Insurance Basics Questions (Set Four) Flashcards
What is a physical hazard?
One that derives from the use, conditions, or occupant of a property.
What is a moral hazard?
One caused by the negligence or irresponsible behavior of the insured party.
What is a political hazard?
One related to the passage of a law of ordinance.
What is a legal hazard?
The regulatory environment the insured party is operating in.
What is a peril?
The specific cause of loss or damage.
What is an economic loss?
The total estimated cost of repairing or replacing loss and damage.
What is indemnity?
The compensation for loss provided by a property and casualty liability insurance policy.
When is a party said to have insurable interest?
When damage or loss cause financial loss.
Define deductible.
The amount of loss above which an insurance company will make payment. The insured must pay any value below the deductible.
What is the difference between a direct and indirect loss?
A direct loss is a financial loss caused by damage done by a covered peril while indirect loss is any loss caused by a direct loss and these aren’t always covered.
What are the different degrees of coverage?
“Specific coverage single insurance” (One type of property at one location) or “blanket coverage” (More than one property in one location, one type of property in multiple locations, or multiple types of property in multiple locations).
What are the different methods of valuation?
“Actual cash value” (value of loss is the lost or replacement with of depreciation and obsolescence).
When is valuation said to be at replacement cost?
“Replacement cost” (cost of replacement without deductions for replacement or obsolescence.
What is salvage value?
The amount the insurer can expect to receive after taking possession of a property after replacement and restoration payments are made to policy holder.
What is stated value?
The maximum amount of money the insurance company is required to pay in the event of a loss. This is usually supplied by the property owner.
