Insurance Words

Front 1

law or large numbers

Back 1

The principle states that the largest the number of exposures considered. The more closely the losses reported will equal the underlying probability of loss. The principle applies to homogenous groups, but not to individual risks

Front 2

adverse selection

Back 2

INSURING RISKS WHICH ARE MORE PRONE TO LOSSES THAN AVERAGE RISKS. POORER RISKS,

Front 3

insurable interest

Back 3

potential for financial hardship in the even of loss

must prove there was interest at the time of loss.

insurable interest MUST exist in every enforceable contract

insurable risks MUST BE ACCIDENTAL EXCLUDESSSS catastrophic perils. ig. war

Front 4

principle of indemnity

Back 4

in a property and liability contract the insure is restored to the same financial condition as prior to the loss. the insured should not profit from or lose from an insurance trasaction.

Front 5

prior approval

Back 5

insurers cannot use rates until approved by the department of insurance or until a specific time has passed after the filing without being disapproved.

Front 6

physical hazard

Back 6

a physical condition that increases the chance or likelihood of a loss occuring

Front 7

moral hazard

Back 7

dishonesty

Front 8

morale hazard

Back 8

indifference to loss or the failure to take proper care to protect from loss.

Front 9

pro rata cancellation

Back 9

the cancellation of a policy for which a refund is made of the unearned premium calculated to the time the policy was in force.

when the INSURER cancels the policy the underearned premium is refunded to the insured on a pro rata basis.

Front 10

short rate cancellation

Back 10

where the INSURER retains a portion of the unearned premium.

when the INSURED cancels the policy the unearned premium is refunded to the insured on a short rate basis.

Front 11

peril

Back 11

a cause of a potential loss

Front 12

proximate cause

Back 12

the cause that sets others causes in motion to combine produce loss or damage.

a fire created a explosion and causesd smoke damage.

Front 13

concurrent causation

Back 13

two causes resulting in a loss and one of the causes is excluded while the other cause is NOT excluded.

if there was a earthquake and it caused a fire. the fire is covered.

Front 14

concurrency

Back 14

two policies provide identical coverage for the same risk. when policies are concurrent each policy pays there portion.

a building is covered for $100,000 and it suffers a $100,000. COMPANY A pays $50,000 and COMPANY B pays $50,000.

Front 15

nonconcurrency

Back 15

two policies cover an insured's property against damage or destruction, but limits of coverage or covered perils are not included. the INSURED MAY NOT BE FULLY COVERED AT THE EVENT OF A LOSS.

there was a $50,000 theft.
company A provides $25,000
company B provides $25,000 of covg. since COMPANY A COVERS THEFT, they pay $25,000 but company B DOESNT PAY THEFT. it pays nothing.

Front 16

bailee

Back 16

dry cleaners jewelers
servicing repair storage

Front 17

bailor

Back 17

the OWNER of the clothing to be cleaned the jewelry to be repaired

Front 18

direct loss

Back 18

damage to property cause of a loss is an insured peril

Front 19

indirect loss

Back 19

a second or financial loss occuring as the result of a direct loss.

Front 20

INSURER CANCELS THE POLICY FOR NONPAYMENT GIVES 10 DAYS OF WRITTEN NOTICE

Back 20

10 DAYS OF WRITTEN NOTICE