Michigan Property & Casualty Insurance Exam with correct solutions.

Michigan Property & Casualty Insurance Exam with correct solutions. Risk - correct answers.The possibility that a loss will occur Speculative Risk - correct answers.Chance of loss or gain Pure Risk - correct the possibility of loss Peril - correct of loss Exposure - correct answers.The potential for accidents and other losses Direct Loss - correct answers.Loss that is a direct result of a peril, such as fire. Indirect Loss - correct answers.Loss that is a result or consequence of a direct loss Moral Hazard - correct answers.Arise from a person's character (dishonesty) Morale Hazard - correct answers.A condition of carelessness or indifference that increases the frequency or severity of loss. Physical Hazard - correct answers.a physical condition that increases the frequency or severity of loss Sharing risk - correct answers.Two or more individuals share risk transfer risk - correct answers.The purpose of insurance Avoidance - correct nating certain risk by not engaging in certain activity Retention - correct answers.Self-insurance, person will pay for loss Reduction - correct answers.Lessening the possibility or severity of a 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. Elements of Insurable Risk - correct answers.Calculable Affordable Non-catastrophic Homogeneous Accidental Measurable Adverse Selection - correct that have a greater than average chance of loss Reinsurancd - correct answers.Transfers risk from one insurer to another Stock Insurer - correct answers.Owned by stockholders Mutual Insurer - correct by policyholders Fraternal Benefit Society - correct answers.An insurance company formed to provide insurance for members of an affiliated lodge, religious, or fraternal organization with a representative form of government. Reciprocal Insurers - correct unincorporated groups of individual members that provide insurance for other members through indemnity contracts. Each member acts as both insurer and insured and are managed by Attorney in Fact. Lloyd's Association - correct ance provided by individual underwriters, usually insure unusual risks Risk Retention Group (RRG) - correct answers.a mutual insurance company formed to insure people in the same business, occupation, or profession Self insurers - correct answers.These insurers do not transfer their share of a loss to an insurance company, but instead establish their own pool of reserves to cover losses that may arise. Domestic Insurer - correct answers.An insurance company that conducts business in the state of incorporation. Foreign Insurer - correct answers.An insurer licensed to operate in a state but incorporated in another state. Alien Insurer - correct answers.An insurance company that is incorporated outside the United States Certificate of Authority - correct license for an insurance company Financial Strength Rating - correct answers.a report card of the company independent agent - correct answers.Insurance agents who represent and sell products for several different insurance companies and are paid by commission. Captive Agent - correct insurance agent who represents only one insurance company and who is, in effect, an employee of that company General Agent - correct answers.Individuals that train, hire, manage other agents Direct writing - correct company sells the insurance through salaried employees of the company direct-response marketing - correct answers.No agent/producer involved Law of Agency - correct acts made by the agent are considered to be contracts of the principal Express Authority - correct en or stated authority Implied Authority - correct answers.Authority that is not expressed or written into the contract, but which the agent is assumed to have in order to transact the business of insurance for the principal. Apparent Authority - correct answers.The authority an agent is believed by third parties to have because of the behavior of the principal. Elements of a Legal Contract - correct answers.Consideration, Legal, Offer, Acceptance, Competent parties Contracts of Adhesion - correct en by one party and the other party cannot negotiate if ambiguous, the court will decide in favor or the insured Aleatory Contract - correct answers.The exchange of value is unequal. Contract of Utmost Good Faith - correct answers.Both parties bargain in good faith in forming the contract, and rely upon the statements and promises of each other. Unilateral Contract - correct answers.One-sided contract Personal Contract - correct answers.An agreement between an insurance company and