MISSISSIPPI INSURANCE TEST COMPLETE QUESTIONS & ANSWERS
(GRADED A).Buy Quality Materials!
What is insurance?
A method of handling pure risk by spreading it over a large number of similar individuals
Law of Large Numbers
This law shows you can predict what will happen to a large group of similar individuals
in each time period
Risk pools
Large group of individuals are combined in ...
Principle of Indemnity
An insured who has suffered a loss should only be restored to the financial condition
previous to the loss, no better or no worse.
Pure Risk vs Speculative Risk
One risk there is only the chance of loss. Other there is the chance for gain or loss
Static Risk
Risk that Happens from a reoccuring event like a flood every 100 years. insurable
Dynamic Risk
Risk that comes with change. New product releases that causes a business to become
obsolete. not insurable
Fundamental Risk
Risk that Affects an entire groups of people like hurricanes and earthquakes. Insurable
Particular Risk
Risk that only Affects only a particular family. Insurable
Moral Hazard
Intentionally causing losses because one party will lose and the other will benefit
Morale Hazard
Carelessness because you know you're insured so you put yourself in harm's way.
Driving on a dirt road instead of paved road because you are insured
Adverse Selection
Insurance companies not underwriting and picking people with above average loss
possibilities
Reinsurance vs Over Insurance
Vs. One is an insurance company purchasing insurance to spread the risk. One is
purchasing more insurance than the lost cost so its illegal
Contract & 4 elements
An agreement between two or more parties that is enforceable by law. CLOC
- Capacity to Contract
-Legal Purpose
-Offer and Acceptance
-Consideration
Parties of an Insurance Contract
- First Party: Insured
- Second Party: The insurance Company
- Third Party: Person harmed by first party
, Parts of an Insurance Contract
DICE
- Declarations Page
- Insuring Agreement
- Conditions
- Exclusions
7 characteristics of an Insurance Contract
- Aleatory Contract
-Contract of Adhesion
- Executory Contract
-Conditional Contract
- Unilateral Contract
- Personal Contract
- Contract of Indemnification
Warranty
Statements made by an applicant that are guaranteed to be true. If found not true, void
policy
Representations
Statements that are made on an application for insurance that are true to the applicant's
best knowledge and belief. Can't void contract
Misrepresentation
Statements that are made by an applicant for insurance or person selling the policy that
are deliberately false. Can void contract
Twisting
When an agent uses misrepresentations to convince an insured to replace an existing
policy with a new one in their company
Churning
An agent uses misrepresentations to convince insured to get a more expensive policy
Sliding
Agents fails to fully disclose all the details of a policy to make them pay a higher
premium
Concealment
Failure of the insured to reveal known material facts. Stuff that if the insurance company
knew they wouldn't have given the policy
Waiver
Is the intentional relinquishment of a known right. No autopsy for body
Estoppel
Prevents or stops a party from contradicting its own previous actions if those actions
have been reasonable relied upon by another party
Ambiguous Language
Vague language that creates doubt
Arbitration Clause
This clause describes inthe policy language the process of bringing a contract dispute
before an objective third party for resolution. Required before mediation or litigation
Exposure
(GRADED A).Buy Quality Materials!
What is insurance?
A method of handling pure risk by spreading it over a large number of similar individuals
Law of Large Numbers
This law shows you can predict what will happen to a large group of similar individuals
in each time period
Risk pools
Large group of individuals are combined in ...
Principle of Indemnity
An insured who has suffered a loss should only be restored to the financial condition
previous to the loss, no better or no worse.
Pure Risk vs Speculative Risk
One risk there is only the chance of loss. Other there is the chance for gain or loss
Static Risk
Risk that Happens from a reoccuring event like a flood every 100 years. insurable
Dynamic Risk
Risk that comes with change. New product releases that causes a business to become
obsolete. not insurable
Fundamental Risk
Risk that Affects an entire groups of people like hurricanes and earthquakes. Insurable
Particular Risk
Risk that only Affects only a particular family. Insurable
Moral Hazard
Intentionally causing losses because one party will lose and the other will benefit
Morale Hazard
Carelessness because you know you're insured so you put yourself in harm's way.
Driving on a dirt road instead of paved road because you are insured
Adverse Selection
Insurance companies not underwriting and picking people with above average loss
possibilities
Reinsurance vs Over Insurance
Vs. One is an insurance company purchasing insurance to spread the risk. One is
purchasing more insurance than the lost cost so its illegal
Contract & 4 elements
An agreement between two or more parties that is enforceable by law. CLOC
- Capacity to Contract
-Legal Purpose
-Offer and Acceptance
-Consideration
Parties of an Insurance Contract
- First Party: Insured
- Second Party: The insurance Company
- Third Party: Person harmed by first party
, Parts of an Insurance Contract
DICE
- Declarations Page
- Insuring Agreement
- Conditions
- Exclusions
7 characteristics of an Insurance Contract
- Aleatory Contract
-Contract of Adhesion
- Executory Contract
-Conditional Contract
- Unilateral Contract
- Personal Contract
- Contract of Indemnification
Warranty
Statements made by an applicant that are guaranteed to be true. If found not true, void
policy
Representations
Statements that are made on an application for insurance that are true to the applicant's
best knowledge and belief. Can't void contract
Misrepresentation
Statements that are made by an applicant for insurance or person selling the policy that
are deliberately false. Can void contract
Twisting
When an agent uses misrepresentations to convince an insured to replace an existing
policy with a new one in their company
Churning
An agent uses misrepresentations to convince insured to get a more expensive policy
Sliding
Agents fails to fully disclose all the details of a policy to make them pay a higher
premium
Concealment
Failure of the insured to reveal known material facts. Stuff that if the insurance company
knew they wouldn't have given the policy
Waiver
Is the intentional relinquishment of a known right. No autopsy for body
Estoppel
Prevents or stops a party from contradicting its own previous actions if those actions
have been reasonable relied upon by another party
Ambiguous Language
Vague language that creates doubt
Arbitration Clause
This clause describes inthe policy language the process of bringing a contract dispute
before an objective third party for resolution. Required before mediation or litigation
Exposure
