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IIAW Classes > Property Insurance Basics > Flashcards

Property Insurance Basics Flashcards

1
Q

An actuarial term describing the degree of accuracy in forecasting future events based on statistical reporting of past events

A

Credibility

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2
Q

Reduction in value, particularly due to wear and tear

A

Depreciation

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3
Q

The portion of premium paid in advance that now belongs to the insurer because it applies to the elapsed part of the policy

A

Earned premium

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4
Q

Used as a measure of the rating units or the premium base of a risk (exposure units multiplied by the rate results in the premium)

A

Exposure units

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5
Q

The degree to which items are similar

A

Homogeneity

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6
Q

A legal term meaning that a product is suitable for its intended purpose and that it fits an ordinary buyer’s expectations

A

Implied Warranty

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7
Q

The date at which the insurance policy goes into effect

A

Inception

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8
Q

The failure to use the care that a reasonable, prudent person would under the same or similar circumstances

A

Negligence

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9
Q

Depreciation in the value of a property due to becoming outdated

A

Obsolescence

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10
Q

A written law passed by a legislative body

A

Statute

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11
Q
  1. Financial (a monetary interest)
  2. Blood (a relative)
  3. Business (a business partner)
    Are the 3 elements of __________________________
A

Insurable risk

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12
Q

An insurable interest must exist at the _______ ___ _____

A

time of loss

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13
Q

(Incurred losses + Loss adjusting expense) / Earned premium =

A

Loss ratio formula

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14
Q

Loss ratio formula

A

(Incurred losses + Loss adjusting expense) / Earned premium =

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15
Q

The amount charged for a particular amount of coverage

A

Insurance rate

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16
Q

The practice of computing a price per unit of insurance that applies to all applicants possessing a given set of characteristics

A

Class rating (or manual rating)

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17
Q
  1. Judgment rating
  2. Schedule rating
  3. Experience rating
  4. Retrospective rating
  5. Merit rating
    Are all types of ______________________ rate-making approaches
A

Individual

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18
Q

_____________________ rating is used when credible statistics are lacking or when the exposure units are so varied that it is impossible to construct a class.

A

Judgment

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19
Q

Rates are developed by applying a schedule of charges and credits to some base rate to determine the appropriate rate for an individual exposure

A

Schedule rating

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20
Q

In ______________________ rating, the insured’s own past loss experience enters into the determination of the final premium

A

Experience

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21
Q

_____________________ rating is a self-rating plan under which the actual losses during the policy period determine the final premium, subject to minimum and maximum premium with a deposit premium being required at the inception of the policy

A

Retrospective

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22
Q

The type of rating where the insured’s premium is based not on the actual loss record, but on other factors that indicate the probability that loss will occur. Most commonly used in personal auto insurance.

A

Merit rating

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23
Q

Rating method developed by ISO

A

Loss costs

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24
Q

Factors that determine rates including loss reserves, loss adjusting expenses, operating expenses, and profits

A

Components

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25
Q

A condition or situation that creates or increases the probability of or extent of a probable loss from a peril

A

Hazard

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26
Q

Physical, Moral, and Morale are all types of ________________

A

Hazards

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27
Q

A specific cause of loss is a ________________

A

Peril

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28
Q

______________________ is a term used in property insurance to describe the breadth of coverage provided under an insurance policy form that lists specific covered perils

A

Named peril

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29
Q

________________ is a term used in property insurance to describe the breadth of coverage provided under an insurance policy form that insures against any risk of loss that is not specifically excluded.

A

Open peril

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30
Q

The two types of property losses are _____________ and _____________

A

direct and indirect

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31
Q

An _______________ is a sudden, unplanned and unexpected event, not under the control of the insured, resulting in injury or damage that is neither expected nor intended

A

Accident

32
Q

An __________________ is a broader definition of loss than accident because it includes those losses caused by continuous or repeated exposure to conditions resulting in injury to persons or damage to property that is neither intended nor expected.

A

Occurrence

33
Q

______________________ is a single property insurance policy that provides coverage for multiple classes of property at one location, or for one or more classes of property at multiple locations.

A

Blanket Insurance

34
Q

The _____________________ method of valuation reinforces the principle of indemnity because it recognizes the reduction of value of property as it ages and become subject to wear and tear and obsolescence.

A

Actual Cash Value (ACV)

35
Q

Current replacement cost - Depreciation =

A

Actual Cash Value

36
Q

The cost to replace damaged property with like kind and quality at today’s price, without any deduction for depreciation is the definition of ___________________________

A

Replacement Cost

37
Q

________________ ______________ _______________ is the cost to replace damaged property with less expensive and more modern construction or equipment.

