General Insurance Concepts Flashcards
An applicant knowingly fails to communicate information that would help an underwriter make a sound decision regarding coverage. This is an example of what
Concealment
Which of the following is NOT the consideration of a policy?
Application given to a prospective insured
All of the following are examples of risk retention EXCEPT
Premiums
In case of a loss, the indemnity provision in insurance policies
Restores an insured person to the same financial state as before the loss
A producer who fails to separate premium monies from their own personal funds is guilty of
Commingling
Hazard is best defined as
Something that increases the risk of loss
Which authority is NOT stated in an agents’ contract, but is required for the agent to conduct business?
Implied authority
Which of the following is NOT a goal of risk retention?
To minimize the insured’s level of liability in the event of a loss
In insurance transactions, fiduciary responsibility means
Handling insurers funds in a trust capacity
The insurer must be able to rely on the statements in the application, and the insured must rely on their insurer to pay valid claims. In the forming of an insurance contract, this is referred to as
Utmost good faith
Installing deadbolt locks on the doors of a home is an example of which method of handling risk?
Reduction
Which of the following is considered to be a morale hazard?
Driving recklessly
Which of the following would qualify as a competent party in an insurance contract?
The applicant has a prior felony conviction
Which of the following types of authority is also called “perceived authority”?
Apparent Authority
Peril is most easily defined as
The cause of loss insured against
In insurance, an offer is usually made when
An applicant submits an application to the insurer
Which of the following is NOT a characteristic of an insurable risk?
The loss must be catastrophic
A situation in which a person can only lose or have no change represents
Pure risk
What document grants express authority to an agent?
Agent’s contract with the principal
What is a material misrepresentation?
A statement by the applicant that, upon discovery, would alter the underwriting decision
Events in which a person has both the chance of winning or losing are classified as
Speculative risk
A loss has occurred before the first report has been filed on a value reporting coverage form. Which is NOT true?
Never more than 75% of a loss is paid
In which of the following types of property valuation will the policy pay the full value as specified on the policy schedule, regardless of depreciation?
Agreed Value
First aid costs for others injured on the insured’s premises
Are paid in addition to the liability limit
