CIP C120 UNDERWRITING ESSENTIALS FINAL
PAPER 2026 SOLVED QUESTIONS AND FULL
SOLUTION UPDATED
◉ Avoidance.
Answer: Completely eliminating exposure to loss; effective but
seldom practical
◉ Retention.
Answer: AKA self-insurance; insured accepts responsiblity for the
loss before the insurance company pays through use of deductibles
and co-payments
◉ Reduction.
Answer: Act of lessening the possiblity or severity of a loss (i.e.
making healthy changes in lifestyle)
◉ Elements of Insurable Risks.
Answer: Due to chance, measurable, predictable, not catastrophic,
large random loss exposure
◉ Classifications of Insurers.
,Answer: Ownership, domicile, and authority
◉ Law of Agency.
Answer: "The acts of the agent/producer within the scope of
authority are deemed to be acts of the insurer" is known as the...
◉ Express Authority.
Answer: Powers granted by the insurer to the agent that are written
in the contract
◉ Implied Authority.
Answer: Powers that the agent is presumed to have that are not
explicitly written, but that are needed to conduct business (i.e.
collecting and remitting premiums)
◉ Apparent Authority.
Answer: AKA Perceived; refers to a situation where a reasonable
third party would believe an agent had certain powers (i.e. using the
insurer's stationary, applicant believes the agent is authorized to
transact business on the insurer's behalf)
◉ Fiduciary Responsibility.
Answer: Being in position of trust
, ◉ Elements of a Legal Contract.
Answer: Agreement (offer and acceptance), consideration,
competent parties, and legal purpose
◉ Offer.
Answer: Element of a legal contract; applicant does this when
submitting the application
◉ Acceptance.
Answer: Element of a legal contract; when an insurer approves of an
offer in its exact terms and issues a policy
◉ Consideration.
Answer: Element of a legal contract; something of value that each
party gives to each other
◉ Competent Parties.
Answer: Element of a legal contract; legal age, metally competent,
not under the influence of drugs or alcohol
◉ Legal Purpose.
Answer: Element of a legal contract; not against public policy
PAPER 2026 SOLVED QUESTIONS AND FULL
SOLUTION UPDATED
◉ Avoidance.
Answer: Completely eliminating exposure to loss; effective but
seldom practical
◉ Retention.
Answer: AKA self-insurance; insured accepts responsiblity for the
loss before the insurance company pays through use of deductibles
and co-payments
◉ Reduction.
Answer: Act of lessening the possiblity or severity of a loss (i.e.
making healthy changes in lifestyle)
◉ Elements of Insurable Risks.
Answer: Due to chance, measurable, predictable, not catastrophic,
large random loss exposure
◉ Classifications of Insurers.
,Answer: Ownership, domicile, and authority
◉ Law of Agency.
Answer: "The acts of the agent/producer within the scope of
authority are deemed to be acts of the insurer" is known as the...
◉ Express Authority.
Answer: Powers granted by the insurer to the agent that are written
in the contract
◉ Implied Authority.
Answer: Powers that the agent is presumed to have that are not
explicitly written, but that are needed to conduct business (i.e.
collecting and remitting premiums)
◉ Apparent Authority.
Answer: AKA Perceived; refers to a situation where a reasonable
third party would believe an agent had certain powers (i.e. using the
insurer's stationary, applicant believes the agent is authorized to
transact business on the insurer's behalf)
◉ Fiduciary Responsibility.
Answer: Being in position of trust
, ◉ Elements of a Legal Contract.
Answer: Agreement (offer and acceptance), consideration,
competent parties, and legal purpose
◉ Offer.
Answer: Element of a legal contract; applicant does this when
submitting the application
◉ Acceptance.
Answer: Element of a legal contract; when an insurer approves of an
offer in its exact terms and issues a policy
◉ Consideration.
Answer: Element of a legal contract; something of value that each
party gives to each other
◉ Competent Parties.
Answer: Element of a legal contract; legal age, metally competent,
not under the influence of drugs or alcohol
◉ Legal Purpose.
Answer: Element of a legal contract; not against public policy
