Insurance and Legal Concepts

What is risk in insurance terms?

• Risk is the uncertainty of loss.

• Risk is the potential for gain in investments.

• Risk is the likelihood of a natural disaster occurring.

• Risk is the guarantee of profit in insurance policies.

What does the Fair Credit Reporting Act require?

• It requires only pre-notification.

• It requires only post-notification.

• It requires both pre-notification and post-notification.

• It does not require any notification.

When must insurable interest exist in a casualty policy?

• At the time of application for the policy

• At the time of loss

• At the time of renewal of the policy

• At the time of claim submission

What does liability insurance cover?

• Coverage for personal injuries to the insured

• Liability covers bodily injury (BI) and property damage (PD) to others for which an insured is proven to be negligent.

• Coverage for theft and vandalism of personal property

• Liability insurance only covers legal fees for lawsuits

What is the difference between a representation and a warranty?

• A representation is a substantial truth, while a warranty is a literal truth.

• A representation is a promise, while a warranty is an assurance.

• A representation is a legal term, while a warranty is a financial term.

• A representation is a type of contract, while a warranty is a type of agreement.

What information does a certificate of insurance include?

• The named insured, insurer, policy limits, effective date and time, and what the policy coverage is for.

• Only the named insured and insurer details.

• Policy limits and effective date only.

• Coverage details without any policy limits.

What is the law of large numbers?

• The law of large numbers is used to predict the likelihood of loss.

• The law of large numbers states that as a sample size increases, the sample mean will get closer to the population mean.

• The law of large numbers is a principle that states that outcomes will always be the same in repeated trials.

• The law of large numbers indicates that random events will not affect future outcomes.

What is an endorsement in insurance?

• An endorsement is a type of insurance policy.

• An endorsement is added to the policy to modify its terms.

• An endorsement is a penalty for late payment.

• An endorsement is a type of insurance fraud.

What is concealment in insurance?

• Concealment is an omission of a material fact.

• Concealment is the act of hiding a policy from the insurer.

• Concealment is the process of disclosing all facts to the insurer.

• Concealment is a type of insurance fraud.

What is a binder in insurance?

• A document that provides coverage until the policy is issued and includes all coverages provided by the policy.

• A type of insurance policy that covers only specific risks.

• A legal agreement that outlines the terms of a policyholder's coverage.

• A summary of the claims history of an insured individual.