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52 Cards in this Set
- Front
- Back
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What is based on the Principle of Risk Transfer? |
Insurance |
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What kind of risk has an outcome that is uncertain? |
Speculative risk |
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What is the reason for a claim? |
Loss |
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What is the measure of a loss? |
Exposure |
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Name three types of hazards. |
Physical, moral and morale |
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What is a cause of a loss? |
Perile |
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What is the most common way to transfer risk? |
Homeowner's insurance |
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Define adverse selection |
Insuring risks more prone to loss |
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What is the theory of probability that is the basis for insurance? |
Law of large numbers |
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Who manages a Mutual Company? |
Board of Trustees |
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What is the high risk coverage purchased from an unauthorized company? |
Surplus line |
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How are insurance companies defined? |
Where they are chartered |
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What protects policyholders from an insurer's insolvency? |
Property and Causality guaranty corporation |
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What must all insurers obtain to conduct insurance business? |
Certificate of authority |
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What does an agent represent? |
An insurer |
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What is the authority that is written in a contract? |
Express authority |
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What are the four elements of a contract? |
Offer & acceptance, consideration, competent parties, legal purpose. |
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Define a fiduciary? |
A trustee |
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What is value in a contract? |
Consideration |
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What is the fine for violating the Fair Credit Reporting Act? |
$2500 |
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The concept of returning an insured to the financial position they occupied prior to a loss is referred to as the concept of: |
Indemnity |
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What type of marketing involves telemarketing? |
Direct Response |
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What is the date the Fair Credit Reporting Act became law? |
April 25, 1971 |
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Which type of authority is based on the actions, words, or deeds of the principal? |
Apparent |
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The risk of loss may be classified as: |
Pure risk and speculative risk |
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What is an intentional suppression and failure to disclose information, facts and circumstances? |
Concealment |
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What must an insured have in regard to their covered property with their insurer? |
Insurable Interest |
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When must insurable interest exist? |
At the time of loss |
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What is the initial screening of an applicant for insurance coverage? |
The underwriting process |
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Why is a loss ratio formula used? |
To determine profitablity |
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What does an insurer use to determine their profitability? |
Loss-ratio formula |
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What are the ways rates are determined? |
Payroll, gross sales, value of property |
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What is the difference between class and individual rating systems? |
Class: All applicants have similar characteristics; Individual: characteristics vary greatly. |
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What rating is used when a particular risk has no other risk with like characteristics? |
Individual rating system |
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What four components are used to determine rates? |
Operating expenses, individual profits, loss adjusting expenses, and loss revenues. |
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What hazard is created due to an individual intentionally maximizing their behavior? |
Moral hazard |
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What is the cause of a loss called? |
Peril |
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What type of peril insures any risk of loss? |
Open peril |
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What type of insurance covers multiple rental properties? |
Blanket insurance |
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What is the most cost effective rating for classes of construction? |
Fire resistive |
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How is the loss payment calcuated? |
Current replacement cost |
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How is the Actual Cost Value (ACV) calculated? |
Current replacement cost - depreciation |
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What questions are answered in the Declarations? |
Who, what, where, when, how much? |
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What is a dollar amount an insured must pay before their policy provides coverage? |
Deductible |
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What is the main purpose of subrogation? |
To prevent a claimant from collecting damages twice. |
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What is the "when" in a policy's Declarations section? |
12:01 am |
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What policy part covers claims related expenses incurred by an insured to protect their damaged property from further loss? |
Additional coverage |
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What is used to add, change, or correct coverage from a policy? |
Endorsement |
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What are elements that determine rates? |
Components |
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What often refers to "all risks"? |
Open perils |
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What clause establishes a procedure to determine a loss when it cannot be agreed upon by an insured and an insurer? |
Appraisal |
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What is it called when an applicant provides false information on an application? |
Misrepresentation |
