MICHIGAN PROPERTY CASUALTY LIMITED LINES EXAM

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Actual Qs and Ans - Expert-Verified Explanation -Guaranteed passing score -100 Questions and Answers

-Format: Multiple-choice / Flashcard

Question 1: Risk Avoidance

Answer:

act of avoiding or keeping away from

Question 2: Vacancy

Answer:

a building that is unfurnished and not being used as a dwelling or business

Question 3: 3 Types of Insurance Companies

Answer:

Private Commercial, Private Non-Commercial, and The Federal Government

Question 4: Utmost Good Faith

Answer:

A principle of insurance which states that the insurance company must be able to rely on the honesty and cooperation of the insured, and the insured must rely on the company to fulfill its obligations in good faith.

Question 5: Primary and Excess

Answer:

the primary insurer pays first, and the excess insurer pays only after the policy limits under the primary policy are exhausted

Question 6: Punitive Damages

Answer:

awarded against a defended who deserves to be punished for his negligence

Question 7: Personal Contract

Answer:

personal in nature, there must be an insurable interest

Question 8: Concurrent Causation

Answer:

loss or damages occur as a result of more than one cause, one of which is covered while the other is not. Damages are likely to still be compensated for by the insurer.

Question 9: No Benefits to Bailee

Answer:

insured cannot assign the policy to bailee(temporary holder of goods for repair or other services) Bailees are responsible for damage to property while in their care

Question 10: Morale Hazard

Answer:

an indifferent attitude toward risk

Question 11: Contract of Adhesion

Answer:

contract and its provisions are completed by one party - the insurer.

Question 12: Estoppel

Answer:

one party is prevented or estopped from asserting a right that would be to the detriment of another party

Question 13: Insurable Risk Requirements

Answer:

Loss Must Be: Predictable, Definite, Due to Chance, Cannot Be Catastrophic, Exposure Must be Large, Significant

Question 14: Expressed Authority

Answer:

written authorities in agency agreement

Question 15: Physical Hazard

Answer:

physical or tangible situation which can cause a peril to occur Question 16: How do you calculate partial loss settlements when the coinsurance clause is not satisfied?

Answer:

(amount of insurance carried / amount of insurance required) x loss = settlement

Question 17: Warranty

Answer:

a statement that is considered and guaranteed to be true

Question 18: Accident

Answer:

sudden unexpected event resulting in financial loss

Question 19: Types of Perils

Answer:

Named & Open

Question 20: Individual Rates

Answer:

used when there are not enough similar exposures to justify a class rate

Question 21: Replacement Cost

Answer:

amount of money necessary to replace damaged or destroyed property with like kind and quality as of the date of loss

Question 22: Mutual Insurance Company

Answer:

no permanent capital stock, Par- policy holders participate in dividends

Question 23: Negligence

Answer:

misrepresenting a plan, coverage or information about the policy or quoting inflated information that will affect the client at a later date

Question 24: Stock Insurance Company

Answer:

capital stock is owned by stockholders. No Par- policy holders do not participate in dividends

Question 25: Nonconcurrence

Answer:

when two or more policies cover an insured's property against damage or destruction, but the limits of coverage and kinds of property are not the same. May result in the insured not being covered in the event of a loss

Question 26: Special Damages

Answer:

actual out of pocket expenses incurred by a person as a result of an accident

Question 27: Legal Elements of An Insurance Contract

Answer:

Offer & Acceptance, Consideration, Legal Intent, Competent Parties

Question 28: Arbitration

Answer:

settling a dispute by agreeing to accept the decision of an impartial outsider