Insurance Knowledge Flashcard

Front

What is required for an insurer to nonrenew a homeowner’s policy?

Back

Written notice 30 days before expiration

Answer explanation

For an insurer to nonrenew a homeowner's policy, they must provide written notice 30 days before expiration. This ensures the policyholder has adequate time to seek alternative coverage.

Front

Which of the following is NOT a valid reason for policy cancellation? Options: Nonpayment, Fraud, Increased hazard, Change of address

Back

Change of address

Answer explanation

Change of address is not a valid reason for policy cancellation, while nonpayment, fraud, and increased hazard are legitimate grounds for terminating a policy.

Front

What must a personal auto policy clearly state?

Back

Liability limits and exclusions

Answer explanation

A personal auto policy must clearly state liability limits and exclusions to inform the policyholder of the coverage provided and any limitations. This is crucial for understanding the extent of financial protection.

Front

What is the purpose of a Certificate of Insurance?

Back

To provide informational evidence of coverage

Answer explanation

A Certificate of Insurance serves to provide informational evidence of coverage, confirming that an individual or business has the necessary insurance in place. It does not expand, alter, or guarantee new rights.

Front

What is the role of the Idaho Property & Casualty Guaranty Association?

Back

To pay covered claims if an insurer becomes insolvent

Answer explanation

The Idaho Property & Casualty Guaranty Association's primary role is to pay covered claims if an insurer becomes insolvent, ensuring policyholders are protected even if their insurance company fails.

Front

Binder in insurance terms

Back

A temporary contract of insurance

Answer explanation

A binder in insurance is a temporary contract of insurance that provides immediate coverage until a formal policy is issued. It is not a permanent contract, fraud, or a discount on premiums.

Front

How can credit history be used in insurance rating?

Back

To cap premium differences

Answer explanation

Credit history can be used to cap premium differences, ensuring that while it influences rates, it does not lead to excessive disparities among policyholders. This promotes fairness in insurance pricing.

Front

What must auto policies include unless rejected in writing?

Back

Uninsured/Underinsured Motorists coverage

Answer explanation

Auto policies must include Uninsured/Underinsured Motorists coverage unless the insured rejects it in writing. This coverage protects drivers from losses caused by uninsured or underinsured drivers.

Front

What is required for drivers age 55+ to receive a premium discount?

Back

Completing an approved accident-prevention course

Answer explanation

Drivers age 55+ can receive a premium discount by completing an approved accident-prevention course, which helps improve their driving skills and safety awareness.

Front

What is the purpose of the Assigned Risk Plan?

Back

To provide coverage for high-risk drivers

Answer explanation

The Assigned Risk Plan is designed to provide coverage for high-risk drivers who may not qualify for standard insurance, ensuring they have access to necessary insurance protection.