Property & Casualty Insurance WA Questions with Correct Answers

Risk Management Tools (STARR) Correct Answer 1. Share: Buy insurance, share in the loss when you pay the deducible. 2. Transfer: The risk is transferred to an insurance company. 3. Avoidance: Watch for and avoid any potential risk. 4. Retention: You pay for any losses (common for small losses). 5. Reduction & Loss Prevention: Wear a seatbelt, don't text and drive, annual wellness exam, etc. Elements of Insurable Risk (Calm Chap) Correct Answer 1. The loss cannot be CAtastrophic to the insurance company. (natural disasters, hurricanes, etc) 2. Exposures must be Large.Utilizing law of large numbers. 3. The loss must be definite or Measurable. 4. The loss must be due to CHAnce. 5. The loss must be Predictable. Elements of a Contract (CCOAL) Correct Answer Consideration, Competent parties, Offer, Acceptance, Legal object. Contract of Adhesion Correct Answer Insurer prepares provisions of contract, policyholder adheres (or agrees) to them. Unilateral Contract Correct Answer Only one party is required to perform under the contract. Express Powers (of an agent) Correct Answer Expressly written in the agent contract with the company. Implied Powers (of an agent) Correct Answer "How to fulfill obligations for expressed powers". ex: collect any premium due upon delivery. Apparent Powers (Authority) of an agent Correct Answer If the agent does something that is apparent to the consumer that the agent has the authority to do, even if it is not implied or expressed by contract, then the agent does have that power. Actual Cash Value Correct Answer cost of repairing the damage minus reasonable depreciation. ACV= RC-Dep Replacement Cost Correct Answer Current cost at the time of loss to repair or replace the damaged property, without deduction for depreciation. Stated Value Coverage Correct Answer Property is insured for a set value