Flashcards in Common Policy Concepts Deck (23):
A situation in which a party experiences an economic advantage if an insured event does not occur or, conversely, economic harm if the event does occur.
In the agency relationship, the party that is authorized by the princi- pal to act on the principal’s behalf.
Someone who has the legal title to a property but is responsible that it be used, handled, and transferred solely for the benefit of the benefi- ciary.
The party temporarily possessing the personal property in a bailment.
The owner of the personal property in a bailment.
Insurance to value
Insurance written for an amount approximating the full value of the asset(s) insured.
The number of losses that occur within a specified period.
The amount of loss, typically measured in dollars, for a loss that has occurred
A provision in property insurance policies that encourages insureds to purchase an amount of insurance that is equal to, or close to, the value of the covered property.
A clause that requires the insured to carry insurance equal to at least a specified percentage of the insured property’s value.
Agreed Value optional coverage
Optional coverage that suspends the Coinsurance condition if the insured carries the amount of insurance agreed to by the insurer and insured.
Inflation guard protection
A method of protecting against inflation by increasing the applicable limit for covered property by a specified percentage over the policy period.
Peak season endorsement
Endorsement that covers the fluctuating values of business personal property by providing differing amounts of insurance for certain time periods during the policy period.
Actual cash value (ACV)
Cost to replace property with new property of like kind and quality less depreciation.
The cost to repair or replace property using new materials of like kind and quality with no deduction for depreciation.
The price at which a particular piece of property could be sold on the open market by an unrelated buyer and seller.
Broad evidence rule
A court ruling explicitly requiring that all relevant factors be consid- ered in determining actual cash value.
Agreed value method
A method of valuing property in which the insurer and the insured agree, at the time the policy is written, on the maximum amount that will be paid in the event of a total loss.
Functional valuation method
A valuation method in which the insurer is required to pay no more than the cost to repair or replace the damaged or destroyed property with property that is its functional equivalent.
Money claimed by, or a monetary award to, a party who has suffered bodily injury or property damage for which another party is legally responsible.
An insurance premium and loss exchange in which the insured pays the insurer premiums for low value losses, and the insurer pays the same dollars back to the insured, after subtracting expenses.
Self-insured retention (SIR)
A dollar amount specified in an insurance policy that the insured must pay before the insurer will make any payment for a claim.