General Insurance

What documentation grants express authority to an agent?

Agent's contract with the principle

Which of the following must an insurer obtain in order to transact insurance within a given state?

Certificate of Authority

A tornado that destroys property would be an example of which of the following?

Peril

Risk is defined as:

The uncertainty or chance of loss

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

Consideration

Which of the following insurance providers would be considered a risk sharing management? A. Stock B. Mutual C. Surplus lines D. Reciprocal

D. Reciprocal

Statements made by an applicant for a life insurance policy that are true to the best of the applicant's knowledge are referred to as: A. Facts B. Warranties C. Information D. Representations

D. Representations

An agent represents the _____, acting on the entity's behalf in contractual agreements with third parties

Principal

The risk management technique that is used to prevent a specific loss by not exposing yourself to that activity is called:

Avoidance

Which of the following is the basis for a claim against an insurance policy? A. Material change B. Hazard C. Misrepresentation D. Loss

D. Loss

Illegal use of narcotics would be an example of a:

Moral hazard -Tendencies of an applicant to break laws or be untruthful

Insurance companies may be classified according to the legal form of their ownership. The type of company organized to return any surplus money to their policyholders is:

A mutual insurer

Which of the following best describes the aleatory nature of an insurance contract? A. Ambiguities are interpreted in favor of the insured B. Policies are submitted to the insurer on a "take it or leave it" basis C. Exchange of unequal values D. Only one of the parties is legally bound by the contract

C. Exchange of unequal values

What is surplus lines insurance? A. Any insurance on items worth more than $25,000 B. Insurance in excess of a standard policy's coverage C. Insurance places with an unauthorized insurer D. Additional insurance placed on itemized risks

C. Insurance places with an unauthorized insurer

When an insured makes truthful statements on the application for insurance and pays the required premium, it is known as which of the following? A. Legal purpose B. Contract of adhesion C. Acceptance D. Consideration

D. Consideration

Faulty wiring in a home is an example of a: A. Loss B. Peril C. Risk D. Hazard

D. Hazard Faulty wiring would increase the chance of a loss

An agent accepts the premium payment 35 days after it is due, telling the insured that there will not be a problem keeping the policy in force. This is an example of what type of agent authority? A. Assumed B. Apparent C. Express D. Implied

B. Apparent An agent who accepts a premium after the end of the grace period appears to the client to have the authority to prevent the policy from lapsing. In fact, the agent has no such power

Which of the following insurers are owned by stockholders who have the usual rights of ownership, including the right of voting? A. Stock B. Mutual C. Reciprocal

A. Stock

Peril is most easily defined as: A. Something that increases the chance of loss B. The cause of loss insured against C. An unhealthy attitude about safety D. The chance of a loss occurring

B. The cause of loss insured against

Which of the following is NOT a goal of risk retention? A. To minimize the insured's level of liability in the event of loss B. To reduce expenses and improve cash flow C. To increase control of claim reserving and claims settlements D. To fund losses that cannot be insured

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

If a court ordered a payment for a loss that was not covered in the policy even if it was clearly worded, it would be an example of which legal concept? A. Indemnity B. Reasonable expectations c. Cease ans desist D. Nonforfeiture

B. Reasonable expectations

In forming an insurance contract, when does acceptance usually occur? A. When an insured submits an application B. When an insurer approves a prepaid application C. When an insurer delivers the policy D. When an insurer receives an application

B. When an insurer approves a prepaid application

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? A. Nonprofit Service Organization B. Stock C. Mutual D. Reciprocal

C. Mutual

In insurance, an offer is usually made when: A. The agent hands the policy to the policyholder B. An agent explains a policy to a potential applicant C. The application is submitted D. The insurer approves the application and receives the initial premium

C. The application is submitted