Question 1

Damages assessed against the negligent party in a tort action sometimes include amounts that are designed to compensate for intangible losses such as pain and suffering. Such damages are called

		exemplary damages.
		punitive damages.
		special damages.
		general damages.
		explicit damages.

1 points

QUESTION 2

A pedestrian injured by an object falling from a building would probably attempt to establish liability on the basis of the doctrine

		comparative negligence.
		respondeat superior.
		caveat lector.
		res ipsa loquitur.
		none of the above.

1 points

QUESTION 3

The doctrine of contributory negligence

		has been replaced in many jurisdictions by the doctrine of comparative negligence.
		is a defense that benefits the injured party.
		is currently applied only in the field of employers liability.
		applies only in the case of automobile accidents.
		actually contributed to the increase in liability damages.
		none of the above.

1 points

QUESTION 4

Liability insurance is concerned primarily with the financial consequences of

		crimes.
		intentional torts.
		unintentional torts.
		unintentional torts which are also crimes.
		contractual torts.
		all of the above.

1 points

QUESTION 5

All of the following statements are true with respect to liability insurance except

		it is commonly referred to as third party coverage.
		the insurer is obligated to pay damages only when the insured is legally liable.
		the injured party has a direct claim against the insurance company.
		the insurer promises to defend any suits involving the type of liability insured.
		none of the above.

1 points

QUESTION 6

Damages assessed against the negligent party in a tort action sometimes include amounts that are designed to punish that party. Such damages are called

		exemplary damages.
		punitive damages.
		special damages.
		general damages.
		explicit damages.

1 points

QUESTION 7

Vicarious liability involves a situation where one person becomes legally liable because of the negligence of another. One of the doctrines upon which vicarious liability may be based is

		negligence per se.
		employee activities.
		sovereign immunity.
		the fellow servant doctrine.
		none of the above.

1 points

QUESTION 8

A drunken driver killed a young boy and injured his father in an automobile accident. The court awarded $10 million in damages to the father. A substantial part of the damages were undoubtedly

		loss of consortium damages.
		special damages.
		general damages.
		punitive damages.
		intangible damages.

1 points

QUESTION 9

In most jurisdictions, a property owner owes the highest degree of care to

		a trespasser.
		a social guest.
		a licensee.
		an invitee.
		the degree of care owed is the same to all.

1 points

QUESTION 10

The application of the rule of strict liability or absolute liability is best shown by

		the employer's liability under workers compensation laws.
		prima facie evidence of negligence.
		res ipsa loquitur.
		respondeat superior.
		the doctrine of last clear chance.

1 points

QUESTION 11

Vicarious liability involves a situation where one person becomes legally liable because of the negligence of another. One of the doctrines upon which vicarious liability may be based is

		negligence per se.
		respondeat superior.
		sovereign immunity.
		the fellow servant doctrine.
		strict liability.
		none of the above.

1 points

QUESTION 12

Lloyd's of London

		is licensed in about half of the states.
		is the parent company of the so-called American Lloyds.
		is a mutual insurance company.
		is a capital stock insurance company.
		is similar in its operation to the New York Stock Exchange.

1 points

QUESTION 13

Multiple line operation

		has been the dominant form of operation in the American insurance industry since about the time of the civil war.
		involves the combination of property insurance, liability insurance, life insurance, and health insurance by a single insurance company.
		was retarded primarily by the reluctance of insurance companies to engage in such operations.
		extends the concept of diversification to the insurance field, permitting the combination of property and liability insurance by a single company.
		none of the above.

1 points

QUESTION 14

The cyclical nature of the U.S. property and liability insurance industry, in which insurance prices and the availability of insurance fluctuate over time

		is evidence of a conspiracy on the part of insurers.
		reflects mismanagement on the part of insurance company executives.
		is gradually changing to a more stable market.
		is evidence that the industry is highly competitive.
		none of the above.

1 points

QUESTION 15

The combined ratio

		predicts future revenue of in insurance company.
		increases when dividends and profitability increase.
		is used because of the accounting principle of matching cannot be used with premium earned and claims paid.
		is affected by investment income.
		of over 100 is desirable.
		increases as premium increases.

1 points

QUESTION 16

Price competition in the insurance industry

		occurs primarily at the insurer level where prices are set.
		occurs at the agency level through the selection of insurers.
		occurs despite the regulated pricing structure.
		is sometimes based on the selectivity an insurer exercises.
		All of the above.

1 points

QUESTION 17

Which of the following is not true with respect to the property and liability insurance industry?

		there are few barriers to entry by new competitors.
		competition has produced changes in market share of competitors over time.
		the field is highly decentralized, with no firm controlling as much as 10% of the market.
		the business is highly cyclical.
		profits have consistently been above those in other industries.

1 points

QUESTION 18

A major difference between stock and mutual insurers is:

		stock insurers are incorporated and mutual insurers are not.
		mutual insurers are not taxed, while stock insurers pay tax.
		stock insurers are owned by their stockholders, while mutual insurers are owned by their policyholders.
		stock insurers pay dividends to policyholders and mutual insurers do not.
		none of the above.

1 points

QUESTION 19

The oldest of the modern fields of insurance is probably

		fire insurance.
		life insurance.
		casualty insurance.
		marine insurance.
		health insurance.

1 points

QUESTION 20

Which of the following is true of brokers and agents?

		brokers are compensated by their clients on a fee basis, while agents receive a commission from the company.
		brokers do not work for the insurer, and therefore cannot bind the company.
		brokers operate primarily in the life insurance field, while agents operate in both the life insurance field and the property and liability field.
		agents may bind a company orally, while brokers have the authority to bind only in writing.
		none of the above.