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AZ General Insurance
AZ State Health Insurance
| Question | Answer |
|---|---|
| What is insurance? | A contract in which one party agrees to indemnify the insured party against loss, damage, or liability arising from an unknown event. |
| What is risk? | The uncertainty or chance of loss |
| What are the two types of risk? | Pure Risk and Speculative Risk |
| What is an insurable risk? | Pure Risk. |
| What is exposure? | A unit of measure used to determine rates charged for insurance coverage. |
| What are the 3 types of hazards? | Physical, Moral, Morale. |
| What is the difference between a Moral Hazard, and a Morale Hazard? | Moral: tendencies towards increased risk. EX: lying. Morale: carelessness. EX: "I have insurance, no need to worry" |
| What is a peril? | The cause of a loss. EX: lightning, tornado, fire. |
| What is loss? | The reduction, decrease, or disappearance of value of the person, or property insured in a policy. |
| What is risk avoidance? | Eliminating exposure to a loss. EX: choosing not to fly in an airplane. |
| What is risk retention? | The planned assumption of risk by an insured through the use of deductibles, copays, and self-insurance. |
| What is risk sharing? | A method of dealing with risk for a group of individual persons or businesses with the same or similar exposure to loss to share the losses that occur within that group. |
| Define risk reduction | To attempt to lessen the possibility or severity of a loss. EX: participating in preventative care. |
| How can you transfer a risk? | Buy insurance. |
| What are the elements of insurable risk? | 1- due to chance 2- definite and measureable 3- statistically predictable 4- not catastrophic 5- randomly selected/large loss exposure |
| What is adverse selection? | Risks that are more prone to losses than the average risk... poorer risks tend to file claims to a greater extent than the average risk. |
| Define the law of large numbers | the larger the number of people with the similar exposure to loss, the more predictable the actual loss will be. |
| What is a stock company? | Owned by stockholders who provide the capital necessary to establish and operate the insurance company, and share in any profits or losses. |
| What is a mutual company? | Owned by the policy holders, and issue "participating policies". Dividends are generated when the premiums and earnings combined exceed the actual costs of providing coverage. Dividends are not guaranteed. |
| Tell me what a Fraternal Benefit Society is? | an organization formed to provide insurance benefits for members of an affiliated lodge, religious organization, or fraternal organization with a representative form of government. Not required to be licensed. |
| What is Lloyd's Association? | Not an insurance company. Provides support facilities for underwriters, or groups of individuals that accept insurance risk. |
| In what kind of insurance company would you find an "Attorney-in-Fact? | Reciprocal Insurance Company |
| What insurance company is owned by members exposed to similar liability risks by virtue of being in the same business or industry? | Risk Retention Groups (RRG's) |
| What company serves the parent organization's insurance needs at a lower rate than other insurers? | Captive Insurers. |
| What kind of insurer has received a Certificate of Authority to transact insurance in this state? | Authorized or Admitted Insurers |
| What is a Certificate of Authority? | A certification given by the Director of Insurance in a state that authorizes insurers to transact. |
| Insurers that are domiciled in this state are called? | Domestic Insurers |
| What is a Foreign insurer? | One from another state/territory. |
| Alien Insurers are located? | In another country. |
| What is the main difference between Private and Government Insurers? | Government insurance companies will provide insurance where Private will NOT. |
| Define reinsurance. | Insurance for Insurers. |
| What are the three types of Authorities given to an Agent, and their definitions? | Express: written in the contract Implied: Not expressed or written in the contract, but assumed. Apparent: a situation where a reasonable person would understand that an agent had authority to act. |
| What is Fiduciary Responsibility? | being trusted to handle funds given to an agent by the insured. |
| What are the elements of a legal contract? | Consideration, Legal Purpose, Offer & Acceptance, and Competent Parties. |
| What is known as a "take it or leave it" contract? | Contract of Adhesion |
| When only one side of a contract is legally bound to deliver a promise, the contract is known as a...? | Unilateral Contract. |
| What is a Conditional Contract? | Certain conditions must be met by both parties in order for the contract to be executed. EX: payment of premium, and promise to pay claims on time. |
| Define indemnity | Restoring an insured back to the financial state they were in before a loss. |
Created by:
jgray2015
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