EXAM GEN INSURANCE

What are the four elements of an insurance contract?

1. Agreement - offer and acceptance 2. Consideration 3. Competent parties 4. Legal purpose

A tornado that destroy property would be an example of what?

A peril

What is consideration on the part of the insurer?

A promise to pay in the event of a loss

What does the term unilateral contract mean?

A unilateral contract is a one-sided contract. This means only one party makes an enforceable promise

According to the law of agency, who represents the principal

Agent or producer

What is the warranty in an insurance contract?

An absolutely true statement upon which the validity of the policy depends

If an insurer holds a certificate of authority, it is known as what type of insurer?

Authorized or admitted

What are the methods of managing risk?

Avoidance, transfer, sharing, retention, and reduction

What is the term reasonable expectations mean and insurance?

Certain next week Tatian for coverage that a reasonable person would have based on sources other than just the policy language

What documentation is required for an insurance company to transact insurance?

Certificate of authority

What is consideration in an insurance contract?

Consideration is something of value that each party gives to the other. Consideration on the part of the insurer is binding.

Conditions that increase the chance of a loss or known as what?

Hazards

What are the three types of agent authority

Implied, Express, and Apparent.

What are the five characteristics of an ideally insurable risk?

Loss must be 1) due to chance, 2) definite and measurable, 3) statistically predictable, 4) not catastrophic, and 5) Coverage cannot be mandatory.

What is the term for the causes of lost insured against an insurance policy?

Peril

What are three types of hazards?

Physical, Moral, Morale

What does indemnify mean an insurance

To restore in insured to the same financial status as before a loss. To make whole in lack of better words.

What is a risk?

Uncertainty of loss

When would a misrepresentation on an insurance application be considered fraud

When it is intentional and material

In insurance contracts when is the offer usually made?

When the insurance application is submitted

And insurance contract when does acceptance usually occur?

When the insurer approves a prepaid application

What type of authority is based on the agent's actions, or words?

apparent

Insurers are classified according to their domicile. What are three types of insurers?

domestic, foreign, alien

What type of insurer is formed under the laws of another state?

foreign

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 lost

indemnity

What do individuals use to transfer their risk of loss to a larger group?

insurance

In the agent/insurer relationship who is considered the principal?

insurer

A situation in which a person can experience only a loss and no gain presents what type of risk?

pure risk

Wagering on a sporting event is known as what type of risk?

speculative