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Insurance License > Chapter2 > Flashcards

Chapter2 Flashcards

1
Q

Tell me the two components in a two party contract

A

The insured and the insurer

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2
Q

A sudden, unforseen, unintended and unplanned event from which loss or damage results

A

Accident

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3
Q

An accident includes contiunous or repeated exposure to the same general harmful conditions

A

Occurance

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4
Q

Cancellation

A

The termination of an insurance policy before its experiation date. There is no coverage after and either party can cancel

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5
Q

Define Pro Rata Cancellation

A

A proportionate cancellation of insurance that refunds premium to the insured based on the percise number of days coverage was in effect.

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6
Q

Short Rate Cancellation

A

A cancellation that incurs a financial penalty. Insurer retains a portion.

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7
Q

Flat Cancellation

A

A cancellation of insurance that is retro active to the effective date of the policy. No coverage provided, insurer must refund policy premium. cancelled on the effective date.

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8
Q

Non renewal

A

A termination of a policy at the expatriation of its term.

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9
Q

Proximate cause

A

The primary cause of loss having the most impact on the damage.

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10
Q

A fire that burns outside its intended boundarires.

A

Hostile Fire

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11
Q

A fire that was intentionally set and stays within its inteded boundaries and results in smoke damage.

A

friendly fire

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12
Q

A quality within a property that causes it to damage or destroy itself

A

Inherent Vice

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13
Q

A legal agreement issued by an insurance company that provides temporary proof of insurance until the insurer is able to issue an insurance policy.

A

Binder

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14
Q

Process whereby a disputed claim is decided by a neutral third party.

A

Arbirtration

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15
Q

Rights of Salvage

A

Right of the insurer to take possession of damaged property after paying for its loss.

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16
Q

The amount for which property can be sold at the end of its useful life

A

Salvage Value

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17
Q

A policy form that alters to or adds provisions of a property and casualty insurance contract

A

Endorsement

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18
Q

A principle holding that when two perils simultaneously cause a loss, the insurer must pay the loss even if one of the perils is excluded by the policy.

A

Concurrent Causation

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19
Q

The existance of two or more policies covering the same exposures, having the same policy periods and same coverage triggers

A

concurrency

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20
Q

The existance of two or more policies covering the same exposures, that do not have the same policy periods and same coverage . Coverage gaps may occur

A

Non cocurrency

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21
Q

Define Deductible

A

The specified amount of each loss that the insured must bear.

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22
Q

What is a bailee?

A

A person or organization to which property has been entrusted, usually for repairs, servicing or storage.

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23
Q

What is a bailor?

A

A person or organization that entrusts property to a bailee

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24
Q

Primary Insurance definition

A

Any type of coverage that responds to loss before all other coverage respond

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25
Q

What is the point of excess insurance?

A

It provides protection against certain perils or causes of loss ONLY after loss or damage exceeds a stated amount.

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26
Q

A property that contains personal property but has no occupants

A

Unoccupancy

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27
Q

A provision in property policy that eliminates or limits coverage for buildings that don’t contain sufficent personal property to support intended occupancy or use.

A

Vacancy

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28
Q

Define Burglary vs Robbery vs theft

A

Burglary is to home, robbery is to person, theft is any act of stealing.

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29
Q

Mysterious disappearance

A

Loss of property when the cause of loss is not known.

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30
Q

What is the benefit to the insured of a higher deductible?

A

lower premiums

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31
Q

What are the two types of property loss?

A

Direct loss and indirect loss

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32
Q

Define direct loss

A

A loss that causes direct damage to a property without an intervening cause

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33
Q

Define Indirect loss

A

A loss that is not the direct result of a peril, came from direct loss

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34
Q

What are the two types of perils?

A

Named Peril and Open Peril

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35
Q

This type of property coverage only provides insurance for the cause of loss, or perils.

A

Named Peril

36
Q

This type of property coverage provides insurance for all causes of loss that are not specifically excluded under the policy.

A

Open Peril

37
Q

What is actual cash value?

A

The cost to repair or replace property at its replacement value minus depreciation

38
Q

What is agreed value?

A

The insured and insurance comapny agreeing to the specific value before the policy is issued. if a total loss occured, the insurer will pay the agreed value.

39
Q

what is the stated value?

A

a valuation method that states the value of a particular property on the declarations page, buyt provides for the insurer to pay the lesser stated value.

40
Q

What policy will pay the full face value in the event of a total loss, regardless of actual cash value.

A

Valued policy

41
Q

The cost to replace property with another property that performs the same function with similar efficiency

A

Functional Replacement value

42
Q

Market price

A

The price a willing buyer would pay for a property purchased from a willing seller.

43
Q

Define Frame in construction

A

a building that has a roof, floor and supports of combustible material.

44
Q

Joisted masonry

A

Buildings with exterior walls of masonry or fire-resistive construction rated for not less than one hour, with combustible floors and roofs.

45
Q

Noncombustible

A

Buildings and its walls, floors and structural framework made of noncombustible materials.

