Study 2

Question 1

Indemnify

Answer 1

To provide compensation for loss or expenses incurred

Question 2

Premium

Answer 2

The price of insurance protection for a specified risk for a specified period of time

Question 3

Contract

Answer 3

An agreement between two or more parties that is intended to be legally enforceable and is constituted by the acceptance by one party of an offer made by another party, to do or to abstain from doing a specific act. The offer and acceptance may either be expressed or be inferred through the conduct of the parties.

Question 4

Agent

Answer 4

A person licensed and authorized or employed to act on behalf of another

Question 5

Broker

Answer 5

A licensed independent person or firm who acts on behalf of an insured in placing business with insurance companies

Question 6

Adjuster

Answer 6

One who investigates insurance claims, makes recommendations regarding the payment of benefits from insurance policies, and negotiates payments and settlements

Question 7

Independent adjuster

Answer 7

One who adjusts losses on behalf of the insurance companies but is not employed by any one insurance company

Question 8

Public adjuster

Answer 8

An insurance claims adjuster representing an insured on a fee basis in a claims settlement

Question 9

Telematics

Answer 9

An interdisciplinary field with telecommunications, vehicular technologies, road transportation, road safety, electrical engineering (sensors, instrumentation, wireless communications), and computer science (multimedia, Internet, GPS)

Question 10

Loss reserve

Answer 10

An amount carried as a liability in an insurer’s balance sheet representing, in respect of each claim, an amount equal to the estimated final settlement cost less any amounts already paid

Question 11

Incurred but not reported (IBNR) losses

Answer 11

An estimate of the amount of an insurer’s (or self-insurer’s) liability for claim-generating events that have taken place but have not yet been reported to the insurer or self-insurer. The sum of IBNR losses plus incurred losses provide an estimate of the insurer’s eventual liabilities for losses during a given period

Question 12

Unearned premium

Answer 12

The part of the premium that has not been used or earned; premium representing the unexpired portion of a policy

Question 13

Earned premium

Answer 13

That portion of premium earned or changed for the period of time a policy remained effective. For example, an annual policy paid for in advance would be one-twelfth “earned” at the end of the first full month of its term

Question 14

Unearned premium reserve

Answer 14

A reserve fund of an insurance company or reinsurance company, representing the unearned premiums

Question 15

Property insurance

Answer 15

First-party insurance that indemnifies the owner or user of property for its loss, or the loss of its income-producing ability, when the loss or damage is caused by a covered peril, such as fire or explosion

Question 16

Casualty insurance

Answer 16

Loosely used to describe an area of insurance not particularly or directly concerned with life insurance, fire insurance, or automobile insurance. Most frequently refers to liability, burglary, and plate glass insurance but may include fidelity and surety