Questions and Answers
Which of the following represents pure risk? (Select all that apply)
Which of the following is a peril?
Direct loss refers to:
When property is unique in value, which of the following may be used to develop premium?
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If the insured moved to a new dwelling 60 days before the loss, which of the following conditions might apply?
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If the insured has a vandalism claim while they are on vacation, which of the following conditions might apply?
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If an individual or business causes harm to another, what is it called when they are held responsible for the damages regardless of negligence?
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When an insured is held liable for a product they manufactured that caused injury without needing to prove negligence, what type of liability is this?
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In a commercial insurance policy, who is responsible for administering the policy?
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All of the following are duties of the insured as detailed in the Conditions of the policy EXCEPT:
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Which of the following is true regarding the insurer's rights to claim settlement?
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Which of the following statements concerning a proof of loss is NOT true?
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A notice of claim to an insurer must include all of the following EXCEPT:
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John has two homeowner's policies in force. Policy A covers the home for $200,000 and Policy B covers the home for $100,000. After a fire that causes $45,000 damage, how much will Policy A pay?
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Select the item that is considered a consumer report:
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If information on consumer reports differs from an applicant's statements and causes the insurer to reject the application, the insurer has made a/an:
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Study Notes
Pure Risk and Perils
- Pure risk refers to situations with no possibility of gain, only loss; example includes the chance of fire in a dwelling.
- A peril is a specific risk; in property insurance, fire is considered a peril.
Understanding Direct Loss
- Direct loss is defined as damage directly caused by a covered peril; e.g., fire damage to a dwelling's roof.
Premium Development for Unique Property
- Stated value is used to determine premiums for property that possesses unique value.
Occupancy Conditions Affecting Coverage
- Coverage may be excluded depending on occupancy status; vacancy applies if the insured has moved to a new dwelling 60 days prior to a loss.
- Unoccupancy may be invoked if a vandalism claim arises while the insured is on vacation.
Liability Concepts
- Absolute liability means responsible for damages without regard to negligence.
- Strict liability holds manufacturers accountable for injuries caused by their products without needing to prove negligence.
Commercial Insurance Policy Administration
- The first named insured is responsible for administering the commercial insurance policy and handling payments.
Insured Duties and Claim Settlement
- Insured must notify the insurer of potential claims and make timely premium payments; selecting an insurance adjuster is not a mandatory duty.
- Insurers may settle liability claims without insured's permission.
Proof of Loss Provisions
- An insured is obliged to submit a proof of loss detailing circumstances of the claim; proof cannot be oral in nature.
Notice of Claim Requirements
- A notice of claim must include the insured's name, address, and description of the loss, but does not require the name of the insured's attorney.
Homeowner's Policy Payments
- In the case where two homeowner's policies cover a property totaling $300,000, and a fire causes $45,000 in damage, Policy A pays $30,000 based on proportional coverage.
Consumer Reports in Insurance
- A consumer report, which can influence insurance applications, may include items like driving records, impacting underwriting decisions.
Adverse Underwriting Decisions
- If consumer reports conflict with an applicant's statements leading to rejection, it's classified as an adverse underwriting decision.
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Description
Test your knowledge of pure risk and perils in property and casualty insurance with this practice exam. Each question is designed to help you understand crucial concepts in risk management and insurance policies. Perfect for those preparing for the VA P&C exam.
