General Insurance 10% (1 of 10)
What are the four elements of a legal contract?
Agreement (offer and acceptance), Consideration, Competent parties, Legal purpose
An insurance company that has its domicile in another country is classified as what?
An alien insurer
What is a Direct Writer?
An insurance company whose products are sold by licenses producers that are employees of the company.
An insurer is classified as a foreign company if it is headquartered where?
Another U.S. state or U.S territory
Which type of insurance company is owned by its customers (policyholders)?
Mutual Company
An insurer that has NOT received a Certificate of Authority from the Utah Insurance Department--but is allowed to sell Surplus Lines insurance-- is called what?
Non-admitted insurer; also called an unauthorized insurer.
A guest in Henry's home was injured when she slipped on a banana peel. Slipping on the banana peel is considered what?
Peril, also known as the cause of loss.
What is the type of risk in which there is only a chance of loss and no change of gain?
Pure Risk. For example, the chance of being in a car accident or a house burning down.
What is indemnity?
To make whole or to reimburse someone after a loss.
What term describes the fact that both the insurer and the insured must rely on each other to have integrity, provide honest information, and trust that there be no misrepresentation, concealment, or fraud?
Utmost Good Faith
What are the three levels of producer authority?
express, implied, apparent
There is ice on the sidewalk in front of a grocery store. The ice is considered what?
A hazard; something that increases the chance of loss.
What is the difference between a Representation and a Warranty?
A representation is a statement one makes which he or she believes to be true to the best of his or her ability. A Warranty is a statement one makes which he or she knows (or should know) to be true.
An insured paid the premium and provided information to the insurer. In return, the insurer provided insurance protection. These are examples of which element of a legal contract?
Consideration. Each party must give something of value to the other party.
A unit of measurement, that measures the amount of risk, is known as what?
Exposure. For example, the number of miles driven or the square footage of a building.
A party in an insurance contract has engaged in concealment if he or she has done what?
Intentionally withheld (hid) material (important) information.
Why is insurance considered to be an Aleatory contract?
The outcome of the insurance contract is dependent on chance or uncertain events that are beyond the control of both parties.
A producer accepted a late payment after the grace period and incorrectly told the customer that she still has coverage (even though the policy has lapsed). This is an example of which level of authority?
Apparent Authority. This authority is based on assumption or appearance.
Which type of insurer provides group insurance to the members of a non-profit, religious, or charitable organization?
Fraternal Benefit Society
Insurance for insurance companies that protects them against having too much risk is called what?
Reinsurance
Having a deductible, not buying insurance, and being self-insured are examples of which method of handling risk?
Risk Retention
Purchasing an insurance policy is which method of handling risk?
Risk Transfer. Insurance is the transfer of risk to an insurance company.
Which type of insurance company is owned by investors, also known as shareholders?
Stock Company
What is express authority?
The authority given to a producer that is written in the contract between the insurer and the producer.
What is Moral Hazard?
The increased chance of loss due to intentional wrongdoing (e.g. lying, stealing, arson.)
What is a Morale hazard?
The increased chance of loss due to the careless behavior (e.g. driving fast, texting while driving, smoking in bed.)
A larger sample size leads to more predictable results. This is known as what?
The law of large numbers.