Free Property & Casualty Insurance License Trivia Questions and Answers — Questions and Answers
Question 1: Which kind of arbitration has a final decision?
- Absolute arbitration
- Non-binding arbitration
- Binding Arbitration (Correct answer)
- Non-discussion arbitration
Correct answer: Binding Arbitration
Binding arbitration is a form of alternative dispute resolution where the parties agree in advance to accept the arbitrator's decision as final and legally enforceable. Unlike non-binding arbitration, the outcome cannot be appealed or relitigated in court. This makes it a definitive method for resolving disputes without further legal action.
Question 2: Taylor's home was completely lost after a fire completely destroyed it. In order to examine the damage and possibly get a check to pay his damages, Taylor phoned his insurance company. Taylor was in charge of providing a list of all the damaged personal stuff he lost in the fire to his insurance provider. Taylor added the computer to the list to have the insurance company pay for a replacement even though he was aware it was in his car at the time of the fire and was undamaged. Which risk is Taylor responsible for?
- Ethical hazard
- Morale hazard
- Physical hazard
- Moral hazard (Correct answer)
Correct answer: Moral hazard
Moral hazard occurs when an insured intentionally causes or exaggerates a loss to collect insurance benefits. Taylor knowingly added an undamaged computer to his list of lost items to defraud his insurance company. This act of dishonesty and intent to gain from the insurance policy is a classic example of moral hazard.
Question 3: An insured may obstruct subrogation in any of the following methods, EXCEPT:
- Impair the investigation
- Interfere with the investigation
- Withhold vital details about the loss
- Provide the insurance carrier with complete documentation of the loss (Correct answer)
Correct answer: Provide the insurance carrier with complete documentation of the loss
Subrogation is the insurer's right to recover payment from a third party responsible for a loss after paying the insured. Providing complete documentation of the loss actually assists the insurance carrier in their subrogation efforts, as it helps them build a case against the at-fault party. Obstructing subrogation would involve actions like impairing the investigation or withholding vital details.
Question 4: Can an employee sue their employer under employer liability insurance in addition to making a workers' compensation claim?
- No, in all cases
- Yes, with no restrictions involved
- Yes, in all cases
- Yes, under a dual capacity claim (Correct answer)
Correct answer: Yes, under a dual capacity claim
Workers' compensation is typically the exclusive remedy for employees injured on the job, preventing them from suing their employer for negligence. However, a dual capacity claim is an exception where an employer acts in a capacity other than just an employer, such as a product manufacturer, and causes injury. In such specific circumstances, an employee might be able to sue their employer outside of workers' compensation.
Question 5: Employer's liability insurance provides two advantages over workers' compensation insurance, despite the fact that the employee must establish fault. Which two claims categories would not be covered by workers' compensation coverage but would fall under employer liability coverage?
- Dual capacity claims and third-party-over claims (Correct answer)
- Third-party-over claims and bodily injury
- Third-party claims and loss of wages
- Dual capacity claims and bodily injury
Correct answer: Dual capacity claims and third-party-over claims
Employer's liability insurance covers situations where an employee can sue their employer for work-related injuries outside of workers' compensation. Dual capacity claims arise when the employer acts in a separate capacity (e.g., as a product manufacturer), while third-party-over claims occur when an employee sues a third party, and that third party then sues the employer for contribution or indemnity. These specific scenarios are typically excluded from workers' compensation but covered by employer's liability.
Question 6: Which exception to the exclusive remedy approach requires employees to demonstrate employer negligence in order to receive compensation for an accident sustained at work?
- Worker’s exemption laws
- Employer’s liability (Correct answer)
- Employee liability
- No-fault employee laws
Correct answer: Employer’s liability
Employer's liability insurance provides coverage for employers when employees sue them for work-related injuries, typically when workers' compensation does not apply due to an exception to the exclusive remedy rule. Unlike workers' compensation, which is a no-fault system, employer's liability requires the employee to prove the employer's negligence caused the injury to receive compensation. This makes it an exception to the exclusive remedy approach.
Question 7: Does non-binding arbitration always produce a "winner" at the end?
- Yes, the parties must leave the proceedings with a final winner or find a new arbitrator
- No, the “winner” must still win in a court of law
- Yes, the “winner” is final in non-binding arbitration
- No, the non-winning party does not have to accept the arbitrator’s decision (Correct answer)
Correct answer: No, the non-winning party does not have to accept the arbitrator’s decision
Non-binding arbitration means that the arbitrator's decision is merely advisory and not legally enforceable. The parties are not obligated to accept the outcome and can choose to proceed to litigation if they are not satisfied. Therefore, it does not always produce a 'winner' in the sense of a final, accepted resolution, as either party can reject the decision.
Free Property & Casualty Insurance License Trivia Questions and Answers
Which kind of arbitration has a final decision?