Vocab

Question 1

An insurer not organized under the laws of this state, but in one of the United States or jurisdictions within the United States, whether or not it is admitted to do business in the state or jurisdiction

Answer 1

Foreign Insurer

Question 2

An insurer organized under the laws of any jurisdiction outside of the United States, whether or not it is admitted to do business in this state

Answer 2

Alien Insurer

Question 3

Hazard

Answer 3

A specific condition that increases the probability, likelihood, or severity of a loss form a peril.

Question 4

Peril

Answer 4

The cause of loss.

Question 5

Physical Hazard

Answer 5

A physical condition that increases the probability of loss; use, condition, or occupancy of property. The hazard can be seen.

Question 6

Moral Hazard

Answer 6

Dishonest tendencies that increase the probability of a loss; certain characteristics and behaviors of people.

Question 7

Morale Hazard

Answer 7

Attitude that increases the probability of a loss. Carelessness

Question 8

Starr Risk Management Sharing Transfer Avoidance Reduction Retention

Answer 8

The method of handling Risk

Question 9

Which principle of insurance restores the insured to the same economic condition that existed before the loss?

A. Idemnity
B. Insurability
C. Adhesion
D. Underwriting

Answer 9

A. Indemnity

Question 10

Direct

Answer 10

Physical loss

Question 11

Indirect

Answer 11

Consequences of the direct loss

Question 12

5 examples of Exposure

Answer 12

1. Auto Accident
2. Luggage lost on a trip
3. Pet bitting a mailman
4. Employee hurt on job
5. House fire

Question 13

Exposure

Answer 13

Possibility that a loss will occur

Question 14

Pure Risk

Answer 14

Chance of loss only; insurance companies will insure.

Question 15

Speculative Risk

Answer 15

Chance of loss or gain, not insurable

Question 16

Law of large numbers

Answer 16

The larger the group, the more accurately future losses can be predicted

Question 17

CANHAM

Answer 17

Elements of an insurable risk

Question 18

CANHAM stands for..

Answer 18

CALCULATED
AFFORDABLE
NON- CATASTROPHIC
HOMOGENEOUS
ACCIDENTAL
MEASURABLE

Question 19

Aleatory

Answer 19

Not equal value
Small premium for a large amount of vegetate

Question 20

Adhesion

Answer 20

Policy written by the insurance company
Contract is like glue-cannot be changed
Insured has no input
If ambiguous (not clear), count will take the side of the insured

Question 21

Dwelling Property Coverages

Answer 21

A : Dwelling
B : Other structures (10% of coverage A)
C : personal property on premises; off premise covered at 10%
D : fair rental value
E : additional living expense
Coverage E is included with DP-2 and DP-3. It can be added to DP-1 by endorsement.

Question 22

Other dwelling coverages
(Automatically Included)

Answer 22

Debris removal
Property removed - 5 days all perils
Reasonable repairs
Renters improvements (10% of coverage C)
Fire department service charge - $500, no deductible
Worldwide personal property- 10% of coverage C

Question 23

Other coverages : DP-2 and DP- 3

Answer 23

All basic other coverages
Trees, shrubs, and plants
Maximum of $500 each
Total -5% of coverage A
Collapse- caused by a covered peril
Glass
Ordinance or law 10% of coverage A
Removal - 30 days (5 days for DP-1)

Question 24

DP -1

Answer 24

Only insures fire, lighting, and internal explosion automatically

Question 25

DP-2: Broad

Answer 25

All of DP-1 available perils ( fire, lighting, internal explosion)
Plus Big affect
Burglar damage
Ice and snow weight
Glass breakage
Accidentally discharge or overflow of water
Falling objects
Freezing pipes
Electrical damage
Collapse
Tearing asunder

Question 26

DP-2 Broad Exclusions

Answer 26

Weight of ice, snow, or falling objects on awnings, fences, patios, swimming pools, docks, and retaining walls.
Accidental discharge of water from continuous leaking
Flood
Burglary of property vacant> 60 consecutive days