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Fundamentals of Insurance > Glossary Key Terms > Flashcards

Glossary Key Terms Flashcards

(90 cards)

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1
Q

Actual Cash Value (ACV)

A

Amount equal to replacement cost minus depreciation of the property at the time of loss

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2
Q

Additional Living Expenses

A

Costs over and above what it would have normally cost for the insured(s) to live had the loss not occurred

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3
Q

Agency Agreement

A

Agreement between the brokerage and the insurer outlining the broker’ binding authority

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4
Q

Agent

A

A person authorized to represent the insurer when dealing with 3rd parties (insurance matters only)

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5
Q

Bailee for Hire

A

Someone who has temporary possession of property of others for purpose other than sale & is compensated.

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6
Q

Binder or Insurance Binder

A

An agreement giving the insured temporary insurance protection pending the issuance of the actual policy.

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7
Q

Blanket coverage

A

Insuring all property within a specific class under 1 limit

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8
Q

Bodily Injury

A

Bodily injury, sickness of disease (including death resulting from the above 3)

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9
Q

Broker

A

Independent middle man who represents clients in helping them secure insurance from insurance companies/their agents

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10
Q

Burglary

A

Unlawful taking of property by someone who entered or exited the premises with evidence of forcible entry or exit (must have signs of force)

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11
Q

Commission

A

Compensation paid to broker for placing business with an insurer

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12
Q

Condition

A

A requirement to do or not to do something (imposed by the insurer on the insured)

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13
Q

Condominium

A

Units in a multi-unit building that’s owned separately

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14
Q

Consideration

A

An exchange of something of value

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15
Q

Contract

A

An agreement that is enforceable by law

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16
Q

Damages

A

Damages awarded to a person injured by a tort

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17
Q

Deductible

A

Amount the insured must pay before they are entitled to indemnity from the insurer (can be a fixed dollar amount or percentage of insured values)

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18
Q

Direct loss or direct damage

A

Damage immediately inflicted by a peril

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19
Q

Disability

A

Physical or mental inability to do work

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20
Q

Domestic water container

A

Apparatus for personal use for holding, heating, cooling or dispensing water

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21
Q

Dwelling

A

Building occupied as a private residence

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22
Q

Endorsement

A

Changes terms of the contract

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23
Q

Ethics

A

Related to moral character and whether the person conforms to professional standards of conduct

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24
Q

Exclusions

A

Occurrences or persons not covered by the policy

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25
Fiduciary
One who manages money, property, or affairs for another
26
Fire
Ignition resulting in destructive burning
27
Floater
Insurance meant to cover mobile property
28
Forthwith
Immediately (no delay)
29
Fraud
A deliberate deception with the intent to secure a benefit
30
Friendly Fire
Fire that is contained (i.e. camp fire )
31
Ground Water
Water in underground soil (i.e well water, underground stream, etc.)
32
Hazard
A condition that might cause a peril to occur
33
Head of Household
The one who earned the most money in the last year
34
Hold Harmless
A contract where 1 party assumes the legal responsibility of someone else
35
Hostile Fire
A fire that is uncontained, uncontrollable and becomes hostile or destructive
36
Indemnity
A sum paid in compensation. The principle of indemnity states that the victim will be compensated the actual amount of loss sustained (no more, no less)
37
Indirect loss or Indirect Damage
Losses not directly inflicted by the peril but rather those that occur as a consequence of a direct loss (aka consequential losses)
38
Insurable Interest
Someone who has insurable interest if they would suffer financially from a loss
39
Insurance
An undertaking by one person to indemnify another against loss or liability when a certain risk/peril damages an object of insurance (or, to compensate someone if some event occurs)
40
Loading
An additional rate charged on tope of the fire rate for providing additional coverage
41
Malicious Acts
A wrongful act done without legal justification/excuse
42
Material Change
A change, taking place after policy issuance, that increases chance of loss
43
Material fact
A fact that would have changed the insurance companies decision if they knew about it. (i.e decline, charge more or add conditions)
44
Minimum Retained Premium
Minimum amount of premium kept by insurer if the policy is cancelled midterm
45
Mobile Home
A home that is factory built with its own chassis and can be easily moved
46
Negligence
Failure to use the degree of care of a reasonable and prudent person given the circumstances
47
Non-proprietary Insurer
Insurers organized for reasons other than profit
48
Partial loss
A loss which does not completely destroy or render the property worthless or one that does not use up the applicable limit of insurance
49
Payee
Someone insurance would pay in the event of a loss to insured property
50
Peril
A cause of a loss
51
Personal Property
Property other than real estate- contents of an insured dwelling and other personal property used by insured(s) usually to maintain or own the dwelling.
52
Premises
Land within the lot lines
53
Premium
Money paid to insurer for insurance