Chapter 2

Question 1

Must exist at time of loss
3 elements
-financial 
-blood (family)
-business

Answer 1

Insurable interest

Question 2

Risk selection and evaluation process

Establishes terms, rates, and conditions

Answer 2

Underwriting

Question 3

Amount charged for coverage

Answer 3

Rates

Question 4

Failure to use reasonable and prudent care
4 elements; 
-legal duty
-standard of care
-unbroken chain of events
-actual loss or damage

Answer 4

Negligence

Question 5

Compromise of bodily injury or property damage

Answer 5

Damages

Question 6

Out of pocket expenses for medical, miscellaneous expenses, or loss of wages

Answer 6

Special damages

Question 7

Compensate for pain and suffering, mental anguish, or disfigurement

Answer 7

General damages

Question 8

Punishment for extreme behavior, gross negligence or willful intent

Answer 8

Punitive damage

Question 9

Often applied to product Liability cases

Answer 9

Strict liability

Question 10

Liability imposed on one party as a result of another

Answer 10

Vicarious liability

Question 11

Basic underwriting information (name, address, coverage amount)

Answer 11

Declarations

Question 12

Clarifies terms of the policy

Answer 12

Policy components

Question 13

Established insured perils, parties to the contract, effective and renewal dates

Answer 13

Insuring agreement/clause

Question 14

Additional amount of coverage for specific laws expenses with no additional premium

Answer 14

Additional and supplementary coverage

Question 15

Detail perils not insured against and persons not insured

Answer 15

Exclusions

Question 16

Time period in which the policy provides coverage

Answer 16

Policy period

Question 17

Location where coverage is provided

Answer 17

Policy territory

Question 18

Termination of in force policy prior to expiration date

Answer 18

Cancellation

Question 19

Termination of policy at its expiration date

Answer 19

Non-renewal

Question 20

Dollar amount that must be made prior to the policy providing coverage

Answer 20

Deductibles

Question 21

Maximum amount of money and insurance will pay for a particular loss

Answer 21

Limits of liability

Question 22

Set amount for all claims arising from a single accident/occurrence

Answer 22

Per occurrence

Question 23

Maximum amount payable for bodily injury of a single person

Answer 23

Per person

Question 24

Maximum limit of coverage available during a policy year

Answer 24

Aggregate

Question 25

Separately stated limits of liability for different coverages

Answer 25

Split

Question 26

Single dollar limit which applies to combine damages for bodily injury or property damage as a result of one accident/recurrence

Answer 26

Combined single

Question 27

Brought her legislated or regulated coverage is extended to current policies at no additional premium

Answer 27

Liberalization

Question 28

Insurers right to seek damages from third-party, after reimbursing insured

Answer 28

Subrogation

Question 29

Insurers requirement to defend insured and lawsuit arising out of covered liability

Answer 29

Duty to defend

Question 30

Temporary agreement offering temporary coverage prior to issuing of policy

Answer 30

Binders

Question 31

Temporary federal program

Intended to share risk of loss from terrorist attacks with insurers

Answer 31

Terrorism risk insurance act

Question 32

Reduction in value, particularly due to wear and tear

Answer 32

Deprecation

Question 33

Used as a measure of the rating units or the premium base of a risk

Answer 33

Exposure units

Question 34

The degree to which items are similar

Answer 34

Homogeneity

Question 35

A legal term meaning that a product is suitable for its intended purpose and that it fits in ordinary buyers expectations

Answer 35

Implied warranty

Question 36

The day I watch the insurance policy goes into affect

Answer 36

Inception

Question 37

Deprecation in the value of the property due to becoming outdated

Answer 37

Obsolescence