general insurance quiz questions

Surplus Lines insurance usually involves insurance for which types of individuals? a. high-risk individuals b. standard risk individuals c. Low-risk individuals d. All of these qualify for surplus lines insurance

a. high risk individuals surplus lines usually involves insurance for high-risk individuals and is placed with nonadmitted insurers who specialize in offering insurance to the high-risk market.

which of the following procedures evaluations of insurers' financial status often used by state departments of insurance? a. consumer's guide b.SEC c. AM Best d.NAIC

c. AM Best AM Best & Company assigns ratings to life, property and casualty insurance companies based upon the financial stability of the insurer.

An insured pays a $100 premium every month for his insurance coverage, yet the insurer promises to pay $10,000 for a covered loss. What characteristic of an insurance contract does this describe? a. adhesion b.conditional c.aleatory d. good health

c. Aleatory In an aleatory contract, unequal amounts are exchanged between payments and benefits. In this instance, the insured receives a large benefit for a small price.

the reduction, decrease, or disappearance of value of the person or property insured in a policy by a peril insured against is known as a. hazard b.risk c.loss d. exposure

c. loss loss is the reduction, decrease, or disappearance of value of the person or property insured in a policy by a peril insured against.

which of the following is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract? a.concealment b.indemnity c.representation d.warranty

d. warranty a warranty in insurance is a statement guaranteed to be true. When an applicant is applying for an insurance contract, the statements he or she makes are generally not warranties but representations. Representations are statements that are true to the best of the applicant's knowledge.

if a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply? a. 7 days b. 10 days c. 3 days d. 5 days

5 days consumers must be advised that they have a right to request additional information concerning investigative consumer reports, and the insurer or reporting agency has 5 days to provide the consumer with the additional information

why is it significant that independent producers own the expirations on the policies they write? a. they may decide to terminate the policies they write at any time and for any reason b. they may choose the terms of the insurance contracts c. they may change the expiration dates of the policies at will. d. they may place business with another insurer upon renewal of the policy if it is in the best interest of the client.

d. they may place business with another insurer upon renewal of policy if it is in the best interest of the client. independent producers own the expirations of the policies they write meaning they may place that business with another insurer upon renewal if in the best interest of the client.

which authority is NOT stated in an agent's contract but is required for the agent to conduct business? a.implied b.apparent c.assumed d. express

a. implied implied authority is not written in the agent's contact but is required in order for the agent to conduct business. Implied authority exists because not every single detail of an agent's authority can be written in a contract.

intentionally misrepresenting or concealing a material fact to induce an insurance company to make a contract is known as a. avoidance b.misrepresentation c. concealment d.fraud

d. fraud fraud is the intentional misrepresentation or intentional concealment of a material fact used to induce another party to make or refrain from making a contract, or to deceive or cheat a party

self-insuring is typically used for which type of insurance? a.workers compensation insurance b. property and casualty insurance c. credit insurance d. life insurance

a. workers compensation insurance self-insuring is frequently used for workers compensation where losses are fairly predictable and states established regulations for self-insurance.

which services are associated with Standard & Poor's and AM Best? a. investing violations of the Fair Credit Reporting Act b.Providing employment histories for investigative consumer reports c. storing medical information collected by insurance companies d. rating the financial strength of insurance companies

d. Rating the financial strength of insurance companies reports generated by Standard & Poor's and AM Best help prospective consumers to judge the financial security of various insurance companies

For the reported losses of an insured group to become more likely to equal the statistical probability of loss for that particular class, an insured group must become a. smaller b. older c. more active d. larger

Larger According to the Law of Large Numbers, the larger a group becomes, the easier it is to predict losses. Insurers use this law in order to predict certain types of losses and set appropriate premiums.

adverse selection is concept best described as a. only offering coverage to good risks b. risks with higher probability of loss seeking insurance more often than other risks c. underwriters slanting the odds in favor of the company d. poor choices of applicants to be covered

b. Risks with higher probability of loss seeking insurance more often than other risks.

Under the Fair Credit Reporting Act, individuals rejected for insurance due to information contained in a consumer report a. must be advised that a copy of the report is available to anyone who requests it. b. may sue the reporting agency in order to get inaccurate data collected c. must be informed of the source of the report d. are entitled to obtain a copy of the report from the party who ordered it

c. Must be informed of the source of the report If an insurance policy is declined or modified because of information contained in a consumer report, the consumer must be advised and provided with the name and address of the reporting agency

what is a foreign insurer? a. an insurer with licensed agents doing business in other countries b. an insurer with licensed agents who are citizens in more than one country. c. An insurer with a home officer in another state d. An insurer with a home office in another country

c. an insurer with a home office in another state a domestic insurer's home office is in this state, a foreign insurer's is in another state, and an alien insurer's is in another country.