Unit 1 Exam Questions Flashcards
According to the law of agency, an insurance agent acts on behalf of_______________
The principal
In an insurance contract the second party is ______________
Insurer
A car accident is an example of
A pure risk
Abc insurance company is licensed to sell insurance in Wisconsin. When the company is licensed in a state its considered to be
An admitted insurer
Susan decides to drive fast in a horrible snowstorm because she knows that if she gets in an accident her insurance will cover her. This is an example of
Morale Hazard
All of the following are elements of insurable risks except;
The risk must be catastrophic for the insurance company,
The premium must be calculable,
The premium must be affordable,
Risk must be non-catastrophic
The risk must be catastrophic for the insurance company
All of the following statements regarding surplus lines insurers are correct EXCEPT;
Surplus lines insurance is placed with a non-admitted carrier by surplus lines agent,
States keep a list of acceptable surplus lines insurers,
Surplus lines insurance is placed with an admitted carrier by a surplus lines agent,
Surplus lines insurance covers high-risk exposures
Surplus lines insurance is placed with an admitted carrier by a surplus lines agent
Which of the following risk management methods is used by insurance companies; Sharing, Retention, Reduction, Transfer
Transfer
A bulk mail insurance advertising brochure sent by the insurer to every home in one zip code is an example of ______________ marketing
Direct response
Insurance is a contract that _______________.
Transfers the risk of financial loss from an individual or business to an insurance company
According to the law of large numbers,_____________
The larger the number of risks combined into one group, the less uncertainty there will be as to the amount of loss that will be incurred
All of the following statements are true except________________
A mutual insurer is owned by its policyholders,
Mutual insurers don’t guarantee dividends,
The mutual insurer has stock and stockholders,
Mutual insurers pay dividends to policy holders
The mutual insurer has stock and stockholders
An insured gives a producer the policy premium. The producer sends the premium to the insurance company. Who is the fiduciary?
Producer
If a house burns down in a fire, the cause of loss is called a__________.
Peril
Which of the following levels of agent authority is a written agreement with the insurer? Binding authority, Express authority, Implied authority, Apparent authority
Express authority
