CH 1 General Insurance Flashcards
(45 cards)
When does an insurance policy go into effect?
When the policy is delivered and the premium is paid
What are the five characteristics of an ideally insurable risk?
Loss must be:
1) Due to chance
2) Definite and measurable
3) Statistically predictable
4) Not catastrophic
5) Coverage cannot be mandatory
What are the four elements of an insurance contract?
1) Agreement (offer and acceptance)
2) Consideration
3) Competent parties
4) Legal purpose
If an insurer meets the states financial requirements and is approved to transact business in the state, it is considered what type of insurer?
Authorized or admitted
Insurance is a contract that protects the insured from what?
Loss
An insurance company that is formed under the laws of another state is known as what type of insurer?
Foreign
In forming an insurance contract, when does an acceptance usually occur?
When the insurer approves a prepaid application
A person who does not lock the doors to his or her house shows an indifferent attitude. This person presents what type of hazard?
Morale hazard
An insurance company is domiciled in California and transacts insurance in Nevada. What is this insurance classification in Nevada?
Foreign
The type of insurance company organized to return any surplus money to its policyholders is known as what?
Mutual company
In insurance, when is the offer usually made on a contract?
When the insurance application is submitted
What is the term for the causes of loss insured against an insurance policy?
Peril
An applicant conceals relevant in health information on the application. The applicant resents what type of Hazzard?
Moral
The requirement that agents must account for and promptly remit all insurance funds collected is known as what type of agent responsibility
Fiduciary
The insurer organized to return a profit to the stockholders is what type of insurer?
Stock company
What type of risk is insurable?
Pure risk
An insurance policy paid a non-taxable dividend to the insured one year, and nothing the next. From what type of insurer did the insured purchased the policy?
Mutual
We are doing on a sporting event is known as what type of risk?
Speculative
What are the strategies used by underwriters to prevent adverse selection?
- Restriction of coverage
- Refusal to except a risk
- Accepting a risk at a higher rate
In the agent/insurer our relationship, who is considered the principal?
Insurer
What is a warranty in an insurance contract?
An absolutely true statement upon which the validity of the insurance contract is based
If an agent fails to obtain the applicants signature on the insurance application, what must the insurer do?
Send the application back to the applicant for a signature
For the purpose of insurance, what is risk?
Uncertainty of loss
According to the law of agency, a principal is represented by whom?
Agent or producer
