Practice Quiz- Chapter 1: General Insurance

What documentation grants express authority to an agent?

AGENT'S CONTRACT with the PRINCIPAL.

Which of the following types of agent authority is also called "perceived authority"?

APPARENT

The risk management technique that is used to prevent a specific loss by not exposing oneself to that activity is called?

AVOIDANCE

The document that indicates that an insurer has been approved and is authorized to transact insurance in a particular state is known as?

CERTIFICATE of AUTHORITY

Which of the following is NOT an essential element of an insurance contract?

COUNTEROFFER

Which of the following are the authorities that an agent can hold?

EXPRESS and IMPLIED

In insurance transactions, fiduciary responsibility means?

HANDLING insurer FUNDS in a TRUST CAPACITY.

Events or conditions that increase the chances of an insured loss occurring are referred to as?

HAZARDS

The insurer may suspect that a moral hazard exists if the policyholder?

Is NOT HONEST about his HEALTH on an APPLICATION for insurance.

Who might receive dividends from a mutual insurer?

POLICYHOLDERS

Which of the following is the most common way to transfer risk?

PURCHASE INSURANCE

If a court ordered payment for a loss that was not covered in the policy even if it was clearly worded, it would be an example of which legal concept?

REASONABLE EXPECTATIONS

Which type of insurance is based on mutual agreements among subscribers?

RECIPROCAL INSURANCE

Adverse selection is a concept best described as?

RISKS with HIGHER PROBABILITY of LOSS SEEKING INSURANCE more OFTEN than other risks.

If only one party to an insurance contract has made a legally enforceable promise, what kind of contract is that?

UNILATERAL