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14 Cards in this Set
- Front
- Back
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List a cost and a benefit of insurance
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Cost: Premium
Benefit: Restores injured person to same finanical condition they were in prior to the loss |
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Define Arson
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Intentionally setting fire to real or personal property
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List four benefits of purchasing insurance
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1. Elinates losses
2. Basis for extending credit 3. Reduces Anxiety 4. Pays for losses |
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Define Risk
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Uncertainity regarding loss
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Name and Describe two types of risk
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Speculative Risk - has three possible outcomes:
Loss No Loss Gain Pure Risk - has two possible outcomes Loss No Loss |
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Insurance is designed to protect against what type of risk?
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Pure risk
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Define Exposure
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Possibility of loss
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Name 5 basic ways to handle risk
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1. Non-insurance transfer
2. Retention 3. Avoidance 4. Insurance 5. Loss Control |
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What is the purpose of insurance?
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To indeminify or restor a policyholder to a preloss condition
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List 3 principal methods used to regulate insurers.
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1. Legislation
2. Courts 3. State Insurance Departments |
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What is the NAIC and what is its function?
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National Association of Insurance Commissioners. The NAIC discusses insurance problems, draft models laws and work with state legislatures to get laws passed
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Describe the primary purpose of the McCarran-Ferguson Act.
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This is Public Law 15 passed in 1945. Recognized that state regulation of insurance was in the public's best interest.
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What is an Admitted Insurer?
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Operate under a
Certificate of Authority granted by the state where the business was formed and the home office is located. |
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What is the difference between an authorized Non-Admitted Insurer and an unauthorized Non-Admitted Insurer.
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Neither are licensed by the state as an Admitted Insurer. However, an Authorized Non-Admitted Insurer can transact business in the state through a Surplus Lines Broker.
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