Property and Casualty Insurance Terms and Related Concepts Flashcards
What type of policy insures all property at multiple locations for a single amount?
Blanket policy
WAGERING on a SPORTING EVENT is known as what TYPE OF RISK?
Speculative
If an INSURED PERIL was the PROXIMATE CAUSE OF LOSS, what TYPE OF LOSS is it?
Direct
What PROVISION states that if a policy allows for GREATER BENEFITS than the FINANCIAL LOSS INCURRED, the insured may be compensated ONLY FOR THE AMOUNT LOST?
Indemnity
What SUBLIMIT in a LIABILITY POLICY puts a CEILING ON THE PAYMENT for all claims that arise from a SINGLE ACCIDENT?
Per occurrence
A policy that covers ALL CAUSES OF LOSS except for those SPECIFICALLY EXCLUDED is known as what type of policy?
Open peril (or special) form
A tornado that DESTROYS A PROPERTY would be an example of what?
Peril
Uncertainty of loss
RISK
What PROVISION found in property policies PREVENTS AN INSURED from COLLECTING TWICE for the SAME LOSS: once from the INSURER and again from a THIRD PARTY?
Subrogation
What law PROTECTS CONSUMERS from the CIRCULATION OF INACCURATE OR OBSOLETE INFORMATION?
The Fair Credit Reporting Act
What term defines an EXACT, DIRECT, and UNINTERRUPTED CAUSE OF LOSS?
Proximate cause
In property insurance, what is ACTUAL CASH VALUE?
REPLACEMENT COST at the TIME OF LOSS, minus DEPRECIATION
What does INDEMNIFY mean in insurance?
To RESTORE AN INSURED to the SAME FINANCIAL STATUS as BEFORE A LOSS
What do INDIVIDUALS use to TRANSFER THEIR RISK OF LOSS to a LARGER GROUP?
Insurance
INSURANCE is a CONTRACT that PROTECTS THE INSURED from WHAT?
Loss
What are the TWO TYPES of COMPENSATORY DAMAGES?
SPECIAL and GENERAL
How are DIRECT AND INDIRECT LOSSES related?
DIRECT LOSSES can CAUSE indirect losses
CONDITIONS that INCREASE THE CHANCE OF A LOSS are known as what?
Hazards
Both ROBBERY AND BURGLARY can be considered what?
Theft
What are the THREE TYPES OF HAZARDS?
Physical
Moral
Morale
An INSURED’S LEGAL RIGHT TO SEEK DAMAGES from THIRD PARTIES after REIMBURSING INSUREDS for a loss
SUBROGATION
What TERM describes a loss CAUSED BY CONTINUOUS EXPOSURE TO A CONDITION?
Occurrence
A person who DOES NOT LOCK THE DOORS to his or her house shows an INDIFFERENT ATTITUDE. What TYPE OF HAZARD does this represent?
Morale
Under ABSOLUTE LIABILITY, does an INJURED PARTY need to PROVE NEGLIGENCE?
No. ABSOLUTE LIABILITY exists when a CONDITION OR CONDUCT is INHERENTLY DANGEROUS, so PROOF OF NEGLIGENCE is NOT REQUIRED
In PROPERTY INSURANCE, what is the PURPOSE OF COINSURANCE CLAUSE?
To ENCOURAGE INSUREDS to insure property CLOSE TO ITS VALUE
In PROPERTY INSURANCE, WHEN must INSURABLE INTEREST EXIST?
At the TIME OF LOSS
The formula for Loss Payment
( Insurance Carried / Insurance Required ) x Loss Amount =
( Insurance Carried / Insurance Required ) x Loss Amount =
The formula for Loss Payment
What TYPE OF LIMITS OF LIABILITY has the LIMITS SEPARATELY STATED for DIFFERENT COVERAGES?
Split limits
FAILURE TO ACT as a REASONABLE, PRUDENT PERSON under GIVEN CIRCUMSTANCES
NEGLIGENCE
A SITUATION in which a person can experience ONLY A LOSS and NO GAIN presents what TYPE OF RISK?
Pure risk
The REDUCTION, DECREASE, OR DISAPPEARANCE OF VALUE of the PERSON OR PROPERTY in a policy is KNOWN AS WHAT?
Loss
What is the TERM for the CAUSES OF LOSS INSURED AGAINST in an INSURANCE POLICY?
Peril
An INSURED’S BUSINESS is DAMAGED BY A FIRE, and TEMPORARILY SHUT DOWN for REPAIRS. As a result, the insured suffers LOSS OF INCOME. What TYPE OF LOSS is the LOSS OF INCOME?
INDIRECT or CONSEQUENTIAL
If a MANUFACTURED PRODUCT is UNSAFE, what TYPE OF LIABILITY APPLIES to the MANUFACTURER?
Strict liability
What determines an INSURER’S RESPONSIBILITY FOR PAYMENT, as STATED in an INSURANCE POLICY?
Limits of liability
A FORCED ENTRY into ANOTHER’S PREMISES with FELONIOUS INTENT
What is BURGLARY?
An insurer discovers that an APPLICANT FOR A POLICY has submitted a FRAUDULENT INSURANCE CLAIM in the PAST. What TYPE OF HAZARD does this represent?
Moral
What is the difference between vacancy and unoccupancy?
VACANCY refers to an INSURED STRUCTURE in which NO PEOPLE have been LIVING OR WORKING and NO PROPERTY HAS BEEN STORED for a SPECIFIED PERIOD OF TIME.
UNOCCUPANCY refers to an INSURED STRUCTURE in which NO PEOPLE have been LIVING OR WORKING WITHIN A REQUIRED PERIOD OF TIME, but some PROPERTY IS STORED.
refers to an INSURED STRUCTURE in which NO PEOPLE have been LIVING OR WORKING and NO PROPERTY HAS BEEN STORED for a SPECIFIED PERIOD OF TIME.
VACANCY
refers to an INSURED STRUCTURE in which NO PEOPLE have been LIVING OR WORKING WITHIN A REQUIRED PERIOD OF TIME, but some PROPERTY IS STORED.
UNOCCUPANCY
What is a DEDUCTIBLE in and INSURANCE POLICY?
A SPECIFIED DOLLAR AMOUNT that the INSURED MUST PAY before the INSURER WILL PAY THE POLICY BENEFITS
A SPECIFIED DOLLAR AMOUNT that the INSURED MUST PAY before the INSURER WILL PAY THE POLICY BENEFITS
DEDUCTIBLE
(Current replacement cost) - (depreciation)
How is the ACTUAL CASH VALUE of a property CALCULATED?
How is the ACTUAL CASH VALUE of a property CALCULATED?
(Current replacement cost) - (depreciation)
