UNIVERSITY OF ILLINOIS AT URBANA CHAMPAIGN College of Business D E PAR T M E N T O F F I NAN C E Finance 230 1 Which guest speaker stated that common sense was an important skill for an underwriter A B C D E 2 Sample First Exam Dean Turner Kenney Davenport Jeff Myers Jeff Brown Sue Myers According to Dean Turner which of the following would be considered soft fraud I II III IV Exaggerated claims Staged accidents Arson Fake thefts A B C D E I only I and II I and IV II III and IV II and IV For the next eight 8 questions assume that you have the State Farm Car Policy handed out in class including the coverages and limits shown on the Declarations page Also assume that the 2001 Sebring is the only car you own unless the question indicates that you purchase another vehicle and that any situation involving borrowing cars is done with permission unless otherwise stated For each situation calculate how much your insurance policy would pay in total Unless otherwise indicated assume the loss occurs during the policy period Do not assume facts not given in the question 3 You are driving your car when you lose control and run into a telephone pole You are injured in the accident Your medical bills are 21 000 It costs 6 000 to repair your car A B C D E 0 25 000 26 900 27 000 None of the above 4 You are driving your spouse s car when you hit a pedestrian Your spouse has insurance with Allstate with the same coverages and limits you have on your car The pedestrian sues you and wins a bodily injury award of 160 000 A B C D E 5 Your 28 year old daughter who does not live with you borrows your car While driving it she is hit from behind by an uninsured driver and seriously injured She incurs 60 000 in medical bills and would be entitled to a 200 000 bodily injury award if the other driver had been insured A B C D E 6 0 25 000 60 000 125 000 None of the above Your car is stolen You immediately report the loss to the insurance company You rent a car that costs 25 per day Your car is never recovered State Farm offers to pay you for the loss 6 days after it was stolen The ACV of your car was 12 000 A B C D E 7 0 60 000 100 000 160 000 None of the above 11 900 12 000 12 064 12 150 None of the above You are walking though a parking lot when you are hit by a car and seriously injured The driver only carries 20 40 15 liability coverage You incur 20 000 in medical bills and would be entitled to a bodily injury award of 75 000 A B C D E 0 20 000 25 000 75 000 None of the above 8 Your 12 year old son who lives with you is getting out of your car one day when he trips over the curb and breaks his ankle He incurs 35 000 in medical bills A B C D E 9 You borrow your neighbor s car Your neighbor has insurance coverage with GEICO but only has liability coverage with 50 100 25 limits You lose control of the car and run into a tree It costs 14 000 to repair your neighbor s car The ACV of the car is 12 000 A B C D E 10 12 0 11 900 13 900 14 000 None of the above Your 16 year old son who lives with you is driving your car when he runs out of gas He calls a service station that delivers 3 gallons of gas The gas costs 5 The service station charges 25 for delivering the gas A B C D E 11 0 25 000 35 000 100 000 None of the above 0 5 25 30 None of the above An insurance company with a complaint ratio of 1 00 means A B C D It is insolvent One complaint has been filed for every 1000 policies issued Every complaint that has been filed has been a valid complaint One complaint has been filed for every 1 million of premiums written E None of the above For which rating agency would a rating of B be acceptable for a conservative insurance buyer A B C D A M Best Duff Phelps Moody s Standard and Poor s E 13 Constructing a guard rail between your new garage and the parking lot of the tavern next door represents which of the following methods of handling pure risk A B C D E 14 Large number of exposure units Fortuitous losses Catastrophe unlikely Definite losses Speculative losses A 12 year old girl cannot be held to a contract she signed with a modeling agency because which requirement of a contract would be violated A B C D E 16 Avoidance Loss control Retention Transfer None of the above After viewing the Blair Witch Project you decide to buy insurance against a witch casting a spell on you Unfortunately you are unable to find a company willing to insure you for this peril Which ideal requisite for insurability is most seriously violated by this coverage A B C D E 15 Weiss Offer and acceptance Consideration Competent parties Legal purpose None of the above On page 5 of the State Farm Car Policy the policy states The insured must give us or one of our agents written notice of the accident or loss as soon as reasonably possible Which part of the contract is this statement A B C D E Declarations Insuring clause Exclusions Conditions Endorsements For the next 4 questions use the coverages described in the U of I Student Health Insurance Plan for Undergraduates to determine how much your student health policy will pay in the following situations and assume the following 1 2 3 4 5 6 17 The average semi private room and board rate charged by each hospital is 500 All treatments are medically necessary Unless otherwise indicated all charges are considered to be the Usual and Customary fees Each situation is the only claim you have ever had while insured under this Insurance Plan All treatment is provided by plan provider hospitals or facilities and licensed providers Unless otherwise indicated each loss occurred during the academic year You are hospitalized for 50 days for a psychiatric condition You are billed 500 per day for room and board Your psychiatrist visits you once each day during your stay You are billed 100 per visit A B C D E 18 You visit a doctor for a routine physical exam The doctor takes x rays and performs some lab tests You are billed 100 for the visit to the doctor 300 for the x rays and 200 for the lab tests A B C D E 19 0 20 000 24 475 26 900 None of …