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Licensing > Property and Casualty Basic Concepts > Flashcards

Property and Casualty Basic Concepts Flashcards

1
Q

The right to sue due to pain and suffering is covered under what liability coverage?

A

Personal Injury

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2
Q

Pays above and beyond the policies liability limits, has NO specific limits

A

Supplemental Payments

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3
Q

Minimizes small nuisance claims

A

Deductible

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4
Q

First peril in an unbroken chain of events

A

Proximate Cause

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5
Q

Only covers losses when the proximate cause is specifically listed

A

Name peril policy

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6
Q

If the Insurance company and named insured disagree about if named perils are covered by the policy THIS is up to the policyholder to prove peril is covered

A

Burden Of Proof

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7
Q

Covers everything except exclusions

A

Special/Open/All Risk Peril Policies

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8
Q

Replacement cost less depreciation

A

ACV

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9
Q

If the policies liability limits are at 100/300/50, what is the maximum the company will pay out for injuries to the 3rd party during an occurrence?

A

300M

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10
Q

Will pay the full cost to replace the home even if it exceeds the policy limits

A

Guaranteed Replacement Cost

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11
Q

The Price AFTER negotiation

A

Market Value

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12
Q

The amount the insurance company agrees to pay for what your property is worth and agrees to pay the full amount during a loss

A

Agreed Value

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13
Q

Insures property at more than one location, more than one type of property or both

A

Blanket Limit

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14
Q

Civil situations that govern the wrongs between individuals

A

Tort Law

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15
Q

Failure to act or not act as a reasonable and prudent person would in a similar situation

A

Negligence

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16
Q

Any loss of bodily function for 90 days or more would be considered

A

Tort Limitation/Verbal Threshold

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17
Q

Negligence is never considered _______

A

Intentional

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18
Q

Lawsuits must be filed within a specific time from the occurrence otherwise it’s violating the

A

Statue Of Limitations

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19
Q

Liability regardless of negligence for high risk circumstances

A

Absolute/Strict Liability

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20
Q

Situations where one party is responsible for the action/liability of others

A

Vicarious Liability

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21
Q

The most the insurer is obligated to pay during a specific period of time and will not be returned until next renewal

A

Aggregate Limit

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22
Q

Who has the authority to either settle or defend the liability claim?

A

The Insurer

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23
Q

Damage that indemnifies the injured party and pays for the loss

A

Compensatory

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24
Q

Additional damages awarded on top of compensatory damages due to gross negligence or recklessness

A

Punitive

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25
Q

The duty to defend ends once _________ have been reached

A

Settlement or Judgement

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26
Q

An insurance policy or contract that is considered one-sided, only the insurance company is legally obligated

A

Unilateral Contracts

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27
Q

A contract offered for acceptance or rejection without negotiation

A

Contracts Of Adhesion

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28
Q

Both parties follow the rules and perform the duties listed in the contract

A

Conditional Contract

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29
Q

Unequal transfer of value between both parties, and requires an expense, even if its small

A

Aleatory Contracts

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30
Q

Mutual reliance on truthfulness, both parties must be able to rely on honesty and cooperation of the other party

A

The Doctrine Of Utmost Good Faith

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31
Q

A policy should cover what a reasonable policyholder would expect.
Ex.) An earthquake policy will cover damage by an earthquake

A

Doctrine Of Reasonable Expectations

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32
Q

Initiated through the application being submitted

A

Offer

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33
Q

The first payment is received

A

Acceptance

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34
Q

Promises are made, may not be equal and the exchange may not be equal.
Ex.) Promise of the PH to pay premium, and promise of the insurance company to pay claims

A

Consideration

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35
Q

The 4 elements that prove negligence:

A

Duty to Protect
Breach of Duty
Damages
Proximate Cause

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36
Q

Both parties must have the legal capacity to enter into contract, considered the ‘Meeting Of The Minds’

A

Competent Parties

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37
Q

Must adhere to the laws of the land, cannot be illegal

A

Legal Purpose

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38
Q

A loss must be considered

A

Measurable or Calcuable

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39
Q

The formula for Actual Cash Value

A

Replacement Cost less Depreciation

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40
Q

Large number of homogenous units, the more examples to develop a statistic, the more accurate the statistic

A

Law of Large Numbers

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41
Q

Statement made by an applicant they believe is true to the best of their knowledge?

A

Representation

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42
Q

A statement made by an applicate that is definite and will remain true until the end of the contract
Contract can be voided if untrue

A

Warranty

43
Q

A written or verbal lie

A

Misrepresentation

44
Q

A lie that impacts the rate or causes the policy to be rejected

A

Material Misrepresentation

45
Q

Withholding information, or hiding information that should have been provided to the insurer

A

Concealment

46
Q

An intentional misrepresentation that causes some type of harm

A

Fraud

47
Q

Termination of contract from the beginning as if it never existed

A

Recission

48
Q

The intentional and voluntary relinquishment of a known right caused by actions taken or not taken
- Failure of an insurer to enforce a prevision

A

Waiver

49
Q

The insurer failed to enforce a prevision and will NOT be enforced later

A

Estoppel

50
Q

The propensity for those that are high risk to purchase insurance, while those with a lesser risk are less apt to purchase the coverage

A

Adverse Selection

51
Q

What is the limit for defense through liability?

