Trivia Flashcards

Which federal program provides flood insurance to property owners in participating communities?

Answer: National Flood Insurance Program (NFIP)

The NFIP, managed by FEMA, offers federally backed flood insurance to homeowners, renters, and businesses in participating communities.

An insured has a $200,000 home insured for only $120,000 with an 80% coinsurance requirement. A covered loss of $40,000 occurs. How much will the insurer pay (ignoring deductibles)?

Answer: $30,000

The coinsurance formula: ($120,000 ÷ $160,000 required) × $40,000 = 0.75 × $40,000 = $30,000.

Which coverage on a personal auto policy pays for damage to the insured's own vehicle caused by perils other than collision, such as hail or vandalism?

Answer: Comprehensive (Other than Collision)

Comprehensive (OTC) covers non-collision losses such as fire, theft, hail, flooding, and vandalism to the insured vehicle.

What is a 'named insured' on a property and casualty policy?

Answer: The person or entity specifically listed on the declarations page as the policyholder

The named insured is the person or entity whose name appears on the declarations page and has the broadest rights under the policy.

Which of the following best describes 'moral hazard' in insurance?

Answer: The tendency of dishonest character to increase the likelihood of fraud or exaggerated claims

Moral hazard refers to the increased risk of loss due to the dishonest or fraudulent character or intent of the insured.

Under a homeowners policy, personal property belonging to the insured is typically covered:

Answer: Worldwide on a named-perils basis under Coverage C

Coverage C of a standard homeowners policy covers personal property on a named-perils basis anywhere in the world.

What does 'pro rata cancellation' mean when an insurance policy is cancelled?

Answer: The refund is calculated based on the exact proportion of the unused policy period

A pro rata cancellation refunds the exact unearned portion of the premium with no penalty.