General Insurance Concepts Flashcards
A situation in which a person can only lose or have no change represents what?
Pure risk
The risk of loss may be classified as what?
Pure risk and speculative risk
In forming an insurance contract, when does acceptance usually occur?
When an insurer’s UW approves coverage
The authority granted to an agent through the agent’s contract is referred to as what?
Express Authority
True or False: Premiums are an example of risk retention.
False
Which insurance principle states that if a policy allows for greater compensation than the financial loss, the insured may only receive benefits for the amount lost?
Indemnity
Events in which a person has both the chance of winning or losing are classified as what?
Speculative Risk
What documentation grants express authority to an agent?
Agent’s contract with the principal
An individuals tendency to be dishonest would be indicative of what?
Moral hazard
True or False: The application given to a prospective insured is a consideration in a policy?
False
True or False: Implied authority is NOT stated in an agent’s contract but is required for the agent to conduct business.
True
If an agent is using stationery with the logo of an insurance company, applicants for insurance assume that the agent is authorized to transact on behalf of that insurer. What type of agent authority does this describe?
Apparent
True or False: To minimize the insured’s level of liability in the event of loss is a goal of risk retention?
False
An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. What has the insurer violated?
Consideration
The risk management technique that is used to prevent a specific loss by not exposing oneself to that activity is called?
Avoidance
