Common Policy Concepts Flashcards Preview

Course 2 Vocab > Common Policy Concepts > Flashcards

Flashcards in Common Policy Concepts Deck (23):
1

Factual expectancy

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.

2

Agent

In the agency relationship, the party that is authorized by the princi- pal to act on the principal’s behalf.

3

Trustee

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.

4

Bailee

The party temporarily possessing the personal property in a bailment.

5

Bailor

The owner of the personal property in a bailment.

6

Insurance to value

Insurance written for an amount approximating the full value of the asset(s) insured.

7

Loss frequency

The number of losses that occur within a specified period.

8

Loss severity

The amount of loss, typically measured in dollars, for a loss that has occurred

9

Insurance-to-value provision

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.

10

Coinsurance clause

A clause that requires the insured to carry insurance equal to at least a specified percentage of the insured property’s value.

11

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.

12

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.

13

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.

14

Actual cash value (ACV)

Cost to replace property with new property of like kind and quality less depreciation.

15

Replacement cost

The cost to repair or replace property using new materials of like kind and quality with no deduction for depreciation.

16

Market value

The price at which a particular piece of property could be sold on the open market by an unrelated buyer and seller.

17

Broad evidence rule

A court ruling explicitly requiring that all relevant factors be consid- ered in determining actual cash value.

18

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.

19

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.

20

Damages

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.

21

Dollar trading

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.

22

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.

23

Insurable interest

An interest in the subject of an insurance policy that is not unduly remote and that would cause the interested party to suffer financial loss if an insured event occurred.