Quiz #1

The insuring agreement summarizes the insurers obligations and conditions for loss payment. Which of the following is/are types of insuring agreements

Defined benefits policy and open peril policy

A term that blocks all attempts to change conduct or reassert a right previously waived, and it usually applies after the other party has begun to rely on the conduct or waiver is known as

Estoppel

An insurance policy is an aleatory contract which means

Performance depends on the occurrence of an uncertain event

When a person installs burglar bars and a fire alarm system, what method of managing risks has been undertaken

Reduction

Actual Cash Value means

Replacement cost minus depreciation

When a person decides not to buy insurance because of the cost, what method of handling risk has been undertaken

Risk retention

The Law Of Large Numbers

States that the more examples used to develop a statistics the more reliable the statistic will be

The two major types of insurers in the private sector are

Stock and mutual companies

An insured's right to seek damages from someone at fault may be transferred to the insurer under this policy

Subrogation

All of the following are true about insurable risk

The loss must be catastrophic in nature, the loSS must be large enough to create hardship, the law of large number should apply

A temporary contract of insurance that commits the insurer before a policy is issued

Binder

Which of the following i used to modify an insurance policy from it's original form

Condintions

Which of the following is not an element for the formation of a valid contract

Incompetent parties

The insurance industry deals with those areas of risk where the chance of loss are

Anywhere between 0% and 100%

Concealment is failure of the insurance applicant to reveal a material fact to the insurer. Which of the following statements must be proved before the insurer can deny a claim on the basis of concealment

A concealed fact was known to be material by the insured and Insured intended to defraud the insured

An insurer formed under the law of a state of the United States other than the state where it is licensed, domiciled and charted is

A foreign insurer

Property and liability insurers use different marketing methods. Which of the following are features of the independent agency system

Agents can represent one or more insurers

All are parst of the insurance contract

Declarations, insuring agreement, conditions

Something that increases the chance of a peril occurring is known as

Hazard

The concept of restoring the insured to approximately the same economic position occupied before the loss is called

Indemnity

Who is considered the first party to a insurance company

Insured

Oily rags left to accumulate in the garage is a

Morale hazard

It is assumed that any oral agreements made before contract formation were incorporated into the written contract. Once formed earlier oral evidence will not be admitted in court to change or contradict the contract

Waiver and Estoppel

Careless driving because the driver knows she or he is insured is a

Moral hazard

Open perils or All Risk

Name the exclusions and limitations

Which of the statements about insurance policies are true

Policies are usually personal contracts

Insurance policies are contracts of adhesion which means

Terms of the contract are drawn up by the insurer and the insured simply adheres to the terms

Which of the following would be considered an offer

The applicant submits an application to the company with payment