Insurance Chapter 1
installing deadbolt locks on the doors of a home is an example of which method of handling risk?
Reduction
what insurers are owned by stockholders who have the usual rights of ownership, including the right of voting?
Stock
insurance companies may be classified according to the legal form of their ownership. the type of company organized to return any surplus money to their policyholders is...
a mutual insurer
What is material misrepresentation
a statement by the applicant that, upon discovery, would affect the underwriting decision of the insurance company
When transacting business in this state an insurer formed under the laws of another country is known as a/an...
alien insurer
reinsurance
an agreement between a ceding insurer and assuming insurer
something of value exchanged between the insurer and the insured is considered...
consideration
Examples of retention risks
deductibles co payments self insurance
speculative risk
events in which a person has both the chance of winning or losing
the basis for a claim against and insurance policy
loss
pertaining to insurance, what is the definition of a fiduciary responsibility?
promptly forwarding premiums to the insurance company
what insurance option would be considered a risk-sharing arrangement?
reciprocal
in insurance transactions, fiduciary responsibility means
handling insurer funds in a trust capacity
what are the characteristics of insurable risk?
lost of exposure must be: - large -due to chance -measurable
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
adverse selection
more risks with higher probability of loss seeking to purchase and maintain insurance than the risks who present lower probability.
Foreign Insurer
one formed under the laws of another state
consideration
something of value that is transferred to the two parties
agent's contract with the principal
the documentation that grants express authority to an agent
fiduciary responsiblity
the requirement that agents not commingle insurance monies with their own funds
what is a morale hazard
the state of mind that causes indifference to loss, such as carelessness
risk retention
to minimize the insured's level of liability in the event of loss
reciprocal insurance
type of insurance based on mutual agreements among subscribers
commingling
when one fails to segregate premium monies from his own personal funds
