General Insurance Flashcards
All of the following are options for dealing with risk, except:
A Subrogating the risk B Avoiding the risk C Transferring the risk D Retaining the risk
A
Subrogating the risk
A person or entity that buys insurance for protection from loss of life or disability is a(n): A Insurer B Insured C Broker D Beneficiary
B
Insured
The following are all correct, except: A A moral hazard includes dishonesty B A physical hazard includes location C Flammable material near a furnace would be considered a physical hazard D A physical hazard includes an attitude of indifference to loss
D
A physical hazard includes an attitude of indifference to loss
Which one of the following applicants is most likely to have an insurable interest in the insured?
A
An individual applying for insurance on a neighbor
B
An employee applying for a policy on a co-worker
C
A spouse applying for coverage on their spouse
D
An applicant who is applying for coverage on a person he/she is expecting an inheritance from
C
A spouse applying for coverage on their spouse
All of the following statements regarding a warranty is correct, except:
A
An implied warranty is stipulated in the contract and is considered a fact
B
A warranty is either expressed or implied
C
Failure to comply with a warranty breaches a contract
D
A warranty may relate to past, present, or future
A
An implied warranty is stipulated in the contract and is considered a fact
Which statement is true of the Law of Large Numbers?
A
As the number of insured units increases, losses decrease
B
If funds are insufficient to pay claims, the insured is assessed additional premium
C
Small certain losses are substituted for large uncertain losses
D
As the number of insured units increases, predictability of losses improves
D
As the number of insured units increases, predictability of losses improves
The idea that there are always some insureds (risks) that are less desirable than average risks, and that these insureds tend to seek or continue insurance coverage to a greater extent than better risks is termed: A Sharing B Estoppel C Adverse selection D Law of Large Numbers
C
Adverse selection
A person who handles insurer funds in a trust capacity is a(n): A Agent B Producer C Agency D Fiduciary
D
Fiduciary
Which insurance company department determines the probability of loss and sets the premium rates? A Sales B Claims C Actuarial D Underwriting
C
Actuarial
Through whom do direct writing companies normally market? A Salaried employees B General agents C General brokers D Independent agents
A
Salaried employees
All of the following statements concerning contract law are correct, except:
A
An insurance policy is a legal contract between 4 parties
B
Contract law pertains to the formation and enforcement of contracts
C
A tort is a civil wrong other than a crime or a breach of a contract
D
An individual committing a tort may be referred to as a tortfeasor
A
An insurance policy is a legal contract between 4 parties
Under the California Financial Information Privacy Act, what must consumers be advised of?
A
The credit rating of the company they are doing business with
B
His/her credit score
C
How many times, if any, the company has had a data breach
D
A financial institution has authority to share their personal financial information
D
A financial institution has authority to share their personal financial information
An insurer organized in another state than the state in which it is authorized to do business is known as which type of insurer? A Foreign B Domestic C Alien D Admitted
A
Foreign
The Commissioner, Director, or Superintendent of insurance is responsible for all of the following, except: A Make insurance laws when appropriate B Examines insurance companies C Approves premium rates D Admits insurance companies to do business in the state
A
Make insurance laws when appropriate
All of the following are recognized classes of insurance in California, except: A Disability B Burglary C Medicare Supplement D Marine
C Medicare Supplement
The shifting of risk of loss to a larger homogeneous group is known as which of the following: A Risk avoidance B Risk transfer C Risk assumption D Risk reduction
B Risk transfer
For life and health insurance, when must an insurable interest exist? A Any time the insurer requires B At each premium due date C The time of claim D When the insurance takes effect
D
when the insurance takes effect
An insurance transaction includes any of the following, except:
A
Negotiating prior to the execution of the contract
B
Transaction of matters subsequent to the execution of the contract
C
Determining rates
D
Execution of contract
C
determining rates
An oral or written statement made at the time of application or before issuance of the policy that is believed to be true to the best of the knowledge of the applicant is called a(n): A Representation B Implied Warranty C Disclosure D Absolute warranty
A
Representation
All of the following are types of insurers, except: A Mutual insurers B Stock insurers C Proprietary insurers D Reciprocal insurers
C
Proprietary insurers
An insurer authorized to transact insurance in a particular state by the state's insurance department is known as: A A resident insurer B A nonadmitted insurer C An admitted insurer D A domestic insurer
C
An admitted insurer
All of the following are true f insurance, except: A Transfers risk B Eliminates risk C Protect against uncertainty D Means sharing of loss
B
Eliminates Risk
All of the following are characteristics of a Mutual Insurance Company, except: A Profits are returned as dividends B Stockholders have ownership C A policyholder votes on the Board of Directors D They provide insurance to members
B
Stockholders have ownership
Which one of the following must be communicated in an insurance contract?
A
The financial rating of an insurance company
B
Information that is not material to a risk
C
The risks insured against
D
Information already known by both parties
C
The risks insured against
Elements of an insurable risk do not include: A Catastrophic perils B Accidental loss C Large number of homogenous units D The ability to set a measurable value on it
A
Catastrophic perils
All of the following are considered part of the consideration of an insurance contract, except:
A
Statements made in the application by the insured
B
Issuance of a policy or binder
C
The insurer’s promise to indemnify in the event of loss
D
Payment of the first premium
B
Issuance of a policy or binder
What must an insurance broker have in place in order to be able to receive, directly from an insured, any compensation or fees for services to be provided?
A
A life, accident & health insurance license
B
A Brokers Service Contract
C
An established place of business in California
D
Approval from the Insurance Commissioner
B
A Brokers Service Contract
Which term describes the probability of loss? A Negligence B Risk C Liability D Peril
B
Risk
Disclosure or lack of disclosure in a statement that would change an insurer's decision to issue a policy for the same premium is considered: A Material B Estoppel C False D Waived
A
Material
The neglect to communicate known information that is material is called: A Waiver B Withholding C Non-disclosure D Concealment
D
Concealment
The process of evaluating a risk for the purpose of issuing insurance coverage is: A Loss exposure B Risk sharing C Adverse selection D Underwriting
D
Underwriting
