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State Farm Comprehensive 2024
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which of the following refers to being restored to the financial condition you were in before a loss? - Answer>> indemnification mark incurred 8000$ damage to his car in an accident. he received 8000$ from his insurance company and 4000$ from the other driver. by receiving a profit from the loss, Mark is in violation of.. - Answer>> principle of indemnity the transfer of risk from one party to another is called - Answer>> insurance the principle of indemnity is designed to prevent - Answer>> keeps the insured from making a profit from an insured loss. the fee paid by the insured in exchange for an insurance policy is called a - Answer>> premium insurance - Answer>> transfers risk of financial losses from one party to another insured - Answer>> individual or organization that pays premiums in exchange for protection insurer - Answer>> company group or government agency offering financial protection insurance policy - Answer>> a legally binding contract in which the insurer agrees to take on specified risks in exchange for the insured's premiums
principle of indemnity - Answer>> restoration to previous financial condition; no more, no less. what are the four qualifications of a contract - Answer>> agreement, consideration, competent parties, and legal purpose. must be 18 years of age what is not a requirement for a legally binding contract - Answer>> notarization when an insurer issues an insurance policy, the actual item, person or organization that is being insured is called the - Answer>> the risk what is a reserve, in insurance terms - Answer>> a pool of collected premiums that the insurer sets aside to pay claims aleatory - Answer>> of or pertaining to accidental causes; of luck or chance; unpredictable unilateral - Answer>> one-sided utmost good faith - Answer>> both parties must act honestly and openly in order for the contract to be valid adhesion - Answer>> one party sets the terms of the contract; the other may simply agree or not agree unilateral - Answer>> only the insurer makes a promise to act; the insured can void contract at any time personal - Answer>> the insured person is protected from losses, not the covered property.
in which section of the policy might you find the following statement? 'damage to insured property must be reported within 15 days of the damaging occurrence.' - Answer>> conditions which of these causes of loss is least likely to be covered by a typical insurance policy? - Answer>> nuclear hazard edna loses some of her property in a hailstorm. when an adjuster comes to investigate the loss, he gives an estimate that edna thinks is far too lowl. as negotiations continue, neither edna nor the adjuster will budge. where in Ednas policy would you find the procedure to follow in this situation? - Answer>> conditions conditions - Answer>> lists requirements that the insured must meet for coverage to apply declarations - Answer>> information that makes the policy unique to a specific insured. exclusions - Answer>> causes of loss or items of property that are not covered by the policy endorsements - Answer>> add, reduce, or change the coverage of the policy in some way definitions - Answer>> explains exactly what specific words mean in the context of the policy insuring agreement - Answer>> the essence of the contract. often only a single sentence Xavier owns a small insurance company. recently the company won a bid to insure a new housing development in Omaha, NE. his company can hangle any claims that arise, but if a series of
tornados were to tear through the area, destroying the entire development, Xaviers company would be hit extremely hard financially. which type of insurer could help Xaviers company protect itself the most from this potential loss? - Answer>> a re- insurer what type of insurance provider operates on a for-profit basis? - Answer>> mutual insurance companies what type of insurer sells shares to the public and is owned by its shareholders - Answer>> a stock insurance company publicly traded acme insurance is listed on the new York stock exchange, and would therefore be considered - Answer>> a non-participating insurance company. stock insurance companies - Answer>> always for profit, publicly traded, 'non-participating' insurers: no dividends go to policy holders mutual insurance company - Answer>> owned by policy holders (no shareholders), elect board directors, participate in dividends re-insurer - Answer>> an insurer that provides insurance for other insurers reciprocal insurer - Answer>> a group of ppl or organizations that insure each other. always non- profit. government insurer vs private - Answer>> government: mandatory, run by government, suited to needs of general public private: offer insurance products based on customer preferences
abc oil and gas drilling needs to purchase liability insurance to protect itself from the risks of the oil and gas drilling business. assuming that ABC O&G wants to use its own money to insure itself, effectively becoming both the insurer and the insured, through whom can ABC oil and gas dirlling purchase an insurance policy - Answer>> a risk retention group an insurer that obeys the laws of a country other than the U.S. is called - Answer>> an alien insurer what insurance providers uses investors money as capital against an insurance policy - Answer>> risk retention groups two meaning of risk - Answer>> potential loss, the insured item speculative risk - Answer>> any risk in which gain is possible. not insurable pure risk - Answer>> any risk in which no gain is possible. insurable exposure - Answer>> the possibility or likelihood of damage or loss hazard - Answer>> anything that increases exposure. ie high crime neighborhoods, smoking peril - Answer>> the cause of damage or loss. ie lightning, hail, fire, vandals ect loss - Answer>> reduction in value, expenses caused by a covered peril, the amount an insurer pays to settle a claim which of the following activities is a speculative risk?
