Chapter 2 Test Questions

Front 1

Speculative risk is NOT

Back 1

a feature of insurance

Front 2

A characteristic that might make a risk uninsurable is a

Back 2

Risk of loss that exists because of a catastrophic exposure

Front 3

An insurance company owned by its policy holders who receive dividends

Back 3

Mutual Company

Front 4

A method that CAN NOT be used to deal with an exposure to risk is

Back 4

Ascertaining the risk

Front 5

The authority of an insurance agent that is spelled out in written words of the agency contract

Back 5

Express Authority

Front 6

That element that is unnecessary for formation of a legally valid contract is

Back 6

signatures of each party

Front 7

Four elements required for a legal contract

Back 7

Consideration

Offer

Acceptance

Legal Purpose and Capacity

Front 8

To form a legal contract, each party must give something of value. Under Contract Law, the is referred to as

Back 8

Consideration

Front 9

Because the insurer writes the policy language and the insured has little to no control over the content These insurance policies are said to be

Back 9

Contracts of adhesion (you are stuck with it)

Front 10

Uncertainty about loss that exists whenever more than one outcome is possible is called

Back 10

Risk

Front 11

insurance is not

Back 11

a form of gambling because it may or may not pay off

Front 12

Something that may increase the seriousness of a loss if loss occurs or the increased likelihood of a loss is called

Back 12

Hazard

Front 13

Apparent authority of an insurance agent is

Back 13

the public believes the agent has due to the acts of the insurer

Front 14

Failure to disclose known facts when completing an insurance application is an act of

Back 14

concealment

Front 15

The process of making someone whole again?

Back 15

Indemnity

Front 16

A property and Casualty insurance agent frequently as the authority to provide temporary insurance coverage known as a

Back 16

binder

Front 17

Contract in which only one party, the insurer makes an enforceable promise is

Back 17

Unilateral

Front 18

Insurable risk must involve

Back 18

the possibility of loss only

Front 19

An agents responsibilities do not include

Back 19

Changing provisions in the policy

Front 20

the element of an insurance contract that requires the insured to have the legal capacity to make a contract

Back 20

Competent parties

Front 21

Is defined as an insurance contract that is dependent on chance or uncertain outcomes

Back 21

Aleatory

Front 22

What contractual element consist of the offer and acceptance

Back 22

Agreement

Front 23

Insurance is the means of

Back 23

Transferring Risk

Front 24

An example of insurable risk is

Back 24

hail damage to the roof of a car

Front 25

The tendency to create a loss on purpose to collect from the insurance company

Back 25

Moral Hazard

Front 26

An absolute literal fact is an example of a

Back 26

Warranty

Front 27

An unincorporated group of people whose members provide insurance among themselves and managed by AN ATTORNEY

Back 27

Reciprocal Insurer

Front 28

Paying damages on behalf of the insured to a third party claimant is an example of

Back 28

Indemnity

Front 29

The amount of risk the insurer is willing to take on is referred to as

Back 29

Exposure

Front 30

Upon the sale of an automobile, the policy covering the car does not automatically transfer to the new owner. Example of

Back 30

Personal Contract

Front 31

non profit with a lodge system that sales life and health insurance to it members only

Back 31

Fraternal Insurer

Front 32

Is the authority an agent has based on the reasonable expectations of the agents customers

Back 32

Implied Authority

Front 33

is the authority is the authority created when the action or inaction of an insurer gives the

impression that such authority exists.

Back 33

Apparent Authority

Front 34

doctrine states one you ________ sates that once you voluntarily waive a legal right you can't get it back

Back 34

estoppel

Front 35

Defined as something you guarantee to be true and usually not required

Back 35

Warranty

Front 36

Only _________ risk is insurable

Back 36

Pure

Front 37

Chance of loss

Back 37

Risk

Front 38

provision that allows your insurance company to stand in your place to recover monies they have already paid you

Back 38

subrogation

Front 39

Stockholders dividends are

Back 39

Not guaranteed and are taxable as ordinary

income

Front 40

__________ represent the insured

Back 40

Brokers

Front 41

___________ represent either an agent or a broker

Back 41

Solicitors

Front 42

Created by a dishonest person

Back 42

Moral hazard