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Chapter 10

Self-Assessment Quiz

Self-Assessment Quiz


This activity contains 10 questions.

	In which part of an insurance contract would you find information about the property or activity to be insured?   insuring agreement declarations conditions exclusions

	Deductibles are used for all of the following reasons EXCEPT   to reduce loss control efforts. to reduce premiums. to eliminate small claims. to reduce moral and morale hazard.

	Which of the following statements is (are) true with respect to endorsements and riders? Endorsements and riders are used to amend provisions of insurance contracts. If the endorsement or rider conflicts with terms in the underlying contract, the endorsement or rider takes precedence unless it conflicts with the law.   II only both I and II neither I nor II I only

	Janice insured a building valued at $200,000 for $150,000 under a property insurance policy that included an 80 percent coinsurance provision. If a $32,000 insured loss occurs, how much will Janice collect from her insurer, assuming no deductible?   $25,000 nothing $30,000 $32,000

	Disability income insurance uses a special type of deductible. No benefits are paid during the initial period of disability (e.g. two weeks, a month, five months, etc.). What is this type of deductible, which is expressed in time rather than in dollars, called?   calendar year deductible elimination period aggregate deductible corridor deductible

	In which section of an insurance contract will you find provisions that qualify or place limitations on the insurer’s promise to perform?   insuring agreement exclusions conditions definitions

	Which of the following statements is (are) true about the insuring agreement in an insurance policy? The insuring agreement provides a description of the property or activity to be insured. The insuring agreement can be written on an “all risks” basis or on a “named-perils” basis.   I only II only both I and II neither I nor II

	Exclusions are found in insurance policies for all of the following reasons EXCEPT   coverage may be provided under another insurance contract. pure risks are not privately insurable. moral hazard problems would develop without certain exclusions. some perils are not insurable.

	Bill borrowed Linda's car with her permission. Both Bill and Linda have automobile liability insurance with a $100,000 limit. While driving Linda's car, Bill negligently caused an accident. The accident victim was awarded $80,000 in damages. How will this claim be settled, assuming that the policy written by Linda's insurer is primary and Bill's insurance coverage is excess?   Neither insurer is liable as duplication of insurance voids coverage. Each insurer will pay $40,000 to settle the claim. Linda's insurer will pay the entire $80,000 claim. Bill’s insurer will pay the entire $80,000 claim

	Dale and his wife Jenny are legally separated. The couple owns a vacation cabin. Dale purchased a $25,000 property insurance policy on the cabin. Unaware that Dale had purchased this coverage, Jenny purchased a $50,000 property insurance policy on the cabin. While both policies were in force, a $12,000 covered loss occurred. The insurers agreed to settle the claim on a pro rata basis. What is each insurer’s liability?   Dale’s insurer pays nothing and Jenny’s insurer pays $12,000. Dale’s insurer pays $12,000 and Jenny’s insurer pays nothing. Dale’s insurer pays $4,000 and Jenny’s insurer pays $8,000. Dale’s insurer pays $3,000 and Jenny’s insurer pays $9,000.

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