Ch21 Professional Liability Insurance Exam Questions

Chapter 21 Professional Liability Insurance

Multiple Choice

1. A contract in which the insurer agrees to assume certain risks of the insured for consideration is a(n) ___________.

a. premium

b. policyholder

c. insurance policy

d. risk

2. A policy that covers all claims that may arise out of a policy period is a ___________.

a. claims-made policy

b. malpractice insurance

c. insurance policy

d. occurrence policy

3. A policy that covers only those claims made or reported during the policy year is a ___________.

a. claims-made policy

b. malpractice insurance policy

c. insurance policy

d. occurrence policy

4. Under an insurance policy with a coverage of $50,000/$120,000, with damages totaling $60,000 in a lawsuit for plaintiff 1 and $10,000 for plaintiff 2, the insured is responsible for ___________.

a. $60,000

b. $10,000

c. $50,000

d. $40,000

5. In the above lawsuit, the insurance carrier is responsible for ___________.

a. $60,000

b. $10,000

c. $40,000

d. $50,000

6. An insurance policy contains the elements of ___________.

a. identification of the risks covered

b. the specific amount payable

c. the specified occurrence

d. all of the above

7. The possibility that a loss will occur is a/an ___________.

a. insurance policy

b. risk

c. claims-made policy

d. liability

8. A hospital can be found liable for the negligence of a nurse on the basis of (the/a) ___________.

a. respondeat superior

b. independent contractor

c. borrowed servant doctrine

d. independent negligence

9. Insurance carriers in some states are prohibited from covering awards for ___________.

a. compensatory damages

b. punitive damages

c. acute care

d. long-term care

10. Insurers do not, as a rule, provide coverage for ___________.

a. intentional torts

b. negligent torts

c. malpractice

d. unintentional torts

11. Insurance companies are required by the laws of the different states to issue only policies that contain certain mandated provisions ___________.

a. to maintain certain financial reserves

b. to maintain certain financial reserves to guarantee to policyholders that their expectations will be met when coverage is needed

c. to guarantee to policyholders that their expectations will be met when coverage is needed for criminal activity

d. to guarantee to policyholders that their expectations will be met

12. The basic underlying concept of insurance is ___________.

a. to spread the risk by writing coverage for a large pool of individuals

b. writing coverage to return a profit to shareholders

c. to be able to meet claims and return profits to the company’s shareholders

d. to spread risk by writing coverage for a large enough pool of individuals so that the premium structure has been established correctly and the prediction of claims are made accurately and the company can be able to finance those claims and return a profit to its shareholders

13. A risk is the possibility that ___________.

a. a loss will occur

b. the insurance carrier will provide security against any loss

c. a loss will occur and the insurance carrier will compensate for the damages based on policy limits

d. the insurer will prevent or hinder the occurrence of all losses

14. A(n) ___________ policy covers awards over the amount provided in the basic policy coverage.

a. umbrella

b. claims made

c. occurrence

d. tail

15. A policy that provides for an uninterrupted extension of an insurance policy period is a(n) ___________.

a. umbrella

b. tail

c. occurrence

d. claims mad

16. Sexual assault does not constitute rendering professional services; ___________.

a. therefore, coverage provisions of such insurance policies is unlimited

b. therefore, malpractice insurers are required to indemnify the insured for liability resulting from the sexual assault

c. therefore, malpractice insurers cover the insured for liability resulting from the sexual assault.

d. therefore, malpractice insurers are not required to indemnify the insured for liability resulting from the sexual assault

17. When the insured becomes aware that an injury has occurred as a result of acts covered under the contract, ___________.

a. the insured must notify the insurance company on a timely basis as to the covered incident occurrence and within the terms of the contract

b. notice must not be provided to the carrier

c. notice need not be oral or written, regardless of what is specified in the policy

d. the policy holder at the time of the covered incident need not report the incident to the carrier until an agreement is reached as to any liability the policy holder may be liable for, until such time as the court determines the amount due from the policy holder

18. The right of a person who pays another’s debt to be substituted for all rights in relation to the debt is referred to as ___________.

a. claims made

b. assignment

c. subrogation

d. notice of claim

19. When a health care facility no longer purchases a policy of malpractice insurance but instead periodically sets aside a certain amount of its own funds as a reserve against malpractice losses and expenses, it ___________.

a. seeks a unique way to provide coverage

b. selects a new insurer

c. purchases off-market insurance

d. self-insures

20. Once a claim is settled, the plaintiff ___________.

a. continues to maintain a right of action against the defendant

b. generally signs a release surrendering his or her right of action against the defendant

c. can file a restraint order

d. can file for summary judgment

21. A health care organization ___________.

a. can require its medical staff to show evidence of professional malpractice insurance

b. cannot require its medical staff to show evidence of professional malpractice insurance

c. can require its medical staff to show evidence of home insurance

d. can require its medical staff to show evidence expired malpractice insurance

22. Insurance coverage for officers and directors of a corporation should include indemnification, to the extent possible by law, for all liabilities and expenses including ___________.

a. when it can be shown that the trustee failed to act in good faith

b. those that are not reasonably incurred as the result of any legal proceeding stemming from and within the scope of his or her responsibilities

c. when it can be shown that the trustee acted in good faith and within the scope of his or her responsibilities

d. all of the above

23. Professional liability policies vary in ___________.

a. coverage exclusions for home insurance

b. broadness and exclusions from coverage, as well as the company’s interpretation of the language of the contract

c. interpretations a company places on the language of the contract based on the company’s for-profit or non-profit status

d. exclusions from coverage but not in scope of coverage

24. Malpractice insurance coverage is especially important for ___________.

a. all health professionals

b. an independent contractor providing a service in a patient’s home

c. health professionals working for an agency or registry

d. most service workers

25. Medical malpractice insurance is affected by ___________.

a. nature of the auto insurance market

b. inflation

c. new technology

d. cyclical nature of the insurance market, new technology, and treatments