chap 1 practice questions
Insurance
what do individuals use to transfer their risk of loss to a larger group?
apparent
what type of agent authority is also called perceived authority
estoppel
ABC insurance company received an incomplete application and issues the policy anyway. Six months later ABC realizes the missing information. What term is used that prevents from forcing the policy owner to answer further questions ABC insurance company had waived its right to receive answers to the missing information.
hazards
conditions that increase the chance of a loss are known as
types of insurers domicile
domestic, foreign, and alien
Agreement(offer & acceptance), consideration, competitive parties, and legal purpose
four elements of an insurance contract
unilateral
get insurance policies, the insured is not legally bound to any particular action in the insurance contract, but the insurance is legally obligated to pay losses covered by the policy
authorized or admitted
if an insurer holds a certificate of authority, it's known as what type of insurer
When the insurer approves a prepaid application
in insurance contracts, when does acceptance usually occur?
when the insurance application is submitted
in insurance contracts, when is the offer usually made?
Insurer
in the agent/insurer relationship, who is considered the principal
consideration
something of value that each party gives to another on the part of the insurer is binding
hazard
something that increases the risk of loss
reasonable expectations
term meaning certain expectations for coverage that a reasonable person would have based on sources other than just the policy language
unilateral contract
they once had a contract that means only one party makes an enforceable promise
Express, implied and apparent
three types of agent authority
aleatory
unequal values are exchange between the parties to a contract
speculative
wagering on a sporting event, as known, as what type of risk
agreement, considering, competent parties, and legal purpose
what are the 4 required elements of an insurance contract
Due to chance, definite and measurable, statistically, predictable, not catastrophic, randomly selected
what are the five characteristics of an ideally insurable risk?
avoidance, transfer, sharing, retention, reduction
what are the methods of managing risk?
physical, moral, morale
what are the three types of hazards?
self insuring
what describes when a person develops a formal program, identifying, evaluating, and funding its losses
certificate of authority
what document is required for an insurance company to transact insurance?
to restore an insured to the same financial status as before a loss
what does indemnify mean in insurance?
an absolutely true statement upon which the validity of the policy depends
what is a warranty in an insurance contract?
reinsurance
what is an agreement between a seating insurer, and an assuming assurer
a promise to pay in the event of a loss
what is consideration part of the insurer?
indemnity
what provision states that if a policy allows for greater benefits than the financial loss incurred, the insured may be compensated only for the amount loss
concealment
what term best describes the active withholding material information that would be crucial to an underwriting decision
apparent
what type of authority is based on the agents actions, or words?
foreign
what type of insurer is formed under the laws of another state?
Consideration
when an insured makes truthful statements on the application for insurance and pay the required premium it's known as
intentional and material
when would a misrepresentation on an insurance application be considered fraud
risk retention group
A liability insurance company owned by its members
commingling
A producer, her fails to separate premium monies from his own personal funds is guilty of
warranty
A statement that is guaranteed to be true, and if untrue, may breach an insurance contract
express, implied, apparent
what are the 3 types of express authority
reduction
Installing the boat locks on the doors of a home is an example of which method of handling risk
peril
The cause of loss insured against
pure risk characteristics
The loss must be due to chance, definite, measurable, and predictable
loss
The reduction, decrease or disappearance of value of the person or property insured, and a policy by a peril insured against is known as
fiduciary responsibility
The requirement that agents not commingle insurance monies with their own funds, is known as
risk
The uncertainty or chance of loss
Peril
What is the term for the causes of loss insured against in an insurance policy?
pure risk
a situation in which a person can experience only a loss and no gain presents what type of risk
peril
a tornado that destroy a property would be an example of what
agent or producer
according to the law of agency, who represents the principal
captive agent
an insurance producer who buy contract is bound to write insurance only for one company
Weiss and Fitch
associated with guides describing company financial integrity