B&C Chapter 12: Commercial Insurance

Question 1

automobile insurance policy

Answer 1

contract between an individual and an insurance company whereby the individual pays a premium and, in exchange, the insurance company agrees to pay for specific car-related financial losses during the term of the policy; typically includes medical-payments coverage and personal injury protection (PIP) to reimburse health care expenses sustained as the result of injury from an automobile accident.

Question 2

base period

Answer 2

period of time that usually covers 12 months and is divided into four consecutive quarters.

Question 3

commercial health insurance

Answer 3

covers the medical expenses of individuals groups; premiums and benefits vary according to the type of plan offered.

Question 4

disability income insurance

Answer 4

see disability insurance

Question 5

disability insurance

Answer 5

reimbursement for income lost as a result of a temporary or permanent illness or injury.

Question 6

indemnity insurance

Answer 6

compensates policyholders for actual economic losses, up to limiting amounts on insurance policy, and it usually requires the insured to prove losses before payment is made (e.g., automobile insurance).

Question 7

liability insurance

Answer 7

policy that covers losses to a third party caused by the insured, by an object owned by the insured, or on the premises owned by the insured.

Question 8

lien

Answer 8

pledges or secures a debtor’s property as security or payment for a debt; may be used in a potential liability case, but use varies on a federal and state basis.

Question 9

subrogation

Answer 9

process of the third-party payer recovering health care expenses from the liable party.