Commercial Lines Insurance Test
1. Insurance handles risk by
- Reducing it
- Avoiding it
- Transferring it
- Ignoring it
2. An insurance policy is a contract between an insured and an insurer in which
- Specific future losses will be covered in exchange for payment
- Risk of loss is reduced
- Payments are sure to increase
- None of the above
3. The payments an insured makes to an insurer are called
- Product options
- Benefits
- Premiums
- Deductibles
4. Which of the following is not an unfair claim settlement practice?
- Misrepresentation of pertinent facts of policy
- Failing to promptly acknowledge, settle, or deny a claim
- Rebating
- Attempting to settle a claim for less than entitled in insured policy
5. Which names below are well-known insurance rating services?
- Standard & Poor’s and A.M. Best
- Procter & Gamble and Johnson & Johnson
- Medicaid and Medicare
- Crosse and Blackwell and Caswell-Massey
6. What type of hazard is a deliberate creation of loss by an insured in order to collect insurance payment or benefits?
- Morale hazard
- Physical hazard
- Moral hazard
- Legal hazard
7. Which statement about state regulation of insurance is correct?
- Rate structures may be excessive but not discriminatory
- Different rates may be charged to groups of policyholders who pose different degrees of risk
- Companies may offer discount rates that cover costs but do not show a profit
- States strictly regulate how much money is spent to advertise insurance products
8. What prevents an insurance company from denying a fact because of a previous action?
- Warranty
- Waiver
- Estoppel
- Consideration
9. What part of the policy structure answers the following, “Who, what, when, where, and what limits?”
- Injuring clause
- Declaration
- Definitions
- Conditions
10. What is not an element of negligence?
- Intervening cause
- Legal duty
- Standard of care
- Proximate cause
11. What is the concept that a policy applies separately to each insured listed?
- Tort
- Intentional tort
- Liability
- Severability
12. Which of the following is a basic perils exclusion?
- Fire
- Lightning
- Explosion
- Falling object
13. Which of the following is excluded as money in a crime policy?
- Checks
- Coins
- Traveler’s check
- Registered check
14. What type of bond is written to protect an employer from theft by employee?
- Surety bond
- Fiduciary bond
- Judicial bond
- Fidelity bond
15. What type of coverage protects a business for care, custody, and control of a non-owned vehicle?
- No benefits to bailee
- Commercial auto coverage
- Drive other car coverage
- Garagekeepers
16. What is coverage that protects property movement on land?
- Trucker
- Cargo
- Ocean marine
- Inland marine
17. Angela works for a global telecommunications company. As a cost-cutting measure, the company terminated Angela’s position and those of 499 of her co-workers. Angela is probably eligible for
- Workers’ compensation benefits
- Unemployment benefits
- Medicaid benefits
- Social security benefits
18. When you buy liability insurance, your insurer agrees to represent you if you are sued. What does your insurer have the right to do?
- Settle the case without your permission
- Settle out of court
- Raise your premiums
- All of the above
19. Which statement about workers’ compensation is correct?
- Workers’ compensation will pay death benefits
- Workers’ compensation will pay medical expenses and all lost wages
- Workers’ compensation will pay college tuition
- None of the above
20. Which of these injuries or health problems would probably NOT be covered by workers’ compensation?
- Breaking your wrist slipping in the office stairwell
- Breaking your ankle playing Frisbee in the parking lot
- “Brown lung” disease from inhaling cotton fibers in the mill
- Multiple fractures after a co-worker bumps your ladder with a forklift