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Susie set fire to her house to collect the insurance. This is an example of a(n) - ططMORAL HAZARDS Henry's tires on his SUV are so worn that the steel belt is showing through the tread. The condition of the tires is known as - ططPHYSICAL HAZARDS When a driver of an auto breaks the posted speed limit, the driver's liability imposed by the law is known as - ططABOSLUTE LIABILITY Under compensatory damages, medical expenses are an example of - ططSPECIAL damages. Josh attends a hockey game. While at the game he is hit in the head by the hockey puck resulting in a broken cheek bone. Josh immediately sues the hockey team for damages. What might be the most logical defense for the hockey team? - ططASSUMPTION OF RISK The Smith family is planning to build a new house. They want the house to be constructed entirely of fire resistance materials. This construction type is an example of a - ططFIRE RESISTIVE building. contracts are written for a specified amount and they list the value of the insured property as agreed to by both the insured and the insurer at policy inception. - ططSusie set fire to her house to collect the insurance. This is an example of a(n) MORAL HAZARDS
Henry's tires on his SUV are so worn that the steel belt is showing through the tread. The condition of the tires is known as - ططPHYSICAL HAZARDS When a driver of an auto breaks the posted speed limit, the driver's liability imposed by the law is known as - ططABOSLUTE LIABILITY Under compensatory damages, medical expenses are an example of - ططSPECIAL damages. Josh attends a hockey game. While at the game he is hit in the head by the hockey puck resulting in a broken cheek bone. Josh immediately sues the hockey team for damages. What might be the most logical defense for the hockey team? - ططASSUMPTION OF RISK The Smith family is planning to build a new house. They want the house to be constructed entirely of fire resistance materials. This construction type is an example of a - ططFIRE RESISTIVE building. contracts are written for a specified amount and they list the value of the insured property as agreed to by both the insured and the insurer at policy inception. - ططVALUED The ABC Company has several business locations. They want to cover all the locations under one policy. They should purchase a(n) - ططBLANKET policy A building has a market value of $100,000, a replacement cost of $80,000 and a depreciated amount of $25,000. Based on these factors, what is the ACV amount of the building? - طط($80,000 - $25,000 = $55,000) Actual cash value, or ACV is usually calculated by determining the item's replacement cost (what it would cost to buy a replacement) and subtracting an amount for depreciation. Here's what it looks like written as a formula: ACV = Replacement Cost - Depreciation
Which is generally NOT covered under the policy territory?. On commercial policies, the policy territory is usually the United States, Canada and Puerto Rico. - طط The State Insurance Company has decided to non-renew Craig's auto insurance policy. The State Insurance Company must - ططGIVE AT LEAST 30 DAYS NOTICE OF NONRENEWAL. The State Insurance Company has decided to non-renew Janet's homeowners' insurance policy. The State Insurance Company must. - ططGIVE AT LEAST 30 DAYS NOTICE OF CANCELLATION FOR ANY REASON Alfred wants to cancel his auto insurance policy. Which of the following is the most appropriate method to accomplish this task? - ططGIVE WRITTEN NOTICE The Big A Computer Store's commercial policy has a limit of liability that applies to all losses occurring within any one policy period. This liability limit is an example of a(n) - ططAGGREGATE limit. Mike trips over a tricycle in his neighbor's driveway. According to the Limits of Liability section of the neighbor's homeowners' policy, Mike's accident is an example of a(n) - ططOCCURRENCE. Ron sold his house to Connor. Ron calls his agent to inform him to assign the homeowners' policy to Connor. What should Ron's agent do? - ططAssignment is a condition in insurance policies that specifies that the policy cannot be transferred to another unless the company consents to the transfer in writing. Mark's liability policy has separate limits of liability for both BI and PD. This liability type is an example of - ططSPLIT LIMITS.
