Unit 1: Introduction to Insurance - Quiz Material
Which of the following individuals represent only on insurance company? A. An Independent Agent B. A general Agent C. A Captive Agent D. A Managing General Agent
A captive agent
States requires companies to have a license to sell insurance in the state. The license is called...
A certificate of authority
A person in a position of financial trust is called...
A fiduciary
A flood is an example of...
A peril
If a fire causes damage to a building, the fire is...
A peril
All of the following statements about a stock insurance company are true except A. A stock company pays dividends to stockholders B. A stock company is a participating company C. A stock company is a nonparticipating company D. A stock company has shareholders
A stock company is a participating company
Sometimes an individual or business has an exceptionally large or specialized risk that no authorized insurer can or will cover. In this case, the individual or business may call...
A surplus lines insurance company
The ABC Insurance company is incorporated in Mexico. While doing business in Texas, it is...
An alien insurer
Which is not an element of an insurable risk? A. Catastrophic B. Affordable C. Accidental D. Measurable
Catastrophic
Which of the following types of advertising does not involves an agent and is conducted through the mail, by advertisements in newspapers and magazines, on television and radio or through the internet?
Direct response
The authority made explicit in a producer's written agency agreement with the insurer is known as...
Express Authority
An insurance company incorporated in Wisconsin and conducting business in Wisconsin is known as a domestic company. What kind of company are they considered if they do business in Minnesota?
Foreign
Carl hands out a business card with his company's logo to all new prospects that he meets at a golf outing. This is an example of...
Implied authority
What is a contract or device for transferring risk from a person, business, or organization to an insurance company?
Insurance
Tiffany leaves her car unlocked when she goes shopping. She figures her car and its contents are insured. so there is no reason to worry. Which type of hazard is this an example of?
Morale
Insurers may be classified according to their financial strength, This includes all of the following factors except A. Number of Clients B. Loss Experience C. Investment Performance D. Operating Expenses
Number of clients
Wearing a seat belt in a car is an example of which method of managing risk?
Reduce
Insurance companies often purchase insurance to cover their own exposure to loss. This is called...
Reinsurance
Since Jeff lives in a good neighborhood across the street from the fire station, he decides to cancel his fire insurance policy. This is an example of which risk management method?
Retention
Which of the following represents a pure risk? A. A poker game B. Gambling in the stock market C. Investing in a new business D. The chance your house may burn down
The chance your house may burn down
Suzanne regularly leaves her side door unlocked when she leaves for work. One afternoon, a thief entered her apartment and stole all of her jewelry. What was the hazard in this example?
The door being unlocked
An individual applied for auto insurance and obtained coverage from ABC insurance Company. Who is the first party in the contract?
The insured ( customer)
What do insurance companies use to help predict how many losses will occur in a group or class of individuals?
The law of large numbers
Agency is a relationship in which one person is authorized to represent and act for another person or a corporation. In insurance, the insurance agent acts on behalf of
The principal
All of the following are requirements of an insurable pure risk except A. Premiums must be calculable B. Premiums must be affordable C. The risk must be catastrophic for the insurance company D. The loss must have been accidental
The risk must be catastrophic for the insurance company