1E

Question 1

Insurance Application

Answer 1

is the applicant’s offer. whiteout is never acceptable.

Question 2

Representations

Answer 2

a statement of fact

Question 3

Warranty

Answer 3

guarantee of information

Question 4

Material Fact

Answer 4

information that would alter decision to issue insurance

Question 5

Binding Authority

Answer 5

authority given to a producer which provides temporary coverage. may be oral or written. 90 day max

Question 6

Sources of Insurability

Answer 6

inspection services
investigative consumer reports
government agencies
credit reports (can't be used as sole reason to determine insurability)
insurance support organizations

Question 7

Fair Credit Reporting Act of 1970 (FCRA)

Answer 7

protects consumers relative to collection and disclosure of personal info

Question 8

Judgment Rating

Answer 8

oldest and least used form of rating - used with antiques and fine art

Question 9

Manual Rate

Answer 9

most common method. look it up in a manual (ie personal residence)

Question 10

Merit Rate

Answer 10

a manual rate modifier (ie good student modifier)

Question 11

Experience Rate

Answer 11

a discount or surcharge based on experience

Question 12

Retro Rate

Answer 12

initial deposit premium then a premium audit at the end of the term will determine any adjustments. aka “look back” (common on Worker’s Comp Insurance)

Question 13

Policy Structure

Answer 13

1. Declarations
2. Insuring Agreements
3. Condition
4. Exclusions
5. Definitions
6. Additional & Supplementary Coverages
7. Endorsements

Question 14

Declarations

Answer 14

personalize the policy to the insured, identifies the insured, lists coverage and premium, policy period

Question 15

Insuring Agreements

Answer 15

states what is covered, the losses for which the insured will be indemnified, type of property covered and perils against which it is insured

Question 16

Conditions

Answer 16

conditions that apply to both the insured and the insurer

Question 17

Exclusions

Answer 17

describes the losses for which the insured is not covered

Question 18

Definitions

Answer 18

clarifies meaning of certain terms in the policy

Question 19

Additional Coverages

Answer 19

additional coverages included w/o additional premium (ie. cleanup following a covered cause of loss)

Question 20

Supplementary Coverages

Answer 20

gen associated w liability insurance include issues such as providing a defense in lawsuits, paying or bail bonds and costs the insurer incurs in investigation and settlement of a claim

Question 21

Endorsement

Answer 21

modifies the policy in some way. might be added to broaden coverage (w an associated increase in premiu) or may be adde to limit or restrict coverage (w a decrease in premium). Not effective unless accepted by insurer and signed by an exec officer

Question 22

Certificate of Insurance

Answer 22

proof of insurance

Question 23

Insurable Interest

Answer 23

insured must face a risk of financial loss if property is damaged or stolen. used to prevent gambling and reduce moral hazards

Question 24

In P&C Insurance, insurable interest must be demonstrated when?

Answer 24

at the time of loss

Question 25

Cancellation by insured

Answer 25

at any time by providing prior written notification to insurer

Question 26

Cancellation by insurer

Answer 26

can cancel only for specific reasons (30 days notice; non payment of premium is 10 days)

Question 27

Proportionate (Pro-Rata) Share Refund

Answer 27

if INSURER initiates cancellation, insurer is required to refund 100% of the unearned premium

Question 28

Short Rate

Answer 28

if INSURED initiates, the insurer is required to refund unearned premium but allowed to charge a small transaction fee

Question 29

Flat Rate

Answer 29

either initiates a cancellation coincident with the effective date

Question 30

Fire Insurance Policy

Answer 30

refers to a policy that provides coverage in relationship to property losses. can be named or open peril

Question 31

Homeowner Policy Cancellation (Oregon requirements)

Answer 31

insurer may cancel a policy in force for > 60 days only bc of : a. non payment of premium b. fraud c. violation of terms d. substantial increase in risk of loss e. director determination Notificaton 10 days written if non payment of premium or fraud and 30 days for everything else Policy < 60 days can cancel for any reason

Question 32

Commercial Liability Cancellation

Answer 32

a. non payment of premium b. fraud c. substantial increase in risk of loss d. failure to comply with loss control recommendations e. breach of contractual duties, conditions or warranties f. director determination g. loss or decrease in reinsurance h. other reason approved by director. cancellation effective after 10 working days