MONTANA PROPERTY & CASUALTY EXAM<\/p>\n\n\n\n
What is insurance? – Precise Answer \u2714\u2714Transfer of risk to protect from
financial loss.
Types of Risk – Precise Answer \u2714\u2714Pure and Speculative
Pure Risk – Precise Answer \u2714\u2714Insurable risk. There is only loss.
Speculative Risk – Precise Answer \u2714\u2714Not insurable. Could loss or gain
financially. EX: gambling\/stock market. Could win or lose money.
Hazard – Precise Answer \u2714\u2714Conditions that increase the probability for
loss.
Types of Hazards – Precise Answer \u2714\u2714Physical: Structural defects
Moral: Lying about the type of dog you have
Morale: Speeding in unsafe conditions. or Im not gonna pay to fix the
brakes on my car, ill wait for them to break and have insurance pay for
it.
Peril – Precise Answer \u2714\u2714Cause of the Loss<\/p>\n\n\n\n
Property: EX: Hail damage to my car
Casualty: EX: Dog bite from my neighbors dog.
Indemnity – Precise Answer \u2714\u2714Equals reimbursement!
Only collect to extent of financial loss, no gain.
5 ways to handle risk – Precise Answer \u2714\u2714Avoidance: Not driving to
work to avoid car accident.
Retention: Not buying insurance and being self insured.
Sharing: Group of people pool their money to share loss.
Reduction: Being safer. Perform routine maintenance.
Transfer: Insurance
Types of Insurers – Ownership – Precise Answer \u2714\u2714Stock owned
company: Issues nonparticipating policies, owned by stockholders
(allstate), pay dividends to stockholders.
Mutual: Issue participating policies, owned by policy owners, pay to
policy owners. (state farm)
Types of Insurers – Authority – Precise Answer
\u2714\u2714Admitted\/authorized: Certified, approved to transact insurance in a
state
Nonadmitted\/unauthorized: Not certified, prohibited from transacting<\/p>\n\n\n\n
Types of Insurers – Domicile – Precise Answer \u2714\u2714Domestic:
Incorporated in this state
Foreign: Incorporated in another state
Alien: Incorporated outside of the US
Laws of Agency – Precise Answer \u2714\u2714- Agents represent the insurer<\/p>\n\n\n\n
The policy owner – statements on the application, paying premium
Insurance Contract term – Aleatory – Precise Answer \u2714\u2714Unequal
Exchange
Insurance Contract term – Adhesion – Precise Answer \u2714\u2714Take it or
leave it
Insurance Contract term – Unilateral – Precise Answer \u2714\u2714One sided
promise
Application Statements – Precise Answer \u2714\u2714Warranties: Absolutely
true statements. Breach of warranties can void a policy. (saying you dont
have a trampoline in your backyard, when you do.)
Representations: Statements that are true to the best of knowledge – not
guaranteed to be true (saying you havent had a ticket in 5 years to your
knowledge, but you had one 4 years, 6 months ago)
Fraud – Precise Answer \u2714\u2714Intentional misrepresentation of a material
fact made with intent to deceive.
Material Fact – Precise Answer \u2714\u2714Fact that would lead to a different
underwriting decision had the insurer known about it
Quiz 1 – A situation in which a person can only lose or have no chance
of gain represents? – Precise Answer \u2714\u2714Pure Risk<\/p>\n\n\n\n