General insurance (ch. 1)

An insurer has made all of the decisions regarding the provisions included in the insured's policy. The insured finds an object able provision and wants to negotiate it with the insurer but is not allowed to do so. Her only options are to reject the policy or accept it as is. Which contract feature does this describe?

Adhesion

An individual was involved in a head on collision. His injuries=not serious & he recovered. He decided hat in order to never be involved in another accident, he would not drive/ride in a car ever again. Which method of risk management does this describe?

Avoidance

How are state insurance guaranty associations funded?

By their members - authorized insurers/companies

Couple is married. Kevin= primary breadwinner & has a health insurance policy that covers himself and his wife. Nancy has an illness & requires lots of medical attention. They decide to legally separate. Nancy= no longer eligible for health insurance under Kevin. Which option is best for Nancy?

COBRA

In any case where there is a controversy or dispute between the insurance company and the insured, the soliciting agent is the agent of the

Company

Insurance company sells an insurance policy over the phone in response to a TV ad. What best describes this act?

Direct response marketing

ERISA stands for

Employee Retirement Income Security Act

Main purpose of ERISA

Employees reveive the pension and other benefits by their employers

What is surplus lines insurance?

Insurance placed with an unauthorized insurer/company

Not an example of risk avoidance; it creates a possibility of a loss

Investing in the stock market

Under the fair credit reporting act, individuals rejected for insurance due to information contained in a consumer report

Must be informed of the source of the report

If a court ordered payment for a loss that was not covered in the policy even if it was clearly worded, it would be an example of

Reasonable expectations

Applies for a life policy. 2 years ago he suffered from head injury from accident. Has been in the hospital for drug abuse. The insurer issues the policy and learns about his history a year later. What will probably happen?

The policy will not be affected.

For the purpose of insurance, risk is defined as

The uncertainty or chance of loss

If only one party to an insurance contract has made a legally enforceable promise, what kind of contract is it?

Unilateral

An insurance company is domiciled in Montana and transacts insurance in Wyoming. What described the insurer's classification in Wyoming?

Foreign