FLORIDA PERSONAL LINES INSURANCE LATEST UPDATED
EXAMINATION QUESTIONS WITH VERIFIED A+ ANSWERS
Risk
The possibility that a loss might happen.
Pure Risk
Only the possibility of a loss. (Pure risk is the type of risk that is insurable)
Speculative Risk
Possibility of a loss or gain. (Insurance does not deal in speculative risks)
Law of Large Numbers
The more data you have, the more accurate your calculations will be when using it.
What can we do with Risk?
Mitigate (Risk Reduction), Avoid Risk, Pool Risk, Transfer Risk
Risk Mitigation
Lessening the possibility of a loss. AKA Risk Reduction
Risk Avoidance
Choosing not to own a car would be a way of practicing this, and avoiding property or liability losses.
Risk Pooling
Collecting risk together.
Risk Transfer
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
Offer and acceptance, Consideration, Legal Purpose, Competent
Offer
When the applicant submits the application and the premium.
Acceptance
When the insurance company approves the application.
Consideration
, Something of value given for a contract. Ex - The value given (premium payment) in exchange for
insurance coverage.
Legal Purpose
The contract entered into must be legal.
Competent Parties
Both parties (The insurer and the applicant) must be competent at the time of the application.
Exceptions to Competency
1. Minors
2. Mentally Challenged
3. Under the influence of drugs or alcohol
Insurance Policy
A contract between the insurer, AKA the carrier, and the insured.
Applicant
Prospective Insured
Underwriting Information
Information collected by the insurer through credit reports or other means. This is anything that helps
the carrier make a determination about risk.
Binder
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)
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
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
Describes what risk the insurance carrier is assuming and the promise to cover financial losses.
Conditions
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.
EXAMINATION QUESTIONS WITH VERIFIED A+ ANSWERS
Risk
The possibility that a loss might happen.
Pure Risk
Only the possibility of a loss. (Pure risk is the type of risk that is insurable)
Speculative Risk
Possibility of a loss or gain. (Insurance does not deal in speculative risks)
Law of Large Numbers
The more data you have, the more accurate your calculations will be when using it.
What can we do with Risk?
Mitigate (Risk Reduction), Avoid Risk, Pool Risk, Transfer Risk
Risk Mitigation
Lessening the possibility of a loss. AKA Risk Reduction
Risk Avoidance
Choosing not to own a car would be a way of practicing this, and avoiding property or liability losses.
Risk Pooling
Collecting risk together.
Risk Transfer
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
Offer and acceptance, Consideration, Legal Purpose, Competent
Offer
When the applicant submits the application and the premium.
Acceptance
When the insurance company approves the application.
Consideration
, Something of value given for a contract. Ex - The value given (premium payment) in exchange for
insurance coverage.
Legal Purpose
The contract entered into must be legal.
Competent Parties
Both parties (The insurer and the applicant) must be competent at the time of the application.
Exceptions to Competency
1. Minors
2. Mentally Challenged
3. Under the influence of drugs or alcohol
Insurance Policy
A contract between the insurer, AKA the carrier, and the insured.
Applicant
Prospective Insured
Underwriting Information
Information collected by the insurer through credit reports or other means. This is anything that helps
the carrier make a determination about risk.
Binder
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)
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
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
Describes what risk the insurance carrier is assuming and the promise to cover financial losses.
Conditions
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.
