Section 1

Question 0

Hazard

Answer 0

Something that increases the risk

Question 1

Risk

Answer 1

Chance or uncertainty of loss

Question 2

Physical hazard

Answer 2

Hazards that result from material or structural features of a risk

Question 3

Moral Hazard

Answer 3

Circumstances of morals or habits that increase the probability of a loss from an insured peril

Ex: person previously convicted of arson, not paying cc bills

Question 4

Morale Hazard

Answer 4

Risk arising from the insured’s indifference to loss because of an existence of insurance

Ex: careless person

Question 5

Indemnity

Answer 5

Restoring you to where you were financially prior to the loss

Question 6

Insurable Interest

Answer 6

Required at the time of the loss in order to recover on a policy.

Question 7

ACV

Answer 7

Current value minus depreciation
Or
Replacement Cost minus depreciation

Question 8

Negligence

Answer 8

Failure to act as a reasonable person would in the same set of circumstances

Question 9

Liability

Answer 9

Covers BI and PD to others caused by the negligent acts of the insured

All HO have liability but Dwelling does not.

Question 10

Occurrence

Answer 10

Something occurring over a period of time ,but it is still covered by the policy

Question 11

Binders

Answer 11

Temporary insurance contract; may be verbal or written

Question 12

Warranties

Answer 12

Guarantee of truth, such as sprinkler or fire alarms or burglar alarms

Question 13

Representations

Answer 13

Applicant tells the truth to the best of their knowledge on the application.

If client lies, these are misrepresentations. Material Misrepresentation may have the effect of voiding the policy if discovered.

Question 14

Concealment

Answer 14

Omission of a material fact. This may have the effect of voiding the policy.

Question 15

Deposit premium/audit (worker’s compensation and CGL)

Answer 15

Premium you pay is deposit; you will be subject to audit annually and premium adjustments

Question 16

Certificate of Insurance

Answer 16

States who is the insurer, what the policy coverage is for,including limits, and the effective time and date.

NO PREMIUM listed on it!!!!!

Question 17

Law of Large Numbers

Answer 17

Large number of exposure units be combined

Question 18

Pure Risk

Answer 18

No chance of gain, only chance of loss

Question 19

Speculative Risk

Answer 19

You may gain, you may lose; cannot be insured

Question 20

Endorsement

Answer 20

Something added to a policy to modify its terms

Question 21

Most jurisdictions permit courts to award

Answer 21

Compensatory damages to parties injured during the negligent acts of others.

Damages may be special, general, or punitive

Question 22

Special damages

Answer 22

Medical expenses and lost wages aka “out of pocket expenses’

Question 23

General Damages

Answer 23

Compensates the injured party for his or her mental and physical distress, including pain and suffering, disfigurement, and loss of consortium

Question 24

Punitive Damages

Answer 24

Triple the amount of general damages awarded and sometimes not covered by insurance

Injury caused by ‘Gross Negligence’ of the defendant

Question 25

Gross Negligence

Answer 25

Willful and wanton negligence.

Ex: Knowing a product is faulty but still selling it

Question 26

Compliance with the provisions of the Fair Credit Reporting Act

Answer 26

Pre notification must be given. You cannot order consumer reports without the applicant’s written permission.

Post notification must also be given.