APP APP Insurance and Indemnification Strategies 2

Question 1

Which of the following best describes 'insurable interest' as it relates to asset protection insurance?

Accepted Answer

A financial stake in the insured subject matter that would cause loss if it were damaged

Answer

Insurable interest requires the policyholder to have a financial stake in what is being insured, ensuring insurance is used for protection rather than speculation.

Question 2

When structuring an LLC for asset protection, which insurance strategy best supplements the entity's liability shield?

Accepted Answer

Maintaining adequate commercial general liability coverage for the LLC's operations

Answer

Combining an LLC's statutory liability shield with adequate commercial insurance creates layered protection, as the shield alone may not cover all claims.

Question 3

A mutual indemnification clause requires that:

Accepted Answer

Both parties agree to indemnify each other for their respective negligence

Answer

A mutual indemnification clause creates a reciprocal obligation where each party covers the other for losses arising from their own negligence or breach.

Question 4

Which concept describes the maximum amount an insurer will pay under a policy regardless of the actual loss?

Accepted Answer

Policy limit

Answer

A policy limit is the cap on insurer liability, making it essential in asset protection planning to select limits that adequately cover potential exposures.

Question 5

In asset protection planning, 'subrogation' refers to the insurer's right to:

Accepted Answer

Step into the insured's shoes to recover from a negligent third party after paying a claim

Answer

Subrogation allows the insurer to pursue a third party that caused the loss after compensating the insured, preventing the insured from receiving a double recovery.

APP - Asset Protection Professional Certification Practice Test

APP - Asset Protection Professional Certification Practice Test

APP APP Insurance and Indemnification Strategies 2