General Insurance Quiz 1

a. Handling insurer funds in a trust capacity

In insurance transactions, fiduciary responsibility means: a. handling insurer funds in a trust capacity b. maintaining a good credit record c. being liable with respect to payment of claims d. commingling premiums with agent's personal funds

b. risks with higher probability of loss seeking insurancr more often than other risks

adverse selection is a concept best described as a. only offering coverage to good risks b. risks with higher probability of loss seeking insurance more often than other risks c. underwriters slanting the odds in favor of the company d. poor choices of applicants to be covered

b. concealment

an applicant knowingly fails to communicate information that would help an underwrited make a sound decision regarding coverage. this is an example of a. breach of warranty b. concealment c. waiver d. fraud

c. apparent

because an agent is using stationary with the logo of an insurance company, applicants for the insurance assume that the agent is authorized to transact on behalf of that insurer. what type of agent authority does this describe? a. implied b. assumed c. apparent d. express

d. considered true to the best of the applicants knowledge

representations are written or oral statements made by the applicant that are a. guaranteed to be true b. found to be false after further investigation c. immaterial to the actual acceptability of the insurance contract d. considered true to the best of the applicant's knowledge

B) Utmost good faith

the insurer must be able to rely on the statemtns in the application, snd the insured must be able to rely on the insurer to pay valid claims. in the forming of an insurance contract, that is referred to as: a. implied warranty b. utmost good faith c. reasonable expectations d. a warranty

b. fiduciary responsibility

the requirement that agents not commingle insurance monies with their own funds is known as a. accepted accounting principle b. fiduciary responsibility c. premium accountability d. express authority

b. guides describing company financial intergrity

what insurance concept is associated with the names weiss and fitch? a. index used by stock companies b. guides describing company financial intergrity c. policy dividends d. types of mutual companies

d. warranty

which of the following is a statement that is guaranteed to be true, and if untrue, may breach an insurancr contract? a. concealment b. indemnity c. representation d. warranty

a. pay dividends to the policyowner

A participating insurance policy may do which of the following? a. pay dividends to the policyowner b. provide group coverage c. pay dividends to the stockholder d. require 80% participation

d. the policy will not be affected

An individual applies for a life policy. Two years ago he suffered a head injury from an accident, so he cannot remember parts of his past, but is otherwise competent. He has also been hospitalized for drug abuse, but does not remember this when applying for insurance. The insurer issues the policy and learns of his history one year later. What will probably happen? a.The policy will be voided. b.The insurer will sue the insured for committing fraud. c. Because the insured is currently not a drug user, his policy will not be affected. d. The policy will not be affected.

b. a statement by the applicant that, upon discovery, would affect the underwriting decision of the insurance company

what is a material misrepresentation? a. concealment b. a statement by the applicant that, upon discovery, would affect the underwriting decision of the insurance company c. any misstatement made by an applicant for insurance d. any misstatemeny by the producer

a. an agreement between a ceding insurer and adsuming insurer

what is reinsurance? a. an agreement between ceding insurer and assuming insurer b. an agreement between an originating insurer and a ceding insurer c. an agreement between a domestic insurer and a foreign insurer d. an agreement between an insurer and an insured

b. if it is intentional and material

when would a misrepresentation on the insurance appli be considered fraud? a. any misrepresentation is considered fraud b. if it is intentional and material c. never: statements by the applicant are only representations d. when the application is incomplete