General Insurance PrinciplesQuestion 200 of 315
An insurance company purchases coverage from another insurance company to spread risk on very large policies. This arrangement is called:
a.Coinsurance
b.Self-insurance
c.Reinsurance
d.Surplus lines
Explanation
Reinsurance is insurance bought by an insurer (the ceding company) from another insurer (the reinsurer) to spread very large or volatile risks. Coinsurance is a loss-sharing clause inside a policy; self-insurance is retaining risk; surplus lines refers to placement of risk with a non-admitted insurer.
Practice all 315 questions free — no signup required.
Related questions on this topic
- A producer who legally represents the insurance company and binds it within the authority granted is called a(n):
- Which statement BEST distinguishes a stock insurer from a mutual insurer?
- An insurer that has been issued a Certificate of Authority by the California Department of Insurance is classified as:
- On a life insurance policy, the person who has the contractual right to name the beneficiary, take a loan, or surrender the policy is the:
- An applicant submits a completed application with the initial premium. The insurer issues a policy with a different premium class than requested. Under contract law, this is BEST described as:
- Under California Insurance Code §10110.1, insurable interest in another's life is generally found in all of the following relationships EXCEPT:
Last reviewed: · editorial process
PrepPass Editorial Team · Verified against California Life & Health Insurance License Exam · How we review