Property & Casualty Insurance

Question 1

The cost to replace damaged property at today’s value minus a deduction for depreciation due to wear and tear or obsolescence (ACV = RC - D).

Answer 1

Actual Cash Value (ACV)

Question 2

A type of policy limit found in liability policies that limits coverage to a specified total amount for all losses occurring within the policy period.

Answer 2

Aggregate Limit

Question 3

As it is defined in Crime insurance policies, the unlawful taking of property by forced entry into the premises, or exit from the premises. There must be visible evidence of forced entry or exit.

Answer 3

Burglary

Question 4

If an insured does not carry a specified percentage of coverage in relation to the value of the property, the insured will not collect the entire amount of a partial loss. This clause applies to most business properties. Its purpose is to encourage the insured to carry insurance coverage, as close to the full value of the property as possible.

Answer 4

Co-Insurance

Question 5

Actual physical damage to, or destruction of, tangible property. For example, if a house burns, the cost to repair the house is a direct loss of the fire.

Answer 5

Direct Loss

Question 6

Loss that is a result or consequence of a direct loss. Also known as a consequential loss.

Answer 6

Indirect Loss

Question 7

Vanishing of property with no known explanation.

Answer 7

Mysterious Disappearance

Question 8

An unpredictable reduction in the quality, quantity, or value of an asset. For example: bodily injury, disease, property damage, physical disappearance of property, incurred expenses, death, etc.

Answer 8

Loss

Question 9

Failure to use a degree of care that an ordinary person of reasonable prudence would use under the same given circumstances. Negligence may be constituted by acts of either omission, commission, or both.

Answer 9

Negligence

Question 10

Clause in a Fire policy that provides a method of sharing loss when more than one policy is applicable. Each company covers no more than its share. Also known as the Other Insurance clause.

Answer 10

Pro-Rata Liability

Question 11

The happenings or events which cause a loss.

Answer 11

Peril

Question 12

1) Consideration for the insurance. 2) Periodic payment made to keep a policy in force.

Answer 12

Premium

Question 13

In Crime insurance, the forcible and felonious taking of property by violence, or threat of violence, from a messenger or custodian.

Answer 13

Robbery

Question 14

The per-unit cost of insurance.

Answer 14

Rate

Question 15

The cost of replacing property without deduction for depreciation.

Answer 15

Replacement Cost (R/C)

Question 16

Property taken over by an insurance company to reduce its loss. The company may dispose of, or salvage, property as it wishes, but on request and proper reimbursement, may return it to the insured.

Answer 16

Salvage

Question 17

Any act of stealing. Theft includes larceny, burglary, and robbery.

Answer 17

Theft

Question 18

A percentage penalty charged on insurance canceled by the insured, before the end of the policy period. Return premium is calculated on a short-rate basis, meaning the insurance company keeps a portion of the unearned premium to cover expenses.

Answer 18

Short-Rate

Question 19

A legal wrong one person does to another. Tort law is the basis of all civil law. Negligence is an unintentional tort and is covered by liability policies.

Answer 19

Tort

Question 20

The absence of people and personal property from a building, not expected to return. Property coverage is often restricted when there are long periods of vacancy, especially for the perils of vandalism and glass breakage.

Answer 20

Vacancy

Question 21

The process of evaluating a risk for the purpose of issuing insurance coverage on it.

Answer 21

Underwriting

Question 22

Imposed in some states upon a person even though he is not a party to the particular occurrence (e.g., the owner of a motor vehicle might be vicariously responsible for injuries even though he is not driving the car at the time of the occurrence).

Answer 22

Vicarious Liability

Question 23

What best describes the concept where an insured assigns to an insurer his right of action against an at-fault party?

Answer 23

Transfer of rights of Recovery

Question 24

A provision in a property insurance contract that automatically extends to an insured any advantageous changes made in a later edition of a policy may be identified as the

Answer 24

Liberalization Clause

Question 25

If the insurer and the insured disagree on the amount to be paid on a property claim, the dispute may be settled by

Answer 25

Appraisal

Question 26

The clause in a property or auto policy protecting the lender for their interest in your property that is not a building is known as the

Answer 26

Loss payable clause

Question 27

An insurance contract may be modified mid-term by a(n)

Answer 27

endorsement

Question 28

In liability insurance, paying defense costs and expenses in a suit brought against the insured is a contractual obligation known as the

Answer 28

Duty to Defend

Question 29

The promises the parties make to each other in the contract

Answer 29

Insuring Clause

Question 30

A property insurance provision granting special protection for the interest of a mortgagee (e.g., financial institution that has an interest in the property) named in the policy, in effect setting up a separate contract between the insurer and the mortgagee.

Answer 30

Mortgagee Clause

Question 31

The situation that occurs when more than one policy intended to cover the same property are not identical to the extent of coverage or the interest of the insured is known as

Answer 31

non-concurrency

Question 32

Liability can be stated as bodily injury coverage or property damage coverage. When the policy states one dollar amount for both of these situations, it is known as a _______. There is one amount for both bodily injury and/or property damage claims combined per event.

Answer 32

Combined SINGLE limit