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insurance general terms and concepts
insurance general terms and concepts
46 terms
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1
what is a speculative risk ?
can result in loss or gain
only results in loss
2
unilateral contract a contract must be legally
Held by real estate group
Lis pendes
Held by one party
Superfund law
3
personal contracts are made with
your doctor
a group of friends
your boss
two or more parties
4
stock insurers are
insurer organized admitted & writing insurance in TX
personal coverage to individual chance of loss
chance of loss is shared among many people & is called pooling the risk
owned by shareholders receive dividends as stock value or periodic dividend
5
Conditional contracts are:
contracts where only one party makes a legal promise
contracts can be voided if all policy conditions arent met.
contracts that are not binded until premium has been paid
contracts that only pay on third party claims.
6
incorporating a business is a example of what risk management technique?
lloyds of london
risk transfer
risk retention
risk avoidance
7
What is a Domestic Insurer?
An iInsurer organized under the laws of this state
An insurer organized under the laws of a different state
Reciprocal
an insurer organized under the laws of Other countries
8
Foreign Insurer
organized in another State within US border
organized in the State within the US border
organized in the State within the UK border
organized within the US border
9
Alien Insurer
doing business in the same state
doing business in the same countrie
doing business in different capitals
Doing business in different countries
10
Aleatory Contract creates what type of exchange
Certain Conditions must be met
Unequal Exchange
11
What is the
terrorism
risk insurance act
provides medical assistance to the states
gave states the power to regulate insurance
gives temporary assistance in event of a terrorist attack
12
Insurable Interest means
You must tell all information honestly and truthfully
You cannot make a profit from insurance.
two insurance companies will pay half of the compensation.
you must benefit from its existence & suffer from its loss
13
who do producers represent when transacting the business of insurance ?
themselves
the insurer
the commissioner of insurance
the insured
14
when done to jeopardize an insurers security which of the following is not a violation of the federal fraud
exclusively approving catastrophic risk to drive down company profits
abstraction of funds
sending threatening emails emails to impede the insurers business
over valuating property
15
Define law of agency
Legally responisible or obligated
The laws that agencies make up
law that governs the relationship between a principle and his or her agent
Mrs.McGee
16
What is the transfer of risk?
Insurance
Retention
Avoidance
Sharing
17
What is a risk
the cause of a loss
likelihood of loss
18
What does STARR mean ?
share , risk , receive , react
share ,transfer ,avoid, retain, reduction
19
mutual insurers
involves chance of gain/loss & is not insurable
owned by policyholders who receive dividends directly as end of the year
indirect loss due to spoilage temperature change
lend accuracy to a probability
20
Elements of Insurable Risk
loss due to accident, predictable
illness, injury
avoidance,reduction
restoring an insured
21
Insurance is the most
common
way of managing risk
True
False
22
Indemnity means
You must be over 18 to enter a contract
You cannot make a profit from insurance
All items must be insured fully before claiming
You give permission to enter a contract
23
storing paint near a furmace is what hazard
moral
physical
peril
morale
24
The Law of Large Numbers:
Bob from Accounting's Calculations
Means that predictability increases with the number of cases
Refers to number of losses occurring divided by possible losses
Indicates the likelihood of an occurrence
25
What event lead to the Terrorism Risk Insurance Act?
The stock market crash of 2008
Shoe Bombing incident in 2000
Oklahoma City 1995 bombing
9/11
26
Often used in auto insurance, merit rating is based on:
Actual loss records of other policyholders
Factors that indicate the probability of a loss
Adding and subtracting from tables created by actuaries
Actual loss records of the insured
27
Why would an insurer use a manual rating?
The insurer was not happy with the normal group rates
Inadequate group rates since there are very few of them available
The insured was not happy with the normal group rates
Easier for the insurer
28
All are elements of an insurance contract EXCEPT
Agreement
Competent parties
Premium payment
Legal purpose
29
Elements of a Contract
Agreement, consideration, competent, legal purpose.
Agreement Confident, competent
Agreement, Legal purpose
Legal pursposes
30
What is Lloyd's of London?
A Dank Meme
An Insurance Market
A Car Dealership
An Insurance Provider
31
Who does a broker represent ?
Themselves and the insured
Themselves
The brokerage
The customer
32
express authority
authority communicated directly by agent to principal
pick this one
authority communicated directly by principal to agent
authority
33
Apparent Authority
Authority you use that you don’t have
Authority you use that you used to have
Authority you use that you do have
Authority you can't use
34
what is a example of a morale hazard
nail in the wall
air
gas next to a flame
35
What is a example of a physical hazard
piece of plywood on road
icy bridge
Rain
gasoline
36
all of the following are options for managing risk except
avoiding risk
transferring risk
retaining risk
subrogating risk
37
If a material misrepresentation is intentional it is considered...
concealment
a warranty
fraud
a representation
38
Experience rating uses
Known as modified community rating
Spreads risk among large population
previous claim history over a certain time period to adjust policy premium
Based on a groups own experience
39
implied authority is not stated in a agents contract but does grant them authority to perform job duties
False
True
40
Adhesion contracts
Sticky situations that only a court can get us out of
Are based on uncertain events that are not predictable
Unjust and duly one-sided, favoring a powerful interest
Written by party with greater power as "take it or leave it"
41
The Terrorism Risk Insurance Act established the Terrorism Risk Insurance Program, which is administered by:
Homeland Security
The Department of Transportation
The Secretary of the Treasury
The U.S. Attorney General
42
Risk management strategies include risk avoidance, risk transfer, and risk retention
True
False
43
the basis for an insurance claim made by a policy holder is a
peril
loss
speculative
pure risk
44
what is true about a
Doctrine
of Utmost Good Faith
Statements are guaranteed to be true
Statements must be true at time of loss to maintain coverage
Both Insurer and Insured can expect honesty from the other party
Any untruth voids coverage
45
Risk retention involves
buying insurance
the possibility of loss or gain
assuming the cost of an uninsurable risk
stopping the activity that involves risk of loss
46
There are types of hazards like physical hazard, moral hazard and morale hazard.
true
false
