Trivia Flashcards

Which type of insurance policy covers the insured's legal liability for bodily injury or property damage caused to third parties?

Answer: Liability coverage

Liability coverage protects the insured against claims made by third parties for bodily injury or property damage the insured caused.

What does the term 'subrogation' mean in property and casualty insurance?

Answer: The insurer's right to pursue a third party that caused an insurance loss

Subrogation gives the insurer the right to recover claim payments from the responsible third party after compensating the insured.

An insured's home is destroyed by fire. Under a standard homeowners policy, which coverage pays for temporary housing while repairs are made?

Answer: Coverage D – Loss of Use

Coverage D (Loss of Use) pays additional living expenses when a covered loss makes the home uninhabitable.

Which of the following perils is typically EXCLUDED from a standard homeowners policy?

Answer: Flood

Flood is a standard exclusion in homeowners policies; separate coverage must be purchased through the NFIP or a private insurer.

Under the principle of indemnity, the purpose of insurance is to:

Answer: Restore the insured to the same financial position as before the loss

Indemnity means the insurer restores the insured to their pre-loss financial condition, no better and no worse.

A personal auto policy's collision coverage pays for damage to the insured vehicle caused by:

Answer: Contact with another vehicle or object

Collision coverage applies when the insured vehicle strikes or is struck by another vehicle or object, regardless of fault.

What is a 'binder' in the context of property and casualty insurance?

Answer: A temporary agreement providing coverage until a formal policy is issued

A binder is a temporary contract that provides insurance coverage while the formal policy is being prepared and issued.