Earl lives in Iowa. On November 1st, he drives his motor home to Pharr, Texas to reside. He lives in the motor home until March 15th, then returns to his house in Iowa. According to the policy his insured house during his absence is an example of a(n) - ططUNOCCUPIED property. Jack sends in an auto insurance application with the required premium. The submission of the premium is an example of - طط_CONSIDERATION. Tom has completed an auto insurance application and sent it to the insurance company. Under contract law, the submission of the auto application is a(n) - ططINITIAL OFFER. The ABC Insurance Company has agreed to pay for any auto losses that Bill might have for a one year period in exchange for $1,000 in premium. This is an example of a(n) - ططCONTRACT. Valid contracts must have a legal purpose and be consistent with public policy. Which of the following situations lacks a legal purpose? - ططValid contracts must have a legal purpose andbe consistent with public policy. This is why insurance does not cover intentional or criminal actions, why every insured must have an insurable interest, and why a thief cannot insure stolen property. Under the law, a party to a contract must give something of value to the other party Which of the following is NOT an example of consideration? - ططGIFT Kathy, a 16 year old high school student, just purchased a new car. She went to her dad's insurance agent and made an application for her own auto insurance policy. The insurance company's underwriter noted Kathy's age and it caused him to reject her application. The rejection was based on the fact that - ططNOT LEGALLY COMPETENT TO ENTER INTO CONTRACT. A(n) is a legal agreement between two competent parties that promises a certain
Which of the following is a concept of indemnity in insurance? - ططMost property and liability insurance is written on an indemnity basis - the intent being to make someone "whole" again by paying actual losses while preventing any gain. The legal definition of is the intentional relinquishment of a known right. - ططWAIVER When Bob, the insurance applicant, was asked about his driving record, he intentionally withheld his arrest for manslaughter. This is an example of - ططCONCEALMENT. Tim called his agent, Todd, to inform him that he had an auto accident. Todd told Tim not to worry, that his insurance company would take care of everything and cover his loss. Todd's statements could result in the insurance company having to pay the claim. This is an example of
- ططESTOPPEL. The insurance contract requires "utmost good faith." This is taken to mean. - ططeach party should have a reasonable expectation that the other is acting in good faith without attempts to conceal or deceive. Jack had to answer several personal questions when completing an auto insurance application. His answers to these questions will be part of the insurance contract when issued. These answers, when made part of the contract, are considered - ططWARRANTY. Mary filed a lawsuit against Helen and claims to have suffered financial damages. Mary is an example of a - ططPLAINTIFF
An auto insurance policy is an example of a contract governed by - ططCOMMON LAW. Which of the following statements best illustrates the principle of stare decisis? - ططMatters that are decided by a state's highest court become the common law of that state and set a precedent for later decisions in lower courts in similar cases. The principle that lower courts must follow precedents set by higher courts is known as stare decisis. The Texas district court refused to hear a case because the plaintiff resides and does business only in Oklahoma. This refusal refers to - ططJURISDICTION. When a judge decides individual claims under the laws that he/she is entrusted to enforce and interpret, the judge is exercising - ططJUDICIAL POWER. John is the attorney for Holly, the plaintiff. John has decided to take his compensation as a percentage of the settlement. This is an example of - ططCONTINGENT FEE. The sheriff of Travis County in Texas delivers the court's summons to Bill, the defendant. This is an example of an act called - ططSERVICE OF PROCESS. The court has requested that Tina, the defendant, respond to Brenda's allegations within 30 days. This court request is known as a - ططSUMMONS Texas lawyers must follow the state's rules that govern the litigation process and the form and substance of all documents that must be filed with the court. This is known as - ططTHE RULES OF CIVIL PROCEDURE.
