Florida Public Adjuster
All Lines Exam Study
Guide
The process of selecting certain types of risks that have historically produced a
profit and rejecting those risks that do not fit the underwriting criteria of the
insurer is known as:
Correct Answer
Underwriting
When the insurer is confronted with the possibilities of loss due to risk factors
that were not factored in at the time the policy was sold is known as:
Correct Answer
Adverse Selection
How do insurers avoid adverse selection?
Correct Answer
By pooling their risks from more than one source (“spreading the risks”)
What means does an insurer use to reduce their loss exposure to a particular
risk?
Correct Answer
Reinsurance
This is purchased by an insurance company from another insurance company;
rather than accepting the entire risk and possibly suffering a catastrophic loss,
the risk is ceded to another company or companies or risk pools to spread the
risk. This is known as:
Correct Answer
Reinsurance
What are the elements of a valid claim?
Correct Answer
- Capacity to Contract/Competent Parties
- Legal Purposes
- Offer and Acceptance
- Consideration
What is the Acronym for the elements of a valid contract?
Correct Answer
C – Capacity to Contract/Competent Parties
L – Legal Purposes
O – Offer and Acceptance
C – Consideration
In order for a contract to be binding, all parties must have this in order to enter
into the contract. What is it?
Correct Answer
Capacity to Contract/ Competent Parties