Which of the following does a binder of coverage guarantee?
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Terms in this set (172)
Which of the following is an optional coverage that can be added to a mobile home policy?A. Loss from foreclosure B. Loss from collapse of awnings C.Loss from collision damage. D. loss from flood damage C- Loss from Collison damageUnder the national flood insurance program coverage becomes effective on which calendar day after the application is completed and the premium is paid?A. 20th B.30th C. 15th D. 10th B- 30thThe homeowners policy provides only limited coverage for water craft. property coverage for watercraft is subject to a special limit of what amount?A. $1,000 B. $1,500 C. $500 D. $2,000 B- $1,500Which method of handling risk involves two or more individuals agreeing to pay a portion of any loss incurred by any member of the group?SharingWhich part of an insurance contract describes a loss for which the insured will not be indemnified?A. Declarations B. Conditions C. Insuring Agreement D .Exclusions D- ExclusionsWhat is the waiting period in the definition of period of restoration in the business income coverage form?A. 24 Hours B. 0 Hours C. 72 hours. D. 48 Hours C- 72 HoursWhat does homeowners coverage B- other structures cover?A. Additions added to the original structure after the policy is written. B. Structures located on the insured's property separated from the dwelling by clear space. C. Structures located at adjacent properties in the insured's care custody and control. D. Rental apartments added to the structure to provide additional income. B- Structures located on the insured's property separated from the dwelling by clear spaceWhich of the following conditions best describes the type of home the HO-8 modified coverage form was designed?A. Replacement value far exceeding market value B. Under construction or renovation C. Exceptionally high reconstruction costs D. Exhibiting poor overall maintenance. A- Replacement far exceeding market valueWhat authority is NOT written and allows a producer to conduct the business of the insurer?Implied.Which of the following policy assignment rights occurs when the named insured dies?A. A new owner of the property takes over the policy. B. The insured's legal representative takes over the policy. C. The closest relative takes over the policy D. No one is permitted to take over the policy. B- Legal representativeAll of the following are covered for named perils under coverage B exceptA. an in-ground swimming pool B. Perimeter Fencing. C. A detached garage D. Grave markers.All of the following types of construction are subject to functional replacement cost basis EXCEPTModernUnder the equipment breakdown coverage form, the term breakdown does NOT include which of the following?A. Failure of pressure or vacuum equipment B. Damage to any vacuum tube, glass tube, or brush C. Electrical failure, including arcing D. Mechanical failure, including rupture caused by centrifugal force B- Damage to any vaccum tube, glass tube, or brushWhich of the following is eligible for a business owners policy?A. Motor Vehicles subject to motor Vehicle registration. B. An owner- occupied four-family dwelling with three residential rental units C. A contractor with a payroll of $500,000 D.A convenience store with a gasoline pump D- convenience store with a gasoline pumpWhich of the following does an HO-6 Provide?A. Coverage for tenant living in a condominium B. coverage for personal property of a condominium owner. C. Special dwelling coverage for a condominium owner D. Coverage for the rehabilitation of a condominium structure. B- Coverage for personal property of a condominium ownerWhich of the following represent the maximum amount reimbursable for tree debris removal for one occurrence under all homeowners forms?A. $1,000 per occurrence B. 500 C. 15% of coverage A D. 5% of Coverage A A- $1,000 per occurrenceWhich type of hazard is an example of a person who increases the chance of loss through carelessness or by irresponsible actions?A. Physical Hazard B. Morale Hazard C. Moral Hazard D. Reckless Hazard B- Morale HazardMobile homes can be insured in all of the following ways exceptWith an H0-8 modified coverage form.All of the following sell insurance in the residual market except?Disability insuranceWhich of the following terms applies to a policy that pays first when two policies cover the same property?A. Excess B. Pro Rata C.Primary D. Non-assigned C- PrimaryWhich of the following defines the term peril?cause of loss.Property coverage that does not require a specific limit of insurance for each item to be insured is called?A. All Risk B. Blanket C. Comprehensive D. Specific B- BlanketAll of the