Virginia Insurance Licensing

Front 1

Absolute Liability

Back 1

When one part is held liable for the injury or damage to a third party in the absence of fault or negligence.

Front 2

Accident

Back 2

A sudden, unforeseen event

Front 3

Additional (Supplementary) Payments

Back 3

Payments automatically included in a liability policy to cover defence costs, court related expenses, attorney fees, etc.

Front 4

Assumption of Risk

Back 4

Defence against negligence that asserts the injured party was aware of the danger before engaging in the activity; i.e., accepting a ride with a person who is intoxicated.

Front 5

Bodily Injury

Back 5

Type of liability arising from the physical injury or death to another person

Front 6

Civil Law

Back 6

Laws that are concerned with disputes between individuals as opposed to criminal law.

Front 7

Common Law

Back 7

Apart of our legal system that is based on previous and similar situations that have been previously heard in other courts.

Front 8

Comparative Negligence

Back 8

Defence against negligence apportioning blame for the loss based on both parties' contribution to the injury.

Front 9

Compensatory Damage

Back 9

Damages designed to compensate a third party for injury or property damage caused by a first party.

Front 10

Contributory Negligence

Back 10

Defence against negligence that would bar an injured party from recovering anything from the defendant if the injured party contributed in any degree to their own injury.

Front 11

Damages

Back 11

In a civil suit, the money awarded to the injured party.

Front 12

Defamation

Back 12

A false communication that damages a reputation or good name.

Front 13

General Damages

Back 13

A type of compensatory damage for which amounts are usually in excess of special damages and compensate for pain and suffering or psychological trauma.

Front 14

Intervening Cause

Back 14

Defence against negligence that asserts something broke the chain of events leading from the breach of duty to the injury.

Front 15

Libel

Back 15

Written defamation

Front 16

Negligence

Back 16

Failure to do what a reasonable and prudent person would have done under the same or similar circumstances.

Front 17

No Fault Law

Back 17

Limits the right of an individual to sue a third party for damages for injuries involving an auto accident

Front 18

Occurrence

Back 18

Damage caused by continuous and repeated exposure to the same conditions to include accidents (unforeseen events)

Front 19

Personal Injury

Back 19

injury other than bodily injury or property damage caused by false arrest, defamation, invasion of privacy.

Front 20

Proximate Cause

Back 20

Required element to prove negligence. Proximate cause is an unbroken chain of events leading from the breach of duty to injury.

Front 21

Property Damage

Back 21

Liability arising out of damage to real or personal property of another. Property damage includes any damages due to the real or personal property being rendered unusable by the damage, i.e., rental reimbursement for an auto injury.

Front 22

Punitive Damages

Back 22

Damages awarded in excess of compensatory damages. Punitive damages are to punish the party causing the injury or damage. Awarding punitive damages usually requires proof of special circumstances that may show a particular degree of carelessness or intent.

Front 23

Slander

Back 23

Spoken defamation

Front 24

Special Damages

Back 24

A type of compensatory damage for which a specific amount of money can be proven.

Front 25

Statute of Limitations

Back 25

Defence against negligence claiming the injured party waited too long to institute the lawsuit. Statutes of limitations are established individually by each state and also vary based on the situation and age of the injured party

Front 26

Statutory Law

Back 26

Law that is based on bills passed by Federal or State government

Front 27

Strict Liability

Back 27

Proof of negligence is not required. You must only prove that a dangerous situation was created or, in the case of a manufacturer, a dangerous product was produced

Front 28

Third Party

Back 28

The party claiming injury or harm in a liability situation.

Front 29

Tort

Back 29

A wrong against an individual other than criminal or breach of contract.

Front 30

Vicarious Liability

Back 30

Being held liable for actions of another because of your relationship to that party; i.e., a parent being held responsible for their child.

Front 31

Actual Cash Value (ACV)

Back 31

A method to establish value at the time of loss. ACV is the actual cost to repair or replace missing or damaged property minus depreciation.

Front 32

Abandonment

Back 32

Provision in property policies forbidding insured from abandoning property and demanding a total loss.

Front 33

Basic Cause of Loss

Back 33

Covers only the perils listed in the perils listed in the Insuring Agreement.

Front 34

Blanket Limit

Back 34

A single limit of insurance that applies to multiple locations or types of property on one policy.

Front 35

Broad Cause of Loss

Back 35

Covers only the perils listed in the Insuring Agreement. The number of perils listed is greater than a basic cause of loss

Front 36

Burglary

Back 36

theft of property inside a premises by someone unlawfully entering the building leaving visible signs of forcible entry or exit.

