Chapter 1 Quiz

Pure risk and speculative risk.

The risk of loss may be classified as

Beneficiary's consent

An insurance contract must contain all of the following to be considered legally binding EXCEPT

The loss may be intentional.

Not all losses are insurable, and there are certain requirements that must be met before a risk is a proper subject for insurance. These requirements include all of the following EXCEPT

Stock

Which of the following insurers are owned by stockholders

Counteroffer

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

Loss

Which of the following is the basis for a claim against an insurance policy

Investing in the stock market.

All of the following actions by a person could be described as risk avoidance EXCEPT

A fire in the kitchen of a home

All of the following are examples of hazards EXCEPT

Consideration

An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which of the following insurance principles has the insurer violated

Contracts of adhesion.

Contracts that are prepared by one party and submitted to the other party on a take-it-or-leave-it basis are classified as

Adhesion

Insurance policies are not drawn up through negotiations, and an insured has little to say about its provisions. What contract characteristic does this describe

Not taxable since the IRS treats them as a return of a portion of the premium paid.

On a participating insurance policy issued by a mutual insurance company, dividends paid to policyholders are

Express authority.

The authority granted to an agent through the agent's contract is referred to as

Exchange of unequal values

Which of the following best describes the aleatory nature of an insurance contract

Perils

The causes of loss insured against in an insurance policy are known as