Chapter 9 Flashcards
(15 cards)
Claims process
An insurance policy is asked to fulfil its promise. Provide indemnity or restitution for some type of loss.
Losses covered by insurance may be direct or indirect.
The value and quality of an insurance product is proven by the claims service provided.
Third party
A claimant under a liability policy so called because that party is not one of the parties (insured or insurer) who has entered into the insurance contract that pays the claim.
Direct loss
Damage to the property by direct action of a peril insured against as distinguished from contingent or indirect damage.
Indirect loss
Loss resulting from direct damage to property for example income and expense loss resulting from inability to use damaged property.
Forfeiture
The loss of a right as a result of the non-performance of some obligation or condition.
You don’t do what you were told to do. Eg repair vehicle before MPI does an estimate.
Prescription
Time period when an insured can submit a claim.
Eg MPI 2 years from date of loss.
Salvage
Value left in severely damaged property.
Eg - parts from the car
Subrogation
The legal process an insured rights of recovery to the insurer that paid a loss.
Contribution
When two or more insurance companies divide a loss equally. Multiple policies cover the same loss.
Fire loss $200 000
Three companies each covered a $ amount or % - three companies will all together pay out the $200 000.
Coinsurance
What did you insure for, what did the broker tell you to insure for X the amount of loss = what the insurance company will pay.
Requires insurers to pay a portion of every loss if underinsurance exists.
Requires insurers to pay a portion of every loss if underinsurance exists.
Used on commercial items.
Pick a % or an amount. There is a formula.
Companies use this to save on premiums
This formula only applies when you do NOT insure what the broker tells you to insure for.
Insurance $200 000
Value $300 000
Coinsurance amount 80%
Loss $100 000
80% of $300 000 =$240 000
Formula
$200 000 (did)
$240 000 (should) x $100 000 =$83 333.33
Insurer pay $83 333insured will pay $16 667
Claims process
Insured reports the loss
Check of policy coverage
If loss is not covered claims handler may advise insure.
Adjuster and the claim
Verifies policy coverage
Investigates the loss
Evaluates and assesses damages
Negotiates as necessary or denies the claim.
Arrived at a settlement
Recommends payment.
Statue of limitations
A law that determines the time period within which parties can take a specific legal action to enforce their rights. This time period usually begins to run when the injury or damage occurs or was discovered.
Attest
To swear or declare either verbally or in writing that a particular document or testimony about an event is a true and accurate representation of the facts. The witnessing of signatures.
