chap 1 practice questions

Insurance

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

apparent

what type of agent authority is also called perceived authority

estoppel

ABC insurance company received an incomplete application and issues the policy anyway. Six months later ABC realizes the missing information. What term is used that prevents from forcing the policy owner to answer further questions ABC insurance company had waived its right to receive answers to the missing information.

hazards

conditions that increase the chance of a loss are known as

types of insurers domicile

domestic, foreign, and alien

Agreement(offer & acceptance), consideration, competitive parties, and legal purpose

four elements of an insurance contract

unilateral

get insurance policies, the insured is not legally bound to any particular action in the insurance contract, but the insurance is legally obligated to pay losses covered by the policy

authorized or admitted

if an insurer holds a certificate of authority, it's known as what type of insurer

When the insurer approves a prepaid application

in insurance contracts, when does acceptance usually occur?

when the insurance application is submitted

in insurance contracts, when is the offer usually made?

Insurer

in the agent/insurer relationship, who is considered the principal

consideration

something of value that each party gives to another on the part of the insurer is binding

hazard

something that increases the risk of loss

reasonable expectations

term meaning certain expectations for coverage that a reasonable person would have based on sources other than just the policy language

unilateral contract

they once had a contract that means only one party makes an enforceable promise

Express, implied and apparent

three types of agent authority

aleatory

unequal values are exchange between the parties to a contract

speculative

wagering on a sporting event, as known, as what type of risk

agreement, considering, competent parties, and legal purpose

what are the 4 required elements of an insurance contract

Due to chance, definite and measurable, statistically, predictable, not catastrophic, randomly selected

what are the five characteristics of an ideally insurable risk?

avoidance, transfer, sharing, retention, reduction

what are the methods of managing risk?

physical, moral, morale

what are the three types of hazards?

self insuring

what describes when a person develops a formal program, identifying, evaluating, and funding its losses

certificate of authority

what document is required for an insurance company to transact insurance?

to restore an insured to the same financial status as before a loss

what does indemnify mean in insurance?

an absolutely true statement upon which the validity of the policy depends

what is a warranty in an insurance contract?

reinsurance

what is an agreement between a seating insurer, and an assuming assurer

a promise to pay in the event of a loss

what is consideration part of the insurer?

indemnity

what provision states that if a policy allows for greater benefits than the financial loss incurred, the insured may be compensated only for the amount loss

concealment

what term best describes the active withholding material information that would be crucial to an underwriting decision

apparent

what type of authority is based on the agents actions, or words?

foreign

what type of insurer is formed under the laws of another state?

Consideration

when an insured makes truthful statements on the application for insurance and pay the required premium it's known as

intentional and material

when would a misrepresentation on an insurance application be considered fraud

risk retention group

A liability insurance company owned by its members

commingling

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

warranty

A statement that is guaranteed to be true, and if untrue, may breach an insurance contract

express, implied, apparent

what are the 3 types of express authority

reduction

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

peril

The cause of loss insured against

pure risk characteristics

The loss must be due to chance, definite, measurable, and predictable

loss

The reduction, decrease or disappearance of value of the person or property insured, and a policy by a peril insured against is known as

fiduciary responsibility

The requirement that agents not commingle insurance monies with their own funds, is known as

risk

The uncertainty or chance of loss

Peril

What is the term for the causes of loss insured against in an insurance policy?

pure risk

a situation in which a person can experience only a loss and no gain presents what type of risk

peril

a tornado that destroy a property would be an example of what

agent or producer

according to the law of agency, who represents the principal

captive agent

an insurance producer who buy contract is bound to write insurance only for one company

Weiss and Fitch

associated with guides describing company financial integrity