State Farm Exam Questions With Correct And Revised Answers
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Course
State Farm
Institution
State Farm
State Farm Exam Questions With Correct
And Revised Answers
Which of the following refers to being restored to the financial condition you were in before a
loss? - answerindemnification
mark incurred 8000$ damage to his car in an accident. he received 8000$ from his insurance
company and 4000$ ...
State Farm Exam Questions With Correct
And Revised Answers
Which of the following refers to being restored to the financial condition you were in before a
loss? - answer✔✔indemnification
mark incurred 8000$ damage to his car in an accident. he received 8000$ from his insurance
company and 4000$ from the other driver. by receiving a profit from the loss, Mark is in
violation of.. - answer✔✔principle of indemnity
the transfer of risk from one party to another is called - answer✔✔insurance
the principle of indemnity is designed to prevent - answer✔✔keeps the insured from making a
profit from an insured loss.
the fee paid by the insured in exchange for an insurance policy is called a - answer✔✔premium
insurance - answer✔✔transfers risk of financial losses from one party to another
insured - answer✔✔individual or organization that pays premiums in exchange for protection
insurer - answer✔✔company group or government agency offering financial protection
insurance policy - answer✔✔a legally binding contract in which the insurer agrees to take on
specified risks in exchange for the insured's premiums
principle of indemnity - answer✔✔restoration to previous financial condition; no more, no less.
what are the four qualifications of a contract - answer✔✔agreement, consideration, competent
parties, and legal purpose. must be 18 years of age
what is not a requirement for a legally binding contract - answer✔✔notarization
when an insurer issues an insurance policy, the actual item, person or organization that is being
insured is called the - answer✔✔the risk
what is a reserve, in insurance terms - answer✔✔a pool of collected premiums that the insurer
sets aside to pay claims
aleatory - answer✔✔of or pertaining to accidental causes; of luck or chance; unpredictable
utmost good faith - answer✔✔both parties must act honestly and openly in order for the contract
to be valid
adhesion - answer✔✔one party sets the terms of the contract; the other may simply agree or not
agree
unilateral - answer✔✔only the insurer makes a promise to act; the insured can void contract at
any time
personal - answer✔✔the insured person is protected from losses, not the covered property.
conditional - answer✔✔the insurer must only honor the contract if the insured meets certain
conditions.
aleatory - answer✔✔the exectution of the contract depends on an unknown future event.
an insurance applicat revealing his convictions for drunk driving to an insurer is an example of -
answer✔✔utmost good faith.
tom purchases a new car from his local car dealer. he also decides to get insurance coverage that
will pay to repair the car if he were to get into an accident. this is because tom wants to protect -
answer✔✔his own financial interest in the car.
tom decides to purchase an insurance policy to protect his home. according to the definition of a
personal contract, which of the following most accurately describes what tomes insurance
actually protects - answer✔✔toms financial interest in thee home
what is not true about an aleatory contract - answer✔✔in an aleatory contract, the amount of
benefit to the insured and insurer is equal.
what does D.I.C.E stand for? - answer✔✔declarations page (and definitions), insuring
agreement, conditions and exclusions (and endorsements)
'we will provide the insurance described in this policy in return for the premium and compliance
with all applicable provisions of this policy.' in which section of the insurance policy might this
statement be found? - answer✔✔insuring agreement
in which section of the policy might you find the following statement ? 'damage to insured
property must be reported within 15 days of the damaging occurrence.' - answer✔✔conditions
which of these causes of loss is least likely to be covered by a typical insurance policy? -
answer✔✔nuclear hazard
edna loses some of her property in a hailstorm. when an adjuster comes to investigate the loss, he
gives an estimate that edna thinks is far too lowl. as negotiations continue, neither edna nor the
adjuster will budge. where in Ednas policy would you find the procedure to follow in this
situation? - answer✔✔conditions
conditions - answer✔✔lists requirements that the insured must meet for coverage to apply
declarations - answer✔✔information that makes the policy unique to a specific insured.
exclusions - answer✔✔causes of loss or items of property that are not covered by the policy
endorsements - answer✔✔add, reduce, or change the coverage of the policy in some way
definitions - answer✔✔explains exactly what specific words mean in the context of the policy
insuring agreement - answer✔✔the essence of the contract. often only a single sentence
Xavier owns a small insurance company. recently the company won a bid to insure a new
housing development in Omaha, NE. his company can hangle any claims that arise, but if a
series of tornados were to tear through the area, destroying the entire development, Xaviers
company would be hit extremely hard financially. which type of insurer could help Xaviers
company protect itself the most from this potential loss? - answer✔✔a re-insurer
what type of insurance provider operates on a for-profit basis? - answer✔✔mutual insurance
companies
what type of insurer sells shares to the public and is owned by its shareholders - answer✔✔a
stock insurance company
publicly traded acme insurance is listed on the new York stock exchange, and would therefore be
considered - answer✔✔a non-participating insurance company.
stock insurance companies - answer✔✔always for profit, publicly traded, 'non-participating'
insurers: no dividends go to policy holders
mutual insurance company - answer✔✔owned by policy holders (no shareholders), elect board
directors, participate in dividends
re-insurer - answer✔✔an insurer that provides insurance for other insurers
reciprocal insurer - answer✔✔a group of ppl or organizations that insure each other. always non-
profit.
government insurer vs private - answer✔✔government: mandatory, run by government, suited to
needs of general public
private: offer insurance products based on customer preferences
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