General Insurance

An insurance organization that does not issue insurance policies but provides a meeting place for underwriters to conduct business is known as a Capital stock company Lloyd's association Fraternal Society Mutual Company

Lloyd's association.

Pertaining to insurance, what is the definition of a fiduciary responsibility? Promptly forwarding premiums to the insurance company. Helping insureds to file claims Performing reviews of insured's coverage Offering additional coverage to clients

Promptly forwarding premiums to the insurance company. A position of trust.

Which of the following insurers are owned by stockholders? Reciprocal Fraternal Stock Mutual

Stock. Stock insurance companies are owned and controlled by stockholders.

An applicant knowingly fails to communicate information that would help an underwriter make a sound decision regarding coverage. This is an example of

Concealment

Installing deadbolt locks on the doors of a home is an example of which method of handling risk? Avoidance Transfer Self-insurance Reduction

Reduction. Preventing losses from occurring

Which of the following is NOT a characteristic of an insurable risk? The loss must be measurable The loss exposure must be large The loss must be catastrophic The loss must be due to chance

The loss must be catastrophic. Catastrophic loss is not a pure risk, therefore is not insurable.

Which of the following is an example of a producer's fiduciary duty? An obligation to state every known fact about the policy the producer is selling. A duty to base all transactions upon the principle of Utmost Good Faith. The obligation to tell the truth to the best of one's knowledge. The trust that a client places in the producer in regard to handling premiums.

The trust that a client places in the producer in regard to handling premiums.

Which of the following best describes an insurance company that has been formed under the laws of this state? Domestic Sovereign Alien Foreign

Domestic

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

Implied. Not every single detail of an agent's authority can be written in contract.

When transacting business in this state an insurer formed under the laws of another country is known as a/an Alien Insurer Domestic Insurer Foreign Insurer Admitted Insurer

Alien Insurer

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

An insurance company sells an insurance policy over the phone in response to a TV ad. Which of the following best describes this act? Direct Response Marketing Independent agency marketing Illegal Insurance Telemarketing

Direct Response Marketing. This marketing bypasses the agent. Business conducted over the phone, through the mail, or online.

The risk of loss may be classified as: High Risk and Low risk Pure Risk and Speculative Risk Certain Risk and Uncertain Risk Named Risk and Un-named Risk

Pure risk and speculative risk. Pure risk involves the probability or possibility of loss with no chance for gain and are generally insurable. Speculative risks involve uncertainty as to whether the final outcome will be gain or loss and are generally uninsurable.

What insurance concept is associated with the names Weiss and Fitch? Index used by stock companies Guides describing company financial integrity Policy dividends Types of mutual companies

Guides describing company financial integrity

Which of the following is true regarding a risk retention group? It is a liability insurance company owned by its members. It provides support for underwriters and is not an insurance company. It is a benefit society formed to provide insurance for members of an affiliated lodge. It is a company owned by the stockholders that provides nonparticipating policies.

It is a liability insurance company owned by its members. The members are exposed to similar liability risks by virtue of being in the same business or industry.

Which of the following is a characteristic of a Reciprocal Insurance Exchange? - The chief administrator of the insurer is called an "attorney-in-fact". - Normally write al lines of insurance - Stock holders share in any profits - Issues non-assessable policies

The chief administrator of the insurer is called an "attorney-in-fact". Empowered to bind each subscriber to assume a share of the losses of the group.

The proposed insured makes the premium payment on a new insurance policy. If the insured should die, the insurer will pay the death benefit to the beneficiary if the policy is approved. This is an example of what kind of contract? Personal Unilateral Conditional Adhesion

Conditional. Requires both the insurer and policyowner to meet certain conditions before the contract can be executed.

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

Conditions. They are part of the policy structure.

Which of the following is considered to be a morale hazard? Working as a firefighter Engaging in illegal activities Driving Recklessly Smoking

Driving Recklessly. A state of mind that causes indifference to loss, such as carelessness.

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? Alien Nonadmitted Foreign Domestic

Foreign. Insurer formed under laws of another state.

Which insurance principle states that if a policy allows for greater compensation than the financial loss incurred, the insured may only receive benefits for the amount lost? Reasonable Expectations Indemnity Stop-loss Consideration

Indemnity. The insured can only collect for the amount of the 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? Contract of adhesion Acceptance Consideration Legal purpose

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

What documentation grants express authority to an agent? Agent's insurance license Fiduciary contract State provisions Agent's contract with the principal

Agent's contract with the principal. The Principal grants authority to an agent through the contract.

Which of the following types of agent authority is also called "perceived authority"? Express Implied Fiduciary Apparent

Apparent. Appearance or assumption of authority based on the actions, words, and deed of the principal.

Adverse selection is a concept best described as Only offering coverage to good risks Risks with higher probability of loss seeking insurance more often than other risks Underwriters slanting the odds in favor of the company Poor choices of applicants to be covered

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