Chapter 10 Vocab (Notes)

Question 1

Declarations

Answer 1

statements that provide information about the particular property or activity to be insured

Question 2

Insuring Agreement

Answer 2

summarizes the major promises of the insurer

Question 3

Named Perils Coverage

Answer 3

only those perils specifically named in the policy are covered

Question 4

Exclusions

Answer 4

Provisions in an insurance contract that list the perils, losses, and property excluded from coverage

Question 5

Named Insured

Answer 5

person or persons named in the declarations section of the policy

Question 6

First Named Insured

Answer 6

has certain additional rights and responsibilities that do not apply to other named insureds

Question 7

Endoresement

Answer 7

a written provision that adds to, deletes from, or modifies the provisions in the original contract

Question 8

Deductible

Answer 8

provision by which a specified amount is subtracted from the total loss payment that otherwise would be payable

Question 9

Straight Deductible

Answer 9

the insured must pay a certain number of dollars of the loss before the insurer is required to make a payment

Question 10

Aggregate Deductible

Answer 10

means that all losses that occur during a specified time period, usually a year, are accumulated to satisfy the deductible amount

Question 11

Calendar Year Deductible

Answer 11

a type of aggregate deductible that is found in basic medical expense and major medical insurance contracts

Question 12

Elimination (waiting) Period

Answer 12

stated period of time at the beginning of a loss during which no insurance benefits are paid

Question 13

Coinsurance Clause

Answer 13

in a property insurance contract encourages the insured to insure the property to a stated percentage of its insurable value

Question 14

Coninsurance Clause

Answer 14

requires the insured to pay a specified percentage of covered medical expenses in excess of the deductible

Question 15

Pro Rata Liability

Answer 15

each insurer’s share of the loss is based on the proportion that its insurance bears to the total amount of insurance on the property

Question 16

Contribution by Equal Shares

Answer 16

each insurer shares equally in the loss until the share paid by each insurer equals the lowest limit of liability under any policy, or until the full amount of the loss is paid

Question 17

Primary and Excess Insurance Provision

Answer 17

the primary insurer pays first, and the excess insurer pays only after the policy limits under the primary policy are exhausted

Question 18

Coordination of Benefits

Answer 18

provision in group health insurance is designed to prevent overinsurance and the duplication of benefits if one person is covered under more than one group health insurance plan