Front 37

Coinsurance

Back 37

A condition in a property policy that encourages an insured to purchase adequate insurance to value, normally set at 80% of Replacement Cost value

Front 38

Friendly Fire

Back 38

A fire intentionally set that remains within its intended boundaries. the damage caused by a friendly fire is not covered under the peril of fire.

Front 39

Hostile Fire

Back 39

Afire that has escaped its intended boundaries and my be covered

Front 40

Indirect Loss

Back 40

Financial Loss incurred when the insured cannot use their insured property because of direct damage rendering the building unfit or unsafe for use. Loss not directly caused by the peril but as a result of the loss to covered property.

Front 41

Lightning

Back 41

Natural bolts of electricity

Front 42

Market Value

Back 42

The price a seller of real property can expect to receive from a buyer based on an appraisal.

Front 43

Mysterious Disappearance

Back 43

An unexplained loss

Front 44

Named Perils

Back 44

A property policy that covers only perils listed in the policy

Front 45

Open Perils

Back 45

A property policy that covers risk of loss subject to exclusions; in other words, if there is damage to covered property it is covered unless excluded.

Front 46

Pair and Set Clause

Back 46

Indemnifies insured based on value of grouped items where the estimate of undamaged items is subtracted from the value of the group.

Front 47

Peril

Back 47

The cause of loss such as fire, wind, hail, etc.

Front 48

Proximate Clause

Back 48

The original peril causing loss or damage; if the proximate cause of loss is covered, then all subsequent losses are covered as well.

Front 49

Replacement Cost

Back 49

Replacement cost is the actual cost to repair or replace missing or damaged property with no deduction for depreciation.

Front 50

Robbery

Back 50

The act of taking property by the use of violence or the threat of violence

Front 51

Salvage value

Back 51

The estimated value of property at the end of its useful life which can offset the insurer's claims expense

Front 52

Special Cause of Loss

Back 52

Open Peril coverage subject to exclusions

Front 53

Stated Value

Back 53

A stated amount used to determine premium cost on unique items

Front 54

Theft

Back 54

any act of stealing

Front 55

Unoccupied

Back 55

A condition where there are no people present at the time of loss

Front 56

Vacant

Back 56

A condition where there is not enough personal property in the building to conduct normal operations.

Front 57

Claim

Back 57

A demand for payment from the insurer following a covered loss

Front 58

Exposure

Back 58

Any condition or situation that could lead to a financial loss

Front 59

Hazard

Back 59

A condition that increases the chance of loss

Front 60

Indemnify

Back 60

To restore someone to the same financial position that existed before the loss

Front 61

Insurable Interest

Back 61

The potential for financial loss - existing at the time of loss

Front 62

Insurance

Back 62

Transferring risk from an individual or business to an insurer

Front 63

Insurance Policy

Back 63

A legal contract used to transfer risk

Front 64

Insured

Back 64

The party transferring risk to an insurer (policy holder)

Front 65

Insurer

Back 65

The party accepting a transfer of risk from another (company)

Front 66

Law of Large Numbers

Back 66

The mathematical principle that states as the number of similar but independent exposure units increase, the greater the predictability about the future losses based on these exposure units increases

Front 67

Legal Liability

Back 67

Responsibility for injury to another person or their property

Front 68

Loss

Back 68

Any reduction in the quantity, quality, or value of something.

Front 69

Loss of Use

Back 69

When there is damage to real or personal property that causes a financial loss because the real or personal property cannot be used.

Front 70

Moral Hazard

Back 70

When the chance of loss is increased because of the insured's attempt to gain from insurance.

Front 71

Morale Hazard

Back 71

Chance of loss is increased by the insured's attitude toward safety

Front 72

Personal Property

Back 72

All property other than real property, i.e., household furnishings, business inventory, boat, water-craft.

