Personal Lines exam study prep (OH 11-43) SMART
STUDY GUIDE; GUARANTEED PASS.
Domicile correct answers refers to the jurisdiction (i.e., state or country) where an insurer is
formed or incorporated
Domestic Insurer correct answers An insurer organized under the laws of this state, whether or
not it is admitted to do business in this state.
Foreign Insurer correct answers An insurer not organized under the laws of this state, but in one
of the other states or jurisdictions within the United States, whether or not it is admitted to do
business in the state or jurisdiction.
Alien Insurer correct answers An insurer organized under the laws of any jurisdiction outside of
the United States, whether or not it is admitted to do business in this state.
Admitted (Authorized) Insurer correct answers is authorized by this State's Commissioner of
Insurance to do business in this State. It has received a Certificate of Authority to do business in
this State.
Non-Admitted (Unauthorized) correct answers has either applied for authorization to do business
in this state and was declined or they had not applied.
Underwriting Department correct answers Responsible for the selection of risks and rating that
determines actual policy premium
Which insurance company department accepts the insurance risk? correct answers Underwriting
Insurer (principal) correct answers the company who issues an insurance policy
Producer (agent) correct answers A person or agency appointed by an insurance company to
represent it and to present policies on its behalf.
Expressed Authority correct answers authority that is written into the producer's agency contract.
Example, producers binding authority.
Implied Authority correct answers Authority the public assumes the producer has.
Apparent Authority correct answers Authority created when a producer exceeds expressed
authority, and the insurer does nothing to counter it.
Broker correct answers a licensed agent who negotiates insurance on behalf of the applicant
Which of the following individuals represents the insurance company when selling an insurance
company? correct answers Producer
, Which of the following types of authority does the public assume an agent has when quoting
insurance? correct answers Implied
Speculative Risk correct answers A chance of loss, or gain.
Pure Risk correct answers a risk that presents the chance of loss but no opportunity for gain
Loss correct answers The reduction, decrease, or disappearance of value of the person or
property insured in a policy, by a peril insured against.
Peril correct answers the cause of a loss
Hazzard correct answers increases the probability of loss from a peril
Physical Hazard correct answers a physical condition that increases the frequency or severity of
loss (example; flammable material stored near a furnace)
Moral Hazard correct answers dishonesty or character defects in an individual that increase the
frequency or severity of loss (burns own house for insurance payout)
Morale Hazard correct answers A condition of carelessness or indifference that increases the
frequency or severity of loss. (example; leaving car unlocked)
Transfer correct answers transferring the risk from one party to another, such as from one
consumer to an insurance company
Retention correct answers assume the responsibility for loss
Law of Large Numbers correct answers A principle stating that the larger the number of similar
exposure units considered, the more closely the losses reported will equal the underlying
probability of loss.
Insurable Interest correct answers must be calculable
Insurable Interest does not include correct answers catastrophic perils: war, nuclear hazard and
illegal operations
Dishonest tendencies that increase the probability of loss are what types of hazard? correct
answers Moral
Principle of Indemnity correct answers an insurance principle stating that an insured may not be
compensated by the insurance company in an amount exceeding the insured's economic loss
Insurability correct answers The acceptability of an applicant who meets an insurance company's
underwriting requirements for insurance.
STUDY GUIDE; GUARANTEED PASS.
Domicile correct answers refers to the jurisdiction (i.e., state or country) where an insurer is
formed or incorporated
Domestic Insurer correct answers An insurer organized under the laws of this state, whether or
not it is admitted to do business in this state.
Foreign Insurer correct answers An insurer not organized under the laws of this state, but in one
of the other states or jurisdictions within the United States, whether or not it is admitted to do
business in the state or jurisdiction.
Alien Insurer correct answers An insurer organized under the laws of any jurisdiction outside of
the United States, whether or not it is admitted to do business in this state.
Admitted (Authorized) Insurer correct answers is authorized by this State's Commissioner of
Insurance to do business in this State. It has received a Certificate of Authority to do business in
this State.
Non-Admitted (Unauthorized) correct answers has either applied for authorization to do business
in this state and was declined or they had not applied.
Underwriting Department correct answers Responsible for the selection of risks and rating that
determines actual policy premium
Which insurance company department accepts the insurance risk? correct answers Underwriting
Insurer (principal) correct answers the company who issues an insurance policy
Producer (agent) correct answers A person or agency appointed by an insurance company to
represent it and to present policies on its behalf.
Expressed Authority correct answers authority that is written into the producer's agency contract.
Example, producers binding authority.
Implied Authority correct answers Authority the public assumes the producer has.
Apparent Authority correct answers Authority created when a producer exceeds expressed
authority, and the insurer does nothing to counter it.
Broker correct answers a licensed agent who negotiates insurance on behalf of the applicant
Which of the following individuals represents the insurance company when selling an insurance
company? correct answers Producer
, Which of the following types of authority does the public assume an agent has when quoting
insurance? correct answers Implied
Speculative Risk correct answers A chance of loss, or gain.
Pure Risk correct answers a risk that presents the chance of loss but no opportunity for gain
Loss correct answers The reduction, decrease, or disappearance of value of the person or
property insured in a policy, by a peril insured against.
Peril correct answers the cause of a loss
Hazzard correct answers increases the probability of loss from a peril
Physical Hazard correct answers a physical condition that increases the frequency or severity of
loss (example; flammable material stored near a furnace)
Moral Hazard correct answers dishonesty or character defects in an individual that increase the
frequency or severity of loss (burns own house for insurance payout)
Morale Hazard correct answers A condition of carelessness or indifference that increases the
frequency or severity of loss. (example; leaving car unlocked)
Transfer correct answers transferring the risk from one party to another, such as from one
consumer to an insurance company
Retention correct answers assume the responsibility for loss
Law of Large Numbers correct answers A principle stating that the larger the number of similar
exposure units considered, the more closely the losses reported will equal the underlying
probability of loss.
Insurable Interest correct answers must be calculable
Insurable Interest does not include correct answers catastrophic perils: war, nuclear hazard and
illegal operations
Dishonest tendencies that increase the probability of loss are what types of hazard? correct
answers Moral
Principle of Indemnity correct answers an insurance principle stating that an insured may not be
compensated by the insurance company in an amount exceeding the insured's economic loss
Insurability correct answers The acceptability of an applicant who meets an insurance company's
underwriting requirements for insurance.
