Key Terms

Question 1

Certificate of Insurance

Answer 1

A Statement evidencing that a policy has been written and stating the
coverages in general.

Question 2

Coinsurance / Insurance to Value

Answer 2

a Requirement that the insured carry insurance equal to a specified percentage of the value, to be fully indemnified under the policy. Provides a proper basis for
setting rates.

Question 3

Limits of Liability

Answer 3

The sum or sums beyond which a liability insurance company does not protect the insured on a particular policy.

Question 4

Personal / Injury Liability

Answer 4

Liability insurance coverage for third party claims for damages which are other than physical such as libel slander, false arrest, wrongful eviction and invasion of privacy.

Question 5

Bodily Injury Liability

Answer 5

The Liability which may arise from injury or death of another person.

Question 6

Property Damage Liability

Answer 6

Protection against liability for damage to the property of another not in the
care, custody and control of the insured, as distinguished from liability for bodily injury.

Question 7

Fair Credit Reporting Act

Answer 7

Public law requires that an applicant be advised that a consumer report may be requested and given info regarding the agency should applicant be declined.

Question 8

Claims Made policy form

Answer 8

Policy providing liability coverage only if a written claim is made during the policy period or any applicable extended reporting period.

Question 9

Deposit premium / Audit -

Answer 9

The premium deposit required by the company on those forms of insurance subject to periodical premium adjustment.

Question 10

Insured Contract

Answer 10

Definition which shapes the extent of contractual liability coverage by describing the types of contracts which are insured.

Question 11

Other Insurance

Answer 11

The existence of another contract covering the same interest and perils.

Question 12

Binders

Answer 12

Is a temporary contract of insurance, oral or written, offered by an insurer of agent pending issuance of the policy. It is usually written for a period of thirty days or sixty days and remains in force for that period or until permanent policy is either issued or rejected.

Question 13

Mortgagee Rights

Answer 13

Mortgagees right of recovery shall not be defeated by any act or neglect of the insured and giving the mortgagee other rights and privileges.

Question 14

Other Insurance Provision

Answer 14

a Provision found in practically every insurance policy, stating what is to be done in case any other contract of protection embraces the same property and / or hazard.

Question 15

Liability

Answer 15

Any legally enforceable obligation.

Question 16

Occurrence

Answer 16

a Sudden, unexpected, unforeseen event resulting in a loss including repeated and continuous exposure to conditions.

Question 17

Insurance

Answer 17

A social device that protects people and businesses against certain types of losses.

Question 18

Indemnity-

Answer 18

insurance is designed to restore the policyholder to the same financial condition enjoyed prior to the loss.

Question 19

Peril

Answer 19

is the cause of a potential loss. It is immediate and specific.

Question 20

Hazard

Answer 20

anything that increases the seriousness of a loss.

3 Types:
Physical= oily rags ex.
Moral= arsonist Morale= who cares?
A condition that gives rise to a peril.

Question 21

Representations

Answer 21

on an application, facts that the applicant represents as true and accurate to the best of his or her knowledge and belief.

Question 22

Warranties

Answer 22

a statement made on an application for insurance that is warranted to be true in all respects.

Question 23

Subrogation

Answer 23

policyholder transfers the right of legal action against a responsible third party to the insurer.

Question 24

Salvage

Answer 24

property taken over by an insurance company to reduce its loss.

Question 25

Insurable Interest

Answer 25

in order to purchase insurance, one must have an insurable interest in the subject
of the insurance. In P&C, insurable interest must exist at time of loss.

Question 26

Theft

Answer 26

• any act of stealing.

Question 27

Burglary

Answer 27

breaking entering into premises of another, with felonious intent and with visible signs of forced entry.

Question 28

Robbery

Answer 28

the felonious taking by force or fear of force, of the personal property of another.

Question 29

Mysterious Disappearance

Answer 29

the vanishing of insured property in an unexplained manner.

Question 30

Proof of Loss

Answer 30

formal statement made by the insured to the insurance company regarding a loss.

Question 31

Negligence

Answer 31

failure to do what a reasonably prudent person would do under the same circumstances.

Question 32

Unoccupancy

Answer 32

furnished but unused.

Question 33

Vacancy

Answer 33

has neither occupants or contents.

Question 34

Vacancy

Answer 34

has neither occupants or contents.

Question 35

Elements of a Contract

Answer 35

to establish a valid contract you need: (C.L.A.P.) Legally competent parties
Offer and acceptance
Valid consideration
Legality of purpose

Question 36

Risk

Answer 36

the uncertainty about loss. Only pure risks are insurable these involve the uncertainty of loss without any possibility of gain.

Question 37

Proximate Cause

Answer 37

when an uninterrupted chain of events resulting from a negligent act causes a loss.

Question 38

Concealment

Answer 38

the with-holding of facts by an applicant for insurance that affects an insurance risk or
loss.

Question 39

Assignment

Answer 39

transfer of rights in a policy to other than the policyholder.

Question 40

Appraisal

Answer 40

means to settle indemnification disputes.

Question 41

Pair and Set Clause

Answer 41

in the case of a loss the insurance company may repair or replace any part, or pay the value before and after the loss.

Question 42

Declarations

Answer 42

portion of an insurance contract that informs who and what is covered, in addition to when coverage is effective.

Question 43

Loss

Answer 43

is any reduction in the quality, quantity or value of something
Direct - property is lost, stolen, damaged, or destroyed.
Indirect - related to direct losses may also be covered. Loss of housing or business due to fire eg.

Question 44

Actual Cash Value

Answer 44

is equal to the replacement cost less depreciation.

Question 45

Replacement Cost

Answer 45

the cost of replacing property without deduction for depreciation.

Question 46

Right of Salvage

Answer 46

Insurance companies generally have a right to salvage property which has only been partially damaged or which has been destroyed but still has a salvage value.

Question 47

Cancellation

Answer 47

termination of contract of insurance in force by voluntary act of the insurance company or insured by contract provision or mutual agreement.

Question 48

Nonrenewal

Answer 48

termination of insurance coverage at an expiration date or anniversary date.

Question 49

Definition of the Insured

Answer 49

the party to an insurance arrangement to whom, or on behalf of whom, the insurance company agrees to indemnify for losses, provide benefits or render service.

Question 50

Abandonment

Answer 50

the insured cannot just hand over the insurance company, declaring it unsuitable without other pieces from a grouping to be paid for the property as a loss even though it was not damaged.