The title of an auto was used in the trial to prove ownership of the auto. This auto title is considered - ططDOCUMENTARY evidence. The plaintiff's attorney does not want several documents held by the defendant to be allowed into evidence during the trial. Which of the following is a general method to resolve this issue? - ططBENCH CONFERENCE WITH THE JUDGE. A photograph of an accident scene is admitted as evidence in a trial. This is an example of - ططDEMONSTARTIVE To clarify fault in an auto accident, a weather report for that day and time of the accident was entered into evidence at a trial. This weather report is an example of - ططDIRECT evidence. Alfred, an auto accident expert, gives his opinion on the cause of an accident during a trial. His opinion is considered - ططTESTIMONIAL EVIDENCE. Doug, the plaintiff, is faced with the burden of proof in his civil case. Which of the following statements best summarizes this burden? - ططIn a civil case, the plaintiff has to prove all of the essential elements of its case by a preponderance of the evidence. Josh lost his case against Susan. Josh is unsatisfied with the court's ruling. What should Josh do next? - ططFILE AN APPEAL Emily, the plaintiff's attorney, is very concerned that the jurors in her client's case could be biased in favor of the defendant. Emily wants the jurors to be carefully screened. Which of the following statements best describes what Emily can do in the selection of the jurors? - ططVoir dire is the process of examining potential jurors concerning their possible interest in the
matters presented at trial, their ability to decide the case fairly and without prejudice, and their overall competence to serve as jurors. The jury has assembled in the court room and the judge has ordered the trial to start. The attorneys for both parties will immediately be granted a right to - ططMAKE AN OPENING STATEMENT. Daniel, the defendant's attorney, is very concerned that the jurors in this case could be biased in favor of the plaintiff. Daniel does not believe his client can receive a fair trial using the jury system. Which of the following statements is the best solution to this problem? - ططNot all civil trials are held before a jury. A bench trial, also called a trial by court or judge, is a trial that a judge hears without a jury. The judge has granted a motion in limine. Which of the following statements best describes what the judge did? - ططA motion in limine is a pretrial request to the court by one party tothe lawsuit that certain evidence be excluded from the trial. A complaint brought by Sam, the defendant, against Janet, the plaintiff, is an example of a(n)
. - ططA counterclaim is a complaint brought by the defendant against the plaintiff. Janet decides to file a suit against Tim for breach of an agreement. She claims that Tim had breached their agreement three years ago. The statute of limitations for this type of complaint is one year. What will the legal system conclude about this case? - ططTo toll means that the time period specified in a statute of limitations has run out. The movement and location of evidence from the time it is gathered to the time it is in court is known as the. - ططThe chain of custody is the movement and location of evidence from the time it is gathered to the time it is in court.
Misti pays $123 per month for her auto insurance provided by ABC County Mutual Insurance Company. These payments are known to be PREMIUMS. - ططInsurance benefits are not provided free. Insurers charge premiums to cover their administrative costs, to have funds to pay claims, and to try to earn a profit. The additional cost created by insurance is the portion of premium that is used to pay insurers' expenses. Tom wants to calculate his company's pure loss ratio. The company's incurred losses are $900,000 and the earned premiums are $1,000,000. What is the pure loss ratio? - ططInsurersuse the loss ratio as a tool to measure their profitability. The pure loss ratio is expressed as a percentage, as shown below: (Incurred losses / Earned premium) x 100 = Pure loss ratio Which of the following would be considered a claim handler? - ططPeople who handle claimsmight be staff claim representatives, independent adjusters, employees of third-party administrators, or producers who sell policies to insureds. The XYZ Insurance Company estimates the amount of money that it expects to pay in the future for a loss that has already occurred. This is known as calculating its - ططLOSS RESERVES. Which of the following individuals generally does NOT represent or help the insurer in a routine claim? - ططINDEPENDENT ADJUSTERS Tom wants to calculate his company's loss ratio. The company's incurred losses are $900,000, adjustment expenses are $50,000 and the earned premiums are $1,000,000. What is the loss ratio? - ططIncurred losses represent losses that have been paid plus losses for which the insurer is liable, although the insurer has not yet paid them. The loss ratio adds loss adjustment expenses to incurred losses: ((Incurred losses + Loss adjustments expenses) / Earned premium) x 100% = Loss ratio The ABC Insurance Company's medical expenses are sky-rocketing. In order to get control of its medical expenses, it might use the technique of - ططUTILIZATION REVIEWS (URs).
