Florida ACA Claims Licensing Exam Questions With 100% Correct Answers.

Insurance - Answer-transfer of risk by contract to insurers who agree to indemnify insureds for losses Risk - Answer-chance of loss pure risk - Answer-only outcomes are loss or no loss personal risk - Answer-premature death, insufficient income, poor health, unemployment property risk - Answer-loss of real property or personal property (on the land not the land itself) Liability risk - Answer-something that results in loss to another (3rd party buyout) Controlling risk - Answer-risk management; minimal loss speculative risk - Answer-either profit or loss is possible (NOT insurable) indemnify - Answer-compensate for loss, damage, or injury; reimburse; repay Law of Large Numbers - Answer-must have a large pool of insureds to be able to predict losses so that the outcomes will reflect the probability of the results Direct loss - Answer-Results from the damage, destruction, or theft of property by a covered peril indirect loss - Answer-a financial loss that results from the occurrence of a direct physical damage or theft loss When can there be a pay out on liability risk - Answer-negligence is provennegligence - Answer-failure to use due care; otherwise known as the prudent person rule Strict or Absolute Liability - Answer-Liability assigned by statute without regard for negligence (set by the state or industry, no allowable defense) Indemnity Principle - Answer-one should be in approximately the same position after a loss as he was before the loss Insurer - Answer-A person or company that underwrites an insurance risk; the party in an insurance contract undertaking to pay compensation. Insured - Answer-one who is named or covered by insurance Insurable interest - Answer-must exist at the time of loss and usually means an economic or other interest in the event or in a particular property ex: bank loans or mortgage companies What is the measure of insurable interest - Answer-the extent to which the insured might be damnified by loss, injury, or impairment thereof Policy - Answer-a written document containing coverage, exclusions, conditions and endorsements Binder - Answer-can be oral or written and places the insurance "in effect" Requirements of a valid contract - Answer-consent of all parties (offer and acceptance), valuable consideration (monetary exchange), all parties must be of legal capacity (competent), and it must be for legal purposes to be enforceable Characteristics of an insurance contract - Answer-personal, conditional, contract of adhesion (gray area, will side on the behalf of the insured), principle of indemnity, aleatory (exchange is not equal), unilateral (payment for a promise)Domestic insurance company - Answer-A company that resides and is incorporated under the laws of the state in which it is operating Foreign Insurance Company - Answer-An insurance company that is incorporated outside the state where it is conducting business