state farm
which of the following refers to being restored to the financial condition you were in before a loss?
ANS: indemnification
mark incurred 8000$ damage to his car in an accident. he received 8000$ from his insurance company
and 4000$ from the other driver. by receiving a profit from the loss, Mark is in violation of.. ANS:
principle of indemnity
the transfer of risk from one party to another is called ANS: insurance
the principle of indemnity is designed to prevent ANS: keeps the insured from making a profit from an
insured loss.
the fee paid by the insured in exchange for an insurance policy is called a ANS: premium
insurance ANS: transfers risk of financial losses from one party to another
insured ANS: individual or organization that pays premiums in exchange for protection
insurer ANS: company group or government agency offering financial protection
insurance policy ANS: a legally binding contract in which the insurer agrees to take on specified risks in
exchange for the insured's premiums
principle of indemnity ANS: restoration to previous financial condition; no more, no less.
what are the four qualifications of a contract ANS: agreement, consideration, competent parties, and
legal purpose. must be 18 years of age
what is not a requirement for a legally binding contract ANS: notarization
when an insurer issues an insurance policy, the actual item, person or organization that is being insured
is called the ANS: the risk
what is a reserve, in insurance terms ANS: a pool of collected premiums that the insurer sets aside to
pay claims
aleatory ANS: of or pertaining to accidental causes; of luck or chance; unpredictable
unilateral ANS: one-sided
utmost good faith ANS: both parties must act honestly and openly in order for the contract to be valid
,adhesion ANS: one party sets the terms of the contract; the other may simply agree or not agree
unilateral ANS: only the insurer makes a promise to act; the insured can void contract at any time
personal ANS: the insured person is protected from losses, not the covered property.
conditional ANS: the insurer must only honor the contract if the insured meets certain conditions.
aleatory ANS: the exectution of the contract depends on an unknown future event.
an insurance applicat revealing his convictions for drunk driving to an insurer is an example of ANS:
utmost good faith.
tom purchases a new car from his local car dealer. he also decides to get insurance coverage that will
pay to repair the car if he were to get into an accident. this is because tom wants to protect ANS: his
own financial interest in the car.
tom decides to purchase an insurance policy to protect his home. according to the definition of a
personal contract, which of the following most accurately describes what tomes insurance actually
protects ANS: toms financial interest in thee home
what is not true about an aleatory contract ANS: in an aleatory contract, the amount of benefit to the
insured and insurer is equal.
what does D.I.C.E stand for? ANS: declarations page (and definitions), insuring agreement, conditions
and exclusions (and endorsements)
'we will provide the insurance described in this policy in return for the premium and compliance with all
applicable provisions of this policy.' in which section of the insurance policy might this statement be
found? ANS: insuring agreement
in which section of the policy might you find the following statement ? 'damage to insured property
must be reported within 15 days of the damaging occurrence.' ANS: conditions
which of these causes of loss is least likely to be covered by a typical insurance policy? ANS: nuclear
hazard
edna loses some of her property in a hailstorm. when an adjuster comes to investigate the loss, he gives
an estimate that edna thinks is far too lowl. as negotiations continue, neither edna nor the adjuster will
budge. where in Ednas policy would you find the procedure to follow in this situation? ANS: conditions
conditions ANS: lists requirements that the insured must meet for coverage to apply
, declarations ANS: information that makes the policy unique to a specific insured.
exclusions ANS: causes of loss or items of property that are not covered by the policy
endorsements ANS: add, reduce, or change the coverage of the policy in some way
definitions ANS: explains exactly what specific words mean in the context of the policy
insuring agreement ANS: the essence of the contract. often only a single sentence
Xavier owns a small insurance company. recently the company won a bid to insure a new housing
development in Omaha, NE. his company can hangle any claims that arise, but if a series of tornados
were to tear through the area, destroying the entire development, Xaviers company would be hit
extremely hard financially. which type of insurer could help Xaviers company protect itself the most
from this potential loss? ANS: a re-insurer
what type of insurance provider operates on a for-profit basis? ANS: mutual insurance companies
what type of insurer sells shares to the public and is owned by its shareholders ANS: a stock insurance
company
publicly traded acme insurance is listed on the new York stock exchange, and would therefore be
considered ANS: a non-participating insurance company.
stock insurance companies ANS: always for profit, publicly traded, 'non-participating' insurers: no
dividends go to policy holders
mutual insurance company ANS: owned by policy holders (no shareholders), elect board directors,
participate in dividends
re-insurer ANS: an insurer that provides insurance for other insurers
reciprocal insurer ANS: a group of ppl or organizations that insure each other. always non- profit.
government insurer vs private ANS: government: mandatory, run by government, suited to needs of
general public
private: offer insurance products based on customer preferences
commercial insurer vs non-commercial ANS: commercial: runs for profit
non-commericial: non-profit; pass gains on to policyholders
which of the following refers to being restored to the financial condition you were in before a loss?
