Which Insurance principle states that if a policy allows for greater compensation than the financial loss incurred, the insured may only receive benefits for the amount loss?
When doing business in this state an insurance company that is formed under the laws of another state is know as which type of insurer?
Which statement regarding insurable risks is NOT correct?
A. Insurance cannot be mandatory
B. The insurable risk needs to be statistically predictable
C. An insurable risk must involve a loss that is definite as to cause, time, place and amount.
D. Insureds cannot be randomly selected.
D. Insureds cannot be randomly selected.
The causes of loss insured against in an insurance policy are know as.
An applicant knowingly fails to communicate information that would help an underwriter make a sound decision regarding coverage. This is an example of:
All of the following actions by a person could be described as risk avoidance EXCEPT.
A. Never flying in an airplane.
B. Taking a flu shot each year.
C. Investing in the stock market.
D. Refusing to scuba dive.
C. Investing in the stock market
(Investing in the stock market is not an example of risk avoidance; it creates the possibility of a loss.)
A situation in which a person can only lose or have no change represents.
What do individuals use to transfer risk of loss to a large group?
Representations are written or oral statements made by the applicant that are.
Considered true to the best of the applicant's knowledge.
(Representation are statements made by an applicant that they believe to be true.)
An agent accepts the premium payment 35 days after it is due, telling the insured that there will not be a problem keeping the policy in force. This is an example of what type of agent authority?
(An agent who accepts a premium after the end of the grace period appears to the client to have the authority to prevent the policy form lapsing. In fact, the agent has no such power.)
Which of the following is NOT the consideration in a policy?
A. The premium amount paid at the time of application.
B. The promise to pay covered losses
C. The application given to a prospective insured.
D. Something of value exchanged between parties.
C. The application given to a prospective insured.
Which of the following is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract?
(A warranty in insurance is a statement guaranteed to be true. When an applicant is applying for an insurance contract, the statements he or she makes are generally not warranties, but representation. Representations are statements that are true to the best of the applicant's knowledge.)
Which of the following is NOT a goal of risk retention?
A. To increase control of claim reserving and claims settlements.
B. To fund losses that cannot be insured
C. To minimize the insured's level of liability in the event of loss.
D. To reduce expenses and improve cash flow.
C. To minimize the insured's level of liability in the event of loss.
Because an insurance policy is a legal contract, it must conform to the state laws governing contracts which require all of the following elements EXCEPT.
C. Legal purpose.
D. Offer and acceptance.