General insurance quiz

The basis for a claim against an insurance policy

Loss

Which of the following is not a characteristic of an insurable risk

Loss must be catastrophic

On a participating insurance policy issued by a mutual insurance company insurance dividends paid to policy holders are

Not taxable since the irs treats them as a return of a portion of the premium paid

What is the major difference between a stock company and a mutual company

Ownership Mutual companies are owned by policyholders, while stock companies are owned by stockholders.

A participating insurance policy may do which of the following?

Pay dividends to the policyowner

All of the following are examples of risk retentions except

Premiums

What is the term for the entity than an agent represents regarding contractual agreements with third parties

Principal

Which of the following statements is accurate comparison between private and government insurers

Private insurance may be authorized to transact insurance by state insurance departments

The risk of loss may be classified as

Pure risk and speculative risk

In what way can an agent demonstrate a high standard of ethics

Putting the client's best interest before their own

Which services are usually provided with standard & poors and am best?

Rating the financial strength of Insurance companies

Which of the following types of agent authority is also called perceived authority

apparent

A producer who fails to separate premium monies from his own personal funds is guilty of

commingling

The authority granted to an agent through the agent's contract is referred to as

express authority

When doing business in this state, an insurance company that is formed under the laws of another state is known as which type of insurer?

foreign

Which of the following entities is not an insurer but an organization formed to provide insurance benefits for members of an affiliated lodge or religious organization

fraternal benefit society

Surplus lines insurance usually involves insurance for which type of individuals

high risk individuals

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

insurance

For the reported losses of an insured group to become more likely to equal the statistical probability of loss for that particular class, the insured group must become

larger

Insurance is a contract by which one seeks to protect another from

loss

In insurance transactions fiduciary responsibility means

Handling insurer funds in a trust capacity

An insurance producer who by contract is bound to write insurance for only one company is classified as

Captive agent

For the purpose of insurance, risk is defined as a. The certainty of loss b. The cause of loss c. An event that increases the amount of loss d. The uncertainty or chance of loss

D the uncertainty or chance of loss

An insurance company sells an insurance policy over the phone in response to a tv Ad. What best describes this act?

Direct response marketing

Adverse selection is a concept best described as

Risks with higher probability of loss seeking insurance more often than other risks.

A non admitted insurer who provides unique insurance coverage that is not available from an admitted insurer is called

Surplus lines insurer

Peril is most easily defined as

The cause of loss insured against

Not all losses are insurable, and there are certain requirements that must be met before a risk is a proper subject for insurance. These requirements include all of the following EXCEPT

The loss may be intentional

Which of the following is an example of a producer's fiduciary duty?

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

The cause of loss insured against in an insurance policy are known as

perils

Which of the following is the most common way to transfer risk?

purchase insurance

A situation in which a person can only lose or have no change represents

pure risk

Which of the following insurance options would be considered a risk sharing arrangement

reciprocal

Installing deadbolt locks on the doors of a home is an example of which method of handling risk?

reduction

Insurance is the transfer of

risk

Which of the following insurers are owned by stockholders?

stock

When an individual purchases insurance, what risk management technique is he or she practicing

to transfer