Chapter 1 General Insurance

25 Questions | Total Attempts: 103

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General Insurance Quizzes & Trivia

Questions and Answers
  • 1. 
    Any ambiguity in an insurance contract will be interpreted   
    • A. 

      In the favor of the insurer

    • B. 

      Based on the prudent person rule

    • C. 

      In the favor of the insured

    • D. 

      Through arbitration

  • 2. 
    Concerning insurance, the definition of a fiduciary responsibility is  
    • A. 

      Handling assets or money belonging to others

    • B. 

      Being liable for negligence with respect to clients’ application

    • C. 

      Commingling premiums collected with agent’s personal funds

    • D. 

      Handling insurer funds in a trust capacity

  • 3. 
    Within how many days of requesting an investigative Consumer Report must an insurer notify the consumer in writing that the report will take place?
    • A. 

      14

    • B. 

      3

    • C. 

      5

    • D. 

      7

  • 4. 
    What is a fiduciary who handles insureds funds in a trust capacity called?   
    • A. 

      Agency

    • B. 

      Agent

    • C. 

      Authority

    • D. 

      Life and health Guaranty Association

  • 5. 
    Contract law requires each party to give something of value for it to be a legal contract. This value is called?
    • A. 

      A Competent party

    • B. 

      A Legal purpose

    • C. 

      A Consideration

    • D. 

      A Warranty

  • 6. 
    Advertisements for insurance, in magazines or by parcel post, are examples under what type of marketing systems?
    • A. 

      Franchise method

    • B. 

      Independent Agency Method

    • C. 

      Direct Response Method

    • D. 

      Captive Agency method

  • 7. 
    Since it is the insurance company that designs and writes the insurance policy, any resulting ambiguity in the language is typically resolved in the clients favor. This is why an insurance policy is referred to as
    • A. 

      A contract of utmost good faith

    • B. 

      A contract of Adhesion

    • C. 

      A contract of insurable interest

    • D. 

      A unilateral contract

  • 8. 
    Which of the following is not the consideration in a policy?  
    • A. 

      Something of value exchanged between parties

    • B. 

      The application given to a prospective insured

    • C. 

      The premium amount paid at the time of application

    • D. 

      The promise to pay covered losses

  • 9. 
    Mike was under the influence of alcohol at the time his application was completed. Mike would not be issued a valid contract because the contract would not contain:
    • A. 

      Offer and acceptance

    • B. 

      Legal purpose

    • C. 

      A competent party

    • D. 

      Consideration

  • 10. 
    An applicant is denied insurance because of information found in the consumer report. Which of the following requires the insurance company to supply the applicant with the name and address of the consumer reporting company?  
    • A. 

      Conditional receipt

    • B. 

      Disclosure rule

    • C. 

      Fair credit reporting act

    • D. 

      Consumer privacy act

  • 11. 
    A broker is first and foremost responsible to   
    • A. 

      The producer

    • B. 

      The insured

    • C. 

      Other insurance producers

    • D. 

      The insurer

  • 12. 
    The employee retirement income security act (ERISA), was passed by   
    • A. 

      Congress

    • B. 

      Commissioner

    • C. 

      Naïf

    • D. 

      Cobra

  • 13. 
    A licensed producer represents the  
    • A. 

      Fiduciary

    • B. 

      Policyholder

    • C. 

      Insured

    • D. 

      Insurer

  • 14. 
    What contract is offered on an “accept it or leave it basis”?  
    • A. 

      Contract of adhesion

    • B. 

      Contract of aleatory

    • C. 

      Contract of conditions

    • D. 

      Contract of the insured

  • 15. 
    Which of the following is false regarding an insurable risk?
    • A. 

      There must be a large number of homogeneous units.

    • B. 

      The insured event must be accidental.

    • C. 

      The loss must be speculative

    • D. 

      The chance of loss must be calculable.

  • 16. 
    Which of the following is not a marketing and distribution system used by insurers?
    • A. 

      Branch Office System

    • B. 

      Direct Marketing

    • C. 

      Broker Agency System

    • D. 

      American Agency System

  • 17. 
    The authority not stated in an agent's contract and it allows an agent the ability to act outside the authority granted in an agreement and extends the company's liability is 
    • A. 

      Apparent Authority

    • B. 

      Specified Authority

    • C. 

      Express Authority

    • D. 

      Implied Authority

  • 18. 
    Consideration, an element of an insurance contract, include all the following, except:
    • A. 

      Payment of Renewals

    • B. 

      Promises

    • C. 

      Application

    • D. 

      Statements on the application

  • 19. 
    The fact that the insured is restored to the same financial condition as prior to a loss and should not profit or lose from an insurance transaction is considered:
    • A. 

      Reimbursement

    • B. 

      Indemnification

    • C. 

      Law of Large Numbers

    • D. 

      Contract Law

  • 20. 
    Those insurers that are incorporated in another state, but doing business in this state, are considered
    • A. 

      Alien

    • B. 

      Out-of-state insurer

    • C. 

      Foreign

    • D. 

      Non-domestic insurers

  • 21. 
    The contract in which only one party is legally bound to contractual obligations after a premium is paid is known as a 
    • A. 

      Aleatory Contract

    • B. 

      Unilateral Contract

    • C. 

      Conditional Contract

    • D. 

      Torts

  • 22. 
    Rita  was the insured and policyowner of a policy that named her husband as the beneficiary.  Upon her husband's death, she decided to change the beneficiary designation to her best freind since she has no close living relatives.  The insurance company will:
    • A. 

      Decline the change due to lack of insurable interest

    • B. 

      Require Rita to prove insurability

    • C. 

      Require Rita to prove that her best friend is financially dependent on her.

    • D. 

      Effect the beneficiary change.

  • 23. 
    This type of insurer is operated on a not for profit basis and is owned by its policyowners:
    • A. 

      Stock Insurance Company

    • B. 

      Fraternal Association

    • C. 

      Mutual Insurance Company

    • D. 

      The Law of Large Numbers

  • 24. 
    Risk reduction is:
    • A. 

      Retaining the responsibility of the loss

    • B. 

      Minimizing a risk

    • C. 

      Transferring the risk to another

    • D. 

      Not being involved in the activity that gives rise to that risk

  • 25. 
    Which of the following is false regarding a Stock Insurance Comapny?
    • A. 

      Nonassessable policies are issued

    • B. 

      Ownership rests with stockholders

    • C. 

      They are managed by Office and Directors

    • D. 

      Stockholders elect the Board of Directors and receive taxable dividends