Upgrade to remove ads
Only $35.99/year

Insurance Terms & Related Concepts

Terms in this set (47)

Subrogation
What provision found in property policies prevents an insured from collecting twice for the same loss: once from the insurer and again from a third party?
Speculative
Wagering on a sporting event is known as what type of risk?
Indemnity
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?
No. Absolute liability exists when a condition or conduct is inherently dangerous, so proof of negligence is not required.
Under absolute liability, does an injured party need to prove negligence?
Per Occurrence
What sublimit in a liability policy puts a ceiling on the payment for all claims that arise from a single accident?
A specified dollar amount that the insured must pay before the insurer will pay the policy benefits
What is a deductible in an insurance policy?
Moral
An insurer discovers that an applicant for a policy has submitted a fraudulent insurance claim in the past. What type of hazard does this represent?
Hazards
Conditions that increase the chance of a loss are known as what?
What are three types of hazards
Physical, moral, and morale
What does indemnify mean ?
To restore an insured to the same financial status as before a loss
What are three types of hazards ?
Physical, Moral, Morale
An insured's business is damaged by a fire, and temporarily shut down for repairs. As a result, the insured suffers loss of income. What type of loss is the loss of income?
Indirect or consequential
What is subrogation?
An insurer's legal right to seek damages from third parties after reimbursing insureds for a loss
What are two types of compensatory damages?
special and general
Wagering on a sporting event is known as what type of risk?
Speculative
The reduction, decrease, or disappesrace of value of the person or property insured in a policy is known as what
Loss
Both robbery and burglary can be considered what?
theft
A situation in which a person can experience only a loss and no gain presents what type of risk?
Pure risk
If an insured peril was the proximate cause of loss, what type of loss is it?
Direct
If a manufactured product is unsafe, what type of liability applies to the manufacturer?
Strict liability
A tornado that destroys a property would be an example of what ?
peril
What provision found in property policies prevents an insured from collecting twice for the same loss: once from the insurer and again from a third party?
Subrogation
(Insurance Carried ÷ Insurance Required) x Loss Amount =
Loss Payment
What is the term for the causes of loss insured against in an insurance policy?
Peril
What sublimit in a liability policy puts a ceiling on the payment for all claims that arise from a single accident?
Per occurrence
What determines an insurer's responsibility for payment, as stated in an insurance policy?
Limits of liability
What is burglary?
The forced entry into another's premises with felonious intent.
An insurer discovers that an applicant for a policy has submitted a fraudulent insurance claim in the past. What type of hazard does this represent?
Moral
What type of policy insures all property at multiple locations for a single amount?
Blanket Policy
How is the actual cash value of a property calculated?
Current replacement cost minus depreciation
In property insurance, what is the purpose of a coinsurance clause?
To encourage insureds to insure property close to its value
Insurance is a contract that protects the insured from what?
Loss
What do individuals use to transfer their risk of loss to a larger group?
Insurance
What term describes a loss caused by continuous exposure to a condition?
Occurrence
In property insurance, what is actual cash value?
Replacement cost at the time of loss, minus depreciation
What is a deductible in an insurance policy?
A specified dollar amount that the insured must pay before the insurer will pay the policy benefits
What is risk?
Uncertainty regarding loss
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?
Indemnity
What type of limits of liability has the limits separately stated for different coverages?
Split Limits
How are direct and indirect losses related?
Direct losses can cause indirect losses.
What law protects consumers from the circulation of inaccurate or obsolete information?
The Fair Credit Reporting Act
What term defines an exact, direct, and uninterrupted cause of loss?
Proximate Cause
A person who does not lock the doors to his or her house shows an indifferent attitude. What type of hazard does this represent?
Morale
A policy that covers all causes of loss except for those specifically excluded is known as what type of policy?
Open Peril (or special) form
What is the difference between vacancy and unoccupancy?
Vacancy refers to an insured structure in which no people have been living or working and no property has been stored for the specified period of time. Unoccupancy refers to an insured structure in which no people have been living or working within the required period of time, but some property is stored.
In property insurance, when must insurable interest exist?
At time of loss
What is negligence?
Failure to exercise the standard care that a reasonable person would give under similar circumstances
Students also viewed