Front 73

Peril

Back 73

A cause of loss, i.e., fire, wind, hail

Front 74

Physical Asset

Back 74

Real or personal property

Front 75

Physical Hazard

Back 75

When the chance of loss is increased by the construction, use, or location of the property

Front 76

Pure Risk

Back 76

Risk that only involves the possibility of loss or no loss (breaking even)

Front 77

Real Property

Back 77

Buildings or other structures, i.e., house, garage, fence

Front 78

Risk

Back 78

Financial uncertainty of loss

Front 79

Speculative risk

Back 79

Risk that involves the possibility of gain, loss, or no loss (breaking even); i.e., gambling or purchasing stocks

Front 80

Terrorism Risk Insurance Act (TRIA)

Back 80

Law passed to create a federal backstop for commercial property and casualty insurance claims related to acts of terrorism

Front 81

Agreement

Back 81

An element of a contract requiring an offer an acceptance be completed in order to issue a policy

Front 82

Aleatory Contract

Back 82

Describes a contract where the consideration is not always even

Front 83

Ambiguity

Back 83

Describes an unclear word or term in a contract

Front 84

Binder

Back 84

A temporary insurance contract

Front 85

Concealment

Back 85

An intention to withhold information from another party that is entitled to know that information.

Front 86

Conditional Contract

Back 86

Describes a contract with provisions both parties must adhere to for the contract to be binding

Front 87

Consideration

Back 87

An element of a contract where somethig of value must be exchanged between both parties

Front 88

Contract

Back 88

A legal document between two parties enforceable in a court of law

Front 89

Contract of Adhesion

Back 89

Describes a contract prepared by one party and submitted to the other party on a "take-it-or-leave-it" basis

Front 90

Estoppel

Back 90

A legal doctrine that may be used to prevent one party from asserting a legal right when past actions were inconsistent with that right.

Front 91

Legal Purpose

Back 91

An element of a contract that states the reason for the contract must be legal for the contract to be binding

Front 92

Legally Competent Parties

Back 92

An element of a contract where both parties must meet legal competency requirements in order to enter into a contract

Front 93

Material Fact

Back 93

Information that would alter the insurer's decision to offer coverage

Front 94

Misrepresentation

Back 94

An untrue statement of fact

Front 95

Parol or Oral Evidence Rule

Back 95

A rule of evidence used in disagreements over written documents. If the two parties to the contract intend the written document as the final agreement, they may not enter evidence of previous written documents or oral discussion or statements.

Front 96

Personal Contract

Back 96

A characteristic of a contract between two parties where one party (the insured) may not transfer any rights, responsibilities or other privileges to another party without the prior permission of the other party (the insurer)

Front 97

Reasonable expectation

Back 97

if a reasonable person believes coverage exists based on the circumstances of the claim and the insurer's marketing efforts, coverage may exist where it would otherwise be excluded.

Front 98

Representation

Back 98

An applicant's response to a question to the best of their knowledge and belief

Front 99

Subrogation

Back 99

The insurer's right to get their money back from the person causing the insured's loss after the insurer has indemnified the insured

Front 100

Unilateral Contract

Back 100

A characteristic of a contract where on party (the insured) exchanges an act (paying a premium) for a promise from the other party (the insurer)

Front 101

Utmost Good Faith

Back 101

The business of insurance requires that all parties to the insurance contract be able to rely on the honesty of the other parties

Front 102

Waiver

Back 102

Voluntarily giving up known right

Front 103

Warranty

Back 103

A statement of fact

Front 104

Additional Insured

Back 104

Someone covered by the policy other than the named insured

Front 105

Adverse Selection

Back 105

When an insured that presents a risk greater than that anticipated by the company in establishing the rate attempts to obtain coverage in a preferred company

Front 106

Aggregate Limit

Back 106

Maximum the insurer will pay for all claims during a specific policy period

Front 107

Assignment Clause

Back 107

Prohibits the insured from transferring any rights or duties under an insurance policy without the insurer's written permission

Front 108

Bailee

Back 108

A business having possession of another's personal property for mutual benefit (dry cleaner, auto shop)

Front 109

Cancellation

Back 109

Terminating a policy prior to the normal expiration date

Front 110

Combined Single Limit

Back 110

A single limit of Liability applying to all loss in any one occurrence

Front 111

Conditions

Back 111

The policy provisions (rules) that the insured and insurer must follow

Front 112

Declarations Page

Back 112

A necessary component of every insurance policy that shows all of the variables that identify the specific risk

Front 113

Deductible

Back 113

Part of a claim the insured pays before the insurer pays

Front 114

Deposit Premium/Audit

Back 114

Estimated premium paid as a deposit subject to an audit at the end of the policy period to assess premium accurately represents risk

Front 115

Endorsement

Back 115

Something that changes an insurance policy. An endorsement may add coverage, delete coverage, change limits, etc.. An endorsement must be in writing and may only be issued by the insurer.

