Chapter 1 Quiz
What is the maximum penalty for willful noncompliance with the Fair Credit Reporting Act?
$2,500
A consumer receives spam mail from an insurance company. He requests to be removed from the company's list. Within what time period must the company comply with the consumer's request?
10 days
Any licensed person whose activities affect interstate commerce and who knowingly makes false material statements related to the business of insurance may be imprisoned for up to
10 years
Within how many days of requesting an investigative consumer report must an insurer notify the consumer in writing that the report will be obtained?
3 days
Because an agent is using stationary 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 of authority does this describe?
Apparent Authority
A state issued document empowering a company to become an admitted insurer is called a
Certificate of Authority
Considered a morale hazard
Driving Recklessly
Authorities an agent can hold include
Express and Implied
authority that is NOT stated in an agent's contract but is required for the agent to conduct business
Implied
What law is the foundation of the statistical prediction of loss upon which rates for insurance are calculated?
Law of large numbers
Insurance is a contract by which one seeks to protect another from
Loss
NOT an example of retention
Premiums
Gramm-Leach-Bliley Act was passed to
Protect private customer information filed with a financial institution
The risk of loss may be classifed as
Pure Risk and Speculative Risk
Installing deadbolts is an example of what method of handling risk?
Reduction
The Fair Credit Reporting Act
Regulates consumer reports
Adverse selection is a concept best described as
Risks with higher probability of loss seeking insurance more often than other risks
Hazard is best defined as
Something that increases the risk of loss
The National Do Not Call Registry was created to regulate
Telemarketers
NOT the consideration of a policy
The application given to a prospective insured
An individual applies for a life policy. Two years ago he suffered an 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 a year later. What will probably happen?
The policy will not be affected.
A tornado that destroys a property would be an example of what
a peril
Because an insurance policy is a legal contract, it must conform to state laws governing contracts- which DON'T require
conditions
NOT considered negative information about a consumer according to the Fair Credit Reporting Act
disputes regarding consumer report information
Events or conditions that increase the chances of an insured loss occurring are referred to as
hazards
Under the Fair Credit Reporting Act, individuals rejected for insurance due to information contained in a consumer report
must be informed of the source of the report.
NOT correct regarding false statements by a person engaged in the business of insurance
only written statements can be considered fraud
The CAN-SPAM Act
protects consumers from receiving unwanted solicitations from companies
For the purpose of insurance, Risk is defined as
the uncertainty or chance of loss