General Insurance concepts - chapter 1

Consideration

An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which of the following insurance principles has the insurer violated?

Apparent

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 the insurer. What type of authority does this describe?

Contracts of Adhesion

Contracts that are prepared by one party and submitted to the other party on a take-it-or-leave-it basis are classified as

In favor of the insured

Courts will interpret any ambiguity in an insurance contract?

Hazards.

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

Reduction

Installing deadbolts locks on the doors of a home is an example of which method of handling risk?

Express Authority

The authority granted to an agent through the agents contract is referred to as?

Perils

The cause of possible loss

Perils

The causes of loss insured against in an insurance policy are know as?

AM Best

which of the following produces evaluations of insurer's financial status often used by state departments of insurance?

Pure Risk

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

Agent's contract with principal

What documentation grants express authority to an agent?

Guides describing company financial integrity

What insurance concept is associated with the words "Weiss and 'Fitch'?

One-sided, only one party makes an enforceable promise.

What is a definition of unilateral contract?

Consideration

When an insured makes truthful statements on the application for insurance and pays the required premium, it is known as which of the following?

Implied

Which authority is NOT stated in an agents contract but is required for the agent to conduct business?

To minimize the insured of liability in the event of loss

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

Warranty

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

Loss

Which of the following is the basis for a claim against an insurance policy?

Private insurers may be authorized to transact insurance by state insurance departments

Which of the following statements is an accurate comparison between private and government insurers?

Apparent

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