ANS: indemnification
mark incurred 8000$ damage to his car in an accident. he received 8000$ from his insurance company
and 4000$ from the other driver. by receiving a profit from the loss, Mark is in violation of.. ANS:
principle of indemnity
the transfer of risk from one party to another is called ANS: insurance
the principle of indemnity is designed to prevent ANS: keeps the insured from making a profit from an
insured loss.
the fee paid by the insured in exchange for an insurance policy is called a ANS: premium
insurance ANS: transfers risk of financial losses from one party to another
insured ANS: individual or organization that pays premiums in exchange for protection
insurer ANS: company group or government agency offering financial protection
insurance policy ANS: a legally binding contract in which the insurer agrees to take on specified risks in
exchange for the insured's premiums
principle of indemnity ANS: restoration to previous financial condition; no more, no less.
what are the four qualifications of a contract ANS: agreement, consideration, competent parties, and
legal purpose. must be 18 years of age
what is not a requirement for a legally binding contract ANS: notarization
when an insurer issues an insurance policy, the actual item, person or organization that is being insured
is called the ANS: the risk
what is a reserve, in insurance terms ANS: a pool of collected premiums that the insurer sets aside to
pay claims
aleatory ANS: of or pertaining to accidental causes; of luck or chance; unpredictable
unilateral ANS: one-sided
utmost good faith ANS: both parties must act honestly and openly in order for the contract to be valid
,adhesion ANS: one party sets the terms of the contract; the other may simply agree or not agree
unilateral ANS: only the insurer makes a promise to act; the insured can void contract at any time
personal ANS: the insured person is protected from losses, not the covered property.
conditional ANS: the insurer must only honor the contract if the insured meets certain conditions.
aleatory ANS: the exectution of the contract depends on an unknown future event.
an insurance applicat revealing his convictions for drunk driving to an insurer is an example of ANS:
utmost good faith.
tom purchases a new car from his local car dealer. he also decides to get insurance coverage that will
pay to repair the car if he were to get into an accident. this is because tom wants to protect ANS: his
own financial interest in the car.
tom decides to purchase an insurance policy to protect his home. according to the definition of a
personal contract, which of the following most accurately describes what tomes insurance actually
protects ANS: toms financial interest in thee home
what is not true about an aleatory contract ANS: in an aleatory contract, the amount of benefit to the
insured and insurer is equal.
what does D.I.C.E stand for? ANS: declarations page (and definitions), insuring agreement, conditions
and exclusions (and endorsements)
'we will provide the insurance described in this policy in return for the premium and compliance with all
applicable provisions of this policy.' in which section of the insurance policy might this statement be
found? ANS: insuring agreement
in which section of the policy might you find the following statement ? 'damage to insured property
must be reported within 15 days of the damaging occurrence.' ANS: conditions
which of these causes of loss is least likely to be covered by a typical insurance policy? ANS: nuclear
hazard
edna loses some of her property in a hailstorm. when an adjuster comes to investigate the loss, he gives
an estimate that edna thinks is far too lowl. as negotiations continue, neither edna nor the adjuster will
budge. where in Ednas policy would you find the procedure to follow in this situation? ANS: conditions
conditions ANS: lists requirements that the insured must meet for coverage to apply
, declarations ANS: information that makes the policy unique to a specific insured.
exclusions ANS: causes of loss or items of property that are not covered by the policy
endorsements ANS: add, reduce, or change the coverage of the policy in some way
definitions ANS: explains exactly what specific words mean in the context of the policy
insuring agreement ANS: the essence of the contract. often only a single sentence
Xavier owns a small insurance company. recently the company won a bid to insure a new housing
development in Omaha, NE. his company can hangle any claims that arise, but if a series of tornados
were to tear through the area, destroying the entire development, Xaviers company would be hit
extremely hard financially. which type of insurer could help Xaviers company protect itself the most
from this potential loss? ANS: a re-insurer
what type of insurance provider operates on a for-profit basis? ANS: mutual insurance companies
what type of insurer sells shares to the public and is owned by its shareholders ANS: a stock insurance
company
publicly traded acme insurance is listed on the new York stock exchange, and would therefore be
considered ANS: a non-participating insurance company.
stock insurance companies ANS: always for profit, publicly traded, 'non-participating' insurers: no
dividends go to policy holders
mutual insurance company ANS: owned by policy holders (no shareholders), elect board directors,
participate in dividends
re-insurer ANS: an insurer that provides insurance for other insurers
reciprocal insurer ANS: a group of ppl or organizations that insure each other. always non- profit.
government insurer vs private ANS: government: mandatory, run by government, suited to needs of
general public
private: offer insurance products based on customer preferences
commercial insurer vs non-commercial ANS: commercial: runs for profit
non-commericial: non-profit; pass gains on to policyholders
