Chapter 1: General Insurance

Which of the following is an example of a producer's fiduciary duty? A.)The trust that a client places in the producer in regard to handling premium B.)An obligation to state every known fact about the policy the producer is selling C.)A duty to base all transactions upon the principal of Utmost Good Faith D.)The obligation to tell the truth to the best of one's knowledge

A.) The trust that the client places in the producer in regard to handling premium

What documentation grants express authority to an agent?

Agents contract with the principal

When transacting business in this state an insurer formed under the laws of another country is known as a/an

Alien insurer

What is a foreign insurer?

An insurer with a home office in another state

Because an agent is using stationery with the logo of an insurance company, applicants for insurance assume that the agent is authorized to transact on behalf of that insurer. What type of agent authority does this describe?

Apparent

All of the following are examples of hazards EXCEPT A.)Faulty wiring in a home B.)Broken step or hand railing on the porch C.)A fire in the kitchen of a home D.)Trash or debris in the basement of a home

C.) A fire in the kitchen of a home

An insurance company is domiciled in Montana and transacts insurance in Wyoming. Which term best describes the insurer's classification in Wyoming?

Foreign

In insurance transactions, fiduciary responsibility means

Handling insurer funds in a trust capacity

Which insurance principle states that if a policy allows for greater compensation than the financial loss incurred, the insured may only receive benefits for the amount lost?

Indemnity

An insured purchased an insurance policy 5 years ago. Last year, she received a dividend check from the insurance company that was not taxable. This year, she did not receive a check from the insurer. From what type of insurer did the insured purchase the policy?

Mutual

A participating insurance policy may do which of the following?

Pay dividends to the policyowner

Who might receive dividends from a mutual insurer?

Policyholders

Pertaining to insurance, what is the definition of a fiduciary responsibility?

Promptly forwarding premiums to the insurance company

A situation in which a person can only lose or have no change represents

Pure Risk

Peril is most easily defined as

The cause of loss insured against