GI Quiz

What information can be collected and how the information can be used

Fair Credit Reporting Act

Implied

Is NOT stated in an agent's contract but is required for the agent to conduct business.

Negative info - Fair Credit Reporting

1. Failure to pay off a loan 2. Tax delinquencies 3. Late payments

What company produces evaluations of insurer financial status

1. AM Best 2. Fitch 3. Standard & Poor 4. Moody's 5. Weiss

If the consumer requests additional information concerning an investigative Consumer Report, how long does the insurer/reporting agency have to reply?

5 days

Punitive damages

A form of punishment, intended to serve as an example to others to discourage undesirable behavior.

Risk retention Group (RRG)

An insurance organization that most often addresses a commercial casualty concern

An agent accepts the premium payment 35 days after it is due, telling the insured that there will not be a problem keeping the policy in force. This is an example of what type of agent authority?

Apparent (In fact, the agent has no such power).

Victors is a producer/agent for the RU Covers insurance company. She represents only that company and is compensated by commissions paid by the company. Which type of producer/agent is Victoria?

Both Captive and Exclusive producer .

An insurer neglects to pay a legitimate claim that is cover under the terms of the policy. What insurance principles has the insurer violated?

Consideration. The binding force in any contract is consideration. Insured - payment of premiums. Insurer - the promise to pay in the event of loss.

Adhesion contract

Contract prepared by insurer and accepted or rejected by the insured . No negotiation.

Stock insurance companies

Dividends income taxable. Dividends at the end of the year. The company is owned by stockholders.

Aleatory

Exchange of unequal values

Difference between Gov't insurers and private insurers

Gov't programs are funded with taxes and serve national and state social purposes.

Courts will interpret any ambiguity in an insurance contract

In favor of the insured.

Conditional

In order for the contract to be enforceable, it requires both of the insured and insurer meet certain conditions.

The pro rata liability clause is designed to protect the principle of

Indemnity

Loss

Is what insurance is contract by which one seeks to protect another from it.

Domestic

It's an insurance company that has been formed under the laws of this state.

For the reported losses of an insured group to become more likely to equal the statistical probability of loss for that particular class, an insured group must become

Larger

Independent producers

Own the expirations of the policies they write meaning they may place that business with another insurer upon renewal if in the best interest of the client.

Risk retention Group (RRG)

Products liability may be written by RRG, NOT personal liability or worker Compensation.

The fair credit reporting Act

Protects consumers against the circulation of inaccurate or obsolete personal or financial information.

Unilateral contract

The insured is not legally bound to do anything. The insurer, however, must pay losses covered by the policy.

Under the Fair Credit Reporting Act, if the consumer challenges the correctness if the info containing his report, the reporting agency must

Respond to the consumer's complaint.

Reciprocal

Risk sharing arrangements.

Adverse selection

Risk with higher probability of loss seeking insurance more often than other risks.

The Indemnity

States that insurer will only pay for the actual loss of the insured.

What is the maximum penalty for habitual willful noncompliance with the Fair Credit Report Act?

Subject to a penalty of up to $2500

Peril

The Cause of loss insured against

What is an example of Apparent Authority of an agent appointed by an insurer.

The agent accepts a premium payment after the end of the grace period.

In insurance, an Offer is usually made when

The application is submitted.

Reciprocal insurance exchange

The attorney-in fact manages the exchange.

Express authoritity

The authority granted to an agent through the agent's contract.

An agent or producer acts on behalf of

The principal/insurance company

For the purpose of insurance, risk is defined as

The uncertainty or chance of loss.

An insurance company receives an application with some information Miranda issues the policy anyway. What is this called?

Waiver.

Guaranteed replacement cost

Will pay even if this replacement is more expensive than the limit of the contract.

Elements of insurability

1. Loss must be expected 2. Loss is calculable 3. Risk of loss must represent a financial hardship.

Government health insurance program

1. Medicaid 2. Medicare 3. Old-age, Survivors & disability insurance (Social Security)

Risk retention

1. To fund losses that cannot be insured. 2. To reduce expenses improve cash flow. 3. To increase control of claim reserving and claims settlements

Self-insuring

A person or entity develops a formal program that identifies, evaluates, and funds its losses as an alternative to purchasing insurance.

Authorities that an agent can hold

Express and implied

Warranty

Is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract.

Pure risk

A situation in which a person can only lose or have no change represents.

Certificate of authority

A state issued document empowering an insurance company to write contracts of insurance and perform certain business.

If an insurer meets the state's financial requirements and is approved to transact business in the state, it is considered to be

Admitted

What documentation grants express authority to an agent?

Agent's contract with the principal.

Consumer report

Will provide the underwriter with the information about an insurance applicant's credit, character, reputation, or habits.

A stock insurer is defined as an insurer

With its capital divided into shares and owned by its stockholders.