Chapter 9

Chapter 9 - Chapter9 FundamentalLegalPrinciples 1)...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 9 Fundamental Legal Principles 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 Answer: B Question Status: Previous Edition 2) Which of the following is a fundamental purpose of the principle of indemnity? A) to reduce moral hazard B) to minimize physical hazards C) to settle property insurance losses on a replacement cost basis D) to require deductibles in all property insurance policies Answer: A Question Status: Previous Edition 3) Sam ʹ 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 ʹ s loss? A) $600 B) $900 C) $1200 D) $1800 Answer: B Question Status: Previous Edition 4) All of the following are exceptions to the principle of indemnity EXCEPT A) life insurance. B) valued policies. C) replacement cost property insurance. D) actual cash value property insurance. Answer: D Question Status: Previous Edition Chapter 9 Fundamental Legal Principles 99 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 circumstantial evidence rule B) the broad evidence rule C) the property indemnity rule D) the objective value rule Answer: B Question Status: Previous Edition 6) A total loss under a valued policy is settled on the basis of the A) market value of the loss. B) actual cash value of the loss. C) replacement value of the loss.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
D) amount of insurance covering the loss. Answer: D Question Status: Previous Edition 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) Losses are settled without a deduction for depreciation. C) The insurer must replace the damaged or destroyed property in lieu of a cash settlement. D) The policy is converted to a valued policy. Answer: B Question Status: Previous Edition 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 ʹ s loss. II. It reduces moral hazard. A) I only B) II only C) both I and II D) neither I nor II Answer: B Question Status: Previous Edition 100 Rejda · Principles of Risk Management and Insurance , Tenth Edition 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) potential legal liability.
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 06/15/2011 for the course RIM 3331 taught by Professor Papp during the Spring '11 term at Troy.

Page1 / 9

Chapter 9 - Chapter9 FundamentalLegalPrinciples 1)...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online