Assignment 2

Question 1

Principle of indemnity

Answer 1

The principle that insurance policies should provide a benefit no greater than the loss suffered by an insured.

Question 2

Contract of indemnity

Answer 2

A contract in which the insurer agrees, in the event of a covered loss, to pay an amount directly related to the amount of the loss.

Question 3

Collateral source rule

Answer 3

A legal doctrine that provides that the damages owed to a victim should not be reduced because the victim is entitled to recover money from other sources, such as a insurance policy.

Question 4

Contract of adhesion

Answer 4

Any contract in which one party must either accept the agreement as written by the other party or reject it.

Question 5

Reasonable expectations doctrine

Answer 5

A legal doctrine that provides for an ambiguous insurance policy clause to be interpreted the way that an insured would reasonably expect.

Question 6

Consideration

Answer 6

Something of value or bargained for and exchanged by the parties to a contract.

Question 7

Conditional contract

Answer 7

A contract that one or more parties must perform only under certain conditions.

Question 8

Self-contained policy

Answer 8

A single document that contains all of the agreements between the insured and the insurer and that forms a complete insurance policy.

Question 9

Monoline policy

Answer 9

Policy that covers only one line of business.

Question 10

Package policy

Answer 10

Policy that covers two or more lines of business.

Question 11

Modular policy

Answer 11

An insurance policy that consists of several different documents, none of which by itself forms a complete policy.

Question 12

Manuscript form

Answer 12

An insurance form that is drafted according to terms negotiated between a specific insured (or group of insureds) and an insurer.

Question 13

Declarations page (declarations, or dec.)

Answer 13

An insurance policy information page or pages providing specific details about the insured and the subject of the insurance.

Question 14

Insuring agreement

Answer 14

A statement in an insurance policy that the insurer will, under described circumstances, make a loss payment or provide a service.

Question 15

Exclusion

Answer 15

A policy provision that eliminates coverage for specified exposures.

Question 16

Policy condition

Answer 16

Any provision that qualifies an otherwise enforceable promise made in the policy.