INSURANCE FLASH CARDS (STUDY)

6 flashcards

AN INSURANCE PROVIDER HAS TO BE FAIR IN THEIR UNDERWRITING AND MUST PAY ALL COVERED LOSSES OF ANY INSURED. FOR ALL FAITHFUL EXECUTION OF THESE DUTIES, AN INSURANCE PROVIDER HAS THE RIGHT TO: A.) IMPLEMENT STRICT GUIDELINES FOR THE INITIATION OF CLAIMS AGAINST EVERY POLICY.B.) ACCEPT THE PAYMENT OF PREMIUMS FOR EVERY POLICY CURRENTLY IN FORCE. C.) USE FLEXIBLE UNDERWRITING STANDARDS TO EXCLUDE HIGHER-RISK INSUREDS. D.) EMPLOY AVAILABLE RESOURCES TO AVOID PAYING LEGITIMATE CLAIMS.

ANSWER: B) ACCEPT THE PAYMENT OF PREMIUMS FOR EVERY POLICY CURRENTLY IN FORCE. INSURANCE PROVIDERS HAVE THE RIGHT TO INFORM THE APPLICANT A POLICY THAT HAS BEEN FAIRLY UNDERWRITTEN AND WILL PAY FOR COVERED LOSSES. INSURERS HAVE THE RIGHT TO ACCEPT A PREMIUM IN EXCHANGE FOR THIS OFFER. (P12)

A POTENTIAL INSURED INTENTIONALLY DID NOT DISCLOSE A MATERIAL FACT ON THEIR APPLICATION FOR INSURANCE. THIS LACK OF DISCLOSURE WOULD BE CONSIDERED A/AN: A.) MISREPRENSENTATION B.) CONCEALMENT C.) COERCIOND.) AVOIDANCE

ANSWER: B.) CONCEALMENT CONCEALMENT IS THE LEGAL TERM FOR INTENTIONALLY WITHHOLDING INFORMATION ABOUT A MATERIAL FACT THAT IS CRITICAL IN MAKING A DECISION. CONCERNING INSURANCE, CONCEALMENT IS WITHHOLDING INFORMATION THAT WILL RESULT IN AN INACCURATE UNDERWRITING DECISION. (P12)

IF AN INSURANCE PROVIDER AFFIRMS THAT THE VALUE OF A LOSS IS $5,000, BUT THE POLICY HOLDER IS SURE THAT THE AMOUNT OF THE LOSS IS SUBSTANTIALLY DIFFERENT, WHICH OF THE FOLLOWING WOULD LIKELY BE USED TO SETTLE THE DISAGREEMENT: A.) SMALL CLAIMS COURTB.) UMPIRE HEARINGC.) THIRD-PARTY SETTLEMENT D.) ARBITRATION

D.) ARBITRATION WHEN AN INSURER AND INSURED CANNOT AGREE ON HOW TO SETTLE A CLAIM, ARBITRATION IS OFTEN USED. THE SETTLEMENT IS SUBMITTED TO AN ARBITRATION WHOSE DECISION MAY OR MAY NOT BE BINDING ON BOTH PARTIES DEPENDING ON STATE LAW. (P15)

WHICH OF THE FOLLOWING BEST DESCRIBES THE LAW OF LARGE NUMBERS: A.) LARGER GROUPS PRODUCE HEALTHIER APPLICANTSB.) LARGE GROUPS OFFER LESS OPPORTUNITY FOR LOSSC.) THE LARGER THE GROUP, THE MORE LIKELY IT WILL BE TO GET A GOOD CHOICED.) THE LARGER THE POOL OF RISKS, THE MORE ACCURATE THE PREDICTIONS WILL BE

D.) THE LARGER THE POOL OR RISK, THE MORE ACCURATE THE PREDICTIONS WILL BE. ACTUARLES MAKE USE OF THE LAW OF LARGE NUMBERS TO SET PREMIUM RATES. IT IS MORE LIKELY FOR SIMILAR RESULTS TO OCCUR IF A LAGER GROUP IS STUDIED. (PG2)

WHAT PART OF THE INSURANCE CONTRACT EXPLAINS THE COVERED PARTES AND THE NATURE OF COVERAGE OF THE CONTRACTUAL AGREEMENT BETWEEN THE INSURED AND INSURANCE COMPANY: A.) INSURING AGREEMENT B.) EXCLUSIONS C.) DECLARATIONS D.) CONDITIONS

A.) INSURING AGREEMENT THE INSURING AGREEMENT IS THE PART OF THE POLICY STRUCTURE THAT DESCRIBES THE METHOD OF INDEMNIFICATION AND THE INSURED PERILS. (PG 13,22)