Geico Assessment Test Insurance Concepts

Question 1

What is subrogation in insurance?

Accepted Answer

The process where an insurer seeks reimbursement from the at-fault party after paying a claim

Answer

After paying a claim, the insurer may pursue the at-fault party to recover the amount paid, protecting both the insurer and keeping premiums lower.

Question 2

What is an insurance binder?

Accepted Answer

A temporary agreement providing immediate coverage until the formal policy is issued

Answer

A binder provides immediate proof of coverage while the full policy is being prepared, typically valid for 30-90 days.

Question 3

What is an insurance endorsement?

Accepted Answer

A modification or addition to an existing insurance policy that changes its coverage terms

Answer

Endorsements (riders) add, remove, or modify coverage on an existing policy, allowing customization without issuing a new policy.

Question 4

What is the difference between replacement cost and actual cash value?

Accepted Answer

Replacement cost pays to replace the item at current prices; actual cash value deducts depreciation

Answer

Replacement cost covers the full cost to replace an item with a new equivalent. Actual cash value subtracts depreciation, paying less for older items.

Question 5

What is umbrella insurance?

Accepted Answer

Extra liability coverage that extends beyond the limits of your auto or home policy

Answer

Umbrella insurance provides additional liability protection above and beyond what standard policies cover, typically in $1 million increments.

Geico Assessment Test Practice Test

Geico Assessment Test Practice Test

Geico Assessment Test Insurance Concepts