General Insurance Terms

Question 1

Insurance

Answer 1

A contract whereby one party (insurer/agent) agrees to indemnify another party (insured/client) against a loss by a specifies future contingency or peril in return for payment of premium

Question 2

Risk

Answer 2

Uncertainy of a loss

Question 3

Pure risk

Answer 3

Insurable because it involves a chance of loss only

Question 4

Speculative Risk

Answer 4

Not insurable because it involves a chance of loss or gain, i.e. Gambling

Question 5

Hazard

Answer 5

Events or conditions that increase the chance of a loss

Question 6

Physical ( a type of hazard )

Answer 6

A physical condition: medical history, blindness, deafness

Question 7

Morale (MO-RAH-LEE , a type of hazard)

Answer 7

Doing really unsafe things

Question 8

Moral (type of hazard)

Answer 8

A lie

Question 9

Peril

Answer 9

The cause of a loss: fire, accident, flood

Question 10

Law of Large Numbers

Answer 10

Predicts the number of deaths that should occur within a similar group of people; The larger the number, the more accurate the prediction 

Question 11

Captain/career/exclusive agent

Answer 11

Works for one company and sells only their products

Question 12

Independent agent

Answer 12

Works for self and sells products for many companies

Question 13

Domestic agent

Answer 13

Incorporated in the state they are doing business(i.e. California)

Question 14

Foreign agent

Answer 14

Incorporated in another state (i.e. Oregon Or Arizona) but doing business in California

Question 15

Alien agent

Answer 15

Incorporated in a country outside of the US (i.e Canada or England) but doing business in California

Question 16

Fiduciary

Answer 16

A person in position of financial trust. For example, an agent that collects premiums must remit them promptly to the insurance company 

Question 17

Appointment

Answer 17

Authorization of an agent/producer by an insurer to represent the company

-company appoints the agent

Question 18

Authorized/admitted

Answer 18

All companies (domestic, foreign , alien) must have a license to conduct business in a state regardless of where their company in Incorporated; an authorized company has a certificate of authority to conduct business in a state

Question 19

Certificate of authority

Answer 19

A license granted by the states insurance authority which allows an insurer the right to conduct business in that state

-license granted by insurance state

Question 20

Expressed

Answer 20

Powers specifically stated and written in the contracts 

• Word seen with this word: authority and warranties
• The truth

Question 21

Implied

Answer 21

Not specifically stated in the contract but is assumed authority that is needed to conduct insurance business

-assumed, not facts

Question 22

Commissioner

Answer 22

Public official in charge of the states department of insurance responsible for regulating the insurance industry by enforcing the insurance laws

-The people elect the commissioner every four years no more than two terms

Question 23

Conditional receipt

Answer 23

A type of premium receipt that states the coverage will be effective either:  The date of the application or the date of medical exam, which ever is later, if the premium is admitted with the application and the coverage is approved as applied for