Michigan Property & Casualty Limited Lines Practice Exam

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• When two policies cover the insured's property but the limits and types of property differ, potentially causing gaps in coverage, this situation is known as?
• If a policy is canceled midterm with a refund of unearned premium, which cancellation form is in effect?
• When multiple policies cover the same property and payments are distributed by each policy's share until the lowest limit is reached, what method is used?
• Which risk management approach involves retaining responsibility for the loss?
• Which rating method typically applies adjustments for the risk's specific characteristics?
• The damages intended to deter future similar conduct are called?
• Which valuation is based on the price a willing buyer would pay, reflecting current market conditions?
• If the insurer mails a 30-day notice of nonrenewal, what term describes this action?
• Which method involves settling a dispute by accepting the decision of an impartial outsider?
• Occurs as a result of a covered peril is called a?
• Which authority is created when the principal's actions lead a third party to believe the agent has authority?
• Which regulatory tool requires a person to stop an unfair method of competition or deceptive act?
• The maximum amount the policy will pay for losses to any one person, regardless of policy limits, is called?
• Which rating starts with class rates and is then modified based on the likelihood of losses?
• Which term defines a sudden, unexpected event that results in financial loss?
• Which component of a policy outlines the insurer's promise to pay for covered losses?
• Which policy protects professionals against lawsuits arising from errors or omissions in the service provided?
• Under what condition may two people share commissions?
• Careless Driving carries how many points?
• Which practice involves an agent receiving premiums in a non-monetary form such as goods or services?
• Which term means an addition to the policy to cover special circumstances?
• Which term describes illegal misrepresentation of a policy's benefits or an insurer's financial condition to obtain business?
• Which term is equal to replacement cost minus depreciation?
• Which description matches sliding in an insurance transaction?
• Which policy provision specifies losses not covered by the policy?
• Which clause is designed to protect a lender's interest in mortgaged property?
• If two or more insurers share losses equally until each share equals the lowest limit or the loss is paid, this method is called?
• Which concept prevents a party from asserting a right due to their prior conduct or representations?
• Which term is a provision in a policy stating that the insurer will make a loss payment or provide a service under described circumstances?
• Which term applies when irreplaceable pieces are replaced with equivalent material that serves a functional purpose?
• Which rating usually applies an addition or reduction for the actual loss experience for past years?
• The maximum amount a policy will pay for all occurrences within the policy period, to any person or location, is described as?
• A condition or situation which can cause a peril to occur is called a?
• What is the unethical practice called that involves giving a premium reduction or other financial advantage not stated in the policy to induce purchase?
• In insurance terminology, what describes coverage that only pays for perils specifically listed in the policy?
• In an insurance transaction, to whom does the agent owe fiduciary responsibility?
• Which term is awarded against a defendant who deserves punishment for negligence?
• Which method is typically used for decorative pieces that are not easily replaceable but can be replaced with functionally equivalent materials?
• Which term describes a pre-policy agreement on value, paid if a total loss occurs?
• Which term describes the event that sets a sequence of events in motion resulting in direct physical loss under a policy?
• Which term identifies the insured, type of insurance, policy term, premiums, and coverage?
• Which term refers to the termination of a policy during the term by either party?
• Which contract type is characterized by terms that are completed by one party, typically the insurer?
• Which type of insurance company has capital stock owned by stockholders and policyholders do not participate in dividends?
• Which term refers to the act of making false statements to damage someone’s reputation or to mislead others?
• Which term describes sharing a loss proportionally among multiple policies covering the same property?
• The phrase 'a one sided contract where the insured pays a small premium and the insurer provides a substantial benefit' describes which contract?
• What term describes a building that is unfurnished and not being used as a dwelling or business?
• If liability arises from the relationship where one party acts on behalf of another, this is known as?
• The three forms of authority in agency relationships are collectively referred to as what?
• Which term refers to conduct that makes a contract null and void?
• Within the CE requirements, how many hours must be ethics-related?
• Which term describes the insurer's right to recover from a liable party after paying a loss?
• If a policy covers only the perils that are specifically listed in the policy, which term best describes this coverage?
• Which valuation method results when the insurer and insured set a value before loss and pay that exact amount on a total loss?
• For speeding 1-10 mph over, how many points are assigned?
• Which term describes terminating the policy after the term with a 30-day written notice to the named insured?
