General insurance chapter quiz

Which of the following best describes an insurance company that has been formed under the laws of this state

Domestic ... A company is domestic when doing business within the state and which it is incorporated

What documentation grants Express authority to an agent

Agents contract with the principal the principal Grant authority to an agent through the agents contract

What is reinsurance

An agreement between a ceding insurer an assuming insurer ... Originating company that procures Insurance on itself in another ensure is called the ceding insurer the other insurer is called assuming insurer

The risk management technique that is used to prevent a specific lost by not exposing oneself to that activity is called

Avoidance .... risk avoidance is illumination of risk of loss by boarding any exposure to an event that could give rise to such loss

An insurance contract requires that both the insured and the insured meet certain conditions in order for the contract to be enforceable. What contract characteristic does this describe

Conditional, conditional contract requires both the insured and policy owner to meet certain conditions before the contract can be executed , unlike other types of policies which out the burden of condition on either the insured or the policy owner

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

Consideration ... Consideration is something of value that each party gives to the other the consideration on the part of the insured is the payment of premium and the representations made in the application

An insurance company is domiciled in Montana and transacts insurance in Wyoming . Which term describes the insurers classification in wyoming

Foreign , a foreign insured is domiciliated in one state and transacts insurance in another. A domestic insured transacts insurance in the domicile state (in this case montana) an alien insured is domiciliated in one country and transacts insurance in another

For the reported losses of an insured group to become more likely to equal this to statistical probability of loss for that particular class the insured group must become

Larger ... According to the law of large numbers the larger a group becomes easier is to protect losses insurers use this Law in Order to predict certain types of losses and set appropriate premiums

Pertaining to Insurance what is the definition of a fiduciary responsibility

Promptly forwarding premiums to the insurance company...Fiduiciary refers to a position of trust when an agent is handling the premiums that belong to an insurance company they're acting In a fiduciary capacity

All of the following are examples of risk retention

Retention is a planned and Assumption of risk or acceptance of responsibility for the lost by an insured through the use of deductibles co-payments or Self insurance

In insurance policies contract ambiguities are automatically ruled in the favor of the insured what privilege does the insurer have in order to balance this

The right to determine the wording of a policy. In contracts in which only the insurer has the right to determine the wording of a policy the policy holder will receive benefits denied due to a contract and Ambiguity

A person who does not lock the doors or does not repair leaks shows an indifferent attitude this person presents what type of Hazard

Morale ... A morale Hazard is someone who has an indifferent attitude towards an insurance company he is careless or irresponsible because he knows his loss will be covered by insurance

Which of the following entities is not an insurer but an organization formed to provide insurance benefits for members of an Affiliated Lodge or religious organization

Fraternal benefit society .. Fraternal insures operate on the basis of a lodge or charitable organization but they may also sell formal insurance plans for the benefit of their members reciprocal insurers are also associations that provide insurance for their members but they are formed only for the purpose of providing insurance

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

Express authority .... Express Powers are written into the contract between the insurer and the agent

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

Unilateral .. the insured is not legally bound to do anything. The insured however must pay losses covered by the policy