New York State Property
and Casualty Insurance
Exam 17-56 Questions
and Complete Solutions
Graded A+
Denning [Date] [Course title]
,Average Value Method - Answer: A loss reserve established based on average settlements of particular
claim types.
Personal Producing General Agent - Answer: -Does not recruit career agents.
-Sells insurance for carriers it is contracted with.
-Maintains its own office and staff.
Conditional Contract - Answer: Both parties to a contract must perform certain duties and follow rules
of conduct to make the contract enforceable.
Alien Insurer - Answer: An insurer organized under the laws of any jurisdiction outside of the United
States, whether or not it is admitted to do business in this state.
Insurable Events - Answer: Any event, whether past or present, that may cause loss or damage to a
person having an insurable interest or create a liability against him/her.
Personal Injury Liability - Answer: Legal liability arising from the wrongful conduct of the insured
resulting in injury other than bodily injury.
Compensatory Damages - Answer: Awarded to the injured party for the actual loss sustained.
-Special damages: Award for actual expenses such as bills, loss of earnings, and the costs of repairing or
replacing damaged property.
-General Damages: Award for pain, suffering, disfigurement, and similar types of losses.
Commercial Ocean Marine Insurance - Answer: Coverage is called Protection and Indemnity.
Covers legal liability imposed on the insured for damages arising out of the operation of the insured
vessel.
Apparent Authority - Answer: Authority created when a producer exceeds expressed authority, and the
insurer does nothing to counter it.
,Discovery Form - Answer: Provides coverage for losses that are discovered during the policy period, but
that did not necessarily occur during the policy period.
Requires the use of a retroactive date.
Contract of Adhesion - Answer: One party prepares a contract (insurer) and submits it to the other party
on a take-it-or-leave-it basis (insured).
Pollution Extension Endorsement - Answer: Deletes the Pollution Exclusion for bodily injury and
property damage liability, but continues to exclude clean up costs.
Underinsured Motorists Coverage - Answer: Protects the insured against drivers who do have auto
liability insurance, but whose coverage limits are inadequate or insufficient to respond to claims.
The coverage pays only up to the amount that exceeds the limit of liability of the at-fault party.
Contract of Utmost Good Faith - Answer: Both parties bargain in good faith in forming the contract, and
rely upon the statements and promises of each other.
Employee Dishonesty - Answer: Coverage provides insurance for Business Personal Property, including
money and securities, resulting from dishonest acts committed by any of the insured's employees acting
alone or in collusion with other persons.
Direct Loss - Answer: Damage to property in which the proximate cause of the loss is an insured peril.
Medical Payments Coverage - Answer: -Coverage for the bodily injury of third parties sustained on an
insured location or as a result of the insured's activities.
-Coverage provided for the payment of necessary medical, surgical, x-ray, dental, ambulance, hospital,
professional nursing, and funeral expenses.
-Payments made without regard to fault or negligence.
Joint Underwriting Association - Answer: Requires insurers writing specific coverage lines in a given
state to assume the profits/losses accruing their share of the total voluntary market premiums written in
that state.
Participating insurers accept every eligible risk, and then may choose to reinsure some risks.
, Transit Coverage Forms - Answer: -Annual Transit — Used to protect all property/shipments being
shipped or received from other shippers during the year via any common carrier.
-Trip Transit — Used for irregular shipments, to insure a single shipment.
Bodily Injury Liability - Answer: Legal liability arising from physical injury to a person, including sickness,
disease, and death caused by the negligent or purposeful acts or omissions of an insured.
Binder - Answer: A document that temporarily provides insurance coverage until a policy is issued.
Named Insured - Answer: Any person, firm, or organization specifically designated by name on the
Declarations Page of the policy.
Exclusive or Captive Agency System - Answer: -Agent represents solely one company or group of
companies having common ownership.
Insurer retains ownership rights to the business written by the agent.
-The agent is an employee or a commissioned independent contractor.
-Insurer may or may not provide office and agency support services.
deductible - Answer: A specified dollar amount of each covered property loss that an insured must pay.
Financial Rating Services - Answer: Producers are responsible for placing business with insurers that are
financially sound.
Performance Bond - Answer: Guarantee that the contractor will perform, as agreed in the contract.
Premium Assumptions - Answer: -Must charge an adequate premium for the risk based on the same
factors used in evaluating the risk.
-Premium rates are considered inadequate when they do not cover projected losses and expenses.
-Rates must not be excessive or unfairly discriminatory.
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