WASHINGTON STATE INSURANCE EXAM
Apparent - Answers :is the appearance or assumption of authority based on the actions,
words, or deeds of the principal or because of circumstances the principal created.
Mutual Company - Answers :Owned by the policyowner and issue participating policies.
Policy owners are entitled to dividends, which are a return of excess premiums and are
therefore non-taxable. Dividends are not guaranteed.
Sharing - Answers :A method of dealing with risk for a group of individual persons or
businesses with the same or similar exposure to loss to share the losses that occur
within that group. A RECIPROCAL insurance exchange is a form of risk-sharing
arrangement.
Retention - Answers :Is the planned assumption of risk by the insured through the use
of deductibles, co-payments, or self-insurance. It is also known as self-insurance when
the insured accepts the responsibility for the loss before the insurance company pays.
Express Authority - Answers :Is the AUTHORITY a principal intends to grant to an agent
by means of the agent's contract. It is the authority that is written in the contract.
Insurable Risk - Answers :In order to be characterized as a pure risk, the loss must be
due to chance, definite, measurable, and predictable, but not catastrophic.
Insurance Policy Conditions - Answers :Section of an insurance policy that indicates the
general rules or procedures that the insurer and insured agree to follow under the terms
of the policy. Examples: Inspection may be made as needed/ Changes to the policy
must be made by insurer and be in writing/ Liberalization clause/ Return of premiums,
which dictates methods used.
Loss Costs Rating - Answers :Type of rating: Method developed by the insurance
services office Inc. (ISO) that provides an insurer with that portion of a rate that does not
include provisions of expenses or profit and are based on historical aggregate loss and
loss adjustment expenses projected through development to their ultimate value and
through trending to a future point in time.
Strict Liability - Answers :Is commonly applied in product liability cases. The business is
then liable for defective products, regardless of fault or negligence.
Insuring Agreement - Answers :The part of the policy structure that describes the
insured perils and the method of indemnification.
Conditions - Answers :States the legal obligations and duties of the parties to the
contract.
, Stated Amount - Answers :The value of the insured property is determined at the time
the policy is written. In the event of a loss, that amount is paid without regard to any
COINSURANCE provision. However, if the loss is less than total, the insurer has
salvage rights with the insured having first right of refusal of the salvage.
Personal Property - Answers :Property that is moveable
Real Property - Answers :Property that is non-moveable
Components - Answers :Factors that determine rates, including loss reserves, loss
adjusting expenses, operating expenses and profits.
Comparative Negligence - Answers :Many states, by statute, require that damage be
apportioned based upon the degree of negligence of each party in an accident.
Assignment - Answers :The transfer of a legal right or interest in an insurance policy. In
property and casualty insurance, assignments of policies are usually valid only with the
prior written consent of the insurer. Example: transferring a policy to a friend who will be
taking over renters insurance when you move out.
Additional Coverage - Answers :Provides an additional amount of coverage for specific
loss expense, at no additional premium.
Surplus Lines - Answers :Insurance that is not available in the regular market place from
admitted insurers. Usually involves insurance of high risk individuals.
Defamation - Answers :Statements that are false as to the financial condition of any
insurer
Per occurrence (accident) limit - Answers :The limit s expressed in an auto policy is the
limit per accident. After payment of a claim, the limits are restored to the original amount
for the next accident.
Proximate cause - Answers :Is an act or event that is the natural and reasonablely
forseeable cause of damage or an event that occurs and damages property or causes
bodily harm.
When an applicant remit premium money to the insurer - Answers :When must a binder
be given
Valued Policy - Answers :Provides for payment of the full policy amount in the event of a
total loss WITHOUT regard to actual value or depreciation.
Contributory Negligence - Answers :In states that have this, the defendant must have
been 100% at fault for an accident and the claimant free of fault if the claimant is to be
successful in collecting damages.
Apparent - Answers :is the appearance or assumption of authority based on the actions,
words, or deeds of the principal or because of circumstances the principal created.
Mutual Company - Answers :Owned by the policyowner and issue participating policies.
Policy owners are entitled to dividends, which are a return of excess premiums and are
therefore non-taxable. Dividends are not guaranteed.
Sharing - Answers :A method of dealing with risk for a group of individual persons or
businesses with the same or similar exposure to loss to share the losses that occur
within that group. A RECIPROCAL insurance exchange is a form of risk-sharing
arrangement.
Retention - Answers :Is the planned assumption of risk by the insured through the use
of deductibles, co-payments, or self-insurance. It is also known as self-insurance when
the insured accepts the responsibility for the loss before the insurance company pays.
Express Authority - Answers :Is the AUTHORITY a principal intends to grant to an agent
by means of the agent's contract. It is the authority that is written in the contract.
Insurable Risk - Answers :In order to be characterized as a pure risk, the loss must be
due to chance, definite, measurable, and predictable, but not catastrophic.
Insurance Policy Conditions - Answers :Section of an insurance policy that indicates the
general rules or procedures that the insurer and insured agree to follow under the terms
of the policy. Examples: Inspection may be made as needed/ Changes to the policy
must be made by insurer and be in writing/ Liberalization clause/ Return of premiums,
which dictates methods used.
Loss Costs Rating - Answers :Type of rating: Method developed by the insurance
services office Inc. (ISO) that provides an insurer with that portion of a rate that does not
include provisions of expenses or profit and are based on historical aggregate loss and
loss adjustment expenses projected through development to their ultimate value and
through trending to a future point in time.
Strict Liability - Answers :Is commonly applied in product liability cases. The business is
then liable for defective products, regardless of fault or negligence.
Insuring Agreement - Answers :The part of the policy structure that describes the
insured perils and the method of indemnification.
Conditions - Answers :States the legal obligations and duties of the parties to the
contract.
, Stated Amount - Answers :The value of the insured property is determined at the time
the policy is written. In the event of a loss, that amount is paid without regard to any
COINSURANCE provision. However, if the loss is less than total, the insurer has
salvage rights with the insured having first right of refusal of the salvage.
Personal Property - Answers :Property that is moveable
Real Property - Answers :Property that is non-moveable
Components - Answers :Factors that determine rates, including loss reserves, loss
adjusting expenses, operating expenses and profits.
Comparative Negligence - Answers :Many states, by statute, require that damage be
apportioned based upon the degree of negligence of each party in an accident.
Assignment - Answers :The transfer of a legal right or interest in an insurance policy. In
property and casualty insurance, assignments of policies are usually valid only with the
prior written consent of the insurer. Example: transferring a policy to a friend who will be
taking over renters insurance when you move out.
Additional Coverage - Answers :Provides an additional amount of coverage for specific
loss expense, at no additional premium.
Surplus Lines - Answers :Insurance that is not available in the regular market place from
admitted insurers. Usually involves insurance of high risk individuals.
Defamation - Answers :Statements that are false as to the financial condition of any
insurer
Per occurrence (accident) limit - Answers :The limit s expressed in an auto policy is the
limit per accident. After payment of a claim, the limits are restored to the original amount
for the next accident.
Proximate cause - Answers :Is an act or event that is the natural and reasonablely
forseeable cause of damage or an event that occurs and damages property or causes
bodily harm.
When an applicant remit premium money to the insurer - Answers :When must a binder
be given
Valued Policy - Answers :Provides for payment of the full policy amount in the event of a
total loss WITHOUT regard to actual value or depreciation.
Contributory Negligence - Answers :In states that have this, the defendant must have
been 100% at fault for an accident and the claimant free of fault if the claimant is to be
successful in collecting damages.
