Wrong FC Flashcards
If a manufactured product is unsafe, what type of liability applies to the manufacturer?
Strict Liability
What are the two types of compensatory damages?
Special and general
What is subrogation?
An insurer’s legal right to seek damages from third parties after reimbursing insureds for a loss
What term describes a loss caused by continuous exposure to a condition?
Occurrence
What are the three types of hazards?
Physical, moral, and morale
(Insurance Carried ÷ Insurance Required) x Loss Amount =
Loss Payment
What type of limits of liability has the limits separately stated for different coverages?
Split Limits
What provision found in property policies prevents an insured from collecting twice for the same loss: once from the insurer and again from a third party?
Subrogation
What determines an insurer’s responsibility for payment, as stated in an insurance policy?
Limits of Liability
What type of policy insures all property at multiple locations for a single amount?
Blanket Policy
What law protects consumers from the circulation of inaccurate or obsolete information?
The Fair Credit Reporting Act
The reduction, decrease, or disappearance of value of the person or property insured in a policy is known as what?
Loss
What sublimit in a liability policy puts a ceiling on the payment for all claims that arise from a single accident?
Per occurrence
What sublimit in a liability policy puts a ceiling on the payment for all claims that arise from a single accident?
Per occurrence
What term defines an exact, direct, and uninterrupted cause of loss?
Proximate Cause
How is the actual cash value of a property calculated?
Current replacement cost minus depreciation
An insured’s business is damaged by a fire, and temporarily shut down for repairs. As a result, the insured suffers loss of income. What type of loss is the loss of income?
Indirect or consequential
If an insured peril was the proximate cause of loss, what type of loss is it?
Direct
What is a risk?
Uncertainty of loss
What provision states that if a policy allows for greater benefits than the financial loss incurred, the insured may be compensated only for the amount lost?
Indemnity
A tornado that destroys a property would be an example of what?
Peril
In property insurance, when must insurable interest exist?
At the time of loss
What provision defines how a policy will respond if there is more than one insurance policy written on the same risk?
Other Insurance
In commercial property policies, who has control of the policy, and who can cancel it?
First named insured
What are the four elements of an insurance contract?
Agreement (offer and acceptance), consideration, competent parties, and legal purpose
What is proof of loss?
A sworn statement from an insured notifying the insurer about a loss
What part of an insurance policy indicates the general rules or procedures that the insurer and insured agree to follow under the terms of the policy?
Conditions
In property and casualty policies, what is required for an assignment to be valid?
A written consent of the insurer
What are an insured’s duties after loss?
Protect the damaged property from further damage, prepare an inventory of damaged property, cooperate with the insurer in settling a loss, notify police in case of theft; and submit proof of loss
Who is an insured in property and casualty insurance?
Anyone covered under the policy, even if not specifically named
What is consideration on the part of the insurer?
A promise to pay in the event of a loss
In insurance contracts, when is the offer usually made?
When the insurance application is submitted
What section personalizes an insurance policy?
Declarations
Information about changes to the policy or return of premium can be found in what section of a policy?
Conditions
What process is used to settle a casualty claim when the insured and the insurer cannot agree?
Arbitration
In insurance contracts, when does acceptance usually occur?
When the insurer approves a prepaid application
When is an appraisal needed and how can it be requested?
If an insured and an insurer disagree about the value of a property loss, either party can make a written demand for an appraisal.
What does the term unilateral contract mean?
A unilateral contract is a one-sided contract. This means only one party makes an enforceable promise.
What is consideration in an insurance contract?
Consideration is something of value that each party gives to the other. Consideration on the part of the insurer is binding.
A Businessowners policy is sold as a package. What Does that mean?
Coverage includes both property and liability
What are some of the exclusions found in all 3 dwelling forms?
Earth movement, water damage, power failure ,neglect, war, nuclear hazard, intentional loss, freezing of plumbing, ordinance or law, and government action
What HO form covers condo unit owners
HO-6 ( Condo unit owners)
In dwelling policies, what is the purpose of the automatic increase in insurance endorsement that increases the amount of insurance by an annual percentage?
To offset the effects of inflation
Which dwelling form is called the broad form?
DP-2
Commercial property coverage can be written with one of 3 causes of loss forms, what are they?
Basic, Broad, and Special
What are the major coverages included in a homeowners policy?
Coverage A- Dwelling
Coverage B- Other structures
Coverage C- Personal Property, and coverage
Coverage D- Loss of Use
What are the 5 coverages of dwelling policies?
Coverage A - Dwelling
Coverage B - Other Structures
Coverage C - Personal property coverage
Coverage D - Fair rental value
Coverage E - Additional living expenses
