Policy Conditions

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Question 1 of 7

1. Question
Four months after Harold purchased an Auto insurance policy, he did not pay the monthly premium, and the insurer terminated the policy. This is best described as
- abandonment.
- indemnification.
- cancellation.
- non-renewal.
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Question 2 of 7

2. Question
When her homeowner’s insurance policy expired, Anna decided to switch insurance companies. This is best described as
- abandonment.
- indemnification.
- cancellation.
- non-renewal.
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Question 3 of 7

3. Question
After Leo’s primary insurance policy reached its limit of insurance, another policy paid the remainder of his accident costs. What is the name for the second insurance policy?
- Safety policy
- Reserve policy
- Excess policy
- Surplus policy
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Question 4 of 7

4. Question
What is the policy territory for most personal auto policies?
- the state where the insured lives
- the United States
- the United States, its territories, and Canada
- anywhere in North America
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Question 5 of 7

5. Question
Which is NOT true about a deductible?
- All insurance policies have a deductible.
- It is an example of risk retention.
- Property insurance usually has a deductible.
- In general, the higher the deductible, the lower the policy's premium.
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Question 6 of 7

6. Question
Suppose there are two policies insuring the same building, and a fire destroys the building. If the pro rata method is followed, each policy
- is responsible for paying a percentage of the loss that is equal to the percentage of their limit compared to the total amount of insurance.
- will pay an equal amount of the loss.
- will pay the total amount of the loss and the insured will be double indemnified.
- is responsible for paying a percentage of the loss that is determined by each company's loss ratio.
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Question 7 of 7

7. Question
Suppose there are two policies insuring the same building, and a fire causes a partial loss of $40,000 to the building. If the contribution by equal shares method is followed, each policy
- is responsible for paying a percentage of the loss that is equal to the percentage of their limit compared to the total amount of insurance.
- will pay an equal amount of the loss.
- will pay the total amount of the loss and the insured will be double indemnified.
- is responsible for paying a percentage of the loss that is determined by each company's loss ratio.
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Policy Conditions

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