Chapter 1: General Insurance Quiz Flashcards
The insurer may suspect that moral hazard exists if the policyholder
A. Is indifferent to activities that may be dangerous
B. Always drives over the speed limit
C. Is not honest about his health on an application for insurance
D. Is prone to depression
Is not honest about his health on an application
An applicant is denied insurance because of information found in a consumer report. Which if the following requires that the insurance company supply the applicant with the name and address of the consumer reporting company?
A. Consumer Privacy Act
B. Fair Credit Reporting Act
C. Conditional receipt
D. Disclosure rule
Fair Credit Reporting Act
If an insurance company sends e-mail solicitations to potential customers, and if a customer chooses to opt out of the list, then how much time will the company have to remove the person from solicitation lists?
A. 30 days
B. 10 days
C. 60 days
D. 15 days
10 days
According to the telemarketing sales rules, what are the permissible calling hours for telemarketing calls?
A. 8am to 9 pm
B. 7 am to 9 pm
C. 7 am to 7 pm
D. 10 am to 10 pm
8 a.m. until 9 p.m.
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?
A. Implied
B. Apparent
C. Express
D. Assumed
Apparent
All of the following actions by a person could be described as risk avoidance EXCEPT
A. Never flying in an airplane
B. Not driving after being in an accident
C. Investing in the stock market
D. Refusing to scuba dive
Investing in the stock market
How is it determined whether an insurer is allowed to write business in a state?
A. The insurer’s net income will determine whether a company will be allowed to write business in a state
B. The insurer’s domicile or location of incorporation will determine whether a company is domestic, foreign, or alien
C. The insurer’s domicile will determine whether an insurance company is domestic, foreign, or alien
D. The insurer’s location of incorporation will determine whether a company is domestic, foreign, or alien
The insurer’s domicile or location of incorporation will determine whether a company is domestic, foreign, or alien
Which of the following types of agent authority is also called “perceived authority?”
- Implied
- Apparent
- Fiduciary
- Express
Apparent
What was created to keep telemarketers from calling consumers who do not wish to be contacted?
- Confidential No Call Act
- Call Control Registry
- Freedom of Information Act
- National Do Not Call Registry
National Do Not Call Registry
A person who does not lock the doors or does not repair leaks shows an indifferent attitude. This person presents what type of hazard?
- Moral
- Physical
- Morale
- Legal
Morale
A life insurance policy has a legal purpose if both of which of the following elements exist?
A. Offer and counteroffer
B. Policyowners and named beneficiaries
C. Underwriting and reciprocity
D. Insurable interest and consent
Insurable interest and consent
A tornado that destroys property would be an example of which of the following?
A. A physical hazard
B. A pure risk
C. A loss
D. A peril
A peril
Which of the following is considered to be a moral hazard?
A. Driving recklessly
B. Smoking
C. Engaging in illegal activities
D. Working as a firefighter
Driving recklessly
When would a misrepresentation on the insurance application be considered fraud?
- Any misrepresentation is considered fraud
- Never: statements by the applicant are only representations
- When the application is complete
- If it is intentional and material
If it is intentional and material
In forming an insurance contract, when does acceptance usually occur?
- When an insurer receives an application
- When an insurer’s underwriter approves the coverage
- When an insurer delivers the policy
- When an insured submits an application
When an insurer’s underwriter approves coverage
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?
A. Reduction
B. Avoidance
C. Retention
D. Transfer
Reduction
Which of the following insurance options would be considered a risk-sharing arrangement?
A. Reciprocal
B. Mutual
C. Surplus lines
D. Stock
Reciprocal
Installing deadbolt locks on the doors of a home is an example of which method of handing risk?
A. Reduction
B. Self-insurance
C. Transfer
D. Avoidance
Reduction
Which of the following is the basis for a claim against an insurance policy?
A. Hazard
B. Material change
C. Loss
D. Misrepresentation
Loss
A situation in which a person can only lose or have no change represents?
A. Speculative risk
B. Pure risk
C. Hazard
D. Adverse selection
Pure risk
For the reported losses of an insured group to become more likely to equal the statistical probability of loss for that particular class, the insured group must become
A. More active
B. Smaller
C. Older
D. Larger
Larger
A state-issued document empowering an insurance company to become an admitted insurer is called
A. Certificate of deposit
B. Certificate of authority
C. Certificate of admission
D. Certificate of title
Certificate of Authority
According to the Fair Credit Reporting Act, all of the following would be considered negative information about a consumer EXCEPT
A. Disputes regarding consumer report information
B. Tax delinquencies
C. Failure to pay off a loan
D. Late payments
Disputes regarding consumer report information
Units with the same or similar exposure to loss are referred to as
A. Insurable risks
B. Catastrophic loss exposure
C. Law of large numbers
D. Homogeneous
Homogeneous
Which of the following regulatory authorities participated in creating the National Do Not Call Registry?
A. BBB
B. SEC
C. NAIC
D. FTC
FTC
All of the following are examples of risk retention EXCEPT
A. Deductibles
B. Self-insurance
C. Premiums
D. Copayments
Premiums
Which of the following is NOT correct regarding false statements by a person engaged in the business of insurance?
A. Statements made with the intent to deceive are unlawful
B. False statements about the financial condition of an insurer are unlawful
C. Omissions of material fact on insurance application are fraud
D. Only written statements can be considered fraud
Only written statements can be considered fraud
An insurance company sends frequent email advertisements and coupons to its customers. One customer does not want to receive these emails anymore and requests to be excluded from the mailing list. The emails to the customer must stop within
A. 10 business days
B. 15 business days
C. 30 business days
D. 1 business day
10 business days
Events or conditions that increase the chances of an insured loss occurring are referred to as
A. Hazards
B. Risks
C. Perils
D. Exposures
Hazards
Under the Fair Credit Reporting Act, if a consumer challenges the accuracy of the information contained in a consumer or investigative report, the reporting agency must
A. Change the report
B. Send an actual certified copy of the entire report to the consumer
C. Respond to the consumer’s complaint
D. Defend the report if the agency feels it is accurate
Respond to the consumers complaint
