North Carolina Property and Casualty
Exam Terms fully solved
Contract - correct answer ✔✔A legal agreement between two competent parties that promises
a certain performance in exchange for a certain consideration
Contracts must exhibit: - correct answer ✔✔Competent parties
Legal Purpose
Offer and Acceptance
Consideration
Principle of indemnity - correct answer ✔✔When a loss occurs, an individual should be restored
to the approximate financial condition he was in before the loss, no more or no less
Aleatory - correct answer ✔✔A contract contingent on an uncertain event (A loss) that provides
for unequal transfer of value between two paries
Adhesion (Contracts) - correct answer ✔✔One party has greater power over the other party in
drafting the contract
Unilateral (Contracts) - correct answer ✔✔One Sided; Only the insurance company is legally
bound to perform its part of the agreement
Contract of utmost good faith (Contracts) - correct answer ✔✔The truthfulness and integrity of
the applicant when providing information that leads to issuing a policy.
,Conditional (Contracts) - correct answer ✔✔A number of conditions that both the insured and
the insurer most follow by in order to keep the contract valid
Five parts of an insurance contract - correct answer ✔✔Declarations
Insuring Agreements
Conditions
Exclusions
Definitions
Declarations (Contain) - correct answer ✔✔Name of Insured
Address
Amount of Coverage
Description of Property
Perils covered
Insuring Agreements (Contain) - correct answer ✔✔Losses for which the insured will be
indemnified
What is covered
What perils covered
Conditions (Contain) - correct answer ✔✔Responsibilities and obligations for both the insurance
company and the insured
Exclusions (Contain) - correct answer ✔✔Losses for which the insured is not covered
Definitions - correct answer ✔✔Meaning of certain terms used in the policy
, Stock Company (Types of Insurance Companies) - correct answer ✔✔Sells stock to raise money
to operate the business, profits are returned to stock holders, not the insureds
Mutual Company (Types of Insurance Companies) - correct answer ✔✔Insureds are also owners
of the company, profits are returned as dividends or discounts off future payments
Reciprocal Company (Types of Insurance Companies) - correct answer ✔✔A unincorporated
group forms together and agrees to share the insurance responsibly with all other members.
Each insurers each other and share the losses with each other
Attorney-at-fact - correct answer ✔✔Manager of a reciprocal company who is empowered to
handle all the business of said company
Lloyd's Association - correct answer ✔✔Voluntary association of individuals, or groups of
individuals, who agree to share in insurance contracts. Each individual, or "syndicate" is
individually responsible for the amounts of insurance they write
Fraternal benefit society - correct answer ✔✔Incorporated society or order, without capital
stocks, that is operated on the lodge system and conducted solely for the benefit of its
members and their beneficiaries and not for profit. Only available to their members
Risk Retention Groups - correct answer ✔✔A self-insurance or group captive insurance
company set up to protect manufacturers against product liability exposures and to purchase
liability insurance.
Self-Insurance - correct answer ✔✔When a company takes part of all of the risk of loss without
the benefit of insurance coverage to fall back on if a loss occurs
Residual market insurance - correct answer ✔✔When the government steps in and provides
insurance that is not ordinarily available from private insurers. It provides
Exam Terms fully solved
Contract - correct answer ✔✔A legal agreement between two competent parties that promises
a certain performance in exchange for a certain consideration
Contracts must exhibit: - correct answer ✔✔Competent parties
Legal Purpose
Offer and Acceptance
Consideration
Principle of indemnity - correct answer ✔✔When a loss occurs, an individual should be restored
to the approximate financial condition he was in before the loss, no more or no less
Aleatory - correct answer ✔✔A contract contingent on an uncertain event (A loss) that provides
for unequal transfer of value between two paries
Adhesion (Contracts) - correct answer ✔✔One party has greater power over the other party in
drafting the contract
Unilateral (Contracts) - correct answer ✔✔One Sided; Only the insurance company is legally
bound to perform its part of the agreement
Contract of utmost good faith (Contracts) - correct answer ✔✔The truthfulness and integrity of
the applicant when providing information that leads to issuing a policy.
,Conditional (Contracts) - correct answer ✔✔A number of conditions that both the insured and
the insurer most follow by in order to keep the contract valid
Five parts of an insurance contract - correct answer ✔✔Declarations
Insuring Agreements
Conditions
Exclusions
Definitions
Declarations (Contain) - correct answer ✔✔Name of Insured
Address
Amount of Coverage
Description of Property
Perils covered
Insuring Agreements (Contain) - correct answer ✔✔Losses for which the insured will be
indemnified
What is covered
What perils covered
Conditions (Contain) - correct answer ✔✔Responsibilities and obligations for both the insurance
company and the insured
Exclusions (Contain) - correct answer ✔✔Losses for which the insured is not covered
Definitions - correct answer ✔✔Meaning of certain terms used in the policy
, Stock Company (Types of Insurance Companies) - correct answer ✔✔Sells stock to raise money
to operate the business, profits are returned to stock holders, not the insureds
Mutual Company (Types of Insurance Companies) - correct answer ✔✔Insureds are also owners
of the company, profits are returned as dividends or discounts off future payments
Reciprocal Company (Types of Insurance Companies) - correct answer ✔✔A unincorporated
group forms together and agrees to share the insurance responsibly with all other members.
Each insurers each other and share the losses with each other
Attorney-at-fact - correct answer ✔✔Manager of a reciprocal company who is empowered to
handle all the business of said company
Lloyd's Association - correct answer ✔✔Voluntary association of individuals, or groups of
individuals, who agree to share in insurance contracts. Each individual, or "syndicate" is
individually responsible for the amounts of insurance they write
Fraternal benefit society - correct answer ✔✔Incorporated society or order, without capital
stocks, that is operated on the lodge system and conducted solely for the benefit of its
members and their beneficiaries and not for profit. Only available to their members
Risk Retention Groups - correct answer ✔✔A self-insurance or group captive insurance
company set up to protect manufacturers against product liability exposures and to purchase
liability insurance.
Self-Insurance - correct answer ✔✔When a company takes part of all of the risk of loss without
the benefit of insurance coverage to fall back on if a loss occurs
Residual market insurance - correct answer ✔✔When the government steps in and provides
insurance that is not ordinarily available from private insurers. It provides
