Insurance Awareness Questions – Set 16

Dear Aspirants,
Welcome to Insurance Awareness Questions in AffairsCloud.com. Here we are covering some important Insurance Awareness Questions & Answers with Explanations. Do study this questions thoroughly as it may prove to be helpful in upcoming exams and also in interviews.

1. A period of up to one month during which the purchaser of an annuity can cancel the contract without penalty is known as ______
   A. Lock Period
   B. Demutualization
   C. Annuitization
   D. Free Lock Period
   
   Answer & Explanation

   D. Free Lock Period
   Explanation:
   A period where a new insurance policy owner is able to terminate the contract without penalties such as surrender charges is termed as Free Lock Period.
   
   
2. An auto-mobile insurance option, available in some states, that covers the difference between a car’s actual cash value when it is stolen or wrecked and the amount the consumer owes the leasing or finance company is called ______
   A. Double Insurance
   B. Commercial Insurance
   C. Industrial Insurance
   D. Gap Insurance
   
   Answer & Explanation

   D. Gap Insurance
   Explanation:
   GAP insurance is the difference between the actual cash value of a vehicle and the balance still owed on the financing (car loan, lease). GAP coverage is mainly used on new and used small vehicles (cars and trucks) and heavy trucks.
   
   
3. Which of the following insurance is mainly used for leased cars?
   A. Double Insurance
   B. Commercial Insurance
   C. Industrial Insurance
   D. Gap Insurance
   
   Answer & Explanation

   D. Gap Insurance
   Explanation:
   GAP insurance is the difference between the actual cash value of a vehicle and the balance still owed on the financing (car loan, lease). GAP coverage is mainly used on new and used small vehicles (cars and trucks) and heavy trucks.
   
   
4. A legal concept that holds gun manufacturers liable for the cost of injuries caused by guns. Several cities have filed lawsuits based on this concept is termed as ______
   A. Gun Liability
   B. Commercial Insurance
   C. Industrial Insurance
   D. Gap Insurance
   
   Answer & Explanation

   A. Gun Liability
   Explanation:
   Gun liability insurance as a means to offset the economic costs of gun violence.
   
   
5. _________ is a coverage for glass breakage caused by all risks.
   A. Glass Insurance
   B. Commercial Insurance
   C. Industrial Insurance
   D. Gap Insurance
   
   Answer & Explanation

   A. Glass Insurance
   Explanation:
   An insurance policy that provides coverage for damage to an expensive piece of glass.
   
   
6. __________ is a coverage for expenses incurred as the result of an identity theft.
   A. Glass Insurance
   B. Commercial Insurance
   C. Identity Theft Insurance
   D. Gap Insurance
   
   Answer & Explanation

   C. Identity Theft Insurance
   Explanation:
   Identity theft insurance means any insurance policy that pays benefits for costs, including travel costs, notary fees, and postage costs, lost wages, and legal fees and expenses associated with efforts to correct and ameliorate the effects and results of identity theft of the insured individual.
   
   
7. A provision added to a home owners insurance policy that automatically adjusts the coverage limit on the dwelling each time the policy is renewed to reflect current construction costs is termed as _____
   A. Double Insurance
   B. Inflation Guard Clause
   C. Industrial Insurance
   D. Gap Insurance
   
   Answer & Explanation

   B. Inflation Guard Clause
   Explanation:
   A provision that gradually and continuously increases the limit of insurance by a specified percentage over a specified time period.
   
   
8. This broad type of coverage was developed for shipments that do not involve ocean transport is known as ______
   A. Double Insurance
   B. Inflation Guard Clause
   C. Inland Marine Insurance
   D. Gap Insurance
   
   Answer & Explanation

   C. Inland Marine Insurance
   Explanation:
   Insurance provided to cover the loss to movable or moving property that is a subset of ocean marine insurance.
   
   
9. An organization such as a bank or insurance company that buys and sells large quantities of securities is called __________
   A. Major Investor
   B. Minor Investor
   C. Institutional Investor
   D. Giant
   
   Answer & Explanation

   C. Institutional Investor
   Explanation:
   Institutional investor is a term for entities which pool money to purchase securities, real property, and other investment assets or originate loans. Institutional investors include banks, insurance companies, pensions, hedge funds, investment advisors, endowments, and mutual funds.
   
   
10. ________ is a coverage designed to protect businesses from liabilities that arise from the conducting of business over the Internet, including copyright infringement, defamation, and violation of privacy.
    A. Internet Liability Insurance
    B. Inflation Guard Clause
    C. Inland Marine Insurance
    D. Gap Insurance
    
    Answer & Explanation

    A. Internet Liability Insurance
    Explanation:
    Internet liability insurance covers very specific wrongful acts as defined by the policy forms. Here are some examples of such coverages: Infringement or unauthorized use of any advertising material, copyright, slogan, trademark, etc., through the Internet.
    
    

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