1J-1L Flashcards
Valuation is the ________ of an item’s worth.
Estimation
1.Actual Cash Value - ACV
2.Replacement Cost - RC
3.Stated Amount
4.Agreed Value - Valued Policy
Are various methods of what?
Valuation
Actual Cash Value take an item’s ________ into account.
Depreciation
Replacement Cost is based on what?
Current market prices
Define Depreciation
An item’s estimated loss of value due to wear, tear, and age.
Annual and Accumulated are ways to calculate depreciation. True or False
True
Broad Evidence Rule takes into consideration any evidence available to determine value. This rule is used in ALL states.
False - only used in some states
No depreciation, based on replacement cost at the time of loss, and higher premiums are all characteristics of what?
Replacement Cost
What does the principle of indemnity state?
The insured cannot profit from an insurance transaction.
_______ ________ ______pays to replace an outdated, obsolete item with a functionally equivalent item - mot an identical item
Functional Replacement Cost
When something is no longer used or wanted, despite being in good working order is the definition of what?
Obsolescence
What is the policy where the insurer and insured agree to a specific value for an item, appraised at the inception of the policy.
Valued Policy
A Stated Amount (also called a Stated Value) is the value that the insured claims an item is worth
when applying for an insurance policy. On this type of policy, how are the premiums determined?
The policy premiums are then based on this stated value.
What is the difference in a partial loss and a total loss.
Partial Loss - insured property is only partly damaged, and repair costs fall within the policy limit
Total Loss - insured property is damaged so badly that it is not worth repairing
What are two types of total loss?
Actual total loss and Constructive total loss
A _________ is a predetermined amount that a policyholder must pay in order to activate the
financial benefits of an insurance policy.
Deductible
What are the three types of deductibles?
- Fixed Deductible
- Percentage
- Franchise
What type of depreciation is predetermined amount that a policyholder must pay out-of pocket
before he can be indemnified?
Fixed Deductible
On percentage deductibles, what value is the percentage based on?
The percentage is based on the value of the insured risk.
A _________ deductible states that the policyholder only pays for damages that are less than his
deductible. If the cost of damages equals or exceeds his deductible, the insurer pays the full
amount and the policyholder pays nothing.
Franchise
Coinsurance imposes a penalty on coverage for partial losses if the property is not fully insured - ____% of its RC.
80
Define Liable
Obligated according to law or equity; responsible
Liability insurance protects the policyholder by paying for such damage on behalf of the
responsible, or liable, party. True or False
True
_______ insurance only covers people who are listed as “insured” under the policy.
Liability
Failure to exercise a reasonable degree of care in a particular situation is Negligence. Negligence can be one of two things, what are they?
An act or the omission of an act.
When does Vicarious liability apply?
When an act of negligence is transferred from one party to another.
Negligence is always an unintentional act. True or False
True
What are the three types of liability policy limits?
- Single limits
- Split limits
- Aggregate limits
Define Single limit.
Establishes on maximum payout for liability damages caused by the PH and the limit applies for each occurrence.
Split limit liability insurance establishes HOW MANY different limits of payouts in the policy.
Three
Aggregate limits are usually found in _______ liability policies and establishes HOW MANY liability limits?
Commercial
Two
________ Law: based on written laws (e.g. state legislature)
Statutory
_______ Law: based on court decisions and customs when statutory law does not provide an answer.
Common
Statutory Law governs the authority of Common Law. True or False
True
Any civil wrongdoing, whether intentional or unintentional is know as ______
Tort
In a criminal case the ______ charges an individual.
State
In a civil case one individual charges another. True or False
True
The authority of a court or judge to hear a case and to make a judgement is _________.
Jurisdiction
Plaintiff is the party who suffered injury or damage; aka claimant. True or False
True
Define Tortfeasor.
The party accused of committing a tort, otherwise known as the defendant.
A group of two or more parties accused of committing a tort is know as?
Joint Tortfeasor
What are the two types of tort?
Intentional Tort and Negligent Tort
Define Complaint.
When a claimant files a lawsuit against a policyholder for damages the policyholder caused.
Define Answer.
The tortfeasor, or defendant’s, response to the complaint
can be one of the following:
● I accept the complaint and will pay for damages
● I deny the complaint
● I accept the complaint with a right to insert evidence into the case
When a policyholder is taken to court, the insurer must do what?
● Defend the policyholder
● Pay any legal expenses that are incurred at its own request
When the circumstances of a lawsuit or a claim may not be covered under the policy, the insurer will issue a _______ __ ______ .
Reservation of Rights
Money awarded to punish egregious misconduct
● For intentional acts, such as slander, fraud, violence, oppression, or recklessness
● Not typically covered in liability insurance
Punitive Damages
Awards money for tangible and intangible damages.
Compensatory Damages
A law limiting the amount of time an injured party has to file a complaint after an occurrence is known as.
Statute of Limitations
Define Wrongful Death Act.
Law that defines the rights of individuals who are associated with someone who was killed because of a negligent act.
Law that restricts people from suing governmental entities.
Sovereign Immunity
What do workers’ compensation laws do?
Restrict an employee’s right to sue his or her employer for injuries that occurred on the job
