Insurance Chapter 1

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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


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