P&c Exam

Front 1

What is a Risk?

Back 1

The chance of loss, odds that a loss will occur

Front 2

What are the 2 types of Risk and which does Insurance cover?

Back 2

- Pure Risk = Only a chance of loss ****

- Speculative Risk = Chance of loss or gain (Gambling)

Front 3

What is Insurance?

Back 3

An economic device that allows the individual to substitute a small certain cost for protection against a large, uncertain cost.

Front 4

What is Insurable Interest?

Back 4

When you have Insurable Interest, the loss impacts you financially

Front 5

What is a Peril?

Back 5

A Cause of Loss

Front 6

What is a Hazard?

Back 6

Increase chance of loss

Front 7

What are the 4 kinds of Hazards?

Back 7

Moral - Insured's Character/Intent
Morale - Insured's Carelessness/Neglect
Physical - Defects to the risk (Slick floors)
Legal - Potential that the insured causes other person's loss

Front 8

What is a Loss?

Back 8

A reduction in economic value due to BI/PD

Front 9

What is a Direct Loss?

Back 9

• A physical loss to covered property caused by a covered peril (House Total Fire Loss)

Front 10

What is an Indirect Loss?

Back 10

A loss that follows a Direct Loss and causes the insured to suffer further financial consequences. (Renting a hotel room after a House Fire)

Front 11

What is Proximate Cause?

Back 11

• When Damage is done by an unnamed peril due to a named peril

Front 12

What is a Deductible?

Back 12

• An insured’s way of participating in the loss.
• Helps reduce the number of small claims for the insurance company.

Front 13

What is Indemnity?

Back 13

• To make whole again. No better/No worse

Front 14

How do you calculate Actual Value Cost?

Back 14

• ACV = Replacement Cost - Depreciation

Front 15

What is Replacement Value

Back 15

• The cost to replace something at today’s value without subtracting depreciation

Front 16

What are the 3 kinds of Limits of Liability?

Back 16

• Single Limits – Paid by the Occurrence (Not per Person)
• Split Limits – (100/300/100)
• Aggregate Limits – How much a policy can pay in total during a term, regardless of the number of claims

Front 17

What is Co-Insurance?

Back 17

• Deals only with partial losses
• The insured must be insured for atleast 80% of the value – They get 100% of repair cost
• If under 80% then – (Did/Should) x Loss = Amount Paid

Front 18

What are some Extensions of Coverage

Back 18

(WCSHAVER)

A specific endorsement attached to a Standard Fire policy, usually providing coverage of windstorm, hail, explosion, riot, riot attending civil strike, aircraft, vehicular damage, smoke and civil commotion.

Front 19

What are Additional Coverages?

Back 19

• Provided without additional cost (Debris Removal, Fire Dept. Service Charge)

Front 20

What is an Accident?

Back 20

An unexpected and unintended chance happening occurring at a known time and place

Front 21

What is an Occurrence?

Back 21

• Continuous and repeated exposures to the same conditions that could result in BI

Front 22

What is the difference between Vacant and Unoccupied?

Back 22

• Vacancy is void of people and stuff. Losses to buildings vacant for over 60 days is not covered
• Unoccupancy is temporarily void of people (No one is home)

Front 23

What does 'Right to Salvage' mean?

Back 23

If an insurance company declares an insured piece of property to be non-repairable the company can simply pay the insured the value of the item and salvage the damaged property

Front 24

What is Abandonment?

Back 24

An attempt by an insured to receive full value for a partially damaged item by offering the damaged property to the insurance company.

Front 25

What is Liability?

Back 25

• To have responsibility for damage caused to another person or their property

Front 26

What is Negligence?

Back 26

• The basis of liability claims – “The failure to do or not do what a reasonable person would do or not do in the same similar circumstances”

Front 27

What is Theft?

Back 27

• Any act of stealing

Front 28

What is Burglary?

Back 28

The taking of property from a premises that is closed and locked - There MUST be visible signs of forced entry.

Front 29

How do you define Robbery?

Back 29

The taking of property from a person using force or threat of force

Front 30

What is a Mysterious Disappearance?

Back 30

Coverage in "All Risk" policies for property that is lost or misplaced with no likelihood or probability of theft

Front 31

What are Binders?

Back 31

• Provides temporary, interim coverage before a policy is reviewed by the insurance company. Can be oral or written

Lasts 30-90 days

Front 32

What is a Wavier and Estoppel?

Back 32

• Waiver is voluntarily giving up a right
• Estoppel is a barrier to legal action due to a party’s prior actions.

Front 33

What is a Valued Policy?

Back 33

• GA is a Value Policy State. In the event of a total fire loss, the company MUST pay the policy limits.

Front 34

What is the Law of Large Numbers?

Back 34

Used to predict the outcome of insuring risks. Based on previous outcomes of thousands of similar claims

Front 35

What is included in a typical Insurance Policy?

Back 35

• A policy consists of
o Declaration’s Page – Includes everyone’s information + Policy #
o Insuring Agreement – How loss will be covered by the policy
o Conditions – Spell out the Duties, Rights, and Responsibilities
o Exclusions – Loss that aren’t covered
o Endorsements – Used to modify or make changes to a policy
o Definitions – Clear indication on how the policy is expected to perform