following are listed in the duties of the insured following a loss except?A. Contracting for restoration B. Proof of loss C. Contracting for restoration D. Submitting to examination A. Contracting for restorationWhat does an application for insurance contractually represent for the insured?A. An offer B. An agreement of terms C. A primary source of information D. A promise to pay A- An offerAll of the following are elements of a valid contract except?ProvisionsA business owners policy includes two separate aggregate limits. Both aggregates are how many times the limit shown in the declarations for liability and medial expenses coverage?A. Five B. Two C. Three D. Four B- Two- limits the aggregate limits to twice the liability and medical expenses limit.What triggers coverage under the business income form with extra expense coverage?A. Building Inspector fees after a loss. B.Carpet cleaning after a water main break C. Unit rent when the tenant is liable D. Employee pay after a building structure is damaged B- Carpet cleaningWhich of the following is attached to and used to modify or change the original policy in some way?A. Change Order B. Written Request C.Endorsement D. Binder C- EndorsementWhich of the following is TRUE for stated value?A. The insurer chooses the value of property B. the insured chooses the value of property. C. An adjuster chooses the value of the property D. A realtor chooses the value of the property B- The insured chooses the value of the propertyIn an insurance policy, where are the terms and phrases clearly describing the extent of coverage located?A. Conditions B. Exclusions C. Definitions D. Declarations C- DefinitionsAll of the following are examples of direct loss exceptAfter a car crash you have to rent a replacement vehicleWhich method of handling risk represents an insured's attempt to refrain from risk?AvoidanceCoinsurance requires the insured to carry a minimum amount of insurance. The coinsurance requirement is normally what percentage of the replacement cost?A. 0.6 B. 0.4 C. 0.2 D. 0.8Which of the following defines a loss which is consequential and comes as a result of an original loss?A. Direct Loss B. Total Loss C. Partial Loss D.Indirect loss. D- Indirect LossWhich of the following is the special limit of coverage on the homeowners policy form for property damage to personal watercraft?A. 2,000 B. 2,500 C. 1,500 D. 1,000 C- 1,500How does the businessowners policy BOP differ from the commercial package policy?A. The BOP covers property damage only B. The BOP covers small businesses that have multiple locations. C. The BOP prepackages a group of coverages desirable to small businesses. D. The BOP is specifically designed for larger companies. C- BOP Pre Packages a group of coverages for small bizWhich of the following is covered under a commercial articles floater?A. Inherent Vice B. Theft C. Earthquake D. Infidelity B- TheftWhen does the coverage begin for a builders risk form?At the time the insured becomes legally responsible for the property if that date occurs after the policy's effective date.Misrepresentation may void an insurance policy only under which of the following circumstances?It involves a material fact.What characterizes a policy requiring a deductible for a loss?Risk SharingWhat increases the loss potential of an unforeseen event that causes injury to an insured or damage to property?A. Peril B. Hazard C. Insurance D. Risk B- HazardWhich coverage forms are used when the insured sustains loss of revenue due to direct physical loss from a peril insured against that forces the insured to suspend operations during the period of restoration?A. Cause of loss forms B. Commercial casualty forms C. Suspension forms D. Business income coverage forms. D- Business income coverage formsPolicy A is written covering a building with a 50K limit. Policy B is written covering the same building with a 100K limit. A 9K covered loss occurs. company A will pay 3K of the loss. company B will pay 6K of the loss. this is an example of which principle of indemnity?A. Pro Rata B. Split Limit C. Primary D. Excess A- Pro RataWhat type of authority is in writing and allows a producer to act on behalf of the insurer?Express authority.An insurer's right to cancel a policy is often limited by state laws but is generally permitted under which of the following conditions?Non- payment of premiumAn insured is involved in an automobile accident. the adjuster declares the insured's car to be a total loss and authorizes payment to the insured for the actual cash value of the car. the salvage belongs to theInsurer .According to the nationwide definition of marine insurance, which category is an eligible marine risk?A. Public park playground and equipment B. Condominium