EXAM GEN INSURANCE
What are the four elements of an insurance contract?
1. Agreement - offer and acceptance 2. Consideration 3. Competent parties 4. Legal purpose
A tornado that destroy property would be an example of what?
A peril
What is consideration on the part of the insurer?
A promise to pay in the event of a loss
What does the term unilateral contract mean?
A unilateral contract is a one-sided contract. This means only one party makes an enforceable promise
According to the law of agency, who represents the principal
Agent or producer
What is the warranty in an insurance contract?
An absolutely true statement upon which the validity of the policy depends
If an insurer holds a certificate of authority, it is known as what type of insurer?
Authorized or admitted
What are the methods of managing risk?
Avoidance, transfer, sharing, retention, and reduction
What is the term reasonable expectations mean and insurance?
Certain next week Tatian for coverage that a reasonable person would have based on sources other than just the policy language
What documentation is required for an insurance company to transact insurance?
Certificate of authority
What is consideration in an insurance contract?
Consideration is something of value that each party gives to the other. Consideration on the part of the insurer is binding.
Conditions that increase the chance of a loss or known as what?
Hazards
What are the three types of agent authority
Implied, Express, and Apparent.
What are the five characteristics of an ideally insurable risk?
Loss must be 1) due to chance, 2) definite and measurable, 3) statistically predictable, 4) not catastrophic, and 5) Coverage cannot be mandatory.
What is the term for the causes of lost insured against an insurance policy?
Peril
What are three types of hazards?
Physical, Moral, Morale
What does indemnify mean an insurance
To restore in insured to the same financial status as before a loss. To make whole in lack of better words.
What is a risk?
Uncertainty of loss
When would a misrepresentation on an insurance application be considered fraud
When it is intentional and material
In insurance contracts when is the offer usually made?
When the insurance application is submitted
And insurance contract when does acceptance usually occur?
When the insurer approves a prepaid application
What type of authority is based on the agent's actions, or words?
apparent
Insurers are classified according to their domicile. What are three types of insurers?
domestic, foreign, alien
What type of insurer is formed under the laws of another state?
foreign
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 lost
indemnity
What do individuals use to transfer their risk of loss to a larger group?
insurance
In the agent/insurer relationship who is considered the principal?
insurer
A situation in which a person can experience only a loss and no gain presents what type of risk?
pure risk
Wagering on a sporting event is known as what type of risk?
speculative
