Michigan Property & Casualty Exam 2023/2024 with Complete Solutions
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Course
Michigan Property & Casualty
Institution
Michigan Property & Casualty
Indemnity - ANSWER-a payment for damages or loss
Risk - ANSWER-Uncertainty or chance of loss occurring
Pure Risk - ANSWER-Presents the chance of loss with no opportunity for gain
Speculative Risk - ANSWER-Presents the chance of loss with an opportunity to gain (Like Gambling)
Exposure -...
Michigan Property & Casualty Exam 2023/2024 with Complete Solutions
Indemnity - ANSWER-a payment for damages or loss
Risk - ANSWER-Uncertainty or chance of loss occurring
Pure Risk - ANSWER-Presents the chance of loss with no opportunity for gain
Speculative Risk - ANSWER-Presents the chance of loss with an opportunity to gain (Like Gambling)
Exposure - ANSWER-a unit of measurement used to determine rates charged for insurance coverages.
Hazards - ANSWER-Conditions or situations that increase the probability of an insured loss occurring.
Peril - ANSWER-Causes of loss
Risk Retention - ANSWER-planned assumption of risk by an insured through the use of deductibles, co-payments, or self-insurance.
Risk sharing - ANSWER-method of dealing with risk for a group of individual persons or businesses with a similar exposure.
Risk reduction - ANSWER-an attempt to lessen the possibility or severity of a loss.
Risk transfer - ANSWER-buying insurance
Elements of insurable risk - ANSWER-due to chance, definite and measurable, statistically predictable, not catastrophic, randomly selected and large loss exposure
Adverse Selection - ANSWER-insuring of risks that are more prone to losses than the average risk.
Law of Large Numbers - ANSWER-the larger number of people with a similar exposure to loss, the more predictable the losses will be.
Stock Company Insurer - ANSWER-Stockholders own and do not share profits or losses
Mutual Company Insurer - ANSWER-Policyowners own shares and share profits or losses in excess premiums, but are not guaranteed. Authorized - ANSWER-Admitted
Rating Services - ANSWER-Am Best
Fitch
Standard and Poor's Moody's
Weiss
Law of Agency - ANSWER-Agent represents the insurer, not the insured
Any knowledge of the agent is presumed to be knowledge of the insurer
If the agent is working within the conditions of his/her contract, the insurer is fully responsible
When the insured submits payment to the agent, it is the same as submitting a payment
to the insurer.
Principal - ANSWER-Insurer
Express Authority - ANSWER-Written in the contract
Implied - ANSWER-Not expressed or written, but is assumed
Apparent Authority - ANSWER-Perceived or appearance
Fiduciary Responsibility - ANSWER-Legal duty in handling funds from the insured or insurer.
Elements of a legal contract - ANSWER-Agreement - Offer and Acceptance
Consideration Competent Parties
Legal Purpose
Contract of Adhesion - ANSWER-Prepared by one party and accepted or rejected by another party.
Aleatory Contract - ANSWER-Exchange of unequal amounts or value
Personal Contract - ANSWER-Between the insurance company and an individual.
Unilateral Contract - ANSWER-The insurer is not legally bound, but the insured is.
Conditional Contract - ANSWER-Policy owner and insurer must meet certain conditions before the contract is executed.
Contract Ambiguity - ANSWER-Court stated that these are in the favor of the insured. Indemnity - ANSWER-A reimbursement without financial gain
Utmost Good Faith - ANSWER-There will be no fraud, misrepresentation, or concealment between both parties
Representations - ANSWER-believed to be true to the best of ones knowledge.
Warranty - ANSWER-An absolutely true statement upon which the validity of the insurance policy depends
Involved in Fraud - ANSWER-fined and up to 10 years or prison time unless it jeopardizes the insurers' security then it may be extended up to 15 years.
Involved in Embezzlement - ANSWER-Fined and Prison time unless it is less than $5,000 then time may be reduced to 1 year.
Elements of Insurable Risk - ANSWER-Financial (Monetary) Blood (Relative) Business (Partner)
Loss Ratio - ANSWER-(Incurred Losses + Loss Adjusting Expense) / Earned Premium
Judgement Rating - ANSWER-"Ocean Marine" Credible Statistics lack or varied exposure units.
Schedule Rating - ANSWER-Rate is developed by applying a schedule of charges or credits
Experience Rating - ANSWER-Past loss experience
Retrospective Rating - ANSWER-Actual losses during policy period determine final premium
Merit Rating - ANSWER-Based off of other personal factors
Physical Hazards - ANSWER-material, structural, or operational features of risk
Moral Hazards - ANSWER-Lying on insurance applications or have committed fraudulent acts in the past
Morale Hazards - ANSWER-Insured's indifference to loss because of the existence of insurance.
Named Peril - ANSWER-Listed perils
Open Peril - ANSWER-Any risk of loss not excluded
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