Buildings C. Imported goods. D. Office building of more than two stories C- Imported GoodsWhich method of risk management is used when an insured elects to self insure?retentionUnder a commercial property policy, the insurer has the right to make inspections and surveys at any time. these surveys are for what purpose?A. Identify the building is being maintained B. Verify the need for Coverage C.underwriting and rating. D. Safety Inspections C- Underwriting and ratingWhat is the valuation basis for coverage B- Business personal property under the businessowners policy?A. Agreed Amount B. Actual Cash Value C. Functional Equivalent D.Replacement cost. D- Replacement Cost.Which of the following is the standard amount of coverage A- Dwelling provided by the HO-6 unit owners policy?1,000Which of the following losses is covered under Coverage A Dwelling?A. Wind damage to detached garage B. Paint spilled on living room couch C. Lightning strike on home's chimney D. Vehicle Damage to fence C- Lighting strike on home's chimneyUnder a farm, which of the following covered causes of loss are covered under a special form?A.Electrocution of covered livestock B. Drowning of covered livestock C.Voluntary parting with property D. Accidents involving loading and unloading C- Voluntary parting with propertyWhich of the following is an example of replacement cost valuation?A. cost new without depreciation at the time of loss. B. Fair Market value of item at time of loss. C. Actual Cash Value of item at time of loss D. Cost of functional value of item at time of loss. A- Cost new without depreciation at the time of loss.The businessowner policy covers specified medical expenses.A. To a person whose injury calls for benefits payable under disability B. To anyone hired to work for the insured. C. To any insured D. Without regard to who is at fault. D. Without regard to who is at fault.Under the fair credit reporting act, a licensee must give notice to the consumer no later than how many days after a report is requested?3 daysWhich of the following is eligible for a dwelling property policy?A mountain vacation house used mostly in the summer and some weekends.A DP-2 Policy covers all of the following EXCEPTDamage to awnings from weight of snow.A personal injury endorsement added to a homeowners policy provides coverage for liability caused by the insured.A. Intentionally using a racial slur while campaigning for election. B. Accidentally running over a child on a bicycle and being sued for medical expenses and damages C. Stealing $5,000 worth of personal belongings from his neighbor's garage D. Intermittently entering his tenants' apartment to see if the tenant is harboring a cat, which violates the tenant's lease D- Tenant's apartment to see if he has a cat.Under a commercial package policy, the common policy declarations page shows the who, what, when, where, andHow much- Premium cost. The 4 W's rememberWhich of the following hazards is an example of a physical hazard?A. Backing into the garage door because you want insurance to pay for a new one B. Leaving the keys in the car and doors unlocked. C. Leaving the shed unlocked at night because contents are insured D. Burning debris near the building on a calm sunny day D- Burning debris near the building on a calm sunny day.Under a commercial property policy, which endorsement is used to provide coverage based on actual inventory values at certain locations at specific times?A. Spoilage Form B. Causes of loss form C. Ordinance or law coverage D.Value reporting form D- Value reporting FormWhich of the following best describes the policy conditions?A. Who is insured, location of risk, and what is insured. B. The responsibilities and obligations of insured and insurer. C. The meanings of terms used in the policy D. The losses for which the insured is not covered. Answer is BWhich of the following best determines the terms vacant versus unoccupied?A. Vacant Means the absence of people and property B. Vacant means insured is away for a period of time. C. Unoccupied means absence of people and property D. Vacant means the absence of people A- Vacant means the absence of people and property.Which of the following are NOT covered under homeowners special form HO-3?A. Personal Property B. Tenants living in condominiums C. Broken Glass D. Structures other than the dwelling B- Tenants Living in condominiumsAll of the following demonstrate insurable interest ExceptA. Purchasing fire insurance on a newly acquired cottage. B. Adding collision coverage on auto due to a new loan. C. Insuring an engagement ring given to fiancee D. Deciding to insure an inherited firearms collection. C- engagement ring fianceeAll of the following are considered to be incompetent