Insurance Contract / Insurance Company Organization / Insurance Transaction Flashcards ionicons-v5-c

The contract between the insurance company and the agent spells out exactly what the agent can or cant do. This is an example of

Express Authority

An agent representing the XYZ Insurance Company, equipped with business cards, sampel XYZ policies, and a XYZ rate book, informs a prospect that XYZ has given him unlimited binding authority. The prospect assumes this is true. Given the prospects assumption, which of the following correctly defines the agents authority in this case?

Apparent Authority

The limits of liability are found in which of the following sections of a casualty policy?

Declarations

A local agent attends park district softball and soccer games handing out water bottles, frisbees, and her business cards with ABC Insurance Company logo on them. What type of authority does she have?

Apparent Authority

Estoppel

The insuring agreement section of a policy describes

Perils insured against

The procedure for resolving a disagreement between an insured and a insuracne company about a loss is described in which of the following parts of an insurance policy?

Conditions

An insurance company may measure its underwriting profitability by using which of the following ratios?

Loss Ratios

Which one of the following terms indicates that an insurance contract contains the enforceable promises of only one party?

Unilateral contract

According to the law of agency, which of the following is NOT correct?

Knowledge of the principal is knowledge of the agent

ABC Auto Club offers car insurance to its members. ABC Auto Club is an example of which of the following types of organization?

Reciprocal Insurer

Twisting is a form of ?

Misrepresentation

What kind of insurance comany is an insurance company owned by its policyowners?

Mutual

In general, insurance regualators require insurance rates to be adequate, not excessive, and not unfairly discriminatory. The BEST reason for such regulation is to keep its rates:

High enough to cover loss costs

Jennifer and David signed a homeowners insurance application for coverage on their home. They did not divulge that last year their garage burned down after their 16-year-old son left a cigarette burning. The agent sent in the application and a policy was issued. When another fire occurred 2 months after the policy was issued, the company voided the policy because the agent would not have sent in the application if he had known of the prior loss. Which contract principle does this situation describe?

Utmost good faith

A group of individuals who agree to share each others' losses is known as a:

Reciprocal exchange

An insurer wants to increase its rates, but the Department of Insuracne requires that all rates be filed and approved before they can be used. This best describes which kind of rate regulation?

Prior Approval

A Policy may be amended only with a(n):

endorsement

When an insurance company cancels a policy, what is the method used to determine the premium due?

Pro Rata

A waiver

Losses that are paid on the basis of the cost to replace the property, without an allowance for depreciation, are paid on _____.

A Replacement Cost Basis

The purpose of the pro-rata liability (apportionment) clause appearing in a property policy is to

ensure that insurers will share proportionally in a loss

A dwelling policy would cover

furniture by the insured

Gisele's home is covered by the DP-3 with the Personal Liability and Medical Payments to Others Endorsement. WHen a vistor at giselle's home is injured, Giselle calls an ambulance to proivde immediate first aid and transport the visitor to the emergency room. In addition to $800 in medical expenses, the ambulance services bills Giselle $250. The insureds Medical Payement to Others limit is $1000. How much would the insurer pay for this loss?

$1,050

If eligible, why might a property owner purchase a homeowners policy instead of a dwelling policy

Broader Coverage

Homeowners policies provide

more comprehensive coverage than dwelling policies

An insured suffers a covered loss to some rental property that forces the tenant to move to another location. Under which section of the dwelling policy would the insured receive payment during the time the property is being repaired?

Coverage D - Fair Rental Value

An insured has $40,000 dwelling special form DP3 policy. After hosting a afternoon party the insured discovers the families credit cards and ATM cards are missing. If they are used, what coverage is provided under Coverage C-Personal Property and why?

$0. Coverage C excludes coverage for credit cards

An insured has an unendorsed $50,000 special form (DP-3) dwelling policy. The insureds dog bites a child, and the parents sue the insured for $500 for the childs medical bills, $1000 for rabies shots, and $5000 for pain and suffering. How much will the policy pay

The insured has no coverage because the policy is unendorsed and laibility coverage is not automatically included in dwelling policies. Coverage is avaliable by adding a personal liability supplement to the policy. Liability coverage can be added for a residence premise as long as the insured resides in at least one of the family units; the residence premise can be a 3- or 4 family dwelling. Coverage is provided for bodily injury and property damage. Medical payments coverage is also included in the libaility supplement and will pay the necessary medical expenses for bodily injury of others when caused by action of the insured.