Insurance Terms And Related Concepts

Front 1

Which of the following best expresses the purpose of astated value contract?

Back 1

To pre-establish the amount of coverage available forproperty items that are difficult to value

Front 2

In case of a loss, the indemnity provision in insurancepolicies

Back 2

Restores an insurance person to the same financial state asbefore the loss

Front 3

What are the two types of compensatory damages?

Back 3

Special and general

Front 4

The legal process that gives the insurer, after payment of aloss, the right to seek recovery from a third party that was responsible forthe loss is known as

Back 4

Subrogation

Front 5

Am insures is driving her car through a residential areawhen she loses control and crashes into a neighbor’s front porch. The neighbor,who was sitting on the porch, is injured. The insured’s liability policy has alimit of $500,000. This amount applies to the total of damages for any bodily injuryand property damage resulting from one accident. Which type of limit ofliability does the insured have?

Back 5

Combined single

Front 6

In property and casualty insurance, what is the term for theamount of a loss that the insured must cover out of pocket, and the insurerwill only pay for the additional amount of the loss above the limit?

Back 6

Deductible

Front 7

An additional loss that results from a direct loss ofproperty is called

Back 7

Indirect loss

Front 8

An insured’s building has an actual cash value of $200,000,and he has insured the property for $120,000 with an 80% coinsurance clause. A $40,000loss occurs. How much will the policy pay?

Back 8

$30,000

Front 9

What does the term proximate cause refer to?

Back 9

Negligence that leads to an injury

Front 10

Property insurance that provides $100,000 coverage for abuilding and $50,000 coverage for personal property at a single location iscalled

Back 10

Specific coverage

Front 11

An insured has a liability policy that sets the amount forall claims that arise from a single incident at $50,000. Which type of limit ofliability foes this insured’s policy have?

Back 11

Per occurrence

Front 12

The policy provision found in property insurance policiesthat prevents the insured from collecting twice for the same loss is called

Back 12

Subrogation

Front 13

Payment for medical expenses, loss wages, funeral expenses,or the cost to repair or replace damaged property are known as what type ofcompensatory damages?

Back 13

Special

Front 14

What is defined as the maximum limit of coverageavailable under a liability policyduring a policy year, regardless of the number of claims that may be made orthe number of accidents that may occur?

Back 14

Aggregate limit of liability

Front 15

Which method of loss valuation is contrary to the basicconcept of indemnity?

Back 15

Replacement cost

Front 16

What determines an insurer’s responsibility for payment, asstated in an insurance policy?

Back 16

Limits of liability

Front 17

What is negligence?

Back 17

Failure to act as a reasonable, prudent person under givencircumstances

Front 18

What part of an insurance policy contains the insurer’spromise to pay a claim?

Back 18

Insuring agreement

Front 19

What provision states that if a policy allows for greaterbenefits than the financial loss incurred, the insured may be compensated onlyfor the amount lost?

Back 19

Indemnity

Front 20

What is a binder?

Back 20

A temporary insurance contract that goes in effect prior tothe policy issue

Front 21

What type of policy insures all property at multiplelocations for a single amount?

Back 21

Blanket policy

Front 22

In property insurance, what is actual cash value?

Back 22

Replacement cost at the time of loss, minus depreciation

Front 23

A policy that covers all causes of loss except for thosespecifically excluded is known as what type of policy?

Back 23

Open peril (or special) form

Front 24

When is an appraisal needed and how can it be requested?

Back 24

If an insured and insurer disagree about the value of aproperty loss, either party can make a written demand for an appraisal

Front 25

What are the two types of compensatory damages?

Back 25

Special and general

Front 26

How are direct and indirect losses related?

Back 26

Direct losses can cause indirect losses

Front 27

What part of an insurance policy sets forth the rules ofconduct, duties, and obligations of the parties to the contract?

Back 27

Conditions

Front 28

What sublimit in a liability policy puts a ceiling on thepayment for all claims that arise forma single accident?

Back 28

Per occurrence

Front 29

What type of limits of liability has the limits separately statedfor different coverages?

Back 29

Split limits

Front 30

What is proof of loss?

Back 30

A sworn statement from an insured notifying the insurer abouta loss

Front 31

What provision found in property policies prevents aninsured from collecting twice for the same loss; once from an insurer and againfrom a third party?

Back 31

Subrogation

Front 32

If an insured peril was the proximate cause of loss, whattype of loss is it?

Back 32

Direct

Front 33

An insured’s business is damaged by a fire, and temporarilyshut down for repairs. As a result, the insured suffers loss of income. What typeof loss is the loos of income?

Back 33

Indirect or consequential

Front 34

What term defines an exact, direct, and uninterrupted causeof loss?

Back 34

Proximate cause

Front 35

Under absolute liability, does an injured party need toprove negligence?

Back 35

No. absolute liability exists when a condition or conduct isinherently dangerous, so proof of negligence is not required.

Front 36

Which method of loss valuation is contrary to the principleof indemnity?

Back 36

Replacement cost

Front 37

How is the actual cash value of property calculated?

Back 37

Current replacement cost minus depreciation

Front 38

In property insurance, what is the purpose of coinsuranceclause?

Back 38

To encourage insured to insure property close to its value

Front 39

Information about changes to the policy or return of premiumcan be found in what section of a policy?

Back 39

Conditions

Front 40

In commercial property policies, who has control of thepolicy, and who can cancel it?

Back 40

First named insurer

Front 41

If a manufactured product is unsafe, what type of liability applies to the manufacturer?

Back 41

Strict liability

Front 42

what does an endorsement do to an insurance contract?

Back 42

it modifies the policy's original terms

Front 43

what is burglary?

Back 43

a forced entry into another's premises with felonious intent

Front 44

both robbery and burglary can be considered what?

Back 44

theft

Front 45

What is a deductible in an insurance policy?

Back 45

a specified dollar amount that the insured must pay before the insurer will pay the policy benefits

Front 46

(insurance carried / insurance required)

X

loss amount =

Back 46

loss payment

Front 47

what term described a loss caused by continuous exposure to a condition?

Back 47

occurrence

Front 48

persons who are not named on the declarations page of a policy but who are protected by the policy are known as what type of insured?

Back 48

additional insured

Front 49

what is the difference between vacancy and unoccupancy?

Back 49

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

Front 50

What part of a policy shows the amount of insurance, premium, and policy terms?

Back 50

Declarations

Front 51

what does the exclusions section of a policy specify?

Back 51

what perils are not insured against, or what persons are not covered in a policy

Front 52

who is an insured in property and casualty insurance?

Back 52

anyone covered under the policy, even if not specifically named

Front 53

what process is used to settle a casualty claim when the insured and the insurer cannot agree?

Back 53

arbitration

Front 54

what provision defines how a policy will respond if there is more than one insurance policy written on the same risk?