Free Property & Casualty Insurance License Trivia Questions and Answers

Question 1

Which kind of arbitration has a final decision?

Accepted Answer

Binding Arbitration

Answer

Binding arbitration is a form of alternative dispute resolution where the parties agree in advance to accept the arbitrator's decision as final and legally enforceable. Unlike non-binding arbitration, the outcome cannot be appealed or relitigated in court. This makes it a definitive method for resolving disputes without further legal action.

Question 2

Taylor's home was completely lost after a fire completely destroyed it. In order to examine the damage and possibly get a check to pay his damages, Taylor phoned his insurance company. Taylor was in charge of providing a list of all the damaged personal stuff he lost in the fire to his insurance provider. Taylor added the computer to the list to have the insurance company pay for a replacement even though he was aware it was in his car at the time of the fire and was undamaged. Which risk is Taylor responsible for?

Accepted Answer

Moral hazard

Answer

Moral hazard occurs when an insured intentionally causes or exaggerates a loss to collect insurance benefits. Taylor knowingly added an undamaged computer to his list of lost items to defraud his insurance company. This act of dishonesty and intent to gain from the insurance policy is a classic example of moral hazard.

Question 3

An insured may obstruct subrogation in any of the following methods, EXCEPT:

Accepted Answer

Provide the insurance carrier with complete documentation of the loss

Answer

Subrogation is the insurer's right to recover payment from a third party responsible for a loss after paying the insured. Providing complete documentation of the loss actually assists the insurance carrier in their subrogation efforts, as it helps them build a case against the at-fault party. Obstructing subrogation would involve actions like impairing the investigation or withholding vital details.

Question 4

Can an employee sue their employer under employer liability insurance in addition to making a workers' compensation claim?

Accepted Answer

Yes, under a dual capacity claim

Answer

Workers' compensation is typically the exclusive remedy for employees injured on the job, preventing them from suing their employer for negligence. However, a dual capacity claim is an exception where an employer acts in a capacity other than just an employer, such as a product manufacturer, and causes injury. In such specific circumstances, an employee might be able to sue their employer outside of workers' compensation.

Question 5

Employer's liability insurance provides two advantages over workers' compensation insurance, despite the fact that the employee must establish fault. Which two claims categories would not be covered by workers' compensation coverage but would fall under employer liability coverage?

Accepted Answer

Dual capacity claims and third-party-over claims

Answer

Employer's liability insurance covers situations where an employee can sue their employer for work-related injuries outside of workers' compensation. Dual capacity claims arise when the employer acts in a separate capacity (e.g., as a product manufacturer), while third-party-over claims occur when an employee sues a third party, and that third party then sues the employer for contribution or indemnity. These specific scenarios are typically excluded from workers' compensation but covered by employer's liability.

Property & Casualty Insurance License Test Practice Test

Property & Casualty Insurance License Test Practice Test

Free Property & Casualty Insurance License Trivia Questions and Answers