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104 Cards in this Set

  • Front
  • Back
  • 3rd side (hint)

Function of underwriting

Evaluate applications , select rating facters, policy terms and conditions.

3 different ones

Private insurers

3 types stock, mutual, reciprocal


Benefits of insurance

Peace of mind and securing credit


Retaining all or part of the risk

Marketing distribution

4 systems direct writing, direct mail, exclusive agents, independent agencies

Investigative agencies

5 areas personal interviews, MIB, DMV, financial reports, physician statements


Works on behave of a company of an insured


Works on behave of insured fir a company


Works for a employer, selling insurance under a agent


Works with agents and is appointed with many companies

Fire and casualty licensee

Licensed to transact hazard insurance and liability policies including health and disability insurance

Personal lines licensee

Cannot transact health disability or commercial


Assists for settling claims either for a company or a insured

Non admitted/admitted

Not authorized to transact business in California except through Surplus lines broker


Organized under laws of another country/state/or CA

Surplus lines and special Surplus lines

Only transact for non-admitted / broker who transact railroad, aircraft, ship owner coverage

Inactive license

No notice of appointment on file but all fees and CE units are up to date


Handles affairs and funds of others

CE unit requirements

Continuing education is: first 4 years is 25 units each year 3rd renewal cycle 15 units every year or 30 units each renewal cycle


California insurance code in California code of regulations


Department in an insurance company

4 areas Reciprocal, Marketing sales, underwriting, actuarial

Types of insurance companies

5 types reciprocal, mutual, stock, risk retention group, Lloyds


Elected by the citizens to administer, interpret, and enforce the code


California state Guaranty Association

Rating laws

4 types- prior approval, file & use, use & file, open competition


Insured gives up the right to sue the 3rd party & the company does it for them.


Mediator that helps settle disputed claims


Portion the insured pays before the company

Elements of a contract

4 elements- offer and acceptance, competent parties, legal purpose and consideration contract of


Insured has no say in the contract wording, only accept or reject it


Premium for a promise. Insurer is the only one that could not cancel without just cause


Must meet all conditions before claim is paid


Cannot transfer. between company and insured

Utmost good faith

Honest information on both parties, to their best belief and knowledge


Get you back where you were before the loss occurred

Insurance policy

Written instrument where one undertakes to indemnify another

Specs of a policy

6 specifices- declaration page, insuring agreement, definitions, exclusions, endorsements, additional coverage


Void of contract


Professional liability coverage for those who give advice for a fee

Free insurance

Not permissible as an incentive to purchase another product

Can't bribe with free insurance


2 types pure and speculative


Cause of loss


4 types- physical, moral, morale and legal

Law of large numbers

The larger the pool of information gathered the more reliable it becomes

Loss exposure

Degree to which a person or property is at risk

Ideally insurable risk

2 ares- accidental, creates financial hardship, measurable not catastrophic

Adverse selection

Tendency of those who need insurance to buy it

Spread of risk

Transfer or pool the risk


Written comments against others


Spoken comments against another


Deliberately providing false information for gain/profit


Hiding materials info


2 types- expressed or implied


Important facts to the contract


Oral or written expression of information


False information about a contract


2 types- expressed and implied

Transacting insurance

4 areas- execution, negotiation, solicitation of the contract or any other transaction resulting in these

Display of license

Must be in a prominent place in your office

Keeping records

Available in 30 days upon request all policy information must be accessible in 30 days notice and on file for 2 years

Printing license # and fines

Must be printed on all material to the public; fines are for each offense and are 200 1st offense 500 2nd offence and 1000 each offense after that

Broker fees

Must be disclosed

Notice of appointment

Every licensee must have one on file with the DOI to be actively license

Paul vs Virginia

State Should regulate insurance


Government should regulate insurance

McCarron Furguson

State with regulate insurance laws, except for federal programs like flood

Code administration

Commissioner doesn't create the code, only determines how to implement it ect.


First attempt at restoring an insurance company that is close to insolvency


List of eligible Surplus lines insurance


4 elements- Duty, breach of Duty, injury or damage, proximate clause

Defense against negligence

4 defenses- assuming a risk, contributory negligence, comparative negligence, last clear chance

Proximate Claus

Unbroken chain of events that results in damage or injury due to negligence

Gross negligence

Irresponsible Behavior

Vicarious liability

Automatic liability one party has for the actions of another

Liberation clause

Broadening coverage without any extra charge during a policy period

No-fault laws

Each party pays for their own damage or injury. does not exist as a whole anymore

Risk management

5 strategies - STARR; share, transfer, aviod, retain, ruduce

Direct/indirect loss

Reduction of the Quality, quality or value of something to do a covered loss / consequential losses as a result of the cover loss

Combined ratio

Incurred losses + loss adjusted expenses and earned premium = loss ratio

All risks - open peril

Everything's covered unless it is excluded

Named peril

Only perils named on the policy are covered

Short rate

Cancellation made by an insured prior to its expiration date and surcharge by the company

Pro rata

Cancellation made prior to the expiration date and NOT surcharge by the company

Flat rate

Cancellation of a policy back to its Inception date with all premiums are 100% refunded


Cease coverage/ company not continue beyond expiration date/ cancels due to non-pay

Unearned premium

Money the company owes a insured for the uninsured portion of time already paid for

Earned premium

Money owed to the company for a coverage period Provided but not yet paid for

Contingent/ expectant interest

Just because I expect to own something in the future that will not allow me to buy coverage for it now

Los ratio

Percentage of Premium dollar a company spends on a claim and expenses a 100% means no profit, broke even

Waiver & Estoppel

Giving up a right/ agent acts in a misleading way so that the insured is not required to perform


Insurance companies nearing bankruptcy or unable to pay expected loss


Race, color, national origin, religion, sexual orientation, mental impairment that is not Material, ancestry

Absolute / strict liability

considered liable regardless of the injury or damage due to relationship with it

Co - insurance

Carried over required X loss - deductible =loss payment


Limit of insurance for all claims within a policy., typically annually

Damages that may be awarded

Punitive, compensatory, specific, and general

Concurrent causation

2 for more perils happen with no break in time

Types of rating methods

Manual/ judgement /Merit rating

Loss Reserve

Estimate of an amount the insurer may have to pay for future claims

Parts to a policy

Don't cry if dragons eat elephants angrily

Declaration, condition, insuring agreement, endorsement, exclusions, additional coverage


Transferring the policy from one person to another

Lost valuation

AVC, RC, market value, agreed value, stated value

Standard mortgage clause

If the insured neglects to pay the premium, or file a claim, they may do so on the insured's behalf

HO 6

Covered perils to a condominium units and the exposure of liability as well as Loss assortment coverage