General Insurance

Which of the following characteristics of a contract means that the insured pays a small amount of premium for a large amount of risk on the part of the insurance company?

aleatory

An agent's actions show what kind of authority

apparent

Mutual companies are owned by

policyowners

Risk in insurance terminology refers to

the uncertainty of financial loss

Which method of dealing with risk is applied when a person purchases insurance?

transfer

An insurance contract must contain all of the following elements to be considered legally binding EXCEPT

beneficiary's consent

In an insurance contract, consideration refers to

exchange of something of value by both parties

In insurance contracts, a warranty is a

statement that must be true

The insurer must be able to rely on the statements in the application, and the insured must be able to rely on the insurer to pay valid claims. In the forming of an insurance contract, this is referred to as

utmost good faith

Who acts on behalf of the principal?

agent

Conditions that increase the chances of an insured loss occurring are referred to as

hazards

When would a misrepresentation on the insurance application be considered fraud?

if it is intentional and material

Which provision states that if a policy allows for greater compensation than the financial loss incurred, the insured may only receive benefits for the amount lost?

indemnity

All of the following are examples of risk retention EXCEPT

premiums

Which of the following is an example of agent's fiduciary responsibilities?

promptly forwarding premiums to the insurer