Download Illinois Property Insurance Exam Questions And Answers and more Exams Insurance law in PDF only on Docsity!
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insurance policy - correct answer ✅transfer of financial risk Pure Risk - correct answer ✅a risk that presents the chance of loss but no opportunity for gain Speculative Risk - correct answer ✅Chance of loss or gain (betting) What do insurance companies cover? - correct answer ✅pure risks Pooling of risks - correct answer ✅When a large group of people contribute money to a fund out of which their losses can be paid insured - correct answer ✅the person or business covered by the insurance policy
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premium - correct answer ✅money paid by the insured to the ins. company in exchange for the insurance policy lapse - correct answer ✅when a policy is terminated due to non payment of premiums endorsement - correct answer ✅form of ins. policy usually added for additional coverage Peril - correct answer ✅cause of loss Hazard - correct answer ✅Increases the chance of loss Risk - correct answer ✅likelihood that loss will occur
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Indemnity (reimbursement) - correct answer ✅insurance company standing in the place of an insured during the event of a loss concepts of indemnity and insurable interest do what? - correct answer ✅prohibit the insurance company from reimbursing an insured for more than the actual amount of loss Deductible - correct answer ✅initial amount of loss an insured must pay before ins. company begins to indemnify purpose of deductible - correct answer ✅Eliminate small claims that the insured can afford and would cost ins. company to administer Limits of Liability - correct answer ✅maximum amounts the insurance company will pay under each coverage
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aggregate limit - correct answer ✅maximum limit of liability that the policy will pay to all persons who are injured or who incur property damage in an occurrence Additional Coverage (supplemental payments) - correct answer ✅thing specified in homeowners policy that the ins. company will pay for in addition to limits of liability Specified Named Peril Coverage - correct answer ✅protects insured property only against loss caused by perils specifically named in the policy All Risk (Open Peril) Coverage - correct answer ✅protects insured property against all perils covered in basic form and broad form policies, plus more Basic Form Policy - correct answer ✅12 named perils
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loss settlement (adjustment) - correct answer ✅amount paid on the loss Liability Coverage - correct answer ✅pays all sums for which an insured becomes legally liable for bodily injuries and property damage to third parties Claimant - correct answer ✅person who sustains injuries/damages who is making the claim an insurance company will pay to an injured claimant on a liability claim if - correct answer ✅if insurance company determines that a court would find the insured legally liable Necessary Elements - correct answer ✅legal requirements that a claimant must be able to prove to be successful in making a liability claim
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Negligence - correct answer ✅important requirement a claimant must satisfy to persuade a court that the insured is legally liable for damages Omission - correct answer ✅failing Commission - correct answer ✅doing Representations - correct answer ✅basic regular statements which the insured believes to be correct to the best of his/her knowledge Warranties - correct answer ✅special statements that the insured guarantees to be correct an insurance company can refuse to pay a claim if - correct answer ✅if representations can be proven to be false, concealed, or intentional
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Gramm-Leach-Bliley Act (Privacy Act) - correct answer ✅provides for the protection of consumer information, requires financial organizations to provide a consumer a privacy notice, makes financial org. tell consumers of his/her right to request information Buildings - correct answer ✅structures permanently attached to land that are usually insured for replacement cost or sometimes for actual cash value personal property - correct answer ✅property not permanently attached to land (tables, chairs) often insured for actual cash value or replacement cost Replacement Cost Coverage - correct answer ✅pays the cost of rebuilding, repairing or replacing insured's property in an event where a building is totally destroyed, a replacement cost policy will pay for what? -
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correct answer ✅cost of rebuilding foundation and everything above it with new materials and new labor, like kind and like quality at the same location if the insured decides not to rebuild, repair or replace building, what happens? - correct answer ✅insurance company will indemnify only the actual cash value of the loss Actual Cash value Coverage - correct answer ✅ACV coverage reimburses the insured person for no more than his/her actual financial or economic loss what will acv coverage cover? - correct answer ✅ACV covers the cost of rebuilding, repairing, or replacing the damaged property not to exceed is actual cash value how is actual cash value detemined? - correct answer ✅acv is determined by market value of the insured property immediately prior to loss. if loss can not be determined, there is a formula
