Arizona- Property and Casualty Exam
Questions & Answers8
A "reciprocal" is an unincorporated aggregation of individuals, called subscribers, who exchange
insurance risks. If the premiums charged for coverage are not sufficient to pay the losses of the
group, subscribers may be assessed an additional premium. A reciprocal is administered by an
attorney in fact who is empowered to bind each subscriber to assume a share of the losses of
the group.
A state-issued document empowering an insurance company to become an admitted insurer is
called what? - ANSWERS -Certificate of Authority
Which of the following is a characteristic of a Reciprocal Insurance Exchange? - ANSWERS -The
chief of administrator of the insurer is called an "attorney-in-fact"
The document that indicates that an insurer has been approved and is authorized to transact
insurance in a particular state is known as
A. Certificate of insurance
B. Binder
C. Certificate of authority
D. Discretionary Authority - ANSWERS -C. Certificate of authority
Which of the following is issued by the state Department of Insurance to show that the insurer
has power to write insurance contracts in that state? - ANSWERS -Certificate of Authority
Which of the following is true regarding a risk retention group?
A. It is a company owned by the stockholders that provides nonparticipating policies
, B. It is a liability insurance company owned by its members
C. It provides support for underwriters and is not an insurance company
D. It is a benefit society formed to provide insurance for members of an affiliated lodge. -
ANSWERS -B. It is a liability insurance company owned by its members
Insurance is a contract by which one seeks to protect another from - ANSWERS -Loss
Insurance will protect a person, business, or entity from loss.
Insurance is the transfer of - ANSWERS -Risk
Insurance is the transfer of financial responsibility associated with a potential of a loss (risk) to
an insurance company.
Events or conditions that increase the chances of an insured loss occurring are referred to as -
ANSWERS -Hazards
Conditions such as lifestyle and existing health, or activities such as scuba diving are hazards and
may increase the chance of a loss occuring.
Which of the following is a unit of measurement an underwriter uses when determining the
premium rates for insurance? - ANSWERS -Exposure
Exposure is a unit of measurement used to determine rates charged for insurance coverage.
What do individuals use to transfer their risk of loss to a larger group? - ANSWERS -Insurance
Insurance is the mechanism whereby an insured is protected against loss by a specified feature
contingency or peril in return for the present payment of premium. Because many other
individuals with the same or similar risk of lost are paying premiums, funds are available to
indemnify those who actually suffer that loss.
The risk of loss may be classified as - ANSWERS -Pure risk and speculative risk.
Questions & Answers8
A "reciprocal" is an unincorporated aggregation of individuals, called subscribers, who exchange
insurance risks. If the premiums charged for coverage are not sufficient to pay the losses of the
group, subscribers may be assessed an additional premium. A reciprocal is administered by an
attorney in fact who is empowered to bind each subscriber to assume a share of the losses of
the group.
A state-issued document empowering an insurance company to become an admitted insurer is
called what? - ANSWERS -Certificate of Authority
Which of the following is a characteristic of a Reciprocal Insurance Exchange? - ANSWERS -The
chief of administrator of the insurer is called an "attorney-in-fact"
The document that indicates that an insurer has been approved and is authorized to transact
insurance in a particular state is known as
A. Certificate of insurance
B. Binder
C. Certificate of authority
D. Discretionary Authority - ANSWERS -C. Certificate of authority
Which of the following is issued by the state Department of Insurance to show that the insurer
has power to write insurance contracts in that state? - ANSWERS -Certificate of Authority
Which of the following is true regarding a risk retention group?
A. It is a company owned by the stockholders that provides nonparticipating policies
, B. It is a liability insurance company owned by its members
C. It provides support for underwriters and is not an insurance company
D. It is a benefit society formed to provide insurance for members of an affiliated lodge. -
ANSWERS -B. It is a liability insurance company owned by its members
Insurance is a contract by which one seeks to protect another from - ANSWERS -Loss
Insurance will protect a person, business, or entity from loss.
Insurance is the transfer of - ANSWERS -Risk
Insurance is the transfer of financial responsibility associated with a potential of a loss (risk) to
an insurance company.
Events or conditions that increase the chances of an insured loss occurring are referred to as -
ANSWERS -Hazards
Conditions such as lifestyle and existing health, or activities such as scuba diving are hazards and
may increase the chance of a loss occuring.
Which of the following is a unit of measurement an underwriter uses when determining the
premium rates for insurance? - ANSWERS -Exposure
Exposure is a unit of measurement used to determine rates charged for insurance coverage.
What do individuals use to transfer their risk of loss to a larger group? - ANSWERS -Insurance
Insurance is the mechanism whereby an insured is protected against loss by a specified feature
contingency or peril in return for the present payment of premium. Because many other
individuals with the same or similar risk of lost are paying premiums, funds are available to
indemnify those who actually suffer that loss.
The risk of loss may be classified as - ANSWERS -Pure risk and speculative risk.
