FLORIDA 2 20 STATE EXAM FINAL
QUESTIONS WITH COMPLETE
SOLUTIONS GRADED A
◉ Pure Risk. Answer: Only the possibility of a loss. (Pure risk is the
type of risk that is insurable)
◉ Speculative Risk. Answer: Possibility of a loss or gain. (Insurance
does not deal in speculative risks)
◉ Law of Large Numbers. Answer: The more data you have, the
more accurate your calculations will be when using it.
◉ What can we do with Risk?. Answer: Mitigate (Risk Reduction),
Avoid Risk, Pool Risk, Transfer Risk
◉ Risk Mitigation. Answer: Lessening the possibility of a loss. AKA
Risk Reduction
◉ Risk Avoidance. Answer: Choosing not to own a car would be a
way of practicing this, and avoiding property or liability losses.
◉ Risk Pooling. Answer: Collecting risk together.
,◉ Risk Transfer. Answer: Using a contract to decide who will take on
risk, and thus who will pay for losses. Ex - Buying an Insurance
policy
◉ Elements of a Legally Binding Contract. Answer: Offer and
acceptance, Consideration, Legal Purpose, Competent
◉ Offer. Answer: When the applicant submits the application and the
premium.
◉ Acceptance. Answer: When the insurance company approves the
application.
◉ Consideration. Answer: Something of value given for a contract.
Ex - The value given (premium payment) in exchange for insurance
coverage.
◉ Legal Purpose. Answer: The contract entered into must be legal.
◉ Competent Parties. Answer: Both parties (The insurer and the
applicant) must be competent at the time of the application.
◉ Exceptions to Competency. Answer: 1. Minors
,2. Mentally Challenged
3. Under the influence of drugs or alcohol
◉ Insurance Policy. Answer: A contract between the insurer, AKA the
carrier, and the insured.
◉ Applicant. Answer: Prospective Insured
◉ Underwriting Information. Answer: Information collected by the
insurer through credit reports or other means. This is anything that
helps the carrier make a determination about risk.
◉ Binder. Answer: A temporary contract that puts an insurance
policy into force before the premium has been paid.
◉ Certificate of Insurance (COI) and Evidence of Property Insurance
(EPI). Answer: Documents that can of requested banks, landlords,
and others to verify that insurance is in place. Issued by agents and
insurers. These documents should only contain language approved
by the insurer.
◉ Declarations. Answer: Gives the name and address of the insured,
tells which coverage forms and endorsements are attached, what
locations or property are covered, and what the policy limits are, the
effective date and expiration, and the policy premium.
, ◉ Insuring Agreement. Answer: Describes what risk the insurance
carrier is assuming and the promise to cover financial losses.
◉ Conditions. Answer: Places limitations or qualifying statements
on the insurers promise to pay or perform. Includes requiring the
prompt payment of premium, providing notice and proof of loss.
Includes number of days notice the company must give for
cancellation or non renewal.
◉ Duties of the Insured. Answer: Tells what the insured must do
after a loss: give notice, do not prejudice insurers rights, submit
proof of loss. AKA "The duties in the event of a loss or damage".
◉ Exclusions and Limitations. Answer: Tells what is not covered,
takes away coverage from the insuring agreement.
◉ Cause of Loss Form. Answer: On property policies, describes what
perils are covered by the contract.
◉ Endorsements. Answer: Conditions or coverages that are added to
or removed from other parts of the policy. May broaden or narrow
coverage, add or delete insured locations or persons, or make
corrections to the policy.
QUESTIONS WITH COMPLETE
SOLUTIONS GRADED A
◉ Pure Risk. Answer: Only the possibility of a loss. (Pure risk is the
type of risk that is insurable)
◉ Speculative Risk. Answer: Possibility of a loss or gain. (Insurance
does not deal in speculative risks)
◉ Law of Large Numbers. Answer: The more data you have, the
more accurate your calculations will be when using it.
◉ What can we do with Risk?. Answer: Mitigate (Risk Reduction),
Avoid Risk, Pool Risk, Transfer Risk
◉ Risk Mitigation. Answer: Lessening the possibility of a loss. AKA
Risk Reduction
◉ Risk Avoidance. Answer: Choosing not to own a car would be a
way of practicing this, and avoiding property or liability losses.
◉ Risk Pooling. Answer: Collecting risk together.
,◉ Risk Transfer. Answer: Using a contract to decide who will take on
risk, and thus who will pay for losses. Ex - Buying an Insurance
policy
◉ Elements of a Legally Binding Contract. Answer: Offer and
acceptance, Consideration, Legal Purpose, Competent
◉ Offer. Answer: When the applicant submits the application and the
premium.
◉ Acceptance. Answer: When the insurance company approves the
application.
◉ Consideration. Answer: Something of value given for a contract.
Ex - The value given (premium payment) in exchange for insurance
coverage.
◉ Legal Purpose. Answer: The contract entered into must be legal.
◉ Competent Parties. Answer: Both parties (The insurer and the
applicant) must be competent at the time of the application.
◉ Exceptions to Competency. Answer: 1. Minors
,2. Mentally Challenged
3. Under the influence of drugs or alcohol
◉ Insurance Policy. Answer: A contract between the insurer, AKA the
carrier, and the insured.
◉ Applicant. Answer: Prospective Insured
◉ Underwriting Information. Answer: Information collected by the
insurer through credit reports or other means. This is anything that
helps the carrier make a determination about risk.
◉ Binder. Answer: A temporary contract that puts an insurance
policy into force before the premium has been paid.
◉ Certificate of Insurance (COI) and Evidence of Property Insurance
(EPI). Answer: Documents that can of requested banks, landlords,
and others to verify that insurance is in place. Issued by agents and
insurers. These documents should only contain language approved
by the insurer.
◉ Declarations. Answer: Gives the name and address of the insured,
tells which coverage forms and endorsements are attached, what
locations or property are covered, and what the policy limits are, the
effective date and expiration, and the policy premium.
, ◉ Insuring Agreement. Answer: Describes what risk the insurance
carrier is assuming and the promise to cover financial losses.
◉ Conditions. Answer: Places limitations or qualifying statements
on the insurers promise to pay or perform. Includes requiring the
prompt payment of premium, providing notice and proof of loss.
Includes number of days notice the company must give for
cancellation or non renewal.
◉ Duties of the Insured. Answer: Tells what the insured must do
after a loss: give notice, do not prejudice insurers rights, submit
proof of loss. AKA "The duties in the event of a loss or damage".
◉ Exclusions and Limitations. Answer: Tells what is not covered,
takes away coverage from the insuring agreement.
◉ Cause of Loss Form. Answer: On property policies, describes what
perils are covered by the contract.
◉ Endorsements. Answer: Conditions or coverages that are added to
or removed from other parts of the policy. May broaden or narrow
coverage, add or delete insured locations or persons, or make
corrections to the policy.
