#1
What is the purpose of insurance coverage?
To protect against financial loss
ExplanationFinancial protection against loss.
#2
Which of the following is an example of liability insurance?
Auto insurance
ExplanationInsurance covering liabilities from automobile-related incidents.
#3
What is 'deductible' in insurance?
The amount the insured must pay out of pocket before the insurance company pays a claim
ExplanationInitial amount to be paid by the insured before the insurer covers the remainder.
#4
Which type of insurance covers medical expenses and lost wages for employees injured on the job?
Workers' compensation insurance
ExplanationInsurance for work-related injuries' medical costs and lost wages.
#5
What is 'exclusion' in insurance?
A provision that limits coverage under the policy
ExplanationSpecification of situations or items not covered by the policy.
#6
What does 'coverage limit' refer to in insurance?
The maximum amount the insurer will pay for a covered claim
ExplanationMaximum payout for a claim as specified by the policy.
#7
Which type of insurance provides coverage for damage to someone else's property?
Liability insurance
ExplanationInsurance covering damages to third-party properties.
#8
What is 'coinsurance' in insurance?
A provision where the insured and insurer share covered losses in a specified ratio
ExplanationShared coverage of losses between insured and insurer.
#9
Which of the following is typically not covered by a standard homeowners insurance policy?
Flood damage
ExplanationFlood-related damages are generally excluded.
#10
What is 'underwriting' in insurance?
The process of evaluating risk and deciding whether to issue a policy
ExplanationRisk assessment process for policy issuance.
#11
What is an 'umbrella policy' in insurance?
A policy that provides additional liability coverage beyond the limits of other policies
ExplanationAdditional liability coverage exceeding other policies' limits.
#12
What is 'subrogation' in insurance?
The process of an insurer recovering the amount of a claim it has paid to the insured from the person or entity that caused the loss
ExplanationInsurer's pursuit to recover paid claim amounts from liable parties.
#13
What is 'reinsurance' in the insurance industry?
Insurance purchased by insurance companies to limit their own losses
ExplanationInsurers' coverage purchase to mitigate their financial risks.
#14
What is 'moral hazard' in insurance?
The risk that the insured will intentionally cause a loss to collect insurance money
ExplanationRisk of insured causing losses to benefit from insurance.
#15
What is 'cash value' in life insurance?
The amount of money the policy is worth at any given time
ExplanationMonetary value of the life insurance policy.