General Insurance Quiz

Representations are written or oral statements made by the applicant that are

Considered true to the best of the applicant's knowledge

In contracts in which only the insurer has the right to determine the wording of a policy, the policyholder will receive benefits denied due to a

Contract ambiguity

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

Contracts of adhesion

The type of company organized to return any surplus money to their policyholders is

A mutual insurer

* Corporations organize what type of insurer in order to lower insurance rates and avoid uncertainties and risks associated with commercial insurance?

Captive insurer

The document that indicates that an insurer has been approved & is authorized to transact insurance in a particular state is known as

Certificate of Authority

A state-issued document empowering an insurance company to become an admitted insurer is called

Certificate of authority

Following a career change, and insured is no longer required to perform many physical activities, so he has implemented a program where he walks and jogs for 45 minutes each morning. The insured has also eliminated most fatty foods from his diet. Which method of dealing with risk does this scenario describe?

Reduction

Define risk avoidance

The elimination of risk of loss by avoiding any exposure to an event that could give rise to such loss

Define fraud

The intentional misrepresentation of material info that is crucial when deciding whether or not to write a contract for an applicant.

Define consideration on the part of the insured

The payment of premium and the representations made in the application

If an insurer finds that an applicant has committed fraud, it can

Void the contract, provided that the discovery occurs within the first two years of the effective policy date

The trust that a client places in the producer in regard to handling premiums is known as

Fiduciary duty

An insurer has made all of the decisions regarding the provisions included in the insured's policy. The insured finds an objectionable 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

What documentation grants express authority to an agent?

Agent's contract with the principal