PROPERTY TERMS

Question 1

Insurance:
An agreement between two parties in which one agrees to indemnify the other for a specific type and amount of loss, when such loss is caused by an agreed upon peril

Answer 1

Insurance

Question 2

Law of large numbers: The statistical theory that states the larger the number of similar exposure units the more predictable and accurate the estimate of expected loss is.

Answer 2

Law of large numbers:

Question 3

Only the possibility of loss or no loss occurs but no gain. Generally insurable

Answer 3

Pure risk

Question 4

A risk where either a profit or a loss is possible. Not usually insurable.

• Risk: the chance of loss

Answer 4

Speculative risk

Question 5

Something that increases the chance of loss

Answer 5

Hazard

Question 6

the risk of loss

Answer 6

Moral

Question 7

indifference to loss

Answer 7

Morale

Question 8

The cause of loss

Answer 8

Peril

Question 9

______ Loss, which is a direct result of a peril. Also includes loss due to efforts to end the peril or unavoidable exposure following a peril.Direct loss

Answer 9

Direct loss

Question 10

Loss which is a result or consequence of a direct loss.

Answer 10

Indirect loss

Question 11

The cost to replace an item of property at the time of loss, less an allowance for depreciation. Often used to determine amount of reimbursement for a loss (Replacement Cost - Depreciation)

Answer 11

Actual cash value

Question 12

The cost to replace a damaged or destroyed item of property, without deducting depreciation. May be the basis of reimbursement for loss to buildings, or by endorsement, to personal property.

Answer 12

Replacement cost:

Question 13

Written with property insurance policies. It waives the Coinsurance clause and requires the insured to carry insurance equal to at least 80% of a signed statement of values filed with the company

Answer 13

Agreed value

Question 14

Damaged property that may be retrieved, reconditioned, and sold to reduce an insured loss

Answer 14

Salvage value

Question 15

A fundamental doctrine in property insurance that holds that when there is an unbroken connection between an occurrence and damage that grows out of the occurrence, then the resulting damage is a part of the occurrence.

Answer 15

Proximate cause

Question 16

Usually a dollar amount the insured must pay on each loss to which the deductible applies. The insurance company pays the remainder of each covered loss up to the policy limits

Answer 16

Deductible

Question 17

A principle of insurance, which provides that when a loss occurs, the insured should be restored to the approximate financial condition occupied before the loss occurred, no better, no worse.

Answer 17

indemnity

Question 18

the maximum amount of insurance the insurance company will pay for a particular loss, or for a loss during a period of time

Answer 18

Limits of liability

Question 19

A clause that requires an insured to pay part of a loss if the coverage provided under the policy limits is less than a specified percentage of the value of the property at the time of loss

Answer 19

Co-insurance

Question 20

generally defined to be an accident, including continuous or repeated exposure to substantially the same general harmful conditions

Answer 20

Occurrence

Question 21

The absence of people and personal property from a building

Answer 21

Vacancy

Question 22

Unoccupancy the absence of people from a building. The condition when a dwelling has furniture and contents but lacks a tenant

Answer 22

Unoccupancy

Question 23

liability that does not require proving negligence

Answer 23

Absolute liability

Question 24

occurs when liability is assigned by law without regard to negligence or fault

Answer 24

Strict liability

Question 25

Negligence which is not directly attributable to the person claimed against, but which is the negligence of another for whom the person claimed against is in some way responsible

Answer 25

Vicarious liability

Question 26

The failure to exercise that degree of care that the law requires to protect others from an unreasonable risk of harm. The failure to act as a prudent person would have acted under similar circumstances

Answer 26

Negligence

Question 27

An oral or written statement providing immediate insurance protection, valid for a specified period. Designed to provide temporary coverage until a policy can be issued or denied.

Answer 27

Binder

Question 28

A document which is attached to the policy and modifies or changes the original policy in some way

Answer 28

Endorsements

Question 29

________ Insurance where a single amount of insurance applies to two or more coverage items.

Answer 29

Blanket

Question 30

________: the taking of property by a person unlawfully entering or leaving the premises, as evidenced by visible signs of forced entry or exit

Answer 30

Burglary

Question 31

_______: the taking or attempted taking of property by one who has caused or threatened to cause bodily harm or committed and witnessed an obviously unlawful act

Answer 31

Robbery

Question 32

_____: a broad term encompassing any unlawful taking of property, but usually meant to exclude employee dishonesty and mysterious disappearance

Answer 32

Theft

Question 33

excludes coverage for a lost item of considerable value if the cause of the loss cannot be sufficiently explained by the insured

Answer 33

Mysterious Disappearance

Question 34

Warranties A specific agreement between the insured and the insurer that certain conditions will be met. This agreement becomes a part of the policy

Answer 34

Warranties

Question 35

Statements an applicant for insurance believes to be true. Does not carry as much force as warranty.

Answer 35

Representations

Question 36

premium paid at the beginning of the policy period that is based on an estimate of what the final premium will be. This premium is adjusted based on reports submitted by the insured to the insurer

Answer 36

Deposit Premiums/Audits

Question 37

The withholding of a material fact from the insurance company. May void the policy

Answer 37

Concealment

Question 38

a civil wrong, not arising from a contract, for which money damages may be had.

Answer 38

Tort

Question 39

if the insurer adopts a revision that would broaden coverages without additional premium within some period of time prior to the policy period or during the policy period, the insured receives the benefit of such broadened coverage

Answer 39

Liberalization