FundamentalLegalPrinciples

FundamentalLegalPrinciples - Exam Name_ MULTIPLE CHOICE....

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Exam Name___________________________________ MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) 1) Fundamental purposes of the principle of indemnity include which of the following? I. To reduce physical hazards. II. To prevent the insured from profiting from insurance. A) I only B) II only C) both I and II D) neither I nor II 2) 2) Which of the following is a fundamental purpose of the principle of indemnity? A) to minimize physical hazards B) to reduce moral hazard C) to require deductibles in all property insurance policies D) to settle property insurance losses on a replacement cost basis 3) 3) Sam's stereo was destroyed by a fire. The stereo cost $1200 when it was purchased, but a similar new stereo now costs $1800. Assuming the stereo was 50 percent depreciated, what is the actual cash value of Sam's loss? A) $1800 B) $600 C) $1200 D) $900 4) 4) All of the following are exceptions to the principle of indemnity EXCEPT A) valued policies. B) life insurance. C) replacement cost property insurance. D) actual cash value property insurance. 5) 5) Under which of the following rules is actual cash value determined by taking into consideration all relevant factors an expert would use to determine the value of the property? A) the objective value rule B) the circumstantial evidence rule C) the broad evidence rule D) the property indemnity rule 6) 6) A total loss under a valued policy is settled on the basis of the A) actual cash value of the loss. B) replacement value of the loss. C) amount of insurance covering the loss. D) market value of the loss. 7) 7) Which of the following statements describes how losses will be settled if a property insurance policy is written on a replacement cost basis? A) Losses are settled without the applicable deductible. B) The policy is converted to a valued policy. C) Losses are settled without a deduction for depreciation. D) The insurer must replace the damaged or destroyed property in lieu of a cash settlement. 1
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8) 8) Which of the following statements about the principle of insurable interest is (are) true? I. It makes it difficult to measure the amount of an insured's loss. II. It reduces moral hazard. A) I only B) II only C) both I and II D) neither I nor II 9) 9) All of the following will support an insurable interest for purposes of purchasing property and liability insurance EXCEPT A) ties of blood and marriage. B) a creditor - debtor relationship. C) potential legal liability. D) a contract right. 10) 10) Which of the following statements about an insurable interest in life insurance is (are) true? I. It is required of any person named as beneficiary. II. It may result from a pecuniary (financial) interest, even if there is no relationship by marriage or blood. A) I only
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This note was uploaded on 03/21/2011 for the course ECON 400 taught by Professor Shqerat during the Spring '11 term at University of Jordan.

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FundamentalLegalPrinciples - Exam Name_ MULTIPLE CHOICE....

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