-parking the company truck in a dry riverbed -building a house on the beach -driving into a hail storm -betting on a horse race - Answer>> betting on a horse race which of the following best describes a 'risk' according to the insurance definition - Answer>> the potential for a financial loss which of the following statements applies to a speculative risk - Answer>> a speculative risk involves a conscious choice. to an insurance company, which of the following is not an example of a risk - Answer>> a high crime neighborhood from the point of view of an insurer, which of the following would be considered a risk - Answer>> an automobile during a violent summer storm, a bolt of lightning hits Mr. Jones house damaging a large portion of the roof. in this case, the insurer would call the lightning bolt a - Answer>> peril the law of large numbers - Answer>> States that with high probability, the insurance company's average policyholder claim will be close to the true mortality risk of the entire population. ie if you flip a coin 10 times the ratio of heads to tails will most likely not be 50/50 but if you flip the coin 1000 times the ratio will get much closer to 50/50 the more times you flip. which of the following is not an insurable risk? a small town an airplane a collection of jewelry a forklift - Answer>> a small town
binder - Answer>> temporary coverage for an insurance applicant until the policy is issued warranty - Answer>> promise or guarantee that certain conditions will be met. found on the conditions page. if a policyholder breaks a warranty, the insurer can deny coverage concealment - Answer>> deliberately withholding relevant information. concealment is hiding the truth whereas misrepresentation is stating something untrue. waiver - Answer>> voluntary surrender of a right, claim, or privilege. can be express or implied. express waiver is in writing and signed. an implied waiver is assumed based on actions. estoppel - Answer>> legal principle that prevents an insurer from denying coverage if the insured has reasonably come to believe that he has such coverage, based on the insurers practices. estoppel is a form of implied waiver. representation - Answer>> a statement assumed to be true misrepresentation - Answer>> false statement a moral hazard - Answer>> deliberate, reckless behavior because of insurance coverage. behavioral hazard. results from the policyholders conscious decision. morale hazard - Answer>> policyholders unconscious risky behavior because of the comfort of insurance protection. results when insured acts differently because of the comfort that insurance protection provides.
physical hazard - Answer>> a physical condition that increases the chance of a loss. ie potholes in the road or asbestos in an old house hard fraud - Answer>> deliberately planning or faking a loss soft "opportunistic" fraud - Answer>> exaggerating a claim to inflate the indemnity occurrence - Answer>> an event or circumstance that causes a loss proximate cause - Answer>> the original occurrence in an unbroken chain of events that results in a loss. a direct loss - Answer>> physical harm to tangible property indirect loss - Answer>> an indirect loss is an expense that must be met as a result of a direct loss. ie if a car owner had to pay for a rental vehicle while the dented door was in the repair shop first party claim - Answer>> made by the policyholder on her own policy third party claim - Answer>> made by anyone other than the policy holder lender interest - Answer>> a lenders financial stake in an insured item. protects a lender who loans money to a buyer. allows insurers to compensate a lender if a property, in which the lender has a financial interest, is damaged
actual cash value - Answer>> a valuation method that takes into account an items depreciation. replacement cost minus accumulated depreciation. replacement cost - Answer>> a method of valuation based on the cost of replacing an item at current market prices, regardless of depreciation. depreciation - Answer>> an items estimated loss of value due to wear, tear and age valued policy - Answer>> a valuation method that assigns a set value to each insured item annual depreciation - Answer>> replacement cost divided by the items useful life accumulated depreciation - Answer>> the items annual depreciation multiplied by its age replacement cost - Answer>> cost to replace an item at todays market value actual cash value - Answer>> replacement cost minus accumulated while making a right hand turn from the right lane ben is sideswiped by Roxanne, which totals the car he bought 6 years ago for 15,000 dollars assuming the car depreciates at a rate of 1100 a year how much can ben expect to be indemnified by roxannes insurance policy - Answer>> 8400
kevin plays in a brass band using two rare antique alexander tubas. since they are no longer produced the value of the tubas is difficult to determine. which type of policy would best indemnify kevin in the event that his tubas were ever damaged, lost or stolen - Answer>> agreed value policy joes driveway has a very steep grade and several sharp turns. in addition the driveway becomes muddy during rains. to an insurance company joes driveway might best be described as - Answer>> hazard which of the following statements most accurately describes the law of large numbers - Answer>> the larger the number of units insured the more accurately the insurer can predict the number of claims from that group which of the following is not a benefit of a co-insurance clause? - Answer>> co-insurance reduces the risk of damage to a home bill has bought 175,000$ in insurance coverage on his 300, home. which of the following statements applies to bill? - Answer>> bill is underinsured on his home janes $150,000 home is fully insured with a 3% percentage deductible. one night, an oven fire destroys her kitchen, causeing 50,000$ in damage. how much of the damage falls under janes responsibility? - Answer>> 1,500$ to meet the 80% level of co-insurance required by his lender, tom discovers he must insure his homje for at least 320,000$ what is the value of toms home? - Answer>> 400,
product liability - Answer>> a companys responsibility for any damages or injury that result from the manufacturing, merchandising, distributing, or operation of a product employer liability - Answer>> an employers responsibility for any damages caused by or to their employees. vicarious liability - Answer>> transfer of negligence from one party to another indemnifies - Answer>> in a legal sense, protects negligence - Answer>> always an unintentional act. Failure to use a reasonable degree of care four elements of negligence - Answer>> 1. negligent party had a duty to act in a certain way.
