General Insurance

Question 1

What are the methods of managing risk.

Answer 1

Avoidance
Transfer
Sharing
Retention
Reduction

Question 2

What are the three types of agent authority?

Answer 2

Express
Implied
Apparent

Question 3

In the agent/insurer relationship, who is considered the principal?

Answer 3

Insurer

Question 4

What provision states that if a policy allows for greater benefits than the financial loss incurred, the insured may be compensated only for the amount lost?

Answer 4

Indemnity

Question 5

Wagering on a sporting event is known as what type of risk?

Answer 5

Speculative

Question 6

According to the Law of Agency, who represents the principal?

Answer 6

Agent or producer

Question 7

When would misrepresentation on an insurance application be considered fraud?

Answer 7

When it is intentional and material

Question 8

In insurance contracts, when is the offer usually made?

Answer 8

When the insurance application is submitted

Question 9

What do individuals use to transfer risk of loss to a large group?

Answer 9

Insurance

Question 10

What is a warranty in an insurance contract?

Answer 10

An absolutely true statement which the validity of the policy depends.

Question 11

What is the term for causes of loss insured against in an insurance policy?

Answer 11

Peril

Question 12

If an insurer holds a Certificate of Authority, it is known as what type of insurer?

Answer 12

Authorized or admitted

Question 13

In insurance contracts, when does acceptance usually occur?

Answer 13

When the insurer approves a prepaid application

Question 14

A tornado that destroys a property would be an example of what?

Answer 14

Peril

Question 15

What does the term unilateral contract mean?

Answer 15

A unilateral contract is a one-sided contract. This means only one party makes an enforceable promise.

Question 16

What does the term reasonable expectations mean?

Answer 16

Certain expectations for coverage that a reasonable person would have based on sources other than just the policy language.

Question 17

What are the three types of hazards

Answer 17

Physical
Moral
Morale

Question 18

What is consideration in an insurance contract?

Answer 18

Consideration is something of value that each party gives to the other. Consideration on the part of the insurer is binding.

Question 19

Insurers are classified according to their domicile, what are the three types of insurers?

Answer 19

Domestic
Foreign
Alien

Question 20

What document is required for an insurance company to transact insurance?

Answer 20

Certificate of Authority

Question 21

What type of authority is based on the agent’s actions or words.

Answer 21

Apparent

Question 22

Insurance contracts are aleatory in nature. What does that mean?

Answer 22

Unequal values are exchanged between the parties to a contract

Question 23

A situation in which a person can experience only a loss and no gain presents what type of risk?

Answer 23

Pure risk

Question 24

What does indemnify mean in insurance?

Answer 24

To restore Insured to the same financial status s before a loss.

Question 25

What is consideration on the part of the insurer?

Answer 25

A promise to pay in the event of a loss.

Question 26

What are the five characteristics of an ideally insurable risk?

Answer 26

1. Due to chance
2. Definite and measurable
3. Statistically predictable
4. Not catastrophic
5. Randomly selected

Question 27

Conditions that increase the chance of a loss are known as what?

Answer 27

Hazards

Question 28

What are the four elements of an insurance contract?

Answer 28

1. Agreement (offer acceptance)
2. Consideration
3. Competent parties
4. Legal purpose

Question 29

What type of insurer is formed under the laws of another state?

Answer 29

Foreign

Question 30

What is a risk?

Answer 30

Uncertainty of loss