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Exam 10: Analysis of Insurance Contracts

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Question 31

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The purpose of a coordination-of-benefits provision in group health insurance plans is to

A) determine which plan pays first if more than one plan covers a loss.
B) determine which health care provider an insured may use for his or her care.
C) determine if the calendar-year deductible has been satisfied by the insured.
D) determine if the employee is eligible for coverage under the group health plan.

E) B) and D)
F) A) and B)

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Question 32

Multiple Choice

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Kate is covered under her employer's group health plan. She is also covered as a dependent under her husband's group health plan. Under the usual coordination-of-benefits provision, how will each company respond to a claim filed by Kate?

A) Kate's plan is primary, and her husband's plan is excess.
B) Her husband's plan is primary, and Kate's plan is excess.
C) The plan of the person with the birthday earliest in the year pays first, and the other plan is excess.
D) Each plan will pay 50 percent of the claim.

E) None of the above
F) B) and D)

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Question 33

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David owns a commercial building with a replacement cost of $4 million. The building is insured on a replacement cost basis for $2.4 million under a fire insurance policy that has an 80 percent coinsurance clause. How much will David collect if the building sustains a covered fire loss with a replacement cost of $80,000?

Helen and John both own automobiles on which they carry liability insurance. If Helen is negligent and has an accident while driving John's car with his permission, how will each insurer respond to any liability judgment against Helen?

The deductible used for automobile collision losses is an example of a(n)

Which of the following statements about "open-perils" coverage is (are) true? I.All losses are covered except those losses specifically excluded. II.The burden of proof is on the insured to prove that a loss is covered.

Jane purchased a $50,000 liability insurance policy from Insurer A. Fearing that she did not have enough liability insurance, she purchased an additional $100,000 of liability coverage from Insurer B. As a result of a negligent act, Jane was ordered to pay $75,000 in damages. Assuming the coverage from Insurer A is primary and the coverage from Insurer B is excess, how will this claim be settled?

Purposes of the coinsurance clause in health insurance contracts include which of the following? I.To reduce premiums. II.To exclude coverage for certain medical procedures.

Kevin has three liability policies which provide for contribution by equal shares if other insurance applies to a loss. How much will each policy pay for a $3,000,000 liability judgment if policy A provides $500,000 of coverage, policy B provides $1,000,000 of coverage, and policy C provides $3,000,000 of coverage?