Quiz Questions

An insured wants to transfer his personal insurance policy to a friend. Under what conditions would this be possible?

The insured will need a written consent of the insurer

Which of the following produces evaluations of insurers' financial status often used by state departments of insurance?

AM Best

Which of the following is the closet term to an authorized insurer?

Admitted

Which law is the foundation of the statistical prediction of loss upon which rates for insurance are calculated?

Law of large numbers

A person who does not lock the doors or does not repair leaks shows an indifferent attitude. This person presents what type of hazard?

Morale Hazard (has indifferent attitude towards an insurance company)

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

Principal

Adverse selection is a concept best described as...

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

What is the definition of fiduciary responsibility

promptly forwarding premiums to the insuranc= company

What describes the concept that the insured pays a small amount of premium for a large amount of risk on the part of the insurance company?

Aleatory (requires a relatively small amount of premium for a large risk)

Because an agent is using stationery with the logo of an insurance company, applicants for insurance assume that the agent is authorized to transact on behalf of that insurer. What type of agent authority does this describe?

Apparent