Front 116

Equal share

Back 116

A condition that establishes the insurers' contribution to the loss settlement when there are multiple insurers' contribution to the loss settlement when there are multiple insurers' with coverage applying to the same loss. Each insurer pays an equal share of the loss based on the total number of policies involved. For example: IF three insurers cover the same risk, then each would pay 1/3 of any loss.

Front 117

Exclusions

Back 117

Part of the policy that details perils, situations, or people not intended to be covered by the policy

Front 118

Field Underwriting

Back 118

Underwriting done at the point of sale by the agent

Front 119

First Named Insured

Back 119

A concept in commercial insurance policy where the person or business listed first on the decelerations page is responsible for making premium payments, receiving refunds, and cancelling or changing the policy

Front 120

Flat Rate

Back 120

the policy is terminated as of the effective date and all premiums are returned as if the policy never existed.

Front 121

Insuring Agreement

Back 121

The section of the insurance policy that describes the insurance company's promise to pay

Front 122

Short Rate

Back 122

Method of calculating return premium when a policy is cancelled by the insured before the expiration date. The insurer charges a penalty for early termination.

Front 123

Split Limits

Back 123

A method used for expressing liability limits. On an auto-mobile policy, for example, there is one limit for bodily injury per person, another limit for all bodily injury from one occurrence and a separate limit for property damage liability.

Front 124

_________ is the financial uncertainty about loss.

Back 124

Risk

Front 125

There are two types of risk. The type that deals with a potential for loss only is ____________. The type that could result in loss or gain ____________.

Back 125

Pure; Speculative

Front 126

Tina Scott, your insured and owner of a fast food restaurant, has purchased proterty coverage on her building and contents. Tina has a serious gambling problen and business has been really lousy. If a fire was started intentionally by Tina to collect on her insurance, we could say that _________ hazard was responsible for the loss.

Back 126

Moral

Front 127

You own a home and there is potential for fire damage. The home presents a(n) _______________ to loss.

Back 127

Exposure

Front 128

If there were a fire at your home caused by careless smoking, fire would be the hazard of loss. True or False

Back 128

False, fire would be the peril, smoking would be the hazard.

Front 129

John owns an 80 Chevrolet truck and decides to not buy coverage in case the truck is stolen or damaged. Paying for damage to your vechicle out of your own pocket in case of loss is which risk management technique?

Back 129

Retain

Front 130

Insurers use what mathematical principle to make predictions about loss?

Back 130

Law of Large Numbers

Front 131

In property/casualty insurance, insurable interest must exist _________________.

Back 131

At time of Loss

Front 132

A legal contract used to transfer risk to an inusrer is the definition of_________________.

Back 132

Insurance Policy.

Front 133

Al Bore, your insured, has a home that was damaged by fire due to careless use of smoking materials. The peril causing loss was ____________ and the type of hazard that made the loss more likely was ___________. In addition to risk transfer to an insurer, what other risk management techniue could or should have been used?

Back 133

Fire; Smoking; Reduce

Front 134

Write a brief definition of indemnify.

Back 134

To bring insured back to financial status prior to loss.

Front 135

Terrorism Risk Insurance Act (TRIA) provides a federal "backstop" for insurance claims covering what types of commercial insurance?

Back 135

Property & Casualty

Front 136

Identify the four required elements of a contract.

Back 136

Consideration; Legal Purpose; Agreement; Legally Competent Parties

Front 137

In an aleatory contrcat, consideration is not always equal. In an insurance contract, what is the consideration on the part of the client? On the part of the insurer?

Back 137

Transfer of risk; Representation

Front 138

What is another word to describe an unclear provision in an insurance policy?

Back 138

Ambiguity

Front 139

What is the difference between "concealment" and misrepresentation?

Back 139

Concealment knowingly leaves out information; Misrepresentation gives inaccurate or false information.

Front 140

Ethel applied for insurance with Klugman Insurance Agency. When asked about other drivers in the household, she indicated there were none. Two months later, her husband of 5 years and a resident of the household had an accident and a claim was submitted. This would be an example of intentional misrepresentation of an __________ _________.

Back 140

Material Fact

Front 141

Describe an insured's rights concerning assigning an insurance policy to another person.

Back 141

Must have insurers permission.

Front 142

Parol or Oral Evidence Rule is best defined as:

Back 142

Verbal

Front 143

Subrogation extends the right to recover damages from an at-fault party to whom?

Back 143

Insurer

Front 144

True or False A written binder should not include premium

Back 144

True

Front 145

Who is contractually obligated in a unilateral contract?

