Terms

Question 1

Moral Hazard

Answer 1

can not touch, can lead to fraudulent claims. (insured lying or overexaggerating, not caring)
Ex: a lot of bank loans
Ex: multiple claims

Question 2

Mutual Companies

Answer 2

a form of cooperative enterprise owned by its policyholders (members)

Question 3

Agent

Answer 3

is one who has authority from a company to manage all of that company’s business within his or her territory to appoint other agents, and to settle claims

Question 4

Binder

Answer 4

A written or oral agreement given by an insurer to insure a risk, pending the issurance of a formal policy.

Question 5

Binding Authority

Answer 5

The capacity to confirm to people who have submitted insurance applications that they have coverage against insured event that, if they occur, may cause financial loss

Question 6

Broker

Answer 6

A licensed and authorized or employed to act on behalf of another.

Question 7

Negligence

Answer 7

Failure to use the degree of care expected from a reasonable and prudent person.

Question 8

Contract

Answer 8

An agreement or promise between two or more parties that is intended to be legally enforceable and is constituted by the acceptance by one party, to do or to abstain from doing a specific act.

Question 9

Peril

Answer 9

The event that caused a loss covered by the policy.

Question 10

Physical Hazard

Answer 10

A hazard arising from the physical condition or characteristics of the object that is insured.

Question 11

Premium

Answer 11

The price of insurance protection for a specified risk for a specified period of time.

Question 12

Cover Note

Answer 12

A document with insurance, or the insurance protection provided.

Question 13

Direct Writer

Answer 13

Are salary based employees who deal directly with the public to sell policies to insured.

Question 14

Express Contract

Answer 14

The terms of the arrangement have been specifically stated and agreed to by both parties either orally or in writing.

Question 15

Proximate Cause

Answer 15

A cause that, in a natural and continuous sequence unbroken by any new and independent cause, produces an event and without which the event would not have happened.

Question 16

Public Adjuster

Answer 16

An insurance claims adjuster representing an insured on a fee basis in a claims settlement.

Question 17

Pure Risk

Answer 17

A chance of a loss, or no loss but no chance of gain.

Question 18

Implied Contract

Answer 18

The parties have acted in a way that it is understood that the principal agent relationship exists, even though no expressed statement may have been made by either.

Question 19

Reinsurance

Answer 19

Insurance purchased by an insurance company from another reinsurer to provide it protection against large losses on cases it has already insured.
- in part or all of the liability assumed.

Question 20

Risk

Answer 20

The chance of loss. Possible loss or destruction of property or possible incurring liability.

Question 21

Independent Adjuster

Answer 21

One who adjusts losses on behalf of the insurance companies but is not employed by any one insurance company

Question 22

Insurance

Answer 22

A contract in which one party, the insurer agrees to reimburse another, the insured, for loss or liability on a defined subject caused by specific hazards or perils.

Question 23

Speculative Risk

Answer 23

Financial loss or financial gain.

Ex: Gambling

Question 24

Stock Companies

Answer 24

Similar to capital enterprise. Individuals (corporations) subscribe & pay in capital to form a legal entity known as a corporation. These subscribers, known as shareholders, have an equitable interest in the assets of the corporation and hope to realize a reasonable profit on their investment.