A

There isn’t a limit, supplemental payments will pay above and beyond the limits

52
Q

The insurance Company cancels the policy when the policy period ends

A

Pro-Rata

53
Q

The policyholder canceling the policy mid-term and may be charged a cancellation fee

A

Short Rate

54
Q

The termination of coverage during the policy period

A

Cancellation Clause

55
Q

The insurance company terminating coverage at the end of the policy period

A

Non-Renewal Clause

56
Q

Someone that has care, custody and control of YOUR property

A

Bailee

57
Q

The Bailee cannot benefit from the insured’s insurance policy and is liable for any damages that occur while they have custody

A

No Benefit to Bailee Clause

58
Q

Some exclusions can be purchased and added to the policy with an endorsement

A

Buyback

59
Q

Any changes to an existing policy either at the beginning or during their term

A

Endorsement

60
Q

A loss that would damage the solvency of the insurance company

A

Catastrophic Loss

61
Q

Intentional losses, general wear and tear

A

Predictable Loss

62
Q

3 common exclusion categories are:

A

Predictable
Catastrophic
Covered Elsewhere or by another policy

63
Q 
The amount that an entity would have to pay to replace an asset at the present time according to its current worth
A.) Actual Cash Value
B.) The Replacement Cost Principle
C.) Market Value
D.) Functional Replacement Cost
A

B.) The Replacement Cost Principle

64
Q

The insurer assumes the right to sue the at-fault 3rd party after they have reimbursed the insured, prevents the insured from collecting twice

A

Subrogation Clause

65
Q

The Insured may not transfer policy ownership without the insurer’s written consent

A

Assignment Clause

66
Q

Give prompt notice to insurer, notify police if there is a theft, cooperate with the insurance company, protect property from further damage, and prepare inventory of damaged property are all steps of:

A

Duties After A Loss Clause

67
Q

The duties, obligations, rules, clauses, and responsibilities of both the insurer and the named insured

A

Conditions

68
Q

What is the makeup of a policy structure:

A 
Declaration
Insuring Agreement 
Conditions
Exclusions
Definitions
69
Q

The heart of the policy, the companies promise to pay and will define and describe all perils covered

A

Insuring Agreement

70
Q

Personalizes the policy, listing who is covered, property, effective dates Etc.

A

Declaration

71
Q

Anything that is written in additionally for perils will be listed in the:

A

Exclusions

72
Q

Glossary, clarifies and defines words used in the contract

A

Definitions

73
Q

The transfer of risk is

A

Insurance

74
Q

A hazard caused by something you can see, and is always tangible. A material structure or feature that may increase injury

A

Physical Hazard

75
Q

Caused by the dishonesty of the insured

A

Moral Hazard

76
Q

Caused by the carelessness or indifference of the insured

Ex.) Failing to fix or update your home

A

Morale Hazard

77
Q

A condition that increases the chance of loss

A

Hazard

78
Q

A tangible loss, caused by peril

A

Direct Loss

79
Q

An economic loss, suffering further financial consequences as a result

A

Indirect Loss

80
Q

The state of being vulnerable, susceptible, or subject to a loss. The potential for an accident or a loss to occur to something you own

A

Exposure

81
Q

The reason the loss has occurred

A

Peril

82
Q

Methods Of Handling Risk

A 
Sharing 
Transferring 
Avoiding 
Retaining
Reducing
83
Q

Choosing a $500 Deductible would be an example of what method:

A

Retaining the risk

84
Q

A sudden, unexpected, and unforeseen event resulting in loss or damage

A

Accident

85
Q

Continuous and repeated exposure to injurious conditions

A

Occurrence

86
Q

The chance, uncertainty, or possibility of a financial loss

A

Risk

87
Q

a chance of loss and a chance of gain

A

Speculative Risk

88
Q

A chance of loss without gain

A

Pure Risk

89
Q

Having a financial stake in the property

A

Insurable Interest

90
Q 
Which would not be covered through supplemental payment?
A.) Loss of earnings to testify in court
B.) The cost of an appeal
C.) The insured's Medical Bills
D.) The 3rd party's pain and suffering
A

C.) The insured’s medical bills

91
Q

To put back to a pre-loss financial position

A

Indemnification

92
Q

Anyone listed on the policy would be considered:

A

Named Insured

93
Q

Premium paid in full before the company has the opportunity to provide coverage

A

Unearned Premium

94
Q

Two party contract, protects your property, and indemnifies you and yours for a loss

A

Property Policy

95
Q

3rd party contract, protects you from lawsuit due to injuries to others, indemnifies others you injure (3rd party and their property)

A

Casualty/Liability Policy

96
Q

The injured party knew the risk involved but took the chance

A

Assumption Of Risk

97
Q

An external factor contributed or caused the damages

A

Intervening Cause

98
Q

Comparing blame, assigning partial blame to the victim in court

A

Comparative Fault

99
Q

Two types of compensatory damages

A

Special & General

100
Q

Consumer privacy regulations required to protect their customer’s privacy. The insurer must notify, explain and give the opportunity to opt-out

A

Gramm-Leach Bliley Act

101
Q

What is the consideration of the policyholder?

A

Truthful Statements and paying the premium

102
Q

Selecting, classifying, pricing and insuring a risk

A

Underwriting

103
Q

Consequences of a material misrepresentation will result in what?

A

Voided

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