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Law of Contracts and Negligence Exam
Which of the following is true about cancellations of an insurance policy? A. By the insurance company at any time B. By the insurance company after it gives the insured 5 days written notice C. By the insured at any time after giving advance written notice to the company D. By the insured after they give the insurance company 10 days written notice - ✔✔C. By the insured at any time after giving advance written notice to the company What individual represents the insurance company when selling an insurance policy? - ✔✔A producer/ agent A temporary insurance contract pending the issuance of a policy is called: - ✔✔Binder What type of authority does the public assume an agent has when quoting insurance? - ✔✔Implied Sprinklers in a building are an example of which type of risk management? - ✔✔Reduction A producer has each of the following responsibilities to the insurer, except:
A. A fiduciary duty B. Forwarding premiums to the insured on a timely basis C. Reporting material facts that may affect underwriting D. A duty to recommend only high rate policies - ✔✔D. A duty to recommend only high rate policies To collect under a policy of indemnity insurance, the insured must have insurable interest at what time: - ✔✔At the time of loss A federal regulation called the __________ protects consumer privacy. - ✔✔Fair Credit Reporting Act The promise by the insurance company to pay the insured for covered losses is stated i which of the following sections of the insurance policy? - ✔✔The insuring agreement A deductible is used for what reasons? - ✔✔- to decrease the moral hazard by requiring the insured to pay a part of each loss
- to reduce insurance company claim expense
- reduce the cost of insurance by eliminating small claims Dishonest tendencies that increase the probability of loss are what type of hazard? - ✔✔Moral
The part of the insurance contract that describes who is insured, besides the named insured, is the: - ✔✔Definitions During an inspection of an insured's home, the insurance company discovers the chimney is not properly attached to the house. This would be referred to as what type of hazard? - ✔✔Physical hazard Insurance producers are licensed in New York to perform all of the following functions except: A. Underwrite B. Negotiate C. Solicit D. Sell - ✔✔A. Underwrite Which of the following would be a violation of insurance law? A. A broker charging fees for their service B. A trip awarded to an agent by their company for meeting production requirements C. A broker paying finder fees to their telephone solicitor D. A broker charging fees for their service - ✔✔C. A broker paying finder fees to their telephone solicitor
A court would consider which of the following in determining a persons negligence? A. How serious the injury B. How a prudent person would have acted in the same situation C. The amount of insurance the person has D. How many times they have been sued in the past - ✔✔B. How a prudent person would have acted in the same situation What is the purpose of the Fair Credit Reporting Act? - ✔✔To protect the consumers right to privacy Material misrepresentation in the application for an agents license means: - ✔✔The license may be revoked or suspended Fred decides to protect his home with a home security system. If a fire or break-in occurs when he is not home, the security company will respond. This is an example of: - ✔✔Risk reduction A brokers license is a requirement for an agent who: - ✔✔Places an insurance policy with a a different insurance company other than the ones they are under contract with The superintendent has the authority to take all of the following actions except: A. Subpoena witnesses and compel their attendance at hearings
Unless suspended or revoked, an agent or broker license is valid for: - ✔✔2 years An agent gives a prospective insured 2 tickets to the World Series in return for the purchase of an insurance policy from their agency. The agent is guilty of what? - ✔✔Rebating The type of premium rate charged to a group of policyholders who have similar exposures and experience is called: - ✔✔a class rating Producers found guilty of comingling are subject to a fine up to: - ✔✔B. $500 per violation An individual nonresident licensed to act as an Agent or Broker in their home state, would receive a NY non-resident license without taking a written exam in all of the following situations except: A. They are in good standing in their home state B. They have paid the appropriate fees C. They have submitted a completed application D. There is no reciprocity with NY residents - ✔✔D. There is no reciprocity with NY residents When answering questions on an application for insurance, an applicant must answer in accordance with the legal principle of: - ✔✔Utmost good faith
The fair credit reporting act does what: - ✔✔Requires the insurance company to notify an applicant, in advance, that an inspection report may be obtained Which would be considered rebating? A. Giving stocks or securities in return for purchasing the policy B. Sharing commissions with a broker who helped to negotiate the insurance - ✔✔A. only For a P&C insurance agent's license, the pre-licensing education requirement is a minimum of: - ✔✔90 hours of classroom work In New York, the insurance Superintendent has all of the following duties except: A. Examine insurers' financial operation B. Limit insurers risk retention C. License agents and brokers D. Write and pass insurance laws - ✔✔D. Write and pass insurance laws A warranty can be best described as: - ✔✔A statement of fact that a condition does exist, and will continue to exist in the future How often must domestic insurance company file for review of their records? - ✔✔Every 3 years
After a storm, wet leaves are scattered on a local highway. This condition would be considered a: - ✔✔Physical hazard Herman is a captive agent with the ABC insurance company. Which of the following would list his duties and responsibilities as their agent? A. Implied authority B. Apparent authority C. Expressed authority D. Captive authority - ✔✔C. Expressed authority Statements made by the insured in the application for insurance are considered to be true to the best of their knowledge, not absolute fact. These statements are: - ✔✔Representations A contract where by only one party makes legally enforceable promises is referred to as - ✔✔Unilateral Risk that involves a chance of gain or loss is known as - ✔✔Speculative risk A reciprocal insurer is formed by a group of accountants for their professional liability exposure. What type of risk management is used here? - ✔✔Sharing
All of the following are duties of a broker to the insured except: A. Explain the coverage's under the policy B. Serve the insured in the event of a loss C. Cannot disclose derogatory information to the insurance company without the insureds permission D. Adapt policies to the client's special needs with endorsements - ✔✔C. Cannot disclose derogatory information to the insurance company without the insureds permission Which of the following best describes the term indemnity? - ✔✔Payment limited to the extent of the financial loss Risk is best described by what - ✔✔The uncertainty concerning loss The first class insurance company is organized in NYS, but is also authorized to do business in NJ. With respect to NY, first class is considered to be a: - ✔✔Domestic Insurer Reinsurance is a form of what type of risk management? - ✔✔Transfer All of the following are elements of negligence except: A. Duty owed B. Intentional Acts
When an insured cancels a policy, they would receive which of the following types of cancellation? - ✔✔Short Rate