to enter into a contract exceptSomeone who is incarcerated.What is the waiting period included in the definition of period of restoration in the business income coverage form?72 HoursA morale hazard is consideredIndifference to lossWhich of the following are defined as a part of the policy and can void the policy if they are breached, whether the breach was intentional or unintentional?WarrantiesWhich of the following injuries is covered by medical payments on a homeowner policy?A. A telephone company employee injured while servicing the insured's phone B. When Trimming his tree, the insured's are is broken C. The insured's daughter who slipped on the front steps. D.A neighbor's injury from fall while helping clean the insured's leaves. D- Neighbor injury from fall.All of the following are found on a declarations page exceptA. Address of insured B. Costs of coverage C. Limits of insurance D. Policy exclusions D- Policy ExclusionsCoverage F- Medical Payments to others includes coverage forA. Punitive Damages B. Loss of consortium C. Dental services D. Pain and suffering C- Dental ServicesWhich of the following homeowners form provides the most comprehensive coverage?A. HO-4 B. HO-6 C. H0-5 D. HO-8 C- HO-5A person who intentionally defrauds an insurer to gain from a claim is an example of which type of hazard?Moral HazardA Woman slips on icy steps and breaks her leg. What is the peril in this situation?The FallThe property valuation method paying the full policy amount listed on the declarations page in the event of a total loss, regardless of the actual cash value is called..Valued PolicyWhich of the following is covered by the homeowners broad form H0-2 insurance?A.Condominium B. Tenants C. Breakage of glass D. Structures other than the dwelling C- Breakage of GlassIf an insured stops paying premiums, the insurer can cancel coverage, but the insurer cannot take the insured to court for breaking the contract. This is because insurance contracts are what type of contracts?UnilateralAll of the following are examples of insurable interest exceptA. Insuring Expensive Jewelry B. insuring your friend's automobile C. Insuring business property you own. D. Insuring your home. B- Insuring your friend's automobileThe business owners policy covers specified medical expensesWithout regard to who is at faultWhich of the following methods are losses settled on an actual cash value ACV basis?A. Less depreciation B. Repair Cost C. Market Value D. Replacement Cost. A- Less DepreciationWhat is the purpose of the causes of loss form that lists specific exclusions?A. To state which properties are covered in a loss. B. To state which perils are insured against C. To inform the insured whether the loss in a claim is covered. D. To inform the insurer what the loss is in a claim. B- To state which perils are insured against.The purpose of the homeowners policy is to provideA. A low-cost alternative to those eligible for the dwelling policy B. Availability of insurance coverage to all homeowners. C. A package policy that reduces the need for multiple policies D. All risk replacement cost coverage on all homes. Answer is CAll of the following are commonly used personal inland marine forms exceptA. Personal effects floater B. Personal Property Floater C. Builders floater form D. Personal articles floater. C- Builders floater form.The policy conditions as well as state laws permit the insurer to cancel or rescind a policy when any of the following exist exceptrepresentationWhat is the purpose of a commercial package policy?A. The policy is always more affordable B. The insurer does not have the right to inspect premises C. Repetitive information is eliminated D. Coverages are pre-packaged with customized common forms. C- Repetitive information is eliminated.Which insurer operates within the united states but outside of the state in which it is incorporated?foreignWhich of the following created the national flood insurance program?A. Governors of flood prone states B .The united states congress C. An association of mortgage banks D. A consortium of insurers B- The US CongressWhich of the following explains market value in determining loss valuation?Property is evaluated for the price a willing buyer would payWhich of the following is an example of risk avoidance?Not driving a car to prevent getting in an accidentUnder the Builders Risk Coverage Form, the insured's building materials and supplies used for construction are covered if they are located within how many feet of its premises?A. 40 Feet B. 75 Feet C.100 feet D. 20 Feet C- 100 feetWhen coverage forms are used when the insured sustains loss of revenue due to direct physical loss from a peril insured against that forces the insured to suspend