General Insurance Flashcards
What are the methods of managing risk.
Avoidance Transfer Sharing Retention Reduction
What are the three types of agent authority?
Express
Implied
Apparent
In the agent/insurer relationship, who is considered the principal?
Insurer
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?
Indemnity
Wagering on a sporting event is known as what type of risk?
Speculative
According to the Law of Agency, who represents the principal?
Agent or producer
When would misrepresentation on an insurance application be considered fraud?
When it is intentional and material
In insurance contracts, when is the offer usually made?
When the insurance application is submitted
What do individuals use to transfer risk of loss to a large group?
Insurance
What is a warranty in an insurance contract?
An absolutely true statement which the validity of the policy depends.
What is the term for causes of loss insured against in an insurance policy?
Peril
If an insurer holds a Certificate of Authority, it is known as what type of insurer?
Authorized or admitted
In insurance contracts, when does acceptance usually occur?
When the insurer approves a prepaid application
A tornado that destroys a property would be an example of what?
Peril
What does the term unilateral contract mean?
A unilateral contract is a one-sided contract. This means only one party makes an enforceable promise.
What does the term reasonable expectations mean?
Certain expectations for coverage that a reasonable person would have based on sources other than just the policy language.
What are the three types of hazards
Physical
Moral
Morale
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.
Insurers are classified according to their domicile, what are the three types of insurers?
Domestic
Foreign
Alien
What document is required for an insurance company to transact insurance?
Certificate of Authority
What type of authority is based on the agent’s actions or words.
Apparent
Insurance contracts are aleatory in nature. What does that mean?
Unequal values are exchanged between the parties to a contract
A situation in which a person can experience only a loss and no gain presents what type of risk?
Pure risk
What does indemnify mean in insurance?
To restore Insured to the same financial status s before a loss.
What is consideration on the part of the insurer?
A promise to pay in the event of a loss.
What are the five characteristics of an ideally insurable risk?
- Due to chance
- Definite and measurable
- Statistically predictable
- Not catastrophic
- Randomly selected
Conditions that increase the chance of a loss are known as what?
Hazards
What are the four elements of an insurance contract?
- Agreement (offer acceptance)
- Consideration
- Competent parties
- Legal purpose
What type of insurer is formed under the laws of another state?
Foreign
What is a risk?
Uncertainty of loss
