General Insurance

In any case where there is a controversy or dispute between the insurance company and the insured, the soliciting agent is the agent of the A) Applicant. B) Insured. C) Company. D) Beneficiary.

Company

Which of the following is a unit of measurement an underwriter uses when determining the premium rates for insurance? A) Exposure B) Loss C) Hazard D) Risk

Exposure

Which of the following are the authorities that an agent can hold? A) Authorized and admitted B) Primary and secondary C) Express and implied D) Apparent and allowed

Express and implied

When doing business in this state, an insurance company that is formed under the laws of another state is known as which type of insurer? A) Domestic B) Alien C) Nonadmitted D) Foreign

Foreign

What is the term for the entity that an agent represents regarding contractual agreements with third parties?

Principal (An agent represents the principal, acting on the entity's behalf in contractual agreements with third parties.)

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

Rating the financial strength of insurance companies

All of the following are marketing arrangements used by insurers except A) Reinsurance System B) General Agency System. C) Direct Response Marketing System. D) Independent Agency System.

Reinsurance System

An insured wants to transfer his personal insurance policy to a friend. Under what conditions would this be possible? A) The insured can transfer the policy to his friend and then notify the insurer of the change. B) The insured will need a written consent of the insurer. C) It is impossible to transfer a policy. D) The insured would have to surrender his policy to the insurer, and his friend could then ask to buy it.

The insured will need a written consent of the insurer.

Which authority is NOT stated in an agent's contract but is required for the agent to conduct business? A) Assumed B) Express C) Implied D) Apparent

Implied (Implied authority is not written in the agent's contract 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.)

Which of the following insurance options would be considered a risk-sharing arrangement? A) Reciprocal B) Stock C) Mutual D) Surplus lines

Reciprocal (When insurance is obtained through a reciprocal insurer, the insureds are sharing the risk of loss with other subscribers of that reciprocal.)

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

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

An insurance contract must contain all of the following to be considered legally binding EXCEPT A) Competent parties. B) Beneficiary's consent. C) Offer and acceptance. D) Consideration.

Beneficiary's consent

An insurance company requires that both the insured and the insurer meet certain conditions in order for the contract to be enforceable. What contract characteristic does this describe? A) Conditional B) Contingent C) Aleatory D) Unilateral

Conditional

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) A mutual insurer. B) A reciprocal company. C) A fraternal insurer. D) A stock company.

A mutual insurer.

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

To minimize the insured's level of liability in the event of loss (Retention results from 3 basic desires of the insured: reduce expenses and improve cash flow, fund losses that cannot be insured, increase control of claim reserving and claims settlements.)

Because an insurance policy is a legal contract, it must conform to the state laws governing contracts which require all of the following elements EXCEPT A) Consideration. B) Legal purpose. C) Offer and acceptance. D) Conditions.

Conditions

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) Contract of adhesion B) Acceptance C) Consideration D) Legal purpose

Consideration