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Insurance to Value - correct answer ✅keeping a property insurance policy up to date, keeping the property continuously insured for the required amount or more meeting Loss settlement provision (coinsurance clause) Illustration - correct answer ✅80% minus the deductible, 100% minus the deductible penalty in loss settlement - correct answer ✅if insured property is not insured for required, stated percentage of its value at time of loss, only 100% less will be paid for loss Formula for Loss Settlement for Properties not insured to Value - correct answer ✅Loss settlement (adjustment) = Amount carried Amount Required X Loss Amount Required= Coinsurance Percentage X Replacement cost at the time of loss
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Coinsurance Exceptions - correct answer ✅If loss exceeds limits of liability, insurance company waives the deductible Inflation Gaurd Endorsement - correct answer ✅if added for extra premium charge, increases the face amount of a policy by a percentage rate that is stated in the endorsement at intervals specified in the endorsement Guaranteed Replacement Cost Endorsement - correct answer ✅if added for extra premium charge, there can be no dispute at the time of loss over values Declarations Page - correct answer ✅information page that has names of people insured Insuring Agreement - correct answer ✅clause that states the insurance company's promise to indemnify
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Standard Fire policy - correct answer ✅least property insurance coverage available, covers only classes of property specifically described on the declarations page only for their actual cash value Standard Fire Policy perils covered - correct answer ✅hostile fire, lightning, removal Duties of the insured after a loss in Standard Fire Policy - correct answer ✅prompt notice of loss, proof of loss within 60 days, sue within 12 months if necessary Duties of Insurance company in Standard Fire Policy - correct answer ✅indemnify within 60 days, if no loss settlement is accepted by insured, an umpire will make final determination AKA Arbritation Clause Subrogation Clause - correct answer ✅states that ins. company can require the insured to transfer to it any legal rights which the insured has against third parties at the time of loss
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Assignment Clause - correct answer ✅says no assignment (transfer) of the policy is valid unless signed by an officer of the insurance company Pro Rata clause - correct answer ✅used when there is concurrent policies, sometimes done when insuring high value property Mortgagee Rights - correct answer ✅if lender named in declarations page, they then have three rights in the policy: 10 days notice of cancelation, have loss paid to mortgagee, provide proof of loss should the insured fails to Salvage - correct answer ✅when an insurance company pays a claim, and then the ins. company has the right to assume ownership of damaged property to fix the property up then sell it to recover part or all of the loss
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2), Dwelling Building and Contents Special form (DP-3), Building and Personal property form. Extended Coverage Endorsement - correct answer ✅covers loss by windstorm, hail, explosion, riot, attending strike, civil commotion, aircraft, vehicles and smoke. Extended Coverage Exclusions - correct answer ✅Nuclear reaction, earthquakes, flood/sewer backup/water below surface, Power interruption away from premises Vandalism and Malicious Mischief - correct answer ✅covers damage caused by vandalism and malicious mischief Vandalism and Malicious Mischief exclusions - correct answer ✅no coverage after building has been left vacant for 30 consecutive days
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Dwelling Building and Contents basic (DP-1) form - correct answer ✅covers dwellings where 4 or less families live in, does not have to be owner occupied, policy is mostly used to insure rental properties, 3 standard fire policies and 8 extended coverage perils are included in this policy along with V.M.M endorsement (DP-1) exclusions - correct answer ✅4 perils excluded in standard fire policy, 4 perils excluded in Extended Coverage, and V.M.M exclusions Liberalization Clause - correct answer ✅A policy condition providing that if a policy form is broadened at no additional premium, the broadened coverage automatically applies to all existing policies of the same type. Dwelling Buildings and Contents Broad form (DP-2) - correct answer ✅covers dwelling buildings and some personal property if wanted by insured, covers Hostile fire, Lightning, removal, Extended Coverage perils, vandalism and malicious mischief, broader explosion/broader smoke coverage, glass breakage, damage caused by burglars, falling objects, weight of ice/snow/sleet, collapse, artificially generated currents, freezing or discharge from a plumbing, heating or cooling system.
