OK PROPERTY AND CASUALTY - MOTOR VEHICLE
INCLUDED (ADJUSTER)-SECTION 1 QUESTIONS AND
CORRECT ANSWERS VERIFIED LATEST 2023-2024 GRADE A
+
The uncertainty or possibility of financial loss. (2 types:
Speculative risk and Pure risk) - CORRECT ANSWER >>Risk
Chance of financial loss with the possibility of gain or loss. This
type of risk is not insurable. Example is gambling. - CORRECT
ANSWER >>Speculative Risk
Chance of financial loss with no possibility of gain. The only
potential outcome is loss. - CORRECT ANSWER >>Pure Risk
Unintended unforeseen damage or injury measurable in financial
terms. - CORRECT ANSWER >>Loss
The actual cause of a loss. The reason the loss occurred. (Fire,
lightening, wind, etc.) - CORRECT ANSWER >>Peril
Anything that increases the likelihood (frequency) of a loss
occurring or the severity of a loss. (3 types: Physical, Moral, and
Morale) - CORRECT ANSWER >>Hazard
Arises from material or structural features. Examples: icy road,
oily rag - CORRECT ANSWER >>Physical hazard
,Arises from morality or ethics of insured. Examples: arson, fraud
(thing's done on purpose) - CORRECT ANSWER >>Moral hazard
Arises from human carelessness or irresponsibility. Examples:
leaving garage doors open (negligence) - CORRECT ANSWER
>>Morale hazard
Process of: 1) identifying exposure to risk and 2) deciding how to
handle the financial risk.
4 techniques:
1) reduce- reduce the risk by lowering the hazard
2) retain- assume the risk, (self-insure or deductible)
3) avoid- eliminate the risk (do not engage in the activity)
4) transfer- transfer the financial risk through the purchase of
insurance. - CORRECT ANSWER >>Risk management
A social device for the transfer of an individual's financial risk to a
large number of people. By pooling the risk among a large
number of similar exposures, each individual cost is smaller. -
CORRECT ANSWER >>Insurance
A mathematical principle used by the insurer to statistically predict
future losses.
"The larger the number of similar exposure units, the more
predictable the future total losses become."
Does not predict individual losses. - CORRECT ANSWER >>Law
of Large Numbers
A legally binding contract between the insurance company and
the insured. - CORRECT ANSWER >>Insurance policy
, A temporary insurance contract. Provides temporary protection for
a maximum period of 90 days. A _____ can be written or verbal. -
CORRECT ANSWER >>Binder
1) Legal Purpose-not against the public interest
2) Agreement- requires both an offer and an acceptance
3) Competent Parties- Parties entering a contract must, at the
time of agreement, be considered legally competent to enter into
an agreement.
4) Consideration- Something of value which both parties must
give (aka trade of value) - CORRECT ANSWER >>Essential
Elements of a Legally Binding Contract
Statements made on the application regarding material facts that
the insured believes to be true. A material fact is information that
impacts the insurer's decision to accept. - CORRECT ANSWER
>>Representations
False information given to an insurance company regarding a
material fact. (Lie) - CORRECT ANSWER >>Misrepresentation
Intentional failure to disclose a material fact to an insurance
company. To not tell the whole truth. - CORRECT ANSWER
>>Concealment
Written statements regarding material facts the insured
guarantees to be true. - CORRECT ANSWER >>Warranties
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller tevstudy234. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $22.99. You're not tied to anything after your purchase.
