Insurance Terminology Quiz

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Questions and Answers

What is pure risk?

A risk that is not insurable
A risk with a chance of loss or gain
A risk that is not covered by a policy
A risk with no chance of gain (correct)

What is the principle of indemnity?

The purpose of the policy is to prevent losses
The purpose of the policy is to transfer risk from the insurer to the insured
The purpose of the policy is to provide coverage for all losses
The purpose of the policy is to restore the insured financially to where they were prior to their loss (correct)

What is a binder in insurance?

A temporary contract that provides coverage until the policy is issued (correct)
A provision that obligates the insured to promptly report a claim to the insurer
An agreement between the insurer and the insured to resolve disputes in arbitration
A clause that lists the perils that are not covered

What is the Fair Credit Reporting Act?

<p>A law that protects consumers against the circulation of inaccurate or obsolete personal or financial information (D)</p> Signup and view all the answers

What does the other insurance clause mean in insurance?

<p>It is also known as the pro-rata liability clause and it means that the liability is proportionate to the amount of insurance provided by each policy (D)</p> Signup and view all the answers