Home
Subjects
Expert solutions
Create
Log in
Sign up
Upgrade to remove ads
Only ₩37,125/year
- Social Science
- Business
- Insurance
-
Flashcards
-
Learn
-
Test
-
Match
-
Flashcards
-
Learn
-
Test
-
Match
Terms in this set (60)
What are 5 characteristics of an ideally insurable risk?
1. Due to chance 2. Definite and measurable 3. Statistically predictable 4. Not Catastrophic 5. Randomly selected
what is the another term for an authorized insurer?
Admitted
Events in which a person has both the chance of winning or losing are classified as...
Speculative Risk
Which of the following are NOT a goal of risk retention?
To minimize the insured's level of liability in the event of a loss
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 insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which of the following insurance principles has the insurer violated?
Consideration
An insured falsely reports the theft of a valuable item in order to collect payment from the insurance policy. This is an example of
Fraud
What insurance concept is associated with the names Weiss and Fitch?
Guides describing company financial integrity
Courts will interpret any ambiguity in an insurance contract
In favor of the insured
Because an agent is using stationery with the logo of an insurance company, applicants for insurance assume that the agent is authorized to transact on behalf of that insurer. What type of agent authority does this describe?
Apparent
A producer who fails to segregate premium monies from his own personal funds is guilty of
Commingling
What insurers are owned by stockholders
Stock
What produces evaluations of insurers' financial status often used bu the state departments of insurance?
AM Best
When would a misrepresentation on an insurance application be considered fraud?
If it is intentional and material
What is an example of a producers fiduciary duty?
The trust that a client places in the producer in regard to handling premiums
When an individual purchases insurance, what risk management technique is he or she practing?
Transfer
What are methods of managing risk?
Avoidance, transfer, sharing, retention, and reduction
In insurance contracts, when does acceptance usually occur?
When the insurer approves a prepaid application
What does the term reasonable expectations mean in insurance?
Certain expectations for coverage that a reasonable person would have based on sources other than just the policy language
What do individuals use to transfer their risk of loss to a larger group?
Insurance
What are the four elements of an insurance contract?
agreement (offer and acceptance) consideration, competent parties, and legal purpose
In the agent/insurer relationship who is considered the principal?
Insurer
What is consideration on the part of the insurer?
A promise to pay in the event of a loss
What is risk?
Uncertainty of loss
In insurance contracts, when is the offer usually made?
When the insurance application is submitted
What are the three types of hazards?
Physical, Moral, Morale
What is the term for the causes loss insured against in an insurance policy?
Peril
What is a warranty in an insurance contract?
An absolutely true statement upon which the validity of the policy depends
Insurers are classified according to their domicile. What are the three types of insurers?
Domestic, Foreign, and alien
What document is required for an insurance company to transact insurance?
Certificate of Authority
What type of Insurer is formed under the laws of another state?
Foreign
According to the Law of Agency, who represents the principal?
Agent of Producer
Conditions that increase the chance of loss are?
Hazards
What is consideration in an insurance contract?
Consideration is something of value that each party gives to the other. Consideration on the part of the insurer is binding.
What are the three types of agent authority?
Express, implied and apparent
What does the term unilateral contract mean?
A unilateral contact is a one sided contact. This means only one party makes an enforceable promise
What provision states that if a policy allows for greater benefits than the financial loss incurred, the insured be compensated only for the amount lost?
Indemnity
If an insurer holds a Certificate of Authority, it is known as what type of insurer?
Authorized or admitted
A situation in which a person can experience only a loss and no gain presents what type of risk
Pure Risk
What type of authority is based on the agent's actions, or words?
Apparent
Wagering on a sporting event is known as what type of risk?
Speculative
What are the methods of managing risk?
Avoidance, transfer, sharing, retention, and reduction
Insurance contracts are aleatory in nature. what does that mean?
Unequal values are exchanged between the parties to a contract
A tornado that destroys a property would be an example of what?
Peril
What does indemnify mean in insurance?
To restore an insured to the same financial status as before a loss
What is the most common way to transfer risk?
purchase insurance
The authority granted to an agent through the agent's contract is referred to as
Express Authority
A 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
Which authority is NOT stated in an agent's contract but is required for the agent to conduct business?
Implied
what best describes the concept that the insured pays a small amount of the premium for a large amount of risk on the part of the insure company?
Aleatory
What is the term which best describes when a person develops a formal program identifying, evaluating, and funding its losses?
Self-Insuring
An insurance company assures its new policyholders that their premium costs will not increase for a period of at least 5 years, however, due to increasing financial strain, they plan to raise premium costs for all insured by 10% over the next two years. What term best describes this act?
Fraud
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?
Conditional
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
Following a career change, an insured is no longer required to perform many physical activities, so he has implemented a program where he walks and jogs for 45 minutes each morning. The insured has also eliminated most fatty foods from his diet. Which method of dealing with risk does this scenario describe?
Reduction
Who might receive dividends from a mutual insurer?
Policyholders
On a participating insurance policy issued by a mutual insurance company, dividends paid to policyholders are
Not taxable since the IRS treats them as a return of the premium paid
Which of the following is NOT an essential element of an insurance contract?
Counteroffer
What documentation grants express authority to an agent?
Agent's contract with the principal
What entity is not an insurer but an organization to provide insurance benefits for members of an affiliated lodge or religious organization?
Fraternal benefit society
Other sets by this creatorPractice Exam questions
100 terms
Chretien185Plus
Property and Casualty
43 terms
Chretien185Plus
MA Personal Lines
75 terms
Chretien185Plus
Other Quizlet setsSystem Analysis Ch.10
20 terms
eas174
Advanced Financial Accounting Topics Exam #3
73 terms
kylieakin99
Chapter 64: Assessment and Management of Patients…
40 terms
gnovathechPlus
CHAP 16 MKT101
40 terms
fkw27532