Insurance- Property section 1

In the property and casualty insurance field, insurable interest must exist:
A: At the time the application is made for insurance
B: For at least 5 years
C: At the time of application or at the time of loss
D: At the time of loss

Insurable interest exists only when a number of conditions are met. Which of the following is not one of the requirements for insurable interest?
A: The applicant must have an interest in protecting what is insured
B: The applicant must not have a potential for gain because of the insurance
C: The applicant must face a risk of loss
D: The applicant must not share the interest with anyone else

In which of the following would a person have an insurable interest?
A: Neither "The house she owned but has rented out to a tenant" nor "The car on which she is still paying"
B: The house she owned but has rented out to a tenant
C: Both "The house she owned but has rented out to a tenant" and "The car on which she is still paying"
D:The car on which she is still paying

All of the following are true about speculative risk EXCEPT:
A: Speculative risk is a feature of insurance
B: Speculative risk involves a possibility of gain
C: Speculative risk is a feature of gambling
D: Speculative risk involves an uncertainty of loss

All of the following are true about insurance EXCEPT:
A: It involves the pooling of large numbers of individual risks
B: It is a form of gambling because it may or may not pay off
C: It transfers risk from one party to a group
D: It is a social device for spreading loss over large numbers of people

Insurable risks must involve:
A: Certain and uncertain losses
B: The possibility of loss only
C: Gambling
D: Certain losses only

In property, casualty and medical-expense insurance, the principle of making someone whole again after a loss by paying only for actual losses is called:
A: Warranty
B: Estoppel
C: Subrogation
D: Indemnity

Which of the following is an insurable risk?
A: Hail damage to the roof of a car
B: All answer options are an insurable risk
C: Wear and tear on a valuable oriental rug
D: Theft of a paperback book

The uncertainty about loss that exists whenever more than one outcome is possible is called:
A: Hazard
B: Insurable interest
C: Risk
D: Indemnity

A moral hazard:
A: Arises from the condition, occupancy, or use of the property itself
B: Is not a consideration in insurable risk
C: Arises through an individual's carelessness or irresponsible action
D: Is the tendency to create a loss on purpose, to collect from the insurance company

A client can provide insurable interest via:
A: Lie detector test
B: Checking account statements
C: Police report
D: Physical inspection

A property and casualty insurance agent frequently has the authority to provide temporary insurance coverage known as a:
A: Certificate
B: Policy
C: Binder
D: Quotation

Something that may increase the seriousness of a loss if loss occurs, or that increases the likelihood that a loss will occur, is called a:
A: Catastrophe
B: Peril
C: Hazard
D: Risk

A binder:
A: Is always a written agreement
B: May only be issued by the insurance company
C: May be oral or written
D: Guarantees that a policy will be issued

The law of large numbers states that:
A: The predictions become more accurate as the number of units being considered increases
B: All losses are predictable
C: Small losses are predictable
D: Large losses are easier to predict