A

Functional replacement cost

38
Q

____________________ is a method of casualty claim settlement used when the insured and insurer cannot agree on how to settle a claim

A

Arbitration

39
Q

The four primary elements of:
1. Legal duty
2. Standard of care
3 Unbroken chain of events
4 Actual loss or damage
Must all be present in order to prove ____________________

A

Negligence

40
Q

Any deliberate act that causes harm to another person regardless of whether the offending party intended to injure the aggrieved party

A

Intentional tort

41
Q

Any written or printed untrue statement that injures a person’s or company’s reputation is _________________

A

Libel

42
Q

__________________ is any oral or verbal untrue statement that injures a person’s or company’s reputation

A

Slander

43
Q

__________________ liability is imposed upon a person or company engaged in hazardous or potentially dangerous business when, by negligence or by an omission, causes harm or injury to another person or property

A

Absolute

44
Q

_______________ liability is commonly applied in product liability. A person or business that manufactures or sells a product make an implied warranty that the product is safe

A

Strict

45
Q

__________________ Liability transfers liability from one person to another person with greater ability to pay. (Employers are liable for the acts of their employees)

A

Vicarious

46
Q

Every ____________________ or __________________ policy is comprised of
Declarations
Definitions
Insuring agreement
Additional coverage
Conditions
Endorsements
Exclusions and policy limits

A

property or casualty

47
Q

__________________ is the section of a policy containing the basic underwriting information such as the insured’s name, address, amount of coverage and premiums and description of insured’s locations.

A

Declarations

48
Q

Component of an insurance policy that clarifies terms used in the policy

A

Definitions

49
Q

________________________ is the section of a policy that establishes the obligation of the insurance company to provide the coverages as stated in the policy. Lists the parties to the contract, eff and renew dates, description of coverage and perils

A

Insuring Agreement (or Agreement)

50
Q

A provision in an insurance policy that provides an additional amount of coverage for specific loss expense, at no additional premium

A

Additional (or supplementary) coverage

51
Q

The general rules or procedures that the insurer and insured agree to follow under the terms of the policy.

A

Conditions

52
Q

______________________ detail the perils that are not insured against and what persons are not insured

A

Exclusions

53
Q

___________________ are printed addendums to a contract that are used to change the policy’s original terms, conditions, or coverages

A

Endorsements

54
Q

An _________________ insured is anyone who is covered under a policy, whether named or not. (unnamed spouse, resident relative etc.)

A

Insured

55
Q

The individual(s) whose name appears on the declaration

A

Named insured

56
Q

The individual whose name appears first on the policy’s declaration.

A

First named insured

57
Q

___________________ ______________ are individuals or businesses that are not named as insureds but are protected by the policy, usually in regards to a specific interest. Usually added by endorsement

A

Additional insureds

58
Q

The termination of an in-force policy by either the insured or the insurer prior to the expiration date

A

Cancellation

59
Q

___________________ is the termination of an insurance policy at its expiration date by not offering a continuation of the existing policy or replacement policy

A

Non-renewal

60
Q

A dollar amount an insured must pay on a claim before the policy provides coverage.

A

Deductible

61
Q

The ____________________ clause states that, in consideration of a reduced rate, the insured agrees to maintain a certain minimum amount of insurance on the insured property.

A

Coinsurance

62
Q

(Insurance carried / Insurance required) x Loss Amount = Loss payment

A

Coinsurance penalties formula

63
Q

Coinsurance penalties formula

A

(Insurance carried / Insurance required) x Loss Amount = Loss payment

64
Q

_____________________ is the insurer’s legal right to seek damages from third parties, after it has reimbursed the insured for the loss

A

Subrogation

65
Q

The ____ ________ clause is the clause used to cover the interest of a secured lender in personal property

A

Loss payable clause

66
Q

Application form; motor vehicle records; interview with neighbors, friends, and employers; inspection of property; and inspection of insurance history are some of the sources that may be used in the ____________________ process

A

Underwriting

67
Q

The maximum amount of money an insurer will pay for a particular loss is know as ____________ ___ _____________

A

Limits of liability

68
Q

Sets amount for all claims arising from a single accident/occurence
(type of limit of liability)

A

Per occurrence

69
Q

Maximum amount payable for bodily injury of a single person
(type of limit of liability)

A

Per person

70
Q

Maximum limit of coverage available during a policy year
(type of limit of liability)

A

Aggregate

71
Q

Separately stated limits of liability for different coverages
(type of limit of liability)

A

Split

72
Q

Single dollar limit which applies to combined damages for bodily injury or property damage as a result of one accident/occurrence
(type of limit of liability)

A

Combined single

73
Q

Broader legislated or regulated coverage is extended to current policies at no additional premium

A

Liberalization

74
Q

Insurer’s right to seek damages from a third party, after reimbursing insured

A

Subrogation

75
Q

Insurer’s requirement to defend insured in lawsuit arising ot of covered liability

A

Duty to defend

76
Q
A

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