Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

CH1 Insurance Terms and Related Concepts > General Ins Principles > Flashcards

General Ins Principles Flashcards

1
Q

Law of Large Numbers

A

The larger number of individuals with similar exposure to loss is more predictable of future losses

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Insurable Interest

A

*Must exist at time of loss. Policyowner would incur financial loss.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

3 elements of Insurance Interest

A

Financial, Blood, Business

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Risk

A

Uncertainity regarding financial loss

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What are the two types of Risk?

A

Pure & Speculative

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Pure Risk

A

Insurable because it only involves the chance of loss. No chance for financial gain.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Speculative Risk

A

Involves opportunity for gain or loss. NOT Insurable Ex: Gambling

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Hazards

A

Circumstances or settings that increase the likelihood of an insured loss occurring. Ex. Slippery floor

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

3 kinds of Hazards

A

Physical, Moral, Morale

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Physical Hazard

A

Structural, Material, or Operational features of the risk

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Moral Hazards

A

Deals with an applicant who lies on application or submits fraud claims

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Morale Hazards

A

An indifference to loss. Ex: No intention of fixing something, insurance will pay when breaks.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Indemnity

A

Often referred to as reimbursement.

  • Beneficiary allowed to collect to the extent of financial loss.
  • Cannot gain financially from a loss
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Subrogation

A

Insurer’s legal right to seek damages from third parties after insured is reimbursed. Prevents insured from collecting twice.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Accident vs Occurence

A

Accident-unplanned, sudden and unexpected event resulting in damage or injury.

Occurence-includes losses caused by repeated exposure to conditions resulting from property damage or injury

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Two types of Damages

A

Property and Bodily

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Special Damages

A

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

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

General Damages

A

Compensate for disfigurement, mental anguish, or pain and suffering

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Punitive Damages

A

Punishment for gross negligence, extreme behavior or willful intent

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Negligence

A

Failure to use reasonable and prudent care

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

4 elements of Negligence

A
  • Actual loss or damage
  • Legal Duty
  • Unbroken chain of events
  • Standard of care
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

6 types of Loss Valuation

A
  • Actual Cash Value
  • Replacement Cost
  • Market Value
  • Agreed Value
  • Stated Value
  • Salvage Value
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

Types of Liability

A

Strict and Vicarious

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

Strict Liability

A

Often applied to PRODUCT liability cases

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

Vicarious Liability

A

Liability imposed on one party as a result of another.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

Limits of Liability

A
  • Per Occurence (accident)
  • Per Person
  • Aggregate
  • Split
  • Combined
27
Q

Proximate Cause

A

Cause of property damage or bodily injury is natural and reasonably forseeable

28
Q

Deductible

A

Dollar amount must be met by the insured before insurer provides coverage

*Higher Deductible = Lower Premium

29
Q

Coinsurance

A

Policyholder maintains minimum amount of insurance coverage on property

Partial loss is paid in full if minimum is met

Coinsurance clause is not affected in a total loss

30
Q

Loss Payment = (Insurance carried / Insurance required) x Loss Amount

A
31
Q

Insurance to value

A

Replacement cost settlement for policyowners who carry minimum insurance coverage

32
Q

Deposit Premium

A

Estimated premium is paid in advance of a policy being issued

33
Q

Deposit Premium Audit

A

Insurance provider may audit the insured’s records and books to determine an adequate premium

34
Q

Certificate of Insurance

A

Written evidence demonstrating that the insurance policy has been issued

Lists the amounts and types of insurance provided

35
Q

Peril

A

Causes of loss that are insured against

36
Q

Legal Hazards

A

Describe an array of legal or regulatory conditions that affect an insurer’s ability to collect premiums.

37
Q

Loss

A

Refers to the decrease or reduction of value of the individual or property insured in a policy

38
Q

Direct Loss

A

Involves other damage where the covered peril was the proximate cause of loss.

Example: Water damage from fire dept putting fire out but fire was proximate cause of loss.

39
Q

Indirect Losses

A

losses resulting from direct loss.

Examples: Extra living expenses that occur while home is being repaired or loss of profits a business might suffer having to close down due to repairs.

40
Q

Named Peril

A

Term used in property insurance to describe the extent of coverage provided under an insurance policy form that lists covered perils.

**No coverage is provided for unlisted perils

41
Q

Open Peril

A

insures against any risk of loss that is not specifically excluded.

42
Q

Burglary

A

Crime of forced entry with criminal intent

43
Q

Robbery

A

Taking of property from the custody of an individual by harming or threatening bodily harm.

44
Q

Theft

A

Any act of stealing, includes both burglary and robbery

45
Q

Mysterious Disappearance

A

Disappearance of property without any knowledge as to time, location or how property was lost.

  • this type of loss is excluded from most policies
46
Q

Vacancy

A

Refers to covered structure where no one has been working or living for the required time stated in a policy (typically 60 days)

47
Q

Unoccupancy

A

No one has been working or living within requried period of time, but some property is stored

48
Q

Blanket Insurance

A

Single property policy that offers coverage for more than one class of property at one location, or for multiple classes of property at more than one location.

49
Q

Specific Insurance

A

Property policy that insures specific kind or unit of property for a specific amount of coverage.

50
Q

Loss Valuation

A

A factor in calculating the premium charged and the amount of coverage required

51
Q

Actual Cash Value (ACV)

A

Calculated by deducting depreciation from the current replacement cost to replaced damaged property with like kind and quality

52
Q

Replacement Cost

A

Cost of replacing damaged property with like kind and quality at today’s price without any deduction for depreciation

53
Q

Functional Replacement Cost

A

Cost of replacing damaged property with less expensive and more modern equipment.

Example: building with lath and plaster walls may be replaced with drywall which is lower cost but just as functional

54
Q

Market Value

A

Rarely used method of loss valuation based upon the amount a willing buyer would pay to a willing seller for the property before the loss occurs.

55
Q

Agreed Value

A

Property policy with a provision agreed upon by the insured as to the amount of coverage that signifies a fair valuation for the property

56
Q

Stated Value

A

Amount of coverage scheduled in a property policy that is not exposed to any coinsurance requirements in the event of a covered loss.

57
Q

Salvage Value

A

Estimated value of an asset upon its sale at the end of its life. Property that can be sold as a whole or in parts.

Example: Totaled car being sold for parts so insurer can lower cost of claim

58
Q

Limits of Liability Definition

A

Insurance carriers liability for payment as stated in an insurance policy. Is the maximum amount of money the insurer will pay for particular loss

59
Q

Per Occurence (Accident)

A

Liability policy sublimit that puts a ceiling on payment for all claims that result from a single accident.

60
Q

Per Person

A

Maximum payment amount available for bodily injury to a single perosn in an accident.

61
Q

Aggregate Limit

A

Maximum limit of available coverage provided under liability policy during a policy year, regardless of number of accidents and claims.

*Resets on policy’s anniversary date

62
Q

Split Limit

A

Seperate limits of liability for different coverages.

For example 25/50/25

63
Q

Combined Single

A

Single dollar amount of liability that applies to the total damages of property and bodily injury.

CH1 Insurance Terms and Related Concepts (1 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions