General Insurance - Chapter Quiz
A tornado that destroys a property would be an example of what?
A peril A peril is the cause of loss insured against in an insurance policy.
Material Misrepresentation
A statement that, if discovered, would alter the underwriting decision of the insurance company.
Which of the following types of authority is also called "perceived authority"?
Apparent
A participating insurance policy may do which of the following?
Pay dividends to the policyowner
Which of the following insurance options would be considered a risk-sharing arrangement?
Reciprocal
An individual's tendency to be dishonest would be indicative of a...
moral hazard
Which of the following types of insurers is owned by stockholders?
stock
In insurance, an offer is usually made when..
An applicant submits an application to the insurer
In insurance transactions, fiduciary responsibility means
Handling insurer funds in a trust capacity
Which authority is NOT stated in an agent's contract but is required for the agent to conduct business?
Implied
Representations
Statements made by the applicant on the insurance application that are considered true to the best of the applicant's knowledge.
Which of the following is NOT the consideration in a policy?
The application given to a prospective insured
A producer who fails to separate premium monies from his own personal funds is guilty of...
Commingling
the act of withholding material information that would be crucial to an underwriting decision
Concealment
Hazards
Conditions or situations that increase the probability of an insured loss occurring.
retention
Planned assumption of risk by an insured through the use of deductibles, co-payments, or self-insurance.
Which of the following is the basis for a claim against an insurance policy?
Loss
Who might receive dividends from a mutual insurer?
Policyholders
Pertaining to insurance, which of the following is an example of a producer's fiduciary responsibility?
Promptly forwarding premiums to the insurance company
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 premiums.
When an individual purchases insurance, what risk management technique is he or she practicing?
Transfer
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.
Which of the following is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract?
Warranty
Consideration
When an insured makes truthful statements on the application for insurance and pays the required premium.
In forming an insurance contract, when does acceptance usually occur?
When an insurer's underwriter approves coverage