Insurance is a contract by which one seeks to protect another from (BLANK)
o :## Loss
Which factor is NOT considered by an underwriter when determining the premium rates for an
individual seeking insurance?
o :## Race
Agent/Producer
o :## a legal representative of an insurance company; the c...
Insurance Broker Exam Questions and Answers
Insurance is a contract by which one seeks to protect another from (BLANK)
o :## Loss
Which factor is NOT considered by an underwriter when determining the premium rates for an
individual seeking insurance?
o :## Race
Agent/Producer
o :## a legal representative of an insurance company; the classification of producer
usually includes agents and brokers; agents are the agents of the insurer
Applicant (proposed insured)
o :## a person applying for insurance
Broker
o :## an insurance producer not appointed by an insurer and is deemed to represent the
client
Insurance policy
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,2|Page
o :## a contract between a policyowner (and/or insured) and an insurance company
which agrees to pay the insured to the beneficiaries for loss caused by specific events
Insured
o :## person covered by the insurance policy; may or may not be the policy owner
Insurer (principal)
o :## The company who issues an insurance policy
Premium
o :## The money paid to the insurance company for the insurance policy
Policy owner
o :## The person entitled to exercise the rights and privileges in the policy
Reciprocity/Reciprocal
o :## a mutual interchange of rights and privileges
Insurance
o :## a contract in which on party (the insurance company) agrees to indemnify (make
whole) the insured party against loss
Risk
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, 3|Page
o :## the uncertainty or change of a loss occurring
Pure Risk
o :## refers to situations that can only result in a loss or no change. There is no
opportunity for financial gain. This is the only type of risk insurance companies are
willing to accept.
Speculative Risk
o :## Involves the opportunity for either loss of gain. EX: Gambling. NOT
INSURABLE.
What is considered to be a morale hazard?
o :## Reckless driving
Exposure
o :## A unit of measure used to determine rates charged for insurance coverage.
Homogeneous
o :## a large number of units having the same or similar exposure to loss. The basis of
insurance is sharing risk among members of a large homogeneous group with similar
exposure to loss.
Hazards
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