Back 145

Insurer

Front 146

One of the primary purposes of the Underwriting Department is to avoid _________________ _____________.

Back 146

Adverse Selection.

Front 147

List three types of information you could find on a typical Declarations page.

Back 147

Name; Vehicle; Effective Date

Front 148

The Insuring Agreement is where you would look for information concerning the cancellation provisions, true or false

Back 148

False

Front 149

When there is more than one insurance plicy applying to the same loss the other insurance provision determines the method for deciding how much each policy pays. Describe the method for determining each company's share of the loss when the policies are written on a primary/excess basis.

Back 149

One policy is considered the primary policy. Once that company has paid up to its limit and if the claim is still not satisfied then the excess policy will pay up to its limit or until the claim is satisfied.

Front 150

Split limits of liability are used on personal auto policies. What does each of the following numbers mean: $25/50/20

Back 150

25k per person injury; 50K per occurrence injury; 20k per occurrence property damage

Front 151

What is the alternative to split limits for expressing liability limits on a Personal Auto Policy?

Back 151

Combined Limit

Front 152

If an insured terminates their homeowners' policy prior to the expiration date, the return premium will be calculated using which method of calculating return premium?

Back 152

Pro Rata

Front 153

In a Liability Claim situation, who is the third party?

Back 153

The injured

Front 154

Negligence is designed as the failure to do what a _________ and ___________ person would have done under the same circumstances.

Back 154

Reasonable; Prudent

Front 155

List the four elements that must be present for negligence to exist.

Back 155

Duty to act; Breach of duty; injury or damage; unbroken chain of events

Front 156

Strict liability means that you do not have to prove ________ for the injured party to collect.

Back 156

Negligence

Front 157

There are five primary defences against negligence. List and define them.

Back 157

Intervening Cause- Something breaks the chain of events; Assumption of risk- being aware of the danger involved (skydiving); Contributory Negligence- acting in a manner as to increase the risk; Comparative Negligence- both the negligent and third party are responsible for portion of the loss determined by involvement in the loss; Statute of Limitations- a predetermined amount of time one can wait prior to pursuing action.

Front 158

An accident is defined as a(n) __________ event.

Back 158

Unforeseen

Front 159

Compensatory damages that pay for measurable losses are called _____________.

Back 159

Special

Front 160

The automatic coverage under liability that pays court related expenses is known as _____________ (___________) __________

Back 160

Additional (supplementary) Coverage

Front 161

An insurer has a duty to ___________ an insured even in a groundless lawsuit.

Back 161

Defend

Front 162

Workers compensation is a form of what liability?

Back 162

Absolute

Front 163

Peril is defined as the __________ of _________.

Back 163

Cause; Loss

Front 164

True or False; An open perils policy covers all perils listed in the insuring agreement.

Back 164

False

Front 165

Actual Cash Value is defined as the cost to repair or replace with material of like kind and quality at __________ prices minus ____________.

Back 165

Market; Depreciation

Front 166

What is the difference in ACV and Replacement Value?

Back 166

Actual Cash Value is like material and kind at market value MINUS depreciation Replacement does not recognize depreciation.

Front 167

A binding decision in an appraisal clause is when an agreement has been reached between the __________ and the ___________.

Back 167

Insurer; Insured

Front 168

Coinsurance is to encourage an insured to adequately insure their property to __% of value

Back 168

80

Front 169

What does it mean when a building is vacant?

Back 169

Not enough personal property to conduct daily business.

Front 170

Explain the difference between specific and blanket limit.

Back 170

Specific sets a predetermined limit for policy coverage on certain losses and loss types, Blanket limit covers multiple separate properties.

Front 171

What type of theft would you report to an insurer when someone broke into your home and stole your property?

Back 171

Burglary

Front 172

If an insured chooses to waive subrogation, when must this waiver be completed?

Back 172

before the loss

Front 173

What is the name of the value that estimates property value at the end of its useful life?

Back 173

Salvage

Front 174

_____ ___ ____ ______ Determines the settlement value based on items grouped together where an estimate of the value of remaining undamaged items will be subtracted from the value of the group and the insurer will pay the difference

Back 174

Pairs and set Clause

Front 175

Adverse Selection occurs when:

Back 175

Someone with a poor driving record maintains insurance in a preferred program.

Front 176

Insurance Companies have several major departments. One of them is the actuary department that analyses data and sets rates. Another is the underwriting department and their function is to:

Back 176

Analyse loss history for rate setting