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Multiple Choice Quiz
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1
Fred's fire insurance policy required Fred to provide Big Insurance Co. with written notice of a claim within thirty days of a loss. When Fred's house burned Fred orally told the Big agent who told Fred that the company would process the claim. Big denies coverage since Fred failed to give written notice. Is this defense by Big successful?
A)Yes, Fred violated the terms of the policy.
B)No, the agent is personally liable to Fred as well as Big.
C)Yes, Fred should have known and followed the policy procedures.
D)No, Big is estopped to deny the claim.
2
Zoe agreed not to skydive when she obtained life insurance naming her husband Sam as beneficiary from Small Insurance Co. Small knew that Zoe occasionally assisted the local skydiving club instructing new members. If Zoe dies in a skydiving accident, who has the burden of proving that a warranty has been violated by Zoe?
A)Small Insurance Co.
B)Sam has the burden of proving that Zoe did not violate the warranty.
C)Zoe's executor has the burden of proving that Zoe did not violate warranty.
D)The state Board of Insurance.
3
The amount of an insurance premium is determined by the _____.
A)nature of risk
B)character of the risk
C)likelihood of the risk occurring
D)the nature and character of the risk and the likelihood of the risk occurring
4
Alex is purchasing a house at 10:00 AM. At 9:00 AM Alex could arrange for Temporary insurance coverage called a _____.
A)blinder
B)binder
C)pending policy
D)provisional policy
5
COBRA _____.
A)allows employers to deduct the cost of employee health insurance premiums from the employers' income tax
B)requires employers to keep discharge employees' health insurance coverage for a specified time
C)allows employees who have been discharged to pay premiums and keep health insurance for a specified time
D)allows employees who have been discharge to obtain governmental funds to keep health insurance for a specified time
6
A number of cars have been vandalized in Betty's neighborhood. To provide insurance coverage in the event her car is vandalized, Betty should purchase _____ insurance.
A)comprehensive
B)no-fault
C)collision
D)capstone
7
Most flood insurance requires _____.
A)a building not be in a flood plane
B)communities to manage flood hazards
C)an area not flood more than once in 500 years
D)a building not be in a flood plane and communities manage flood hazards
8
Tom removes his property from his burning warehouse only to have it stolen while stacked along side of the street. Tom's fire insurance policy _____.
A)will not cover the theft loss
B)will cover only 10% of the fair market value of the stolen property
C)will cover the theft loss
D)will cover theft loss unless Tom were guilty of negligence
9
Subrogation allows the _____.
A)insured to sue the insurance company
B)insured to sue the person who caused the damage
C)insurance company to sue the insured
D)insurance company to sue the person who caused the damage
10
Consideration in an insurance contract arises from _____.
A)the payment of premiums
B)the promise to pay the beneficiary if a certain event occurs
C)both the payment of premiums and the promise to pay the beneficiary if a certain event occurs
D)the social need to spread the risk of loss





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