Commercial Lines Insurance Test
1. Insurance handles risk by
A.
B.
C.
D.
Reducing it
Avoiding it
Transferring it
Ignoring it
2. An insurance policy is a contract between an insured and an insurer in which
A.
B.
C.
D.
Specific future losses will be covered in exchange for payment
Risk of loss is reduced
Payments are sure to increase
None of the above
3. The payments an insured makes to an insurer are called
A.
B.
C.
D.
Product options
Benefits
Premiums
Deductibles
4. Which of the following is not an unfair claim settlement practice?
A.
B.
C.
D.
Misrepresentation of pertinent facts of policy
Failing to promptly acknowledge, settle, or deny a claim
Rebating
Attempting to settle a claim for less than entitled in insured policy
5. Which names below are well-known insurance rating services?
A.
B.
C.
D.
Standard & Poor’s and A.M. Best
Procter & Gamble and Johnson & Johnson
Medicaid and Medicare
Crosse and Blackwell and Caswell-Massey
6. What type of hazard is a deliberate creation of loss by an insured in order to collect
insurance payment or benefits?
A.
B.
C.
D.
Morale hazard
Physical hazard
Moral hazard
Legal hazard
7. Which statement about state regulation of insurance is correct?
A. Rate structures may be excessive but not discriminatory
B. Different rates may be charged to groups of policyholders who pose different
degrees of risk
C. Companies may offer discount rates that cover costs but do not show a profit
D. States strictly regulate how much money is spent to advertise insurance products
8. What prevents an insurance company from denying a fact because of a previous
action?
A.
B.
C.
D.
Warranty
Waiver
Estoppel
Consideration
9. What part of the policy structure answers the following, “Who, what, when, where, and
what limits?”
A.
B.
C.
D.
Injuring clause
Declaration
Definitions
Conditions
10. What is not an element of negligence?
A.
B.
C.
D.
Intervening cause
Legal duty
Standard of care
Proximate cause
11. What is the concept that a policy applies separately to each insured listed?
A.
B.
C.
D.
Tort
Intentional tort
Liability
Severability
12. Which of the following is a basic perils exclusion?
A.
B.
C.
D.
Fire
Lightning
Explosion
Falling object
13. Which of the following is excluded as money in a crime policy?
A.
B.
C.
D.
Checks
Coins
Traveler’s check
Registered check
14. What type of bond is written to protect an employer from theft by employee?
A.
B.
C.
D.
Surety bond
Fiduciary bond
Judicial bond
Fidelity bond
15. What type of coverage protects a business for care, custody, and control of a nonowned vehicle?
A.
B.
C.
D.
No benefits to bailee
Commercial auto coverage
Drive other car coverage
Garagekeepers
16. What is coverage that protects property movement on land?
A.
B.
C.
D.
Trucker
Cargo
Ocean marine
Inland marine
17. Angela works for a global telecommunications company. As a cost-cutting measure,
the company terminated Angela’s position and those of 499 of her co-workers. Angela is
probably eligible for
A.
B.
C.
D.
Workers’ compensation benefits
Unemployment benefits
Medicaid benefits
Social security benefits
18. When you buy liability insurance, your insurer agrees to represent you if you are
sued. What does your insurer have the right to do?
A.
B.
C.
D.
Settle the case without your permission
Settle out of court
Raise your premiums
All of the above
19. Which statement about workers’ compensation is correct?
A.
B.
C.
D.
Workers’ compensation will pay death benefits
Workers’ compensation will pay medical expenses and all lost wages
Workers’ compensation will pay college tuition
None of the above
20. Which of these injuries or health problems would probably NOT be covered by
workers’ compensation?
A.
B.
C.
D.
Breaking your wrist slipping in the office stairwell
Breaking your ankle playing Frisbee in the parking lot
“Brown lung” disease from inhaling cotton fibers in the mill
Multiple fractures after a co-worker bumps your ladder with a forklift