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AZ General Insurance

AZ State Health Insurance

What is insurance? A contract in which one party agrees to indemnify the insured party against loss, damage, or liability arising from an unknown event.
What is risk? The uncertainty or chance of loss
What are the two types of risk? Pure Risk and Speculative Risk
What is an insurable risk? Pure Risk.
What is exposure? A unit of measure used to determine rates charged for insurance coverage.
What are the 3 types of hazards? Physical, Moral, Morale.
What is the difference between a Moral Hazard, and a Morale Hazard? Moral: tendencies towards increased risk. EX: lying. Morale: carelessness. EX: "I have insurance, no need to worry"
What is a peril? The cause of a loss. EX: lightning, tornado, fire.
What is loss? The reduction, decrease, or disappearance of value of the person, or property insured in a policy.
What is risk avoidance? Eliminating exposure to a loss. EX: choosing not to fly in an airplane.
What is risk retention? The planned assumption of risk by an insured through the use of deductibles, copays, and self-insurance.
What is risk sharing? A method of dealing with risk for a group of individual persons or businesses with the same or similar exposure to loss to share the losses that occur within that group.
Define risk reduction To attempt to lessen the possibility or severity of a loss. EX: participating in preventative care.
How can you transfer a risk? Buy insurance.
What are the elements of insurable risk? 1- due to chance 2- definite and measureable 3- statistically predictable 4- not catastrophic 5- randomly selected/large loss exposure
What is adverse selection? Risks that are more prone to losses than the average risk... poorer risks tend to file claims to a greater extent than the average risk.
Define the law of large numbers the larger the number of people with the similar exposure to loss, the more predictable the actual loss will be.
What is a stock company? Owned by stockholders who provide the capital necessary to establish and operate the insurance company, and share in any profits or losses.
What is a mutual company? Owned by the policy holders, and issue "participating policies". Dividends are generated when the premiums and earnings combined exceed the actual costs of providing coverage. Dividends are not guaranteed.
Tell me what a Fraternal Benefit Society is? an organization formed to provide insurance benefits for members of an affiliated lodge, religious organization, or fraternal organization with a representative form of government. Not required to be licensed.
What is Lloyd's Association? Not an insurance company. Provides support facilities for underwriters, or groups of individuals that accept insurance risk.
In what kind of insurance company would you find an "Attorney-in-Fact? Reciprocal Insurance Company
What insurance company is owned by members exposed to similar liability risks by virtue of being in the same business or industry? Risk Retention Groups (RRG's)
What company serves the parent organization's insurance needs at a lower rate than other insurers? Captive Insurers.
What kind of insurer has received a Certificate of Authority to transact insurance in this state? Authorized or Admitted Insurers
What is a Certificate of Authority? A certification given by the Director of Insurance in a state that authorizes insurers to transact.
Insurers that are domiciled in this state are called? Domestic Insurers
What is a Foreign insurer? One from another state/territory.
Alien Insurers are located? In another country.
What is the main difference between Private and Government Insurers? Government insurance companies will provide insurance where Private will NOT.
Define reinsurance. Insurance for Insurers.
What are the three types of Authorities given to an Agent, and their definitions? Express: written in the contract Implied: Not expressed or written in the contract, but assumed. Apparent: a situation where a reasonable person would understand that an agent had authority to act.
What is Fiduciary Responsibility? being trusted to handle funds given to an agent by the insured.
What are the elements of a legal contract? Consideration, Legal Purpose, Offer & Acceptance, and Competent Parties.
What is known as a "take it or leave it" contract? Contract of Adhesion
When only one side of a contract is legally bound to deliver a promise, the contract is known as a...? Unilateral Contract.
What is a Conditional Contract? Certain conditions must be met by both parties in order for the contract to be executed. EX: payment of premium, and promise to pay claims on time.
Define indemnity Restoring an insured back to the financial state they were in before a loss.
Created by: jgray2015
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