• Which term applies when all damages from one accident are covered under a single limit for bodily injury and property damage?
• Which term means an instance of something happening?
• Which statement best describes assignment of an insurance policy to a bailee?
• A statement made by the applicant that is believed to be true; all statements on the application are considered representations
• Which principal part of a standard policy contains the insured's name, address, and policy limits?
• Which term is defined as the amount needed to replace damaged property with like kind and quality as of the date of loss?
• Inducing a policy lapse or surrender to purchase a similar policy elsewhere is known as what?
• Which statement best reflects the idea behind 'No Benefits to Bailee' as it relates to policy benefits?
• What term describes the act of avoiding or keeping away from a risk?
• What is the term for the insured's share of a claim in a coinsurance context?
• Which rating usually applies an addition or reduction for the risk's special characteristics?
• A person who temporarily holds property for repair or services is called a
• A policy term described as completed by the insurer and presented on a take-it-or-leave-it basis fits which contract type?
• Which concept refers to pooling risk across a large group to diversify losses?
• Which rating type refers to a large group with the same exposures?
• Vagueness or uncertainty in a contract will be interpreted in favor of the insured. This principle is called
• Which contract is defined by a standard form created by the insurer?
• Who is responsible for damage to property while it is in the care of the bailee?
• Which term describes the geographic area within which losses and claims may occur?
• First at-fault accident carries how many points?
• How many total continuing education hours must a producer complete every two years?
• The clause where the payment is divided between bodily injury and property damage is known as?
• Which description best matches a Mutual Insurance Company?
• What term describes the method where the insured states the value of property and the insurer writes the contract for that amount?
• Which measure compares incurred losses to earned premiums?
• An indifferent attitude toward risk is described as a?
• Which rating modifies a base class rate based on the risk's expected likelihood of losses?
• Which authority governs the relationship between the agent and the customer?
• Which license is issued to an agent who gives insurance advice to clients and charges a fee for such services?
• What term describes the failure to disclose a known material fact on an application?
• Which rating usually adjusts the premium for losses in the same policy year?
• Which term represents the overall cap on liability for bodily injury and property damage within the policy’s duration?
• Which contract type is personal in nature and requires an insurable interest?
• Which term describes a non-physical factor that increases the probability of loss due to the insured's actions or character?
• In an arrangement where the primary insurer pays first and the excess insurer pays after the primary limits are exhausted, what term applies?
• A single dollar limit applying to the total damages for bodily injury and property damage combined from one accident is called?
• Which concept indicates the primary insurer pays first before excess coverage applies?
• Which clause protects the interest of the financial institution against loss to real property caused by perils insured against?
• If a policy covers all risks unless the policy explicitly excludes them, which term best describes this endorsement?
• The term used for the limit that applies to the total of bodily injury and property damage combined, resulting from one accident, is?
• Which term is used to add or modify coverage to address specific situations?
• Which principle allows ambiguous contract language to be interpreted in favor of the insured?
• What percentage of premium from controlled business is allowed in a 12-month period?
• Which term describes the illegal practice of inducing a client to switch to another producer or insurer for the purpose of earning new business?
• Which risk management approach involves passing the financial burden of a loss to another party through contract or insurance?
• Which valuation approach is typically used when depreciation is not deducted from the settlement amount?
• A statement that is considered and guaranteed to be true
• If replacement cost is $200,000 and the insured carries $150,000 with a loss of $40,000, what is the coinsurance settlement?
• Which term describes injuries caused by the insured's animals, livestock, or in rare cases involving explosives or dangerous activity?
• What formula is used to calculate a coinsurance settlement?
• Which term describes insuring family members to receive a commission and is limited to 15% of the agent's premium in a 12-month period?
• In an insurance contract, which element refers to the mental state of the parties intending to form a valid contract?
• Which of the following is NOT one of the four principal parts of an insurance policy?
• A person or corporation authorized to solicit insurance, collect premiums, and transact insurance business on behalf of an insurance company is known as what?
• How many days does a producer have to notify the insurance bureau of a change of mailing address or email address?
• A claim asks for reimbursement of medical bills and lost wages resulting from an accident. Which type of damages is described?
• Which of the following must be true for a loss to be considered insurable with respect to exposure?
• Which term describes prohibiting unfair competition or deceptive acts?
• Which of the following describes duties after a loss?
• Which term best matches 'the amount by which something is reduced'?
• Damaging the good reputation of someone through slander or libel is called what?