operations during the period of restoration?Business Income Coverage formsAll of the following are a covered cause of loss under the homeowners HO-2 broad form except?A. Freezing of plumbing or related systems. B. Sudden and accidental damage from electrical current. C. weight of ice, snow, or sleet. D. Discharge of overflow of water from a sump. D- Discharge or overflowThe causes of loss form lists which of the followingA. Exclusions to named insureds B. The amount of insurance provided. C. Perils property is insured against D. The type of property insured C- perils property is insured againstWhich of the following describes market value?It is what property can be sold forWhat is the chance of uncertainty of loss?RiskWhich of the following is an example of a financial loss caused by a home being damaged in a windstorm?A. Inconsequential Loss B. Indirect Loss C. Direct Loss D. Excluded Loss C- Direct LossA personal lines earthquake endorsement defines all earth movement occurring within what time period to be considered a single occurrenceA.72 Hours B. 12 Hours C. 48 Hours D. 24 hours A- 72 hoursWhich homeowners form is most appropriate for older homes with replacement values that may far exceed their market values?A. H0-5 B. H0-8 C. HO-2 D. HO-3 B- HO-8. older homes written at 80% or market value.Which of the following defines the chance of uncertainty of loss?RiskWhich method of risk management is used when a person chooses NOT to drive because of the risk of having an automobile accident?AvoidanceAll of the following types of personal property are covered under Coverage C ExceptA. Lawn Mowers B. Motor Vehicles C. Computers D. Watercraft B- Motor VehiclesUnderwriters are permitted to use all of the following when underwriting an application for insurance EXCEPTA. Credit Reports B. Inspection Services C. Disability D. Claim History C- DisabilityWhat forms the basis of a loss under an insurance policy?A loss- A loss is the basis of a claim made under an insurance policyIf a covered loss, the insured must provide proof of loss, and the insurer must respond within a specified time period following the loss. This is because insurance contracts are which type of contract?ConditionalAfter a loss occurs, whose duty is it to complete a proof of loss?InsuredDetermining adequate indemnification after a loss is a principle duty of theA. Producer B. Insurer C. Insured D. Contractor B- InsurerWhat is the valuation basis for coverage B- Business Personal property under the businessowners policy?Replacement costWhich policy provision provides that an insurer can take possession of damaged property?A. Subrogation B. Benefit of bailee C. Salvage D. Assignment C- SalvageWhich of the following is covered under a commercial articles floater?TheftWhich of the following homeowners forms covers tenants?A.HO-4 B. HO-2 C. HO-5 D. HO-3 A- HO-4Which of the following describes why the insuring agreement is the heart of an insurance policy?A. It describes the losses for which the insured is not covered. B. It states the ground rules for the policy. C. It describes property covered and perils insured D. It lists the amount of coverage provided. C- Describes property covered and perils insured.Which characteristic of an insurance contract states that when a loss occurs the insured should be restored to the financial condition he was in before the loss?Contract of IndemnityWhat is the standard limit for coverage D- Fair Rental Value on dwelling policy forms?0.2Which provision applies when the policy term ends and either the insured or the insurer wants to discontinue coverage?A. Flat Cancel B. Cancellation C. Expiration D. Non-renewal D- Non RenewalOne of the criteria to determine an insurable risk isCalculable lossMobile homes can be insured in all of the following ways EXCEPTA. With an HO-8 modified coverage form. B. On a separate mobile homeowners package policy C. If the mobile home endorsement is attached. D. If the mobile home is on a foundation. B- With HO-8 Modified coverage form.Under a homeowners earthquake endorsement, what is the correct timeframe for earthquake shocks to be considered as a single earthquake?72 hoursIn which of the following DP forms is the dwelling covered under open perils and the personal property on a named peril basis?DP-3Which of the following is an example of pure risk?storing your new motorcycle outsideIn which of the following types of insurance organizations are profits returned to the insureds in the form of dividends?MutualsWhat part of a legal contract refers to an exchange of value?ConsiderationThe property coverage of a BOP includes which of the followingA. Outdoor signs that are not attached to the building. B. Motor Vehicles C. Carpeting that is permanently