P&C Chapter 1

Which of the following best describes the concept that the insured pays a small amount of premium for a large amount of risk on the part of the insurance company?

Alegory

Which of the following types of agent authority is also called "perceived authority"?

Apparent

Which of the following must an insurer obtain in order to transact insurance within a given state?

Certificate of authority

An insurance company sells an insurance policy over the phone in response to a TV ad. Which of the following best describes this act?

Direct response marketing

The authority granted to an agent through the agent's contract is referred to as

Express authority

What insurance concept is associated with the names Weiss and Fitch?

Guides describing company financial integrity

Events or conditions that increase the chances of an insured loss occurring are referred to as

Hazards

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

Insurance

The insurer may suspect that a moral hazard exists if the policyholder

Is not honest about his health on an application for insurance

What is the major difference between a stock company and a mutual company?

Ownership

All of the following are examples of risk retention EXCEPT

Premiums

If a court ordered payment for a loss that was not covered in the policy even if it was clearly worded, it would be an example of which legal concept?

Reasonable expectations

Peril is most easily defined as

The cause of loss insured against

Which of the following is an example of a producer's fiduciary duty?

The trust that a client places in the producer in regard to handling premium

Which of the following is NOT a goal of risk retention?

To minimize the insured's level of liability in the event of loss

Which of the following is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract?

Warranty