Which of the following is an example of a legal requirement for individuals that
could be met through insurance?
a. contributing to the growth of the organization
b. paying for losses
c. obtaining personal auto insurance
d. providing a source of investment funds - CORRECT ANSWER : c. obtaining
personal auto insurance
A fire destroys the kitchen in Rob and Laurie's home. Which insurance policy
would provide coverage for the damage?
a. Homeowners Policy (Personal Liability)
b. Homeowners Policy (Property)
c. Personal Umbrella Policy
d. Personal Auto Policy - CORRECT ANSWER : b. Homeowners Policy
(Property)
Which insurance policy could protect Rob and Laurie's sandwich shop against
losses from employee theft?
a. Workers Compensation
b. Commercial Crime
c. Commercial Property
d. Commercial General Liability
e. Commercial Auto - CORRECT ANSWER : b. Commercial Crime
,The best indication of an insurer's overall financial health is the - CORRECT
ANSWER : policyholders surplus (It shows how much cash an insurer has on
hand for emergencies, unexpected losses, and expansion of business)
Combined ratio = - CORRECT ANSWER : loss ratio + expense ratio
expense ratio = - CORRECT ANSWER : incurred underwriting expenses /
written premiums
loss ratio = - CORRECT ANSWER : incurred losses (including loss adjustment
expenses) / earned premiums
Marco has been approved for a car insurance policy with a low premium because
on his application he gave an address in a low-crime area. However, the actual
address at which he lives and parks his car is in a high-crime area. What is this an
example of?
a. Growing capacity
b. Adverse selection
c. Creating surplus
d. Following underwriting guidelines - CORRECT ANSWER : b. Adverse
selection
Emily is the underwriter for Marco's account. What is one way she could detect
and minimize instances of adverse selection such as this?
a. Increase auto policy premiums
b. Ensure adequate policyholders' surplus
c. Monitor the book of business for unusual patterns of policy growth or losses
d. Alter the underwriting guidelines - CORRECT ANSWER : c. Monitor the book
of business for unusual patterns of policy growth or losses
,These underwriters evaluate individual insurance applications and policy renewals
and manage their own books of business. In many ways, they are the public face of
the Underwriting Department - CORRECT ANSWER : field underwriters
These underwriters make large-scale decisions about coverage, pricing, lines of
business, and the overall risk selection process - CORRECT ANSWER :
corporate underwriters
What do underwriters evaluate to determine the appropriate classification for a
commercial operation?
a. the insurer's book of business
b. specific characteristics of the insured's operation
c. the producer's years of experience on the job
d. policy holders' surplus - CORRECT ANSWER : b. specific characteristics of
the insured's operation
Exposure unit to the type of insurance it's typically used for:
Each vehicle - CORRECT ANSWER : auto
Exposure unit to the type of insurance it's typically used for:
Each $100 of insured value - CORRECT ANSWER : commercial property
Exposure unit to the type of insurance it's typically used for:
Each $1,000 of gross sales - CORRECT ANSWER : general liability
Exposure unit to the type of insurance it's typically used for:
, Each $1,000 of insured value - CORRECT ANSWER : homeowners
Exposure unit to the type of insurance it's typically used for:
Each $100 of payroll - CORRECT ANSWER : workers comp
Maria accidentally rear-ended Kenneth at a stop light. After the two made sure they
were both uninjured, they exchanged insurance information. Shortly afterward,
Kenneth called Maria's insurer and talked to Javier to report the damages to his car.
______ is the claim's representative. - CORRECT ANSWER : Javier
Maria accidentally rear-ended Kenneth at a stop light. After the two made sure they
were both uninjured, they exchanged insurance information. Shortly afterward,
Kenneth called Maria's insurer and talked to Javier to report the damages to his car.
_____ is the claimant. - CORRECT ANSWER : Kenneth
Belinda is a claims professional who works outside her organization's office. She
generally handles claims that require investigating the scene of a loss; resolving
complex investigative issues; and meeting with insureds, claimants, lawyers, and
others involved in a claim. What type of claims representative is she?
a. Telephone claims representative
b. Claims manager
c. Claims supervisor
d. Field claims representative - CORRECT ANSWER : d. Field claims
representative
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