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Chapter 2 Quiz

Description

This chapter will make up roughly 20%, 10 questions, of the required examination.
L S
Quiz by L S, updated more than 1 year ago
L S
Created by L S over 5 years ago
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Resource summary

Question 1

Question
_________ is the uncertainty or possibility for loss in a given policy.
Answer
  • Exposure
  • Hazard
  • Risk
  • Peril
  • Loss

Question 2

Question
_________ is the total outstanding risk for loss.
Answer
  • Exposure
  • Hazard
  • Risk
  • Peril
  • Loss

Question 3

Question
__________ is a situation that increases the likelihood for loss; or the severity of loss:
Answer
  • Exposure
  • Hazard
  • Risk
  • Peril
  • Loss

Question 4

Question
___________ is the cause of damage or loss
Answer
  • Exposure
  • Hazard
  • Risk
  • Peril
  • Loss

Question 5

Question
________ is the physical damage or loss of income
Answer
  • Loss
  • Peril
  • Risk
  • Hazard
  • Exposure

Question 6

Question
_______ is avoiding as much risk as possible; avoiding high-risk policies
Answer
  • Reduction
  • Retention
  • Transfer
  • Sharing
  • Avoidance

Question 7

Question
________ is dealing with risk as it occurs; often consumers will pay a higher deductible.
Answer
  • Reduction
  • Retention
  • Transfer
  • Sharing
  • Avoidance

Question 8

Question
________ is dealing with risk for a group of people with the same risk to reduce the loss for the individual:
Answer
  • Avoidance
  • Sharing
  • Transfer
  • Retention
  • Reduction

Question 9

Question
_______ is limiting the probability for risk by taking preventative steps:
Answer
  • Reduction
  • Retention
  • Transfer
  • Sharing
  • Avoidance

Question 10

Question
_________ is placing risk to another party whom assumes liability if and when loss should occur.
Answer
  • Reduction
  • Retention
  • Transfer
  • Sharing
  • Avoidance

Question 11

Question
________ is the social phenomenon whereby persons with a higher than average probability of loss seek greater insurance coverage than those with less risk..
Answer
  • Law of large numbers
  • Reinsurance
  • Adverse selection

Question 12

Question
________ 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.
Answer
  • Law of large numbers
  • Reinsurance
  • Adverse selection

Question 13

Question
_______ 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.
Answer
  • Law of large number
  • Reinsurance
  • Adverse selection

Question 14

Question
______ is a type of insurance company whom gains its capital from its shareholders, or those who purchase stock in the company.
Answer
  • Stock Companies
  • Lloyd's Associations
  • Fraternal Benefit Societies
  • Mutual Companies

Question 15

Question
_______ is a type of insurance company owned entirely by the policyholders (consumer).
Answer
  • Stock companies
  • Lloyd’s associations
  • Fraternal benefit societies
  • Mutual companies

Question 16

Question
______ 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.
Answer
  • Stock companies
  • Lloyd’s associations
  • Fraternal benefit societies
  • Mutual companies

Question 17

Question
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.
Answer
  • Stock companies
  • Lloyd’s associations
  • Fraternal benefit societies
  • Mutual companies

Question 18

Question
Self-insured funds is a method of managing risk by setting aside a pool of money to be used if an unexpected loss occurs..
Answer
  • True
  • False

Question 19

Question
_______ is any insurance company operating in a country for which the company did not originate..
Answer
  • Domestic
  • Foreign
  • Alien

Question 20

Question
______ is any insurance company operating within the same state for which the company originated.
Answer
  • Domestic
  • Foreign
  • Alien

Question 21

Question
_______ is any insurance company operating in a state for which the company did not originate.
Answer
  • Domestic
  • Foreign
  • Alien

Question 22

Question
______ authority is granted to an individual based upon a mutual agreement, and is explicitly stated and understood. .
Answer
  • Apparent
  • Implied
  • Express

Question 23

Question
_______ authority is not explicitly stated, but is reasonably assumed.
Answer
  • Apparent
  • Implied
  • Express

Question 24

Question
______ is an agent's power to act on behalf of a principal, even though not expressly or impliedly granted.
Answer
  • Apparent
  • Implied
  • Express

Question 25

Question
Which of the following are elements of a legal contract?
Answer
  • Offer and acceptance
  • Consideration
  • Competent parties
  • Legal purpose
  • All of the above

Question 26

Question
______ is a contract in which one party has substantially more power than the other in creating the contract.
Answer
  • Unilateral contract
  • Personal contract
  • Conditional contract
  • Aleatory contract
  • Contract of adhesion

Question 27

Question
______ is an agreement concerned with an uncertain event that provides for unequal transfer of value between the parties.
Answer
  • Unilateral contract
  • Personal contract
  • Conditional contract
  • Aleatory contract
  • Contract of adhesion

Question 28

Question
______ is a contract written to a named individual that may not be transferred.
Answer
  • Unilateral contract
  • Personal contract
  • Conditional contract
  • Aleatory contract
  • Contract of adhesion

Question 29

Question
______ is a contract in which only one party makes an enforceable promise..
Answer
  • Unilateral contract
  • Personal contract
  • Conditional contract
  • Aleatory contract
  • Contract of adhesion

Question 30

Question
_____ is a legal agreement that requires the prior performance of another agreement or clause in order to be enforceable.
Answer
  • Unilateral contract
  • Personal contract
  • Conditional contract
  • Aleatory contract
  • Contract of adhesion

Question 31

Question
Indemnity is the form of a contract that ensures a party be brought back to whole in the event of a peril.
Answer
  • True
  • False

Question 32

Question
______ 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
Answer
  • Estoppel
  • Representations
  • Warranties
  • Waiver

Question 33

Question
______ is any statement made in the application process for insurance that is guaranteed to be true in nature. .
Answer
  • Estoppel
  • Representations
  • Warranties
  • Waiver

Question 34

Question
_________ is the voluntary withholding of a given legal right, or advantage known by the insurer
Answer
  • Estoppel
  • Representations
  • Warranties
  • Waiver

Question 35

Question
________ is utilized to prevent the denial of a fact if the fact was admitted to be true by a previous action
Answer
  • Estoppel
  • Representations
  • Warranties
  • Waiver
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