What are the types of insurers?
domestic, foreign and alien
who owns stock companies?
stockholders
what are the types of hazards?
physical, moral and morale
conditions that increase the chance of a loss are known as what?
hazards
what is the best way to handle incomplete insurance applications?
return the application to the applicant for completion
what type of insurer is formed under the laws of another country?
alien
insurance is a contract that protects the insured from what?
loss
if an agent fails to obtain the applicant's signature on the insurance application, what must the insurer do?
send the application back to the applicant for signature
a situation in which a person can only experience a loss and no gain presents what type of risk?
pure risk
the type of insurance company organized to return any surplus money to its policyholders is known as what?
mutual company
the requirement that agents must account for and promptly remit all insurance funds collected is knows as what type of agent responsibility?
fiduciary
whose responsibility is it to determine that all questions on an insurance application are answered?
the agent's
when agents act within the scope of their contract, their actions will be assumed to be the acts of whom?
the insurer
whom does and insurance agent represent?
the insurance company
what entities make up the Medical Information Bureau?
insurers
what do individuals use to transfer their risk of loss to a larger group?
get insurance
according to the law of agency, a principal is represented by whom?
agent or producer
in the agent/insurer relationship, who is considered the principal?
insurer
when would a misrepresentation on an insurance application be considered fraud?
when it is intentional and material
what document is required for an insurance company to transact insurance?
certificate of authority
what is the term for the causes of loss insured against in an insurance policy?
peril
the reduction, decrease, or disappearance of value of the person or property insured in a policy is known as what?
loss
in forming an insurance contract, when does an acceptance usually occur?
when the insurer approves a prepaid application
what type of report provides information about the applicant's hobbies, habits and financial status?
inspection report
what two elements are necessary for a life insurance contract to have a legal purpose?
insurable interest and consent
what are the five characteristics of an ideally insurable risk?
loss must be: duet to chance, definite and measurable, statistically predictable, not catastrophic, and coverage cannot be mandatory
if an applicant does not receive his or her insurance policy, who would be held responsible?
the agent
when does an insurance policy go into effect?
when the policy is delivered and the premium is paid
what type of risk is insurable?
pure risk
the insurer organized to return a profit to the stockholders is what type of insurer?
stock company
what is a warranty in an insurance contract?
an absolutely true statement upon which the validity of the insurance contract is based
what are the strategies used by the underwriters to prevent adverse selection?
restriction of coverage, refusal to accept a risk, and accepting a risk at a higher rate
what is a wrongful act or violation of someone's rights that leads to legal liability called?
tort
during the grace period, the policyholder can:
pay a late premium without penalty
an intentional or unintentional concealment entitles the affected party to which of the following?
rescission of a contract
an agreement that is enforceable by law is known as a:
contract
what are the requirements of a conditional contract?
both the insurer and policyholder (policy owner) to meet certain conditions before the contract can be executed
a contract between an insured and an insurance company which agrees to pay the insured for loss caused by specific events is:
a policy
what is an injured party entitled to receive if an intentional concealment is discovered?
rescission of the policy
which of the following does not need to be identified in an insurance policy?
the insurer's financial rating
factual statements about the insured or the risk in an insurance policy are considered:
express warranty
a life insurance policy has a legal purpose if both of which of the following elements exist?
insurable interest and consent
an insurer neglects to pay a legitimate claim that is covered under the terms of the policy. what insurance principal has the insurer violated?
consideration
what is the insurer's consideration?
the promise to pay for losses
what is the insured's consideration?
the premium and statements on the application
what is a contract without a legal purpose considered?
void and cannot be enforced by any party
what are the special characteristics of an insurance contract?
contract of adhesion, conditional contract, aleatory, unilateral, and personal
what are representations described as for insurance purposes?
the answers the insured gives to the questions on the insurance application
what type of material misrepresentation is considered fraud?
intentional
what are statements believed to be true?
representations
what does CIC stand for?
California Insurance Code
what is materiality determined by?
the probable and reasonable influence of the facts that they would have on the party that needs the facts to make a decision
what determines the importance of a misrepresentation?
the materiality of a given concealment
what are disadvantages considered?
material information
concealment may do what to a policy?
void it
concealment is the failure of what?
to disclose known facts
when is an injured party entitled to rescind a contract?
if there is a false material representation, concealment, or violation of a material warranty or any other material provision of a policy
what are six specifications for insurance policies?
the parties to the contract, the persons or property being insured, a statement of the insurable interest that exists if the insured is not the owner, the risks insured against, the time period during which the policy will be in force or continue, the sta
what is a policy that is terminated because of nonpayment of premiums called?
lapsed policy
how is the premium determined?
by multiplying the rate by the number of units of insurance purchased (premium = rate x units of insurance)
what are the essential elements of an insurance contract?
agreement, consideration, competent parties, and legal purpose
what is representation?
a statement true to the best of one's knowledge
what is the difference between policy cancellation and nonrenewal?
cancellation involves termination of a policy, while nonrenewal is discontinuance of a policy