- negligent party failed to act accordingly
- claimant suffered actual loss or injury 4 loss or injury was a direct result of the negligent partys breach of duty what are the three degrees of legal liability - Answer>> full, partial and no liability full liability - Answer>> the policyholder is 100% at fault for damages to a third party partial liability - Answer>> the third party is responsible for a percentage of his own damages no liability - Answer>> the policyholder has 0% liability in the damages to a third party
jim is out turkey hunting on a private ranch when he hears some movement in the brush. assuming its a turkey, jim raises his shotgun and fires. unfortunately for jim, he has not taken a turkey, but has severely injured one of the landowners calves instead. jim is responsible for the cost of the calf because he acted with... - Answer>> negligence bill has three unruly kids. while out playing one day his eldest child decides it would be great fun to throw rocks at a neighbors home, and does so, breaking several windows. bill is responsible for the damages because of - Answer>> vicarious liability jim is out hunting on his property when he hears some movement in the brush. assuming its a turkey jim begins to raise his shotgun when it fires unexpectedly, shooting jim in the foot. upon further inspection it is determined that there was a defect with the guns safety and trigger mechanism causing it to fire when it moved the claim would fall under - Answer>> product liability vicarious liability ___________ negligence - Answer>> transfers liability policy limits - Answer>> maximum payout for each policy single limit - Answer>> a fixed limit for each type of damage split limit - Answer>> three different limits: -maximum paid for bodily injury of one person -maximum paid for bodily injury of multiple persons -maximum paid for property damage aggregate limit - Answer>> two limits: -maximum payout per occurrence -maximum payout per policy period
adds two extra chutes extending its lengt. the chute collapses under the weight of the additional concrete injuring one of the job site worker to the tune of 35000. the loss is covered by the policy and james insurer pays the claim. what will the new limits be for the remainder of the term? - Answer>> $150,000/$465, statutory law - Answer>> based on written legislated laws common law - Answer>> based on court cases and customs tort law - Answer>> body of law that applies to civil court cases and addresses any civil wrongdoing intentional tort - Answer>> planned wrongful act negligent tort - Answer>> unintentional wrongful act tortfeasor - Answer>> the defendant in the court case plaintiff - Answer>> One who begins a lawsuit in tort law a person or entity that commits an act of wrongdoing or negligence that leads to damages to a third party is known as a - Answer>> tortfeasor which of the following is excluded from liability insurance coverage? - Answer>> intentional acts of tort or wrongdoing which of the following does not apply to tort law? -the defendant is called the tortfeasor -the state charges the defendant -only a simple majority is required to reward the claimant for damages
-tort law applies only to civil trials - Answer>> the state charges the defendant a ______ is a law set forth by a governing body such as a state or city - Answer>> statutory law complaint - Answer>> filed by a claimant against a policy holder answer - Answer>> policyholders response to a complaint default judgment - Answer>> issued if policyholder fails to answer complaint duties of the insured - Answer>> alert insurer if taken to court; send insurer all info pertaining to the case obligations of the insurere - Answer>> defend the insurer in a court case reservation of rights - Answer>> issued when the case may not fall under the terms of the insurance policy james and eric want to play a prank on bob for Halloween they dress up like blah blah blah end up lighting bobs porch on fire causing 3500$ in damages. bob sues both james and eric for the cost of the repairs. in court james and eric would be.. - Answer>> a joint tortfeasor a few weeks ago frank was involved in an accident with another car and was judged at fault. aside from his premiums increasing frank didn't worry too much about it since he had liability insurance. unfortunately yesterday frank received a notice that he is named as the defendant in a lawsuit involving the accident.
