the policy allows the insurance company to inspect the insured's books at the end of the policy term to make sure sufficient premium has been collected for the exposure she plans to insure. which condition is part of the insured's policy? Appraisal - answer-Professional assessment to determine extent of damage -Both the insurer and insured can request a written demand Earned Premium - answerthe portion of a premium paid in advance that now belongs to the insurer because it applies the elapsed part of the policy Liberalization - answerThe removal or loosening of restrictions Policyowner - answerthe person entitled to exercise the rights and privileges in the policy Third party - answera person (or group) other than the two involved in an insurance contract (insured and insurer) Underwriting - answerRisk selection; the process of reviewing applications for insurance to determine eligibility for coverage Elements of a contract - answer-Agreement -Consideration -Competent parties -Legal purpose Representation - answerStatements that are believed to be true to the best of one's knowledge, but they are not guaranteed to be true (saying no cancer, then finding out you have it) Concealment - answerThe legal term for the intentional withholding of information of a material fact that is crucial in making a decision (asked about going to the Dr. and answering yes the dermatologist, but leaving out going to the cardiologist) Binders - answerTemporary agreement issued by an agent or insurer providing temp coverage until a policy can be issued Material misrepresentations - answerUntrue statements on the application unintentionally made by the insured's thats, if discovered, would alter the underwriting decision of the insurance company are called
A statement by the applicant that, upon discovery, would affect the underwriting decision of the insurance company - answerWhat is material misrepresentation When the policy is issued - answerWhen do binders expire? Property or casualty policy is made up of what major components - answer-Declarations (first page) -Definitions -Insuring agreement -Additional coverage -Conditions -Endorsements -Exclusions and policy limit Declaration - answerthe section of an insurance policy containing the basic underwriting informationation, such as the insured's name, adress, amount of coverage and premiums, and the description of insured locations Definitions - answerthe portion that clarifies terms used in the policy Insuring agreement - answerA statement in an insurance policy that establishes the obligation of the insurance company to provide the insurance coverages as stated in the policy Additional or Supplementary Coverage - answerA provision in the insurance policy that provides an additional amount of coverage for specific loss expense, at no additional premium Conditions - answerThe section of an insurance policy that indicates the general rules or procedures that the insurer and insured agree to follow under the terms of the policy. Endorsments - answerprinted addendums to a contract that are used to change the policy's original terms, conditions, or coverages Exclusions - answerdetails the perils that are not insured against and what persons are not insured Policy Limit - answerThe maximum amount an insured may collect. or for which an insure is protected under the terms of the policy Insured - answerAnyone who is covered under the policy, whether named or not. Such as spouse or relative within the household aka kids Named insured - answerThe individual(s) whose name appears on the policy's declaration
Fair Credit Reporting Act - answerProcedures that consumers-reporting agencies must follow in order to ensure that records are confidential, accurate, relevant, and properly used Consumer Reports - answerWritten and /or oral statements regarding a consumer's credit, character, reputation, or habits collected by a reporting agency from employment records, credit reports, and other public sources. Investigative Consumer Reports - answerA report similar to consumer report, but one that also provides information on the consumer's character, reputation and habits. Privacy Protection (Gramm-Leach-Bliley) - answer-An insurance company may not disclose nonpublic personal info to a nonaffiliated third party except for certain reasons -Requires 2 disclosures to a customer, when a customer relationship is established and before disclosing protected info -Customer must also receive an annual privacy disclosure, have the right to opt out, or choose not to have their private info shared with other parties Terrorism Risk Insurance Act (TRIA) - answer-Temporary federal program -Intended to share risk of loss from terrorist attacks with insurers -Insurer must meet deductibles and retentions before government reimbursement Duties after loss - answerWhich of the following provisions requires that the insured protects the damaged property from further damage, cooperates with the insurer in settling the loss, and submits to the insurer signed proof of loss within a specified period of time? Dwelling covers includes all of the following EXCEPT? - answerLand on which the dwelling is located. Agreement - answerInsuring agreement Deductible - answerApplies to all covered losses unless noted otherwise in the policy form Coverages, including other coverages - answerDefine direct and indirect property coverages. and additional coverages included in the premium charge Perils Insured Against - answercary by form and is a key differentiator in form selection General Exclusions - answerPerils not covered in all forms Conditions - answerSpecify when coverage will apply Dwellings form DP 00 01 - answerProvides the most limited coverage of all 3 forms
