general insurance

Question 1

Transfer of Risk

Answer 1

Insurance

Question 2

Loss

Answer 2

reduction, decrease or disappearance of value

Question 3

pure risk

Answer 3

situations that can only result in a loss or no change and insurable

Question 4

risk

Answer 4

uncertainty or chance of a loss occurring

Question 5

speculative risk

Answer 5

involves the opportunity for either loss or gain

Question 6

hazards

Answer 6

conditions or situations that increase the chance of loss

Question 7

physical hazard

Answer 7

individual characteristics that in crease the chance of the cause of loss
(physical conditions are past medical history, condition at birth)

Question 8

moral hazard

Answer 8

tendencies towards risk (applicants that lie on application of insurance)

Question 9

morale hazards

Answer 9

similar to moral they arise from a state of mind (carelessness)

Question 10

peril

Answer 10

causes of loss

Question 11

exposure

Answer 11

a unit of measure used to determine rates charged for insurance coverage (age, medical history, occupation and sex)

Question 12

Homogeneous

Answer 12

a large number of units having the same or similar exposure to loss

Question 13

avoidance

Answer 13

eliminated exposure to a loss (avoid being killed in airplane crash by never choosing to fly)

Question 14

retention

Answer 14

planned assumption of risk by the insured through deductibles, com payments or self insurance to reduce expenses and improve clash flow, increase control of claim reservations and settlements, and to fund losses that cannot be insured

Question 15

reduction

Answer 15

to lessen the possibility or severity of loss (installing smoke detectors, having an annual physicals to detect health issues early and making lifestyle changes

Question 16

elements of insurable risks

Answer 16

due to chance, definite and measurable, statistically predictable, mot catastrophic, randomly selected and large exposure

Question 17

adverse selectioj

Answer 17

insuring of risks that are more prone to losses than average risk

Question 18

reinsurance

Answer 18

contract under which one insurance company reimburses another insurance company for all or part of its liabilities

Question 19

stock companies

Answer 19

owned by stockholders - non participating - doesn’t pay dividends to policyowners but does pay dividends to stockholders

Question 20

mutual companies

Answer 20

owned by policyholders - participating- policyholders are intitles to dividend( return of excess premiums) non taxable

Question 21

express

Answer 21

powers specifically stated in the contract

Question 22

implied

Answer 22

not specially stated in the contract but is assumed necessary to conduct insurance business

Question 23

apparent

Answer 23

appearance of a relationship between the agent and the principal (insurer) based on words or actions (also know as perceived)

Question 24

elements of a contract

Answer 24

agreement -offer and acceptance
consideration
competent parties
legal purposes

Question 25

acceptance

Answer 25

when the underwriter approved application and issues policy

Question 26

consideration

Answer 26

something of value each party gives to the other insured--pay premiums--insurer is pay in the event of loss

Question 27

competent parties

Answer 27

legal age mentally competent and not under drugs or alcohol

Question 28

aleatory

Answer 28

unequal values

Question 29

adhesion

Answer 29

only one party (insurer) prepares a contract and the other part (insured) accepts or rejects it

Question 30

unilateral

Answer 30

one sided (only one party makes a promise)

Question 31

contract of adhesion

Answer 31

in favor of insured

Question 32

indemnity / reimbursement

Answer 32

a provision in an insurance policy that states the event of a loss an insured or beneficiary is permitted to collect to the extent of the financial loss (not gain any extra)

Question 33

utmost good faith

Answer 33

implies that there is no fraud, misrepresentations, or concealment between the parties

Question 34

representations

Answer 34

statements believed to be true to the best of ones knowledge

Question 35

misrepresentations

Answer 35

untrue statements

Question 36

warranty

Answer 36

is an absolutely true statement

Question 37

concealment

Answer 37

legal term for the intention withholding of information of material that is a crucial fact in making a decision.

Question 38

waiver

Answer 38

voluntary act of relinquishing a legal right, claim or privileges

Question 39

estoppel

Answer 39

legal consequence of a waiver

Question 40

fraud

Answer 40

intentional representations or intentional concealment of a material fact

Question 41

domestic

Answer 41

incorporated in this state

Question 42

foreign

Answer 42

incorporated in another state

Question 43

alien

Answer 43

incorporated in another country

Question 44

agent/producer

Answer 44

a legal representative of an insurance company

Question 45

broker

Answer 45

an insurance producer not appointed by an insurance company so represents the client

Question 46

reciprocity/reciprocal

Answer 46

a mutual exchange of rights and privileges