46
Q

Masonry noncombustible

A

Buildings with exterior walls of masonry (at least 4 inches thick) or made of fire restive construction

47
Q

Fire resistive

A

entire building and roof are constructed of reinforced concrete and steel

48
Q

Modified fire resistive

A

Materials used in the walls, floors and roof of a structure must have a fire resisting rating of at least 1 hour, but less than 2 hours.

49
Q

What are the 3 methods of writing property insurance limits?

A

specific, scheduled and blanket.

50
Q

Define specific limit

A

Insures a single item of property for a singel limit of insurance.

51
Q

Define Scheduled limit

A

Insures one or more items of a property on a single policy and the amount of insurance applying to each item is shown on a schedule.

52
Q

Define Blanket Limit

A

Insures property located at more than one location or more than one type of property at the same location, OR both.

53
Q

WHAT IS DICE?

A

a way to remember structure of a standard property insurance policy, D(eclerations) I(nsuring Agreement) C(onditions) and (E)xclusions.

54
Q

What does the declarations page describe about the policy?

A

who, what, where, when and how much

55
Q

What is the purpose of the insuring agreement?

A

It states the company’s promise to pay the insured.

56
Q

Define policy period

A

Specifies that coverage only applies to losses occurring when it was in force.

57
Q

Define the conditions in relation to concealment or fraud

A

Specifies taht coverage will not apply if an insured amkes a material concealment or misrepresentation or fraud.

58
Q

Specifies that if the insurer broadens coverage with no increase in premium, that broadening of coverage will apply to existing policies without the need for an endorsement.

A

Liberalization clause

59
Q

Rights, such as the insured’s term for cancellation, or the duties, such as the insured’s duties in the event of a claim, are found in the _______ section of the insurance policy.

A

Conditions.

60
Q

_____ Addresses the requirements o the insurer if it elects to not renew a policy.

A

nonrenewal

61
Q

_____ specifies taht the insured may not transfer rights of ownership without the insurers prior written consent.

A

Assignment

62
Q

____ States that the insured must transfer to the insurance company its right of recovery against any party causing a loss after it accepts payment from the insurere for a loss. _____ also allows the insurer to recover from the party that caused a loss any amouns paid to an insured.

A

Subrogation

63
Q

Subrogation ultimately __________________

A

holds the responsible third party accountable for the loss

64
Q

Any _____ to the policy must be made in writing by the insurer.

A

Changes

65
Q

What ensures that the insurer will not be responsible for payment loss in an amount greater than the financial interest of an insured?

A

Insurable interest and limit of availability

66
Q

What specifies the sum and circumstances under which an insurer charges the insured to restore a policy to its initial face value?

A

Restoration/ Nonreduction of limits.

67
Q

What are some duties in the event of a loss?

A

Giving prompt written notice to the insurer, including a complete description of how, when, and where the loss or damage occurred
Notifying the police if a theft occurred
Cooperating with the insurer in the investigation and settlement of the loss
Protecting property from further damage
Preparing an inventory of the damaged property
Allowing the insurer to inspect any damaged property and examine books and records
Submitting proof of loss to the insurer

68
Q

What kind of proof of loss to the insurer must you submit?

A

Time and cause, any other insurance that may cover it, and any receipts, evidence or affidavits to support loss

69
Q

_____ specifies which loss valuation method will apply to the property insured under the policy.

A

Loss Settlement

70
Q

___ addresses disuptes about the amount of a loss.

A

Appraisal.

71
Q

______ specifies how the insurer will make payment for loss and any applicable time frames that must be honored when submitting proof of loss and other claim doccuments.

A

Loss Payment

72
Q

True or false, the insurer is not obligated to accept any property abandoned by an insured.

A

true

73
Q

The __________ specifies how the policy protest the mortgagees financial interest.

A

Mortgage clause

74
Q

How many days does the insurer have to provide the mortgage holder advance written notice before cancelling or nonrenewing coverage?

A

10

75
Q

____ condition specifies that in the event of the named insured’s death, the insurer will extend coverageto the legal rep of decseased.

A

Death

76
Q

Where are perils that are NOT covered by the policy listed?

A

Exclusions

77
Q

Give me 2 examples of property exclusions:

A

Law, earth movement, war, utility failure that originates off premise, nuclear hazard, fungus, neglect, intentional loss.

78
Q

___________ are automatically included in property policies without an additional premium.

A

Additional Coverages

79
Q

What are the 4 types of insured?

A

name insured, insured, first name insured and additional insured.

80
Q

____ receives the broadest coverage of all persons or organizations protected by a policy.

A

Named insured

81
Q

When does coinsurance apply?

A

in the event of a partial loss.

82
Q

What ecnourages the insured to purchase insurance to value?

A

Coinsurance provisions

83
Q

The _____the conisinurance percentage, the ___ rate.

A

Higher, lower

84
Q

What is the coinsurance formula?

A

DID over Should x loss = amount paid

85
Q

The part of an insurance policy that states where the risk is located is the __________.

A

Declarations

86
Q

Which insurance provision prevents the insured from collecting twice for the same loss?

A

Subrogation

Insurance License (4 decks)

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