Chapter 10 Vocab Flashcards
property insurance
insurance coverage that protects real and personal property from catastrophic losses caused by a variety of perils such as fire, theft, vandalism, and windstorms
liability insurance
insurance that protects against the financial consequences that may arise from the insured’s responsibility for property loss or injuries to others
peril
a cause of loss
negligence
failing to act in a reasonable manner or to take necessary steps to protect others from harm
principle of indemnity
an insurance principle stating that an insured may not be compensated by the insurance company in an amount exceeding the insured’s economic loss
moral hazard
when dishonest policyholders purposely cause losses in order to collect the insurance payments
actual cash value
a value assigned to an insured property that is determined by subtracting the amount of physical depreciation from its replacement cost
right of subrogation
the right of an insurer, who has paid an insured’s claim, to request reimbursement from either the person who caused the loss or that person’s insurer
co-insurance
in property insurance, a provision requiring a policyholder to buy insurance in an amount equal to a specified percentage of the replacement value of their property
comprehensive policy
property and liability insurance policy covering all perils unless they are specifically excluded
named peril policy
property and liability insurance policy that individually names the perils covered
personal property floater (PPF)
an insurance endorsement or policy providing either blanket or scheduled coverage of expensive personal property not adequately covered in a standard homeowner’s policy
replacement cost
the amount necessary to repair, rebuild, or replace an asset at today’s prices
personal automobile policy (PAP)
a comprehensive automobile insurance policy designed to be easily understood by the “typical” insurance purchaser
bodily injury liability losses
a PAP provision that protects the insured against claims made for bodily injury
property damage liability losses
a PAP provision that protects the insured against claims made for damage to property
uninsured motorists coverage
automobile insurance designed to meet the needs of “innocent” victims of accidents who are negligently injured by uninsured, underinsured, or hit-and-run motorists
underinsured motorists coverage
optional automobile insurance coverage, available in some states, that protects the insured against damages caused by being in an accident with an underinsured motorist who is found liable
collision insurance
automobile insurance that pays for collision damage to an insured automobile regardless of who is at fault
comprehensive automobile insurance
coverage that protects against loss to an insured automobile caused by any peril (with a few exceptions) other than collision
no-fault automobile insurance
automobile insurance that reimburses the parties involved in an accident without regard to negligence
financial responsibility laws
laws requiring motorists to buy a specified minimum amount of automobile liability insurance, or to provide other proof of comparable financial responsibility
personal liability umbrella policy
an insurance policy providing excess liability coverage for homeowner’s and automobile insurance as well as additional coverage not provided by either policy
captive agent
an insurance agent who represents only one insurance company and who is, in effect, an employee of that company
