General Insurance

what is a warranty in an insurance contract?

An absolutely true statement upon which validity of the insurance contract is based

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

Express authority

The requirement that agents must account for and promptly remit all insurance funds collected is knows as what type of agent responsibility?

Fiduciary

An Insurance company is domiciled in California and transacts insurance in Nevada. What is this insurer's classification in Nevada?

Foreign

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

Foreign

what insurance concept is associate with the names Weiss and Fitch

Guides describing company financial integrity

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

Implied

What two elements are necessary for a life insurance contract to have a legal purpose?

Insurable interest and consent

In the agent/ insurer relationship, who is considered the principle?

Insurer

when agents act within the scope of their contract, their actions will be assumed to be the acts of whom?

Insurer

What entities make up the Medical Information Bureau?

Insurers

An applicant conceals relevant health information on the application. The applicant presents what type of hazard?

Moral

A situation in which in which a person can only experience a loss and no gain presents what type of risk?

Pure Risk

which services are associated with standard & poor's and AM best?

Rating the Financial strength of insurance companies

What is the best way to handle incomplete insurance applications?

Return the application to the applicant for completion

Wagering on a sporting event is known as what type of risk?

Speculative

the insurer organized to return a profit to the stockholders is what type of insurer?

Stock company

Whose responsibility is it to determine that all the questions on an insurance application are answered?

The agent's

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

To minimize the insured's level of liability in the event of loss

For the purpose of insurance, what is risk?

Uncertainty of loss

If only one party to an insurance contract has made a legally enforceable promise, what kind of contract is it?

Unilateral

When would a misrepresentation on an insurance application be considered fraud?

When it is intentional and material

In insurance, when is the offer usually made on a contract?

When the insurance application is submitted

Insurers are classified according to their domicile. What are the three types of insurers?

domestic foreign alien

the requirement that agents not commingle insurance monies with their own funds is known as

fiduciary responsibility

An insurance company that is formed under the laws of another state is know as what type of insurer

foreign

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

implied

What do individuals use to transfer their risk of loss to a larger group?

insurance

which of the following statement regarding insurable risks is NOT correct?

insureds cannot be randomly selected

which of the following is true regarding a risk retention group?

it is a liability insurance company owned by its members

Insurance is a contract that protects the insured from what?

loss

The reduction, decrease, or disappearance of value of the person or property insured in a policy is known as what?

loss

What are the five characteristics of an ideally insurable risk?

loss must be 1. due to chance 2. definite and measurable 3. statistically predictable 4. not catastrophic 5. coverage cannot be mandatory.

A person who does not lock the doors to his or her house shows an indifferent attitude. This person presents what type of hazard?

morale

An insurance policy paid a nontaxable dividend to the insured one year, and nothing the next. From what type of insurer did the insured purchase the policy?

mutual

All of the following are examples of risk retention Except

premiums

Which services are associated with Standard & Poor's and AM Best?

rating the financial strength of insurance companies

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

reduction

If an agent fails to obtain the applicant's signature on the insurance application, what must the insurer do?

send the application back to the applicant for signature

Who owns stock companies?

stockholders

If an applicant does not receive his or her insurance policy, who would be held responsible?

the agent

Not all losses are insurable, and there are certain requirements that must be met before a risk is a proper subject for insurance. These requirements include all of the following Except

the loss may be intentional

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

to minimize the insured's level of liability in the event of loss

In insurance policies, the insured is not legally bound to any particular action in the insurance contract, but the insurer is legally obligated to pay losses covered by the policy. What contract element does the describe?

unilateral

what are the three types of hazards?

1. Physical 2. Moral 3. Morale

what are the strategies used by underwriters to prevent adverse selection?

1.Restriction of coverage 2. refusal to accept a risk 3.accepting a risk at a higher rate

what are the four elements of an insurance contract?

1.agreement (offer and acceptance) 2. consideration 3.competent parties 4. legal purpose

which of the following is another term for an authorized insurer?

Admitted

According to the Law of Agency, a principal is represented by whom?

Agent or producer

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

Aleatory

What type of insurer is formed under the laws of another country?

Alien

In insurance, an offer is usually made when

An applicant submits an application to the insurer.

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

Apparent

If an insurer meets the state's financial requirements and is approved to transact business in the state, it is considered what type of insurer?

Authorized or admitted

What document is required for an insurance company to transact insurance?

Certificate of Authority

When a change needs to be made on the application for insurance, which is the best method for correcting the information?

Complete a new application or ask the applicant to initial the correction on the original application

What are the three types of agent authority?

Express, implied and apparent

conditions that increase the chance of a loss are known as what?

Hazards

What is the term for the causes of loss insured against in an insurance policy?

Peril

the causes of loss insured against in an insurance policy are known as

Peril

What type of risk is insurable?

Pure

which of the following is NOT a characteristic of an insurable risk?

The loss must be catastrophic

In terms of parties to a contract, which of the following does not describe a competent party?

The person must have at least completed secondary education

when does an insurance policy go into effect?

The policy will go into effect when the first premium is paid and the policy has been delivered.

In forming an insurance contract, when does an acceptance usually occur?

When the insurer approves a prepaid application

When risks with higher probability of loss are seeking insurance more often than other risks, this is known as what?

adverse selection

Whom does an insurance agent represent?

an insurance company

the type of insurance company organized to return any surplus money to its policyholders is known as what?

mutual company