Insurance Principles and Coverages Flashcards
7 cards from real TRIP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Insurance Principles and Coverages flashcards as text
Under a Motor Truck Cargo policy, which valuation basis compensates the insured for the invoice value of goods plus freight charges?
Answer: Shipper's invoice value plus freight
Many cargo policies value goods at the shipper's invoice price plus freight charges, ensuring the shipper recovers the full cost of goods in transit.
What is the purpose of a 'waiver of subrogation' endorsement on a commercial auto policy?
Answer: It prevents the insurer from seeking recovery from a specified third party after paying a claim
A waiver of subrogation endorsement contractually prohibits the insurer from pursuing recovery against a named third party, often required by contract between business partners.
Which condition in a commercial insurance policy requires the insured to take reasonable steps to protect property from further damage after a loss?
Answer: Duties after loss — protect property
The duties-after-loss condition obligates the insured to mitigate additional damage following a covered loss, such as covering a damaged roof to prevent water intrusion.
A trucker's policy has a $500 deductible for physical damage. The insured suffers $3,200 in collision damage. How much does the insurer pay?
Answer: $2,700
The insurer pays the loss amount minus the deductible: $3,200 − $500 = $2,700.
Which type of transportation policy covers goods owned by the insured while they are being shipped by common carriers, railroads, or airlines?
Answer: Inland marine — shipper's interest policy
A shipper's interest (inland marine) policy covers the cargo owner's goods while in the custody of various carriers during domestic transit.
What term describes the immediate cause that directly produces a loss without which the loss would not have occurred?
Answer: Proximate cause
Proximate cause is the dominant, direct cause of a loss, which insurers use to determine whether coverage applies under the policy.
A commercial auto policy's 'other insurance' clause says coverage is excess over any other valid insurance. What does this mean for a covered loss?
Answer: The policy only pays after all other applicable insurance has been exhausted
An excess 'other insurance' clause makes the policy secondary, paying only the remaining loss after primary policies have paid their limits.