Insurance Flashcards
Financial responsibility law
State legislation that requires drivers to prove their ability to cover the cost of damage or injury caused by an automobile accident
Bodily injury liability
Coverage for the risk of financial loss due to legal expenses, medical costs, lost wages, and other expenses associated with injuries caused by an automobile accident for which the insured was responsible
No-fault insurance
An automobile insurance program in which drivers involved in accidents collect medical expenses, lost wages, and related injury costs from their own insurance companies
Subrogation
The right of an insurance company to recover the amount it pays for the loss from the person responsible for the loss
What kind of states usually require wage loss insurance?
In states where a no-fault insurance system is in place
What are three main factors that affect the cost of automobile insurance premium rates?
Vehicle type, eating territory, and driver classification
Assigned risk pool
Consists of people who are unable to obtain automobile insurance due to poor driving or accident records and must obtain coverage at high rates through a state program that requires insurance companies to accept some of them
Strict liability
Legal responsibility for the financial cost of another person’s losses or injuries
Vicarious liability
A situation in which a person is held legally responsible for the actions of another person
Person property floater
Additional property insurance to cover the damage or loss of a specific item of high value
Umbrella policy
Supplemental personal liability coverage; also called a personal catastrophe policy
Endorsement
An addition of coverage to a standard insurance policy