Doug had a very serious claim. His negotiations with the insurer are not progressing to his satisfaction. What should Doug do? - ططHIRE A PUBLIC ADJUSTER Janet's house burns down. She files a claim under her homeowners' insurance policy for the loss of her property. This is an example of - ططFIRST-PARTY LOSS. Tim is injured in an auto accident. Sally, the other driver, was at fault and was ticketed. Tim filed a claim against Sally's insurer. Sally's insurer considers Tim a - ططCLAIMANT. The ABC Insurance Company hires a(n) to project future income loss based on an evaluation of economic trends in the job market, demography's, incomes, and business opportunities. - ططACCOUNTANT Upon the filing of a claim with the ABC Insurance Company, Connor, the assigned adjuster, begins the process of determining whether the claim is covered by carefully reading the policy form and all endorsements. For Connor to determine whether a loss is covered, all the following issues EXCEPT must be resolved. - ططUpon the filing of a claim with the insurer, an adjuster begins the process of determining whether the claim is covered by carefully reading the policy form and all endorsements. To determine whether a loss is covered, the following issues must be resolved: people, time of the loss, cause of loss, and property. Which of the following is NOT an example of how Coverage Exclusions restrict the broad terms of the insuring agreement by stating limitations to coverage? - ططExclusions restrict the broad terms of the insuring agreement by stating limitations to coverage such as; activities, causes of loss, types of property, persons, and places for which the insurer does not provide coverage.
The person standard determines the amount of care that a person must use in any given situation by determining what a reasonably cautious person would or would not do under similar circumstances. - ططREASONABLY PRUDENT The Texas Feed Company failed to deliver the feed grain per their agreement with the Texas Cattleman's Feedlot. The Texas Cattleman's Feedlot was forced to purchase the needed grain at a substantially higher price, resulting in a $100,000 loss. The Texas Cattleman's Feedlot sues the Texas Feed Company for its loss. This is an example of - ططCONTRACT LIABILITY. The Auto Add-on Company states in their advertisements that their equipment is absolutely safe. When Carol has an auto accident due to the failure of the Auto Add-on Company's equipment she files suit against the Auto Add-on Company based on their warranty that was stated in their advertisement. - ططEXPRESSED Sally became very upset with the BBB Clothing store for not taking her return after she damaged the item. She decided to get even with the store, so she took out a full page ad in the local paper denouncing the store as crooks. The BBB Clothing store could file a suit against Sally based on - ططINTENTIONAL TORT. The ABC Insurance Company has trained its adjusters to try to settle their claims outside the traditional court system of litigation. This method of reaching a claim agreement is known as - ططALTERNATIVE DISPUTE RESOLUTION (ADR). Which of the follow is most accurate about a mini-trial? - ططtest the validity of their positionsin a trial setting and continue negotiations
Jane, the injured person, is willing to settle the claim with the ABC Insurance Company but only with a specific allowance for future medical care. ABC Insurance Company can accomplish this demand with a special release called a(n) - ططOPEN END RELEASE AGREEMENT. When Cameron, an adjuster, handles a third-party claim, he must determine , which is not a consideration in first-party claims. - ططCOMPENSATORY DAMAGES Cameron, an adjuster, cannot personally obtain an agreement with Bill, the claimant. Still, Cameron wants to obtain a mutually agreeable settlement with Bill. The court brings in a third- party to point out the weaknesses in each party's argument and in the evidence presented, and propose solutions. This person helps Cameron and Bill improve their relationship. This is an example of - ططMEDIATION. Someone who holds property in trust for another must perform his or her duties faithfully and act in the best interest of the person he or she represents. Which of the following bonds would guarantee this obligation? - ططA fiduciary bond guarantees that the fiduciary will perform his or her duties faithfully and act in the best interest of the person he or she represents. A fiduciary protects the interest of a person who has a legal interest in the property being held in trust. Which of the following is an example of a bid bond situation? The ABC Construction Company obtained a bond that guarantees that it will enter into a contract with the Alpha Feed Mill, if chosen. - ططA bid bond guarantees two things: 1) That the firm will enter into a contract if chosen; and 2) That it will secure a performance bond for the work. may be issued when individuals must provide proof of financial responsibility for accidents. - ططMotor vehicle bonds may be issued when individuals must provide proof of financial responsibility for accidents.
The Crime Coverage Plan 4 Storekeepers' burglary and robbery includes coverages: D, E, and Q. Which one of the following is NOT covered under the plan? - ططThe plan includes: Form D - Robbery and safe burglary (property other than money and securities); Form E - Premises burglary; and Form Q - Robbery and safe burglary, money and securities. The Pro Bass shop has a Crime declarations form A. What type of policy does the Pro Bass Shop have? A Commercial Crime coverage policy - ططDeclarations form A is to be used when crime coverages are being issued as a monoline policy. The Fishing Hole Motel has a Crime Coverage form K attached to their Commercial package policy. Which of the following does form K cover? Several of the motel's guests have left their valuables in the motel's safe. The motel was robbed and the motel clerk was forced at gun point to open the safe and give the robber the contents of the safe, including all the guests' personal property. - ططForm K provides liability for guests' property, safe deposit box. The Bear Claw Bait Shop had a Commercial Crime policy with the ABC Insurance Company. On June 1, 2003, the ABC Insurance Company non-renewed the policy. On January 15, 2004, the Bear Claw Bait Shop discovered that several high-powered rifles had been stolen during the month of May in the previous year. What is the ABC Insurance Company's position about this crime? - ططA crime insurance policy applies to losses the insured discovers within 12 monthsof the policy's expiration date. This is known as the "discovery period." The Blue Seas Shipping Company is buying two large oil tankers. They want to insure these ships against the perils of the seas. Which of the following Commercial Ocean Marine Insurance policies would best meet this need? - ططThe marine hull form covers the perils of the seas, including the hostile actions of Men-of-War (fighting ships), pirates, rovers and thieves, fire, lightning, earthquakes, enemies, jettison, barratry and other like perils. Jettison is a voluntary act of destruction in which cargo is cast overboard to save the ship or crew. In barratry, the master or mariners steal the ship and its cargo, willfully sink or desert the ship or imperil the vessel by disobeying instructions.
The Cold Water Shipping Company has decided to make one last trip through the northern ice field before the shipping route closes for the winter. On December 3rd, while traveling through the ice field, the ship struck an iceberg, which punctured a hole in the first storage unit. On Dec 4th, the ship hit another iceberg, which tore a hole along the 5th and 6th storage units. The Marine Hull Form had a $25,000,000 limit of insurance with a $1,000,000 deductible. The first loss was valued as $500,000 in damages and the second loss was valued at $750,000. What will the Cold Water Shipping Company receive for these losses? $250,000 - ططTotal payment = $250,000 ($750,000 + $500,000 - $1,000,000). All heavy weather damage or damage caused by contact with floating ice that occurs during a single sea passage between two successive ports is treated as though due to one accident. Therefore, one deductible is applied. A Commercial Ocean Marine policy will exclude all damages caused by the following situations EXCEPT Damage from a bomb that is being carried as part of the cargo. - ططCommercial ocean marine insurance does not cover the following: 1) Capture, seizures, arrest, restraint or detainment; 2) Any taking of the vessel by requisition or otherwise, whether in time of peace or war; 3) Damage or destruction from any mine, bomb or torpedo not carried as cargo aboard the vessel;
- Strikes, lockouts, civil commotions, riots and martial law; and 5) Malicious acts or vandalism unless committed by the vessel's master or mariners. The ABC Insurance Company offers ocean marine insurance. Their policy lists the perils that will be covered, exclusions, limitations, and definitions. The Texas Department of Insurance considers this policy as a(n) Named perils policy. - ططThe ocean marine policy is still technicallya named perils policy, because the phrase referring to like perils means the coverage applies only to listed perils. The World Transport Company has purchased a Commercial Ocean Marine policy to cover its risk of financial loss. Which of the following losses will NOT be covered? The World Transport Company was transporting perishable food items from South America to New York City. The ship had to travel through the Panama Canal. While traveling through the Canal, the ship was placed under martial law and docked. The food items were ruined resulting in a $2,000,000 loss to the World Transport Company. - ططCommercial ocean marine insurance does not cover loss resulting from martial law.