installed inside the building D. Outdoor Fencing. C. Carpeting installed in the building.Which of the following is eligible for a businessowners policy?A convenience store with a gasoline pump.As a general rule, commercial inland marine insurance covers all of the following exceptA. Merchandise while it is being manufactured B. Musical instruments for professional use. C. Contractor tools used on a job site D. Domestic Shipments of goods. A- Merchandise while it is being manufactured.Who may bring a civil action in the appropriate United States district court against any person engaging in conduct constituting an offense under Section 1033?A. Insurance commissioner B. attorney general C. Secretary of state D. Governor B- Attorney GeneralWhich of the following types of property are NOT covered on the building and personal property coverage formA. Furniture and Fixtures B. Stock C. Machinery and Equipment D. Pets D- PetsWhich of the following is a covered peril under the DP-1 basic policy form?A. Freezing of Plumbing B. Weight of Snow C. Falling Objects D. Riot or Civil Commotion DA contract that is against public policy is NOT enforceable according to which contract characteristic?A. Statute of Limitations B. Competent Parties C. Legal Purpose D. Consideration C- Legal PurposeWhat type of insurance is used when a business sets aside reserve funds to cover losses in advance?A. Mutual Insurance B. Self Insurance C. Reciprocal Insurance D. Risk Retention Insurance B- Self- InsuranceWhen the courts resolve any ambiguity in policy wording in favor of the insured, it is because of theDoctrine of reasonable expectations.Which valuation method is used by the insurer and the insured to specify value of a particular property before the policy is issued?A. Actual Cash Value B. Stated Value C. Agreed Value D. Replacement Value C- Agreed ValueSome insureds pay insurance premiums and never have a covered loss, while others may have a catastrophic event that pays much more that a lifetime of premiums. As a result, insurance contracts are considered to beA. Aleatory B. Adhesive C. Conditional D. Unilateral A- Aleatory, Chance of lossWhich method of risk management is used when a person purchases insurance?A. Reduction B. Transfer C. Retention D. Avoidance B- TransferThe automatic increase in insurance endorsement under a dwelling policy provides annual increases to the limits of which coverages by a percentage shown in the declarations?A. Coverage C- Personal Property and Coverage D- Fair Rental Value B. Coverage A- Dwelling and trees, shrubs, and other plants coverage C. Coverage A- Dwelling and Coverage B- Other Structures D. Coverage B- Other structures and Debris removal C- Coverage A Dwelling and Coverage B other structures.Plugging too many electrical cords into a single outlet can be best described as aA. Hazard B. Peril C. Law of large Numbers. D. Uninsurable Risk A- Hazard.Which type of insurer is an unincorporated group of people agreeing to insure each other's losses under a contract?A. Non- admitted B. self C. reciprocal D. Fraternal benefit of societies C- ReciprocalWhich principle holds that the insurer relies on the truthfulness of the applicant and in return promises and has the ability to pay claims?A. Legal contract B. Indemnity C. Reasonable Expectations D. Good Faith D- Good FaithWhat policy condition states the terms under which covered property losses are settled?A. Loss Payment B. Consent to settle C. Recovered Property D. Loss settlement. D- Loss settlementAll of the following risks are more likely to be insured by state or federal government programs except?A. War risk insurance B. Unemployment insurance C. flood insurance D. Employers liability insurance D- Employers liability insuranceAn insurer's right to cancel a policy is often limited by state laws but is generally permitted under which of the following conditions?A. Underwriting Action B. Insured files three claims C. Non-Payment of premium D. Catastrophic loss event C- Non-Payment of premiumWhich of the following is an example of risk retention?A. Choosing $1,000 deductible B. Signing a contract that places the other party at fault in case of an accident C. Never riding as a passenger in an automobile D. Always wearing a seat belt when driving or riding in an automobile A- Choosing a $1,000 deductibleAll of the following are a producer's responsibility to the insured EXCEPTA. settling and paying claims B. Serving the best interest of the insured. C. Analyzing coverage needs D. Forwarding Premiums to the insurer on a timely basis. A- Settling and paying claims.When an individual with a pre-existing condition is in an automobile accident and the insurance covers rehabilitation only to the level of the condition