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2-20 Florida Insurance – Questions With Some Answers
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2-20 Florida Insurance – Questions With SomeAnswers
Pure Risk ✔️Ans - a situation that presents the opportunity for loss, but no
opportunity for gain.
due to physical damage or bodily injury.
Ex. Fire Loss- not anticipated but poss.
Speculative Risk ✔️Ans - We speculate or have uncertainty about an event
under consideration that could produce either profit or loss.
Ex. Lottery or Betting
Policy ✔️Ans - Written contract or agreement effecting insurance,
including clauses and endorsements.
Insurance ✔️Ans - A contract in which one party indemnifies another
party a specific amount (a pre-determined benefit for pre-determined
contingencies)
Casualty Insurance ✔️Ans - All insurance other than Life and Health
Property Insurance ✔️Ans - Carrier pays directly to the Insured (First
Party).
Liability Insurance ✔️Ans - Carrier pays on behalf of the insured (Third
Party).
Assumed Risk ✔️Ans - Amount of risk that insured is willing to absorb.
Whatever part of the risk maintained(responsible) by the insured. .
How do pure risk and speculative risk differ? ✔️Ans - Pure risk is
insurable and speculative risk is not.
,What is the law of large numbers? ✔️Ans - Statistical theory that the
larger the # of individual risks (or exposures) that are studied in a group, the
more predictable and accurate the estimate of expected losses for the group.
What are the four parts that make up an insurance policy? ✔️Ans - 1.
Declaration Page- info page
2. Insuring Agreement- promise to pay
3. Conditions- rules of the policy
4. Exclusions- situations which are not covered
How do endorsements alter the policy? ✔️Ans - A written form attached to
an insurance policy that alters the policy.
Binder ✔️Ans - Temporary insurance (no longer than 60 days)
- oral or written & includes all terms of the policy.
What is the difference between an insurance policy and a binder? ✔️Ans -
Binder is temporary until they receive there policy in the mail.
The most accurate description of Pure Risk is which of the following? ✔️Ans
- Insurable
Which of the following can be found in Definitions? ✔️Ans - Who is an
insured?
Which of the following can be found in "Conditions"? ✔️Ans - Duties of the
Insured at time of loss
All of the following choices are found on Declarations page EXCEPT: ✔️Ans
- Exclusions
What is an "Exclusion?" ✔️Ans - Events not payable under the policy
What is a Deposit Premium? ✔️Ans - Partial premium placed as a down
payment at the start of the policy
Which of the following best describes a "binder"? ✔️Ans - Temporary
insurance
,What is an "Exclusion?" ✔️Ans - Events not payable under the policy
What are personal contracts? ✔️Ans - covers persons - not property
the property & casualty policies cover persons for their financial loss, not the
damage to their property.
Who has an insurable interest? ✔️Ans - Someone must possibly suffer an
economic loss. The extent of the insurable interest establishes the % paid. It
must exist at the same time of the loss.
Who are the sources of underwriting? ✔️Ans - 1. Insurance Policy
Application
2. Insurer questionnaires
3. Inspections
4. in house indexes
5. Producer visits
6. Public records
7. Credit reports
The most accurate definition of a Contract of Adhesion is: ✔️Ans -
Contract created by insurance company; insured cannot negotiate terms;
ambiguities in favor of insured
What section in the PAP describes payments to others if the insured damages
others? ✔️Ans - Liability
What is NOT a source of underwriting? ✔️Ans - Exclusions
What type of hazards exist? ✔️Ans - Physical, Morale, and Moral
Physical Hazard ✔️Ans - When an object is in the right place at the wrong
time.
Physical characteristic of an object.
Moral Hazard ✔️Ans - Intentional Loss
Ex. Arson & Insurance Fraud
Morale Hazard ✔️Ans - Carelessness, accident
, What is the Proximate Cause Doctrine? ✔️Ans - Unbroken connection
between a covered occurrence and the damage from the occurrence.
If covered property is damaged by a covered peril, the carrier will pay all of
the resulting damage, as long as it is continuous.
Direct Loss ✔️Ans - damage to the covered real or personal property
caused by a covered peril.
Can Be Seen.
Indirect Loss ✔️Ans - Economic loss as a consequence of Direct Loss.
x. own 2 properties, Rent one. Fire. Loss of rent.
loss of income.
What is the Lender's Interest? ✔️Ans - "Mortgage Clause" or "Mortgage
Rights"
- makes lender a payee in any covered loss.
- gives mortgagee advance notice of cancellation/non-renewal.
- Mortgagee is covered even if insured is engaged in act of omission
preventing payment.
- Mortgagee can continue policy if premium is not paid.
What is the concept of Indemnity? ✔️Ans - One should not profit from
loss.
the goal of insurance today is to put people back in the same financial position
they were in before a loss.
Actual Cash Value ✔️Ans - A clause that requires an insured to pay part of
a loss if coverage provided is less than a specified % of the value of the
property at the time of the loss.
Know and explain the Departures from Indemnity. ✔️Ans - Replacement
Cost= New for Old, required to replace.
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