Chapter 2 Quiz

_________ is the uncertainty or possibility for loss in a given policy.

_________ is the total outstanding risk for loss.

__________ is a situation that increases the likelihood for loss; or the severity of loss:

___________ is the cause of damage or loss

________ is the physical damage or loss of income

_______ is avoiding as much risk as possible; avoiding high-risk policies

________ is dealing with risk as it occurs; often consumers will pay a higher deductible.

________ is dealing with risk for a group of people with the same risk to reduce the loss for the individual:

_______ is limiting the probability for risk by taking preventative steps:

_________ is placing risk to another party whom assumes liability if and when loss should occur.

________ is the social phenomenon whereby persons with a higher than average probability of loss seek greater insurance coverage than those with less risk..

________ indicates the larger the pool of insurance policies written the greater probability to estimate the loss expected. This allows companies to estimate how many policies should be written in order to cover the expected loss.

_______ is a transaction between a primary insurer and another licensed (re) insurer where the reinsurer agrees to cover all or part of the losses and/or loss adjustment expenses of the primary insurer. The assumption is in exchange for a premium.

______ is a type of insurance company whom gains its capital from its shareholders, or those who purchase stock in the company.

_______ is a type of insurance company owned entirely by the policyholders (consumer).

______ is an organization of people who usually share a common ethnic, religious, or vocational affiliation. This type of society may provide insurance to its members.

In a _______ individuals who are not in business together come together and each is only responsible for the portion of the risk they choose to insure.

_______ is any insurance company operating in a country for which the company did not originate..

______ is any insurance company operating within the same state for which the company originated.

_______ is any insurance company operating in a state for which the company did not originate.

______ authority is granted to an individual based upon a mutual agreement, and is explicitly stated and understood. .

_______ authority is not explicitly stated, but is reasonably assumed.

______ is an agent's power to act on behalf of a principal, even though not expressly or impliedly granted.

Which of the following are elements of a legal contract?

______ is a contract in which one party has substantially more power than the other in creating the contract.

______ is an agreement concerned with an uncertain event that provides for unequal transfer of value between the parties.

______ is a contract written to a named individual that may not be transferred.

______ is a contract in which only one party makes an enforceable promise..

_____ is a legal agreement that requires the prior performance of another agreement or clause in order to be enforceable.

______ are any statements made by the applicant in the process of filling out an application that are believed to be correct in nature to the best of their knowledge

______ is any statement made in the application process for insurance that is guaranteed to be true in nature. .

_________ is the voluntary withholding of a given legal right, or advantage known by the insurer

________ is utilized to prevent the denial of a fact if the fact was admitted to be true by a previous action