General Insurance

Question 1

Which of the following types of insurance company only covers the risks of the parent organization that owns it?

Answer 1

Captive insurance company

Question 2

Within how many days must an insurer pay a claim after receiving proof of loss needed to settle a claim before interest begins to accrue?

Answer 2

30 days

Question 3

If an insurer repeatedly fails to exercise its right to cancel a policy due to a policyowner’s chronically late payment of a premium, what legal principle would prevent the insurer from exercising that right later on?

Answer 3

Estoppel

Question 4

An insurance agent mistakenly tells policyholder Jerry that his boat is covered under a policy the agent recently sold him. Jerry’s boat is damaged in a storm and he learns his boat is not covered when he files a claim. Will the insurer pay this claim?

Answer 4

Yes, because the agent legally represents the insurer.

Question 5

Insurers and their producers are bound by common-law:

Answer 5

rules of agency

Question 6

In an auto insurance policy, the insurance company’s promise to pay benefits in the event of a covered loss is legally known as:

Answer 6

consideration

Question 7

Ralph recently joined the Independent Order of Craftspeople, a society for men and women who share a common vocational affiliation, and which provides insurance to its members through a type of insurer called a:

Answer 7

fraternal insurer

Question 8

Which of the following does NOT constitute the transaction of insurance?

Answer 8

mailing an insurance contract

Question 9

Diane’s agency agreement specifically gives her the authority to collect insurance premiums. This type of authority is called:

Answer 9

express authority

Question 10

Helen submitted an insurance application and premium deposit to TLS Insurance Company. In doing so, she has:

Answer 10

made an offer to the insurer

Question 11

Which type of agent authority is not intended by the insurer but appears to be granted by the insurer based on the producer’s actions or statements?

Answer 11

apparent authority

Question 12

Jack is selling his home to Sue and wants to transfer his homeowners policy to her. Can Jack transfer his policy?

Answer 12

No, unless the insurer gives written consent to do so.

Question 13

Which of the following statements regarding the concept of insurable risk is true?

Answer 13

Only pure (not speculative) risks are insurable, but not all pure risks are insurable.

Question 14

How long does the term of office last for the Arizona Director of Insurance?

Answer 14

six years

Question 15

Main Street Corp. owns a shopping center. It buys liability and property insurance to cover losses stemming from its business. This is an example of which method of handling risk?

Answer 15

risk transfer

Question 16

Randy goes to Main Street Insurance Company to buy a homeowners policy. He observes that he cannot negotiate the terms with the insurer, which presented the policy to him on a take-it-or-leave-it basis. This type of contract is considered a(n):

Answer 16

contract of adhesion