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Virginia Property and Casualty Insurance _ Questions With 100- Correct Answers.pdf
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Virginia Property and Casualty Insurance _ Questions With 100- Correct A
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9/11/24, 5:08 PMVirginia Property and Casualty Insurance
Jeremiah
Practice questions for this set
Terms in this set (100)
What is based on the principle of Risk Spreading the results of a financial loss among many persons, so the cost to any one
Transfer person is small
What kind of risk has an outcome that is Speculative Risk
uncertain?
What is the reason for a claim? A loss is the reason a claim against an insurance company.
1. Physical Hazard
Name three types of hazards. 2. Moral Hazard
3. Morale Hazard
What is a cause of a loss? Perils are the causes of possible loss
The most common method of risk transfer is when a homeowner purchases insurance
What is the common way to transfer risk?
on their home..
Define adverse selection. Insuring risks more prone to losses than an average risk.
What is the theory of probability that is the The Law of Large Numbers
basis for insurance?
Who manages a Mutual Company A Boar of Trustees
What is high risk coverage purchased from Surplus Lines Insurers
an unauthorized company?
How are insurance companies defined? Where they are located, chartered, or incorporated.
What protects policy holders from an Property and Casualty Insurance Guaranty Association
insurer's insolvency?
What must all insurers obtain to conduct Certificate of Authority
insurance business?
Who does an agent represent? Always deemed to represent an insurer (company)
What is the authority that is written in a Express Authority
contract?
1. Offer and Acceptance
2. Consideration
What are the four elements of a contract?
3. Competent Parties
4. Legal Purpose
Define a fiduciary. An agent/broker who handles insurer's funds in a trust capacity
What is a value in a contract? The consideration
What is the fine for violating the Fair Credit A maximum fine of $2,500.00
Reporting Act?
What must an insured have in regards to their Insurable Interest
covered property with their insurer?
When must insurable interest exist if an It must exist at the time of loss
insured' property is damaged?
What is the measure of a loss? Exposure Units
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What is the initial screening of an applicant Underwriting
for insurance coverage?
To determine the comparison between premium income losses, paid claim and claims
Why is a loss ratio formula used?
related cost (this is how insurance company determine profitability)
What does an insurer use to determine their Loss Ratio Formula
profitability?
1. Payroll
What are the ways rates are determined? 2. Gross Sales
3. Value of Property
Class Rating (manual rating) applies to all applicants with similar group characteristics
What is the difference between class and
individual rates?
Individual Rating is used when features of units vary greatly
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