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Arkansas Insurance study exam Property and Casualty Questions and Answers 2024
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Arkansas Insurance study exam Property and Casualty
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Arkansas Insurance study examProperty and Casualty
Insurance - answer is the transfer of risk of loss
indemnity - answer Which insurance principle states that if a policy allows for greater
compensation than the financial loss incurred, the insured may only receive benefits for
the amount lost?
It is imposed on defendants engaged in hazardous activities. - answerAll of the following
statements describe the concept of strict liability EXCEPT
Absolute - answerWhat type of liability would a person who owns wild animals have?
consequential - answerAn insured's business is damaged because of a fire, and he is
forced to close the business temporarily for repairs. As a result, the insured lost income.
What type of loss is this?
$30,000 - answerAn insured's building has an actual cash value of $200,000, and he
has insured the property for $120,000 with an 80% coinsurance clause. A $40,000 loss
occurs. How much will the policy pay?
Law of Large Numbers - answerWhich law is the foundation of the statistical prediction
of loss upon which rates for insurance are
Open Peril Policy - answerWhat type of insurance policy insures against all risks of loss
that are not specifically excluded by the p
(insurance carried / insurance required) x loss amount = - answerLoss of payment
equation
Vicarious Liability - answerLiability imposed on one party as a result of the actions of
another person is known as
Combined Single - answersingle dollar limit of liability applying to the total of damaged
for bodily injury and property damage combined resulting from one accident or
occurrence
Premium - answerA periodic payment to the insurance company to keep the policy in
force.
,certificate of insurance - answer-Written evidence showing the insurance policy has
been issued
-Lists amounts and types of insurance provided
Deductible - answer-Dollar amount must be met by insured before issuer provides
coverage
-Higher deductible equals lower premium
Proximate Cause - answer-Cause of bodily injury or property damage is natural and
reasonably foreseeable
-For injured party to collect damaged, negligence must have proximate cause
Strict Liability - answeroften applied to product liability cases
Limits of liability - answer-Per occurrence (accident)
-Per person
-Aggregate
-Split
-Combined
Negligence - answerFailure to use Reasonable and prudent care
-legal duty
-standard of care
-unbroken chain of events
-actual loss or damage
Accident - answersudden, unplanned and unexpected event resulting in injury or
damage
Occurance - answerincludes losses caused by continuous or repeated exposure to
conditions resulting from injury or property damage
Subrogation - answer-Insurer's legal right to see damaged from third party
-occurs after insurer reimburses insured
-prevents insured from collecting twice
Indemity - answer-aka reimbursement
-insureds or beneficiary are permitted to collect extent of financial loss
-insured cannot gain financially from a loss
Physical Hazard (3 types) - answera physical condition
Moral Hazard (3 types) - answera tendency toward increased risk
Morale Hazard (3 types) - answeran indifference to loss
, Pure Risk (2 types) - answerinsurable because it involves a change of loss only
Speculative risk (2 types) - answernot insurable because it involves a change of gain
3 elements of insurable risk - answer1. Financial (a monetary interest)
2. Blood (a relative)
3. Business (a business partner)
Replacement cost - answerWhich of the following is used in the formula for calculating
the actual cash value of property
Formula for actual cash value - answerreplacement cost- depreciation
Direct loss - answerwhich term includes where the insured peril was the proximate
cause of loss
Pure risk and speculative risk - answerthe risk of loss may be classified as
Vicarious Liability - answerwhen a parent is required to pay for damages caused by his
or her children, this is an example of
Subrogation - answerThe policy provision found in property insurance policies that
prevents the insured from collecting twice for the same loss is called
Per Occurrence - answerAn insured has a liability policy that sets the amount for all
claims that arise from a single incident at $50,000. Which type of limit of liability does
this insured's policy have?
Vicarious Liability - answerAn insured's 9-year-old son threw a ball, accidentally
breaking a neighbor's plate galss window. The insured was found legally liable for the
cost of replacing the window. This is an example of
The insured will receive a return premium - answerwhich of the following is most likely
to occur if it is determined by the audit
Full replacement of property at its current cost, new and without reduction for
depreciation - answerreplacement cost is defined as
Cert of insurance - answerShows the types and amounts of insurance issued to the
inssued
punitive - answerwhat type of damages may be awarded by the court to create
disincentives
General - answerwhat type of compensatory damages will pay for pain and suffering
and disfigurement
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