Chapter quiz: General Insurance

Events in which a person has both the chance of winning or losing are classified as A. Insurable B. Pure risk C. Retained risk D. Speculative risk

D. Speculative risk- loss or gain

Installing deadlock locks on the doors of a home is an example of which method of handling risk? A. Reduction B. Avoidance C. Transfer D. Self - Insurance

A. Reduction

In forming an insurance contract, when does acceptance usually occur? A. When an insured submits an application B. When an insurers underwriter approves coverage C. When an insurer delivers the policy D. When an insurer receives an application

B. When an insurers underwriter approves converge

Not all losses are insurable, and there are certain requirements that met before a risk is a proper subject for insurance. These requirements include all of the following EXCEPT? A. The loss must not be catastrophic B. There must be a sufficient number of homogeneous exposure units to make losses reasonably predictable C. The loss produced by the risk must be definite D. The loss may be intentional

D. The loss may be intentional

An insured pays $100 dollar premium for his insurance coverage, yet the insure promises to pay $10,000 for covered loss. What characteristic of an insurance contract does this describe? A. Aleatory B. Good health C. Adhesion D. Conditional

A. Aleatory

If only one party to an insurance contract has made a legally enforceable promise, what kind of contract is it? A. Unilateral B. Adhesion C. Conditional D. A legal ( but unethical) contract

A. Unilateral

Which of the following produces evaluations of Insurers financial status often used by state departments of insurance? A. SEC B. AM best C. NAIC D. Consumers guide

B. AM Best

In order for an insurer to legally transact insurance, it must obtain which of the following? A. Authorized of power B. Certificate of authority C. Power of Authority D. Directors decree

B. Certificate of Authority

An insured stated on her application for life insurance that she had never had. A heart attack, when in fact she had a series of minor heart attacks last year of which she sought medical attention. Which of the following will explain the reason a death benefit claim is denied? A. Estoppel B. Material misrepresentation C. Waiver D. Utmost good faith

B. Material misrepresentation

Which statement regarding insurable risk is NOT correct? A. Insurance can not be mandatory B. The insurable risk needs to be statistically predictable C. An insurable risk must involve loss that is definite as to cause , time , place and amount D. Insureds cannot be randomly selected

D. Insurers cannot be randomly selected

Who might receive dividends from a mutual insurer? A. Subscribers B. Stockholders C. Agent D. Policyholders

D. Policyholder

A producer who fails to segregate premium monies form his own personal funds is guilty of? A. Commingling B. Larceny C. Embezzlement D. Theft

A. Commingling

The authority granted to an agent through the agents contract is referred to as A. Express authority B. Apparent Authority C. Implied authority D. Absolute authority

A. Express authority

An individual was in involved in a head-on collision while driving home one day. His injuries were not serious, and he recovered. However, he decided that in order to never be involved in another accident, he would not drive or ride in a car ever again. Which method of risk management does this describe? A. Avoidance B. Reduction C. Sharing D. Retention

A. Avoidance

Which of the following is NOT a goal of risk retention? A. To increase control of claim reserving and claims settlements B. To fund losses that cannot be insured C. To minimize the insureds level of liability in the event of loss D. To reduce expenses and improve cash flow

C. To minimize the insureds level of liability in the event of loss

The requirement that agents not commingle insurance monies with their own funds is known as? A. Accepted accounting principal B. Fiduciary responsibly C. Premium accountability D. Express authority

B. Fiduciary responsibility

Which of following is an example of a producers fiduciary duty? A. An obligation to state every known fact about the policy the producer is selling. B. A duty to base all transaction upon the principle of utmost good faith C. The obligation to tell the truth to the best of ones knowledge. D. The trust that a client places in the producer in regard to handling premium

D. The trust that a client places in the producer in regard to handling premium

Which of the following type Las of agent authority is also called " perceived authority" A. Implied B. Fiduciary C. Apparent D. Express

C. Apparent