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14 Cards in this Set

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  • Back
List a cost and a benefit of insurance
Cost: Premium
Benefit: Restores injured person to same finanical condition they were in prior to the loss
Define Arson
Intentionally setting fire to real or personal property
List four benefits of purchasing insurance
1. Elinates losses
2. Basis for extending credit
3. Reduces Anxiety
4. Pays for losses
Define Risk
Uncertainity regarding loss
Name and Describe two types of risk
Speculative Risk - has three possible outcomes:
Loss
No Loss
Gain
Pure Risk - has two possible outcomes
Loss
No Loss
Insurance is designed to protect against what type of risk?
Pure risk
Define Exposure
Possibility of loss
Name 5 basic ways to handle risk
1. Non-insurance transfer
2. Retention
3. Avoidance
4. Insurance
5. Loss Control
What is the purpose of insurance?
To indeminify or restor a policyholder to a preloss condition
List 3 principal methods used to regulate insurers.
1. Legislation
2. Courts
3. State Insurance Departments
What is the NAIC and what is its function?
National Association of Insurance Commissioners. The NAIC discusses insurance problems, draft models laws and work with state legislatures to get laws passed
Describe the primary purpose of the McCarran-Ferguson Act.
This is Public Law 15 passed in 1945. Recognized that state regulation of insurance was in the public's best interest.
What is an Admitted Insurer?
Operate under a
Certificate of
Authority granted by the state where the business was formed and the home office is located.
What is the difference between an authorized Non-Admitted Insurer and an unauthorized Non-Admitted Insurer.
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.