prior to the accident, this is because of which principle?A. Adhesion B. Reasonable Expectations C. indemnity D. Good Faith C- IndemnityWhen one party of a contract has greater power over the other party in drafting the contract, what type of contract is it?A. Conditional Contract B. Unilateral Contract C. Unenforceable Contract D. Contract of Adhesion D- Contract of AdhesionWhich of the following is the type of insurance the government may step in to provide that is NOT ordinarily available from private insurers?A. Surety Bonds B. Fidelity Bonds C. Residual Market D. Surplus Lines. C- Residual MarketWhich of the following describes an insurer that meets the insurance department's standards and is authorized to do business in the state?A. Approved B. Licensed C. Permitted D. Admitted D- AdmittedWhich of the following best defines a personal insurance contract?A. An Insured may pay premiums for years without having a covered loss. B. The insurer writes the contract, thus has greater power than the insured. C. The insured contract is designed to transfer risk from the insured to the insurer. D. When a loss occurred, the insured should be restored to their approximate financial condition before the loss. C. Designed to transfer risk from the insured to the insurer.Purchasing boatowners insurance is an example of which method of handling risk?A. Control B. Retention C. Transfer D. Avoidance C- Transfer.Under dwelling policy conditions, which of the following situations describes how the insurer will settle a loss?A. The amount of loss over the deductible will be paid, up to the limit of liability B. The insurer will pay the full value of a pair of earrings when only one is lost C. The loss will be paid within 30 days after reaching an agreement with the insured. D. If the loss is covered by other insurance, the other insurance pays full amount of loss. A- Amount of loss over the deductible will be paid, up to the limit of liabilityWhen a business has a specialized risk that no authorized insurer will cover, the coverage may be obtained fromA. Admitted Insurers B. Surety Bond Carriers C. Umbrella Insurers D. Surplus Line Carriers D- Surplus Lines CarriersAll of the following are eligible expenses after a loss under Coverage E- Additional living expense exceptA. Mortgage Expense B. Restaurant dining Expenses C. Laundry Expenses D. transportation Expenses A- Mortgage ExpenseFederal crop insurance is a type of insurance sometimes calledA. National Association coverage insurance B. Special broadened forms insurance C. residual market insurance D. voluntary private insurance C- Residual Market InsuranceThe law of large numbers states which of the followingA. Some types of losses cannot be insurable B. The larger the group, the more accurately losses can be predicted C. there will be many claimants for every loss D. multiple catastrophic losses cannot be insured. B- The larger the group, the more accurately losses can be predicted.The insured purchased a car for $40,000 and added $5,000 in insured modifications. Four Years later it was worth $24,000 when it was totaled in a crash. According to the principle of indemnity, how much should the insured receive from the insurance proceeds?A. 29,000 B. 40,000 C. 45,000 D. 24,000 D- 24,000Which characteristic of an insurance contract expresses the principle the policyholder is returned to the approximate financial condition as before the loss?A. Indemnity B. Insurance C. Risk Reduction D. Risk Transfer A- IndemnityWhat type of insurance do insurers use to transfer risk among themselves?A. Remuneration B. Double Indemnity C. Probability D. Reinsurance D- ReinsuranceWhat is the difference between misrepresentation and fraud?A. Misrepresentation requires a person to rely on a lie, whereas fraud only requires one party to lie to the other. B. Misrepresentation involves the concealment of a material fact, but fraud does not apply to concealment. C. Misrepresentation does not apply to material fact and fraud does. D. Misrepresentation is a representation that is actually false, but fraud is an intentional act designed to deceive. DWhich word describes an insurer incorporated outside of the state in which it is doing business?A. Alien B. Foreign C. Domestic D. Stock B- ForeignWhich of the following is an example of risk reduction?A. Carrying an adequate amount of insurance to cover any loss. B. Not purchasing insurance because of a past history of zero claims. C. Installing a fire hose system on every floor of a building D. Refusal to work in a building that is not made of brick or concrete Answer is C.What is the term for a proposal made by one of the potential parties to a contract?A. Offer B. Legal purpose C. Consideration D. Acceptance A- Offer