Dwelling does not include... - answerloss or damage resulting in side effects from the incident What is the maximum number of roomers or boarders for properties insured under the dwelling policy? - answer Broad form DP 00 02 or DP-2 - answerCoverage expands the causes of loss insured under the basic form Dwelling - answerthe home structure not the items inside 7 Additional broad form perils are described below - answer-Damage by burglars -Falling objects -Weight of ice, show or sleet -Accidental discharge or overflow of water or stream -Sudden and accidental tearing apart, cracking, burning or bulging -Freezing -Sudden and accidental damage from artificially generated electrical current DP-2 - answer=basic form+extended coverage perils + v&mm + broad form perils DP-2 Dwelling property 2 - answertype of dwelling fire policy that covers names perils on rental properties In dwelling what isn't covered? - answerBurglary glass breakage vandalism malicious mischief Coverage A - answerActual building you live in Coverage B - answerOther Structures ike a shed out back Coverage C - answerPersonal Property (turn house up side down and everything that shakes out here) Coverage D - answerFair rent value if coverage a,b,c gets damaged Coverage E - answerAdditional Living Expenses If over 4 living units in the dwelling - answeris actually commercial formers Coverages included in both the broad and special form dwelling policy expect - answerTheft of personal property
how long is a waiting period upon purchase of flood coverage through nfip? - answer days Which of the following is true regarding the fire department service charge under the builders risk form? - answerIt is an additional charge How long is the waiting period after the application has been accepted before flood coverage goes into effect? - answer30 days Johanna purchased a national flood insurance policy 10 days after her community entered an emergency program. When would be coverage be effective - answer12:01am the day after the application and premium payment are mailed According to the loss payment in HO policies, losses must be paid within how many days of the insurer receiving proof of loss? - answer60 Days Jean owns a craft store. The protective safeguards endorsement of her BOP requires the store to have a functional automatic sprinkler system to shut down. How many hours does jean have to restore the system before she must notify her insurer? - answer Hours A covered watercraft was damaged in an accident. The actual cash value of the damaged property was assessed at $10,000. The cost of repairs for the watercraft was assessed at $5,000. The insured's watercraft policy is written with a $25,000 limit. How much will the insurer pay for coverage to damage to the watercraft - answer When would uninsured motorist coverage apply? - answerWhen the other party is legally liable but has no insurance An insurance producer fails to obtain automobile insurance for a client after agreeing to do so. The client is involved in an automobile accident after running a red light and is found to be at fault. The damage to the other vehicle totals $5,000. Which statement regarding the producer's errors and omissions liability policy is true? - answerIt will provide coverage because the damage to the client resulted from the producer's negligence. Which of the following statements would be correct if an insured failed to maintain the underlying limits as required by a personal umbrella policy? - answerThe insured would be responsible for the amount required as underlying limits in the event of a claim. Federal employees compensation act - answerwhich federal act provides benefits to injured civilians who are employed by the federal government quizlet An insurance agency could purchase an errors and omission insurance policy, which would provide protection in the event of any of the following events EXCEPT -
answerThe agency loses commission income from policies that were not issued by the insurer workers compensation statutes provide coverage for diseases that occurs as a result of working in the employer's working evironment. Which of the following is as a result of working in the employer's working environment. Which of the following is an example of a disease that would not be covered by such provisions? - answerAn employee of a medical facility who suffer from a common cold the excess over the self-insured retention - answerwhen an umbrella policy is broader than underlying insurance and it pays a loss that is not covered by the underlying policy, it usually only pays If an insured has an umbrella policy in addition to his personal auto policy, which would be considered the underlying policy? - answerAuto policy Costs the insured incurred in hiring an attorney - answerAll of the following are supplemental payments found in liability policies except Product liability claim - answercrunchy flakes cereal company shipped some of its product in faulty containers that causes spoilage. That resulted in some consumers becoming ill. If the company is sued for this event, it would be an example of a $100 of payroll - answerWorkers compensation rating is developed by applying a rating bureau job classification rate of each Loss or damage to locked safe, vault, or cash register - answerWhich of the following would be covered under the crime coverage inside the premises - theft of money and securities? An employee is caught stealing cash from the register. - answerWhich would NOT be covered by the inside the premises - robbery or safe burglary of other property coverage? Penalty - answera bond is written for a set limit, and the surety will be liable only for this amount of the limit. The limit is known as the an insurer that holds a certificate of authority in the state in which it transacts business is considered a/an - answerAuthorized insurer Domestic - answerWhich of the following best describes an insurance company that has been formed under the laws of this state? Domicile - answerRefers to the location where an insurer is incorporated, not necessarily where the insurer conducts business
