Ohio Property and Casualty Exam Questions & Answers 2023-24 What do individuals use to transfer their risk of loss to a larger group? - ANSWER-Insurance What are the four elements of an insurance contract? - ANSWER-Agreement (Offer and Acceptance), Consideration, Competent parties, and legal purpose.In the agent/insurer relationship, who is considered the principal? - ANSWER-Insurer Insurance contracts are aleatory in nature. What does that mean? - ANSWER-Unequal values are exchanged between the parties to a contract.What are the methods of managing risk? - ANSWER-Avoidance, transfer, sharing, retention, and reduction In insurance contracts, when does acceptance usually occur? - ANSWER-When the insurer approves a prepaid application Wagering on a sporting event is known as what type of risk? - ANSWER-Speculative A situation in which a person can experience only a loss and no gain presents what type of risk? - ANSWER-Pure Risk What type of insurer is formed under the laws of another state? - ANSWER-Foreign When would a misrepresentation on an insurance application be considered fraud? - ANSWER-When it is intentional and material 1 / 3
According to the Law of Agency, who represents the principal? - ANSWER-Agent or producer What does indemnify mean in insurance? - ANSWER-To restore an insured to the same financial status as before a loss.What is a warranty in an insurance contract? - ANSWER-An absolutely true statement upon which the validity of the policy depends.What is the term for the causes of loss insured against in an insurance policy? - ANSWER-Peril What is a risk? - ANSWER-Uncertainty of loss If an insurer holds a Certificate of Authority, it is known as what type of insurer? - ANSWER-Authorized or Admitted What is consideration in an insurance contract? - ANSWER-Consideration is something of value that each party gives to the other. Consideration on the part of the insurer is binding.What is consideration on the part of the insurer? - ANSWER-A promise to pay in the event of a loss A tornado that destroys a property would be an example of what? - ANSWER-Peril What does the term reasonable expectations mean in insurance? - ANSWER-Certain expectations for coverage that a reasonable person would have based on sources other than just the policy language.Conditions that increase the chance of loss are known as what? - ANSWER-Hazards What provision states that if a policy allows for greater benefits than the financial loss incurred, the insured may be compensated only for the amount lost? - ANSWER-Indemnity What are the three types of hazards? - ANSWER-Physical, moral, and morale 2 / 3
What document is required for an insurance company to transact insurance? - ANSWER-Certificate of Authority What does the term unilateral contract mean? - ANSWER-A unilateral contract is a one-sided contract.This means only one party makes an enforceable promise.In insurance contracts, when is the offer usually made? - ANSWER-When the insurance application is submitted.What are the three types of agent authority? - ANSWER-Express, implied and apparent Insurers are classified according to their domicile. What are the three types of insurers? - ANSWER- Domestic, foreign, and alien What type of authority is based on the agent's actions, or words? - ANSWER-Apparent A policy that covers all causes of loss except for those specifically excluded is known as what type of policy? - ANSWER-Open Peril (or special) form How are direct and indirect losses related? - ANSWER-Direct losses can cause indirect losses.What is the difference between cancellation and nonrenewal? - ANSWER-Cancellation is the termination of an insurance policy by either party prior to the policy's expiration date. Nonrenewal is the termination of a policy at its expiration date by not offering a continuation of the existing policy.What is the process that insurers use to determine whether a policy should be insured and on what terms and conditions? - ANSWER-Underwriting In property insurance, when must insurable interest exist? - ANSWER-At the time of loss If an insured peril was the proximate cause of loss, what type of loss is it? - ANSWER-Direct
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