General Insurance

Question 1

What is the most common form of risk management?

Answer 1

Insurance

Question 2

One party is transferring the risk of financial loss to an insurance company so that the insurer absorbs the costs associated with the risk instead of the loss being suffered by that policy.

Answer 2

Policy Contract

Question 3

Uncertainty or chance of a loss occuring

Answer 3

Risk

Question 4

What is an insurance policy’s main intent?

Answer 4

To indemnify a party with insurable interest in a financial loss of a person or some property.

Question 5

To make whole or to restore a person back to where they were before the financial loss.

Answer 5

Indemnify

Question 6

Insurable, no opportunity for financial gain, only loss is suffered, but not all are insurable

Answer 6

Pure Risks

Question 7

Not insurable, opportunity for financial gain, loss, or reward is possible.

Answer 7

Speculative Risks

Question 8

Many units having similar risks present

Answer 8

Homogenous

Question 9

A situation increasing the odds of a loss or circumstance that increases risks or exposure to risks.

Answer 9

Hazard(s)

Question 10

What are the 3 main classes of hazards?

Answer 10

1. Physical Hazards
2. Moral Hazards
3. Morale Hazards

Question 11

A physical condition or status that increases the chance of loss.

Answer 11

Physical Hazards

Question 12

Dishonest acts & fraud.

Answer 12

Moral Hazards

Question 13

Reckless & irresponsible or blatant lack of concern for handling risks in a prudent manner.

Answer 13

Morale Hazards

Question 14

Causes of loss or actual events from which decreases are suffered that are covered by the policy.

Answer 14

Peril

Question 15

he decline in value of a person or thing, the decrease that is suffered after a peril occurs.

Answer 15

Loss

Question 16

What are the 5 methods commonly used in risk management?

Answer 16

1. Avoidance
2. Retention
3. Sharing
4. Reduction
5. Transfer

Question 17

Staying away from a risk altogether

Answer 17

Avoidance

Question 18

Involves bearing the loss yourself if the loss occurs

Answer 18

Retention

Question 19

Establishing a homogenous group with which to _________the risks for similar losses so that losses are less per individual.

Answer 19

Share

Question 20

Decrease the possibility or significance of loss when the loss can’t be avoided.

Answer 20

Reduction

Question 21

Shifting the loss from a risk to another party by contract & done through the purchase of an insurance policy

Answer 21

Transfer

Question 22

What are the elements in risk?

Answer 22

1. unexpected
2. measurable
3. large homogenous group
4. not completely disastrous
5. not mandetory
6. predictable frequencies

Question 23

Groups of investors willing to back the risk of a policy in exchange for receiving a premium with people who want insurance.

Answer 23

Lloyd’s Underwriters

Question 24

What are groups of investors called?

Answer 24

Syndicate

Question 25

___ have a certificate of authority from the state department to sell it's insurance products in the state.

Answer 25

Authorized (Admitted) Insurer

Question 26

___ don't have certificate of authority.

Answer 26

Unauthorized insurers

Question 27

What are the categories insurers are categorized by their state of incorporation or where their coporate charter was organized?

Answer 27

Domestic Foreign Alien

Question 28

What category does an insurer fall under if they are incorporated in Louisiana?

Answer 28

Domestic

Question 29

What category does an insurer fall under when they are incorporated in the U.S. & U.S. territories othan than Louisiana?

Answer 29

Foreign

Question 30

What category does an insurer fall under when they are formed outside the U.S.?

Answer 30

Alien

Question 31

What is it called when agencies publish regular information about the strength & stability of insurers stay tup to date on the insurer's claims, reserves, profits, & investments?

Answer 31

Financial Status aka Independant Rating Services

Question 32

A legal term that applies to someone representing someone else.

Answer 32

Agent

Question 33

Who do client's pay?

Answer 33

Insurer

Question 34

Who does the insurer pay?

Answer 34

Agent

Question 35

Who does the producer legally represent?

Answer 35

Insurer

Question 36

What are the types of authority?

Answer 36

1. Express 2. Implied 3. Apparent

Question 37

_____ given authority to do certain things on behalf of the insurance company because functions were expressed orally or in writing.

Answer 37

Express Authority

Question 38

Inherent to the nature of sales contracts & the expectations.

Answer 38

Implied Authority

Question 39

___ understood as part of the job but are not specifically spelled out, point-by-point, in the contract.

Answer 39

Implied Authority

Question 40

___ when insurance companies indicate by their actions.

Answer 40

Apparent Authority

Question 41

What are the elements of a legal contract?

Answer 41

1. Offer & Acceptance 2. Consideration 3. Competent Parties 4. Legal Purpose

Question 42

___ an agreement between two parties or more that is enforceable by law.

Answer 42

Legal contract

Question 43

Take it or leave it contracts

Answer 43

Contract of Adhesion

Question 44

Consideration that is being exchanged is unequal or unrelated o the consideration given by the other party.

Answer 44

Aleatory Contract

Question 45

___ only one party in the contract has made a legally enforceable promise & is bound by law to act.

Answer 45

Unilateral Contract

Question 46

___ both parties have conditions to meet to execute the contract.

Answer 46

Conditional contract

Question 47

___When contract language has more than one meaning.

Answer 47

Ambiguity

Question 48

____ when the ambiguity is obvious.

Answer 48

Patent

Question 49

___ hidden ambiguities.

Answer 49

Latent

Question 50

___ when a producer or insurer can lead the customer to beleive that certain coverages are in existence during the sales process.

Answer 50

Reasonable Expectations

Question 51

What are the legal interpretations affecting contracts?

Answer 51

1. Ambiguous terms in contract of adhesion 2. Reasonable expectaions 3. Indemnity 4. Utmost Good Faith 5. Representation/Misrepresentation 6. Warranties 7. Concealment 8. Fraud 9. Waiver/Estoppel

Question 52

___ a policy will only be as good as the information submitted in the application.

Answer 52

Utmost Good Faith

Question 53

___ smething a person states that they believe to be true.

Answer 53

Representation

Question 54

___ when people answer questions dishonestly.

Answer 54

Misrepresentations

Question 55

____ an engagement by the insured party that certain statements are true or that certain conditions shall be fulfilled, the breach of it invalidating the policy

Answer 55

Warranties

Question 56

___ withholding substantial & relevant information that is needed for an insurer to decide about a policy or its benefits.

Answer 56

Concealment

Question 57

___ the intent to deceive & mislead for a specific benefit or gain.

Answer 57

Fraud

Question 58

___ legal term for giving up a right or privilage.

Answer 58

Waiver

Question 59

___ the legal process used to stop someone from trying to get a right or privilage back that they already waived.

Answer 59

Estoppel