Washington State Insurance Exam (With Errorless Solutions)

Apparent correct answers is the appearance or assumption of authority based on the actions, words, or deeds of the principal or because of circumstances the principal created. Mutual Company correct answers Owned by the policyowner and issue participating policies. Policy owners are entitled to dividends, which are a return of excess premiums and are therefore non-taxable. Dividends are not guaranteed. Sharing correct answers A method of dealing with risk for a group of individual persons or businesses with the same or similar exposure to loss to share the losses that occur within that group. A RECIPROCAL insurance exchange is a form of risk-sharing arrangement. Retention correct answers Is the planned assumption of risk by the insured through the use of deductibles, co-payments, or self-insurance. It is also known as self-insurance when the insured accepts the responsibility for the loss before the insurance company pays. Express Authority correct answers Is the AUTHORITY a principal intends to grant to an agent by means of the agent's contract. It is the authority that is written in the contract. Insurable Risk correct answers In order to be characterized as a pure risk, the loss must be due to chance, definite, measurable, and predictable, but not catastrophic. Insurance Policy Conditions correct answers Section of an insurance policy that indicates the general rules or procedures that the insurer and insured agree to follow under the terms of the policy. Examples: Inspection may be made as needed/ Changes to the policy must be made by insurer and be in writing/ Liberalization clause/ Return of premiums, which dictates methods used. Loss Costs Rating correct answers Type of rating: Method developed by the insurance services office Inc. (ISO) that provides an insurer with that portion of a rate that does not include provisions of expenses or profit and are based on historical aggregate loss and loss adjustment expenses projected through development to their ultimate value and through trending to a future point in time. Strict Liability correct answers Is commonly applied in product liability cases. The business is then liable for defective products, regardless of fault or negligence. Insuring Agreement correct answers The part of the policy structure that describes the insured perils and the method of indemnification. Conditions correct answers States the legal obligations and duties of the parties to the contract.