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NC Insurance License > Study Guide > Flashcards

Study Guide Flashcards

1
Q

A social device of protecting personas and businesses against certain types of loss by transferring the risks of loss from from the individual persons or businesses to a group. Involves pooling a large number of risks, and the sharing of the potential of loss.

A

Insurance

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2
Q

Company or entity assuming risks and agreeing to pay claims.

A

Insurer

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3
Q

The person or business who pays the premium.

A

Insured

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4
Q

The contract that establishes the terms of agreement between the insurer and the insured.

A

Insurance Policy

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5
Q

Demand for payment of a loss that may be covered by the insurance policy.

A

Insurance Claim

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6
Q

The uncertainty about loss that exists when more than one outcome is possible. (Chance of Loss)

A

Risk

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7
Q

Subject of insurance: involves the certainty of loss without possibility of gain.

A

Pure Risk

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8
Q

Uninsurable: Involves uncertainty of loss as well as possibility of gain. ex. stock market investments, gambling

A

Speculative Risk

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9
Q

the reduction in the quality , quantity, or value of life or property.

A

Loss

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10
Q

The cause of loss. ex. fire, flood, theft

A

Peril

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11
Q

Increases the frequency of or severity of loss.

A

Hazard

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12
Q

Arise from the material, structural, operational, or any other physical features of the risk. ex. slipppery floors, stored gas

A

Physical Hazards

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13
Q

Arise from the actions of people. ex. dishonesty

A

Moral Hazards

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14
Q

Arise from carelessness or inattention. ex. failure to lock doors, daydreaming while driving

A

Morale Hazard

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15
Q

Arise out of court actions that increase the size or possibility of loss. ex. puntitive damages

A

Legal Hazards

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16
Q

loss must define as to time, place, cause, and definable as to the value.

A

Loss: Definite and Definable

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17
Q

Loss is insurable if it may or may not occur.

A

Loss: Accidental

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18
Q

Insurance companies must be able to calculate the frequency and severity of the loss.

A

Loss: Calculable

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19
Q

The larger the number of separate-but-similar risks, the more predictable the potential loss.

A

Law of Large Numbers

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20
Q

Insurance is purchased when a potential loss cannot be paid out of savings or current income without creating economic hardship.

A

Loss: Financial Hardship

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21
Q

The insurance premium must be low in relation to the cost of the potential loss.

A

Reasonable Cost

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22
Q

Losses are uninsurable if large numbers of insureds are subjected to the same loss at the same time. It is the purpose of insurance to spread the risk of loss over a large area.

A

Spread the Risk of Loss

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23
Q

In order to purchase insurance, one must have financial interest (insurable interest) int he subject of insurance.

A

Insurable Interest

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24
Q

insurable interest exists at the time of loss

A

Property and Casualty Insurance

25
Q

insurable interest exists at the inception of policy.

A

Life Insurance

26
Q

To restore the insured to the same financial condition that existed prior to the loss.

A

Principle of Indemnity

27
Q

Often referred to as 1st party coverage. Covers loss to Real Property (structural) and Personal Property.

A

Property Insurance

28
Q

Often referred to as 3rd party coverage, Covers financial obligations incurred as a result of injuries or damages to others.

A

Casualty (Liability) Insurance

29
Q

A statement of utmost good faith.

A

Representations (in policy provisions)

30
Q

The failure to disclose a material fact.

A

Concealment (in policy provisions)

31
Q

declarations, definitions, agreement, exclusions, conditions, endorsements (optional)

A

Policy Structure

32
Q

“All about ME”, name and address, policy period, description of coverage, limits of coverage, deductibles, name of insurer.

A

Declarations (in policy structure)

33
Q

describes obligations assumed by the insurance company in contract.

A

Insuring Agreement (in policy structure)

34
Q

Person or Business first named on the the Declarations, normally have more responsibilities and obligations under a policy.

A

First Named Insured (in policy structure)

35
Q

If a change is made to a policy that broadens coverage at no additional premium, all exisiting policies will include coverage immediately.

A

Liberalization Clause

36
Q

sudden and unexpected happening vs. exposure to same conditions over a period of time.

A

Accident vs. Occurrence

37
Q

Prevents the insured from collecting twice for the same loss.

A

Subrogation

38
Q

Transfer of policy ownership from one insured to another.

A

Policy Assignment

39
Q

If the policy wording is ambiguous (unclear) it will always be interpreted in favor of the insured.

A

Adhesion

40
Q

Temporary contract of insurance, can be issued for up to 30 days.

A

Binder

41
Q

(of liability policies) are always paid in addition to the limit of liability.

A

Supplementary Payments

42
Q

Covers direct losses and Indirect (Consequential) Losses.

A

Property Insurance

43
Q

Cause of loss

A

Perils

44
Q

How the financial loss is measured.

A

Property Valuation

45
Q

AVC

A

Actual cash value - the replacement cost of the damaged property at the time of loss.

46
Q

Cost to replace with comparable material and quality with out deduction of depreciation

A

Replacement Cost

47
Q

Cost of replacing damaged property with property that is functionally equivalent.

A

Functional Replacement Cost

48
Q

The residual value of property after a loss.

A

Salvage Value

49
Q

Specific, Scheduled, and Blanket Coverage

A

Methods of Writing Limits

50
Q

= list, different amount of insurance on different types of property at one or more locations.

A

Schedule

51
Q

A single amount of insurance applying to different types of property and/or locations.

A

Blanket Coverage

52
Q

to insure that the insured is not using insurance for maintenance purposes.

A

Purpose of Coinsurance

53
Q

limit of insurance must meet or exceed the value of property at time of loss.

A

Requirement of Coinsurance

54
Q

A private wrong

A

Tort

55
Q

a public wrong

A

Crime

56
Q

The failure to use such care as a reasonably prudent and careful person would under similar circumstances.

A

Negligence

57
Q

CSL

A

Combined Single Limit - how policies are written on a basis of per loss or per occurrence.

58
Q

a maximum limit for the policy period.

A

Aggregate Limit

NC Insurance License (4 decks)

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