• Which element is described as the exchange of value required to form an insurance contract?
• Which policy provision identifies the rights and duties of the insured and the insurer?
• What are the three types of insurance companies listed?
• In an insurance policy, the insurer's promise to pay upon a future event in exchange for a small premium demonstrates which type of contract?
• Which term covers actual out-of-pocket expenses incurred due to an accident?
• Which clause allows the proceeds to be paid to someone other than the insured?
• Which insurance principle states that the insurer must rely on the insured's honesty and cooperation, and the insured must rely on the insurer to fulfill its obligations in good faith?
• Which term describes an indifferent attitude toward risk, often associated with insured parties seeking easy coverage?
• Which term denotes a liability that presents an extreme likelihood of harm to others when a mishap occurs?
• More than 15 mph over the speed limit carries how many points?
• Which concept concerns a loss that arises from more than one cause, with coverage applying to the outcome even if not all causes are covered?
• The policy's payment cap for a single occurrence is described as?
• Which of the following is a method of managing risk?
• Which term refers to written authorities in the agency agreement?
• Which term describes an outcome not directly caused by a covered peril, but occurring as a consequence?
• For speeding 10-16 mph over the limit, how many points are assigned?
• The principle that larger numbers of similar exposure units lead to more accurate loss forecasts is known as the
• Shifting risk to another party is known as which risk management technique?
• Which term would apply to injuries caused by exotic pets as described in the source material?
• Which rating method adjusts the premium based on actual loss experience from past years?
• Which type of insurer has no permanent capital stock and policyholders participate in dividends?
• Which term refers to damages awarded for non-monetary losses like pain and suffering?
• Which rating type is used when there are not enough similar exposures to justify a class rate?
• Failing to obtain proper type or amount of coverage for a client is called what?
• A trait, conduct, or behavior which can cause loss to occur is called a?
• Each additional at-fault accident after the first carries how many points?
• Which license covers agents who give paid insurance advice to clients and charges a fee?
• Which concept covers a loss caused by multiple causes, one covered and one not, yet the insurer may still compensate?
• What term describes a property that has contents or furnishings in it, but is not being used or lived in?
• Which term describes a loss that happens directly as a result of a peril?
• Which term describes the ratio of incurred losses to earned premiums used to evaluate insurer performance?
• Which act ensures homeowners and personal auto insurance is available and affordable to all citizens?
• Which term describes automatic improvement of insured policy terms when the company improves these terms or benefits on new policies?
• What term describes coverage that pays for all perils except those specifically excluded?
• The maximum amount an insurer is liable for is termed?
• Which statement describes insurable risk requirements?
• A physical or tangible situation which can cause a peril to occur is called a?
• Misrepresenting a plan, coverage or information about the policy, or quoting inflated information that affects the client later is best described as what?
• Which term describes liability that arises when a person acts for the benefit of another?
• One party is prevented or estopped from asserting a right that would be to the detriment of another party
• The process by which an insurer, after paying a loss, can recover the amount paid from any party who caused the loss is called what?
• The giving up of a known or legally enforceable right
• Which term is determined by what a person will give in cash for the property at that moment and is rarely used?
• Which set of items represents the Legal Elements of an Insurance Contract?
• Which type of authority covers powers or duties not stated in the agency agreement but necessary to perform the job?
• Do salaried home office employees need a license to provide insurance advice?
• Which statement describes false advertising?
• Which statement best describes duties after a loss?
• A policy term that involves the insured reporting the value of property and the insurer issuing a contract for that value corresponds to which concept?
• Which description best matches a Stock Insurance Company?
• Which term refers to statements made by the applicant about the risk that are believed to be true, and where all such statements are considered representations?
• What term refers to the requirement that the insured carry a specific amount of insurance pertaining to replacement cost?
• Which contract type is defined by only one party having to fulfill the terms under the contract?
• Which term refers to additional coverage added to the policy by the insurer?
• Which term refers to a negligent act resulting in harm, characterized by omission, carelessness, or ignorance, and is never intentional?
• Which term describes an automatic improvement in insured policy terms on new policies?
• Which concept requires that a policy cover what a reasonable policyholder would expect it to cover?
• Other moving violations carry how many points?
• Which term describes a condition that can cause a peril to occur, such as a slick floor?
• Which cancellation type calculates earned premium only for the period coverage was provided and refunds the unearned premium?