Study 2- Insurance Categories & Functions - Basic Insurance Relationship

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.

Those risks more likely to have losses should pay higher premiums

Question 3

Contract

Answer 3

An agreement or promise 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 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 payments of benefits from insurance policies, and negotiates payments and settlements

When a loss occurs, the insured and the insurer may deal directly with each other in arranging the loss settlement. In such cases, the insured deals with a staff adjuster.

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 claims settlement. Most likely hired on large claims where the amount may be in dispute; however, they are infrequently used