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Insurance

Chapter 1

QuestionAnswer
A peril is: the actual cause of the loss.
Punishment for twisting or misrepresentation would be: up to 1 year in jail up to $25,000
Which of the following statements is true about reinsurance? Reinsurance is the process whereby the insurer transfers all or part of the risk to another company.
According to the California insurance law, either party may rescind a contract for any of the following reasons EXCEPT: Once a contract is signed, it can never be rescinded.
When an insured rejects uninsured motorist in writing this is considered: a waiver
A beautician stating that this conditioner fixes badly damaged hair is a: implied warranty
A hazard that deals with a persons mental attitude, behavior and habits is an example of: Moral hazard
Which of the following are the main types of risks? Speculative and pure
Which of the following is an example of an adverse underwriting decision? Charging a higher rate, rejecting the risk, Issuing with limitations
The uncertainty or chance of a loss occurring is known as: risk
Which of the following is not a class of insurance? Casualty
A hazard is best defined as: anything that increases the chance of loss or severity of loss due to a peril.
Restoring the insured back to the condition he or she was in before the loss occurred is known as: Indemnification
What are the two types of torts? Intentional & Unintentional
Type of loss exposure pertaining to land and structures attached to it is: property loss exposure
Loss control refers to: taking the necessary precautions that will reduce the risk of a loss.
Which of the following describes when one party intentionally gives the other party false information in order to benefit from the unlawful gain. Fraud
The degree of loss a person/organization faces from suits brought by a third party refers to: Liability Loss Exposure
The state of being subject to a loss is considered: exposure
The process of reviewing applications for insurance and the information on the application is: Underwriting
Materiality is determined by the disadvantage placed on the other party and: not by the event and the influence of the facts
Which of the following is the amount of money the insured pays before the insurer pays for the rest of the claim? deductible
Which of the following is NOT required for a risk to be ideally insurable? The loss must occur on the insured`s property.
When a right or privilege has been given up, a party cannot reassert that right or privilege. The process of preventing the party from reasserting that right or privilege is known as: Estoppel
Which of the following elements of a contract is/are the binding force? Consideration
The term loss exposure refers to the possibility of a loss
The law of large numbers is a principal that basically says: the larger the amount of information gathered, the more reliable that information will be.
Which of the following is NOT a known private insurer? Bond Insurance Companies
Performance depends upon an uncertain future event is the feature: aleatory
Which of the following is defined as `an agreement between two or more parties enforceable by law?` Contract
Examples of tort law include all of the following EXCEPT: Breach of contract
Insurance is a contract whereby one undertakes to indemnify another against: Damage
Any contingent or unknown event, whether past or future, which may damnify a person having an insurable interest or create a liability against him/her, may be insured against. The more unpredictable a loss becomes: the more insurable it becomes.
Bob is thinking about obtaining insurance because he just found out he needs extensive surgery that will require several days in the hospital. This situation of waiting until the last minute to obtain insurance is known as: Adverse Selection
Created by: jmlawry
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