If a producer, broker, or solicitor has a change of business address, who should be notified? - answerThe Commissioner An insurer publishes intimidating brochures that portray the insurer's competitions as financially and professionally unstable. Which of the following best describes this act? - answerIllegal under any circumstances All of the following are unfair claims settlement practices EXCEPT - answerSuggesting negotiation in settling the claim Which of the following types of insurance companies is an incorporated insurer without capital stock or shares? - answerMutual insurer The requirement that producers must account for all insurance funds collected, and without the expressed consent of the insurance company(ies) are not permitted to commingle those funds with their own funds, is also known as - answerFiduciary responsibility When an insurance agency published an advertising brochure, it emphasized the company's financial stability and sound business practices. In reality, its financial health is terrible, and the company with soon have to file for bankruptcy. Which of the following terms best describes the advertisement? - answerFalse financial statement If an insurer meets the state's financial requirements and is approved to transact business in the state, it is considered to be - answerAuthorized which of the following is not true regarding a certificate of authority? - answerIt is issued to group insurance participants Foreign Insurer - answerAn insurer with a home office in another state The regulation of the insurance industry primarily rests with - answerthe state What is not true about rebates - answerrebates are allowed if it is in the best interest of the client When handling premium funds, insurance producers are acting in a - answerfiduciary capacity In order to get a non-resident license in this state, producers must - answerApply and pay a fee to a nonresident state that reciprocates A producer in another state wants to become a producer in Arkansas. The other state gives the same privileges to Arkansas producers wanting to be licensed in that state as it does its own producers. Arkansas therefore extends the privileges of its producers to the prospective producer of the other state. What is this called? - answerReciprocity
All of the following could be considered rebates if offered to an insured in the sale of insurance EXCEPT a)Stocks, securities, or bonds. b)An offer to share in commissions generated by the sale. c)Dividends from a mutual insurer. d)An offer of employment. - answerc. dividends from a mutual insurer An insurer that holds a Certificate of Authority in the state in which it transacts business is considered a/an - answerAuthorized insurer What is the role of an adjuster? - answerTo investigate and negotiate settlement of claims on behald of the insurer Which of the following employers is required to provide Workers Compensation benefits? - answerKendall Grocery is a neighborhood convenience store with 3 employees with the exception of building trade or contracting employment, how many workers must an employer have before it has to provide Workers Compensation benefits? - answer The Insurance Code permits an insurer to cancel a Homeowners policy midterm under certain conditions. Which of the following is NOT a situation covered by one of those conditions? - answerThe insured failed to reveal information about his children's health history if an insurance company goes bankrupt, who is primarily responsible for providing an injured employee's workers compensation benefits? - answerThe employer retains responsibility the term "surplus lines" refers to - answerLines of insurance written by nonadmitted insurance companies When may a surplus lines broker place insurance with a surplus line insurance company? - answerWhen the type or amount of insurance required is not available from an authorized insurer What is the state minimum required limits for auto insurance - answer25/50/ Which would not be considered an "employee"? - answerA young boy Arnold pays to mow the grass around his real estate office a rural area is defined by the insurance code as a community with - answerA class 9 or 10 fire protection grade
If trying to buy insurance from somewhere out of the state what do you do first - answeryou have to try to obtain coverages from an admitted insurance company Bailee - answerSomeone who is entrusted with possession of another person's property but has no ownership of it ex auto center has someone's car for a oil change A liability policy that provides coverages for a claim for injury or damage if the claim is first reported or filed against the insured during the policy period is called - answerClaims-made form The occurance form trigger is based on which of the following - answerThe date when injury or damage occurs
