P&C BASIC Flashcards
1
Q
Insurance means what
A
Transfer of risk
2
Q
Chance of loss or gain; not insurable
A
Speculative risk
3
Q
Chance of loss only; insurance companies will insure
A
Pure risk
4
Q
Is physical loss to property with no intervening cause
A
Direct loss
5
Q
This is also called proximate cause of loss
A
Direct loss
6
Q
Is a consequential loss as the result from a direct loss
A
Indirect loss
7
Q
Is the possibility that a loss will occur
A
risk
8
Q
A single policy that covers multiple classes
A
blanket
9
Q
A policy that covers a certain thing or its own amount of coverage
A
Specific
10
Q
Anything that increases the chance that a loss will occur
A
Hazard
11
Q
Arise from material, structural, or operational features of risk situation
A
Physical
12
Q
Intentionally causing a loss; lying
A
Moral hazard
13
Q
Carelessness; Indifference of loss
A
Morale Hazard
14
Q
Owned by policyholders
A
Mutual insurer
15
Q
Owned by stockholders
A
Stock insurer
16
Q
Known as Risk Selection Process
A
Underwriting
17
Q
Cause of loss
A
Peril
18
Q
Is the tendency for higher-risk individuals to get and keep insurance as compared to individual that represent an average level of risk
A
Adverse selection
19
Q
Is insurance for insurers; transfer risk from one insurer to another insurer
A
Reinsurance
20
Q
retaining, rather than transferring risk
A
self-insurance
21
Q
- War risk insurance
- Nuclear energy liability insurance
- Flood Insurance
- federal crop insurance
- unemployment insurance
- worker’s compensation
A
Federal government
22
Q
State where a company is incorporated
A
Domestic
23
Q
Company is incorporated in another state or U.S. territory
A
Foreign
24
Q
Company is incorporated in another country
A
Alien
25
Individual that sell insurance products of several companies
Independent agents
26
Individual that represent only one company
Captive agents
27
Is a written contract
Express Authority
28
Is assumed by insurer
Implied Authority
29
Is assumed by customer; perceived
Apparent Authority
30
Known as offer & acceptance
agreement
31
Customer submits & application
offer
32
insurer issues policy
acceptance
33
is a relationship in which one person is authorize to represent and act for another person, or for a corporation
Agency
34
person authorized to act on behalf of the other
Agent
35
the person whose behalf the agents acts
principal
36
the insurance agent acts on behalf of the principal (insurance company)
Agency
37
Is a person in a position of financial trust
fiduciary
38
Competent parties are.....
1) Legal age
2) mentally sane
3) Not under the influence
39
Both parties bring something of value
Consideration
40
Insurers write the policy customer either takes it or leave it
Adhesion
41
Unequal exchange; customer pays small monthly premium premium; insurer pays large claims
Aleatory
42
Both parties have rules & duties they have to follow
Conditional
43
Statement an applicant believes to be true
representation
44
Did not mean to lie
misrepresentation
45
Contract between you and the insurer
personal
46
one sided promise, only the insurer is legally bound to do anything
unilateral
47
failure to disclose a known fact
concealment
48
medical bills & loss of wages after an accident
special damage
49
pain & suffering, mental anguish-very subjective
general damages
50
Obviously dangerous
EX: pet tiger; swimming pool
Absolute liability
51
Strictly products
Strict Liability
52
Parents/Employers are responsible
Vicarious Liability
53
To restore the insured to the financial state they enjoyed before loss occurred
Indemnity
54
False information must have been a determining factor in the insurer's decision to accept the risk
Material misrepresentation
55
Intentional act designed to deceive and induce another party to part with something of value
Fraud
56
Intentional voluntary giving up of a known right
Waiver
57
Once waiver has been created it cant be changed
Estoppel
58
Most amount of $ the insured can collect under the policy
Policy limits
59
Terminating an in force policy
Cancellation
60
Terminating of policy at expiration
Nonrenewal
61
Early cancellation before expiration
Short rate
62
insured will receive a portion of the premium back
pro rata
63
A policy is canceled on the effective date either by insurer or insured
Flat cancellation
64
The amount of $ the insured pays first before the insurer pays
deductible
65
the MAX AMOUNT of $ the insured can collect under the policy
Limits of Liability
66
pay a fair share of loss to protect indemnity
other insurance
67
No people; No Stuff
Vancancy
68
No people; Yes stuff
Unoccupied
69
Max Available $ on the policy for all claims
Aggregate
70
Insurance for insurers; transfer risk from one insurers to another insurer
reinsurance
71
Policy cannot be transferred without written consent from the insurer
Assignment
72
- Maximum per each accident
- sublimit of liability for each accident
per occurrence
73
Condition found in property insurance contracts that provides that if the insurer broadens coverage under a policy form or endorsement without requiring an additional premium, then all existing similar policies or endorsements will be construed to contain the broadened coverage
Liberalization
74
Is the transfer to the insurance company of the insured's right of recovery against others
Subrogation
75
Is a temporary oral or written statement made by the agent that gives the insured immediate coverage for a specified time
Binder
76
A single policy that covers multiple classes
Blanket insurance
77
A policy that covers a certain thing or its own amount of coverage
Specific Insurance
78
A group-owned insurer whose main activity is risk sharing
Reciprocal Insurance
79
A group-owned insurer that primarily assumes and spreads the liability-related risks of its members
Risk-retention group
80
Assume the financial risk one's self
Self-insurer
81
Protects consumer privacy
Fair Credit Reporting Act
82
Protection financial privacy
Gramm leach
83
Reduction, decrease, or disappearance of value
Loss
84
A policy form that alters or adds to the provision of a property and casualty insurance contract
endorsement
85
What a reasonable and prudent policy owner would expect
reasonable expectation doctrine
86
A sudden, unforseen, unintended, and unplanned event from which loss or damage result
accident
87
An accident includes continuous or repeated exposure to the same general harmful conditions
occurrence
88
A person or any organization to which property has been entrusted, usually for repairs, serving or storage
bailee
89
A person or organization that entrust property to a bailee
bailor
90
Taking of property inside the premises locked safe or vault by a person who commits forcible entry into, or exit from, the property of another while trespassing
burglary
91
Insured does not agree with the insurer's decision regarding a claim, what process helps decide the outcome
Arbitration
92
The cost to replace property with property of like kind & quality, at current pricing, without a deduction for depreciation
replacement value
93
The cost to repair or replace property at its replacement value, minus depreciation
Actual cash value (ACV)
94
The insurance company and insured agree to a specific value of a particular property before the policy is issued
Agreed value
95
A valuation method that states the value of a particular property on the declaration page, but provides for the insurer to pay the lesser of the stated value or ACV of the property following a loss
stated value
96
The price a willing buyer would pay for property purchased from a willing seller
market value
97
Insures one or more items of property on a single policy and the amount of insurance applying to each item is shown on a schedule
Scheduled limit
98
Addresses disputes about the amount of a loss
Appraisal
99
Receives the broadest coverage of all persons or organizations protected by a policy
Named insured
100
Reduces the amount paid in a partial loss as total losses are paid based on the coverage limit on the policy
Coinsurance
101
Is a civil wrong committed by one person against another
tort
102
Is a common law defense used by the defendant when the injured party is partially responsible for his own injuries
Contributory negligence
103
The ____ limit of liability applies to bodily injury, property damages, or both
combined single
104
- Assume the responsibility of loss
Retention
105
Primarily assumes & spreads the liability related risks of its members
Risk retention group
106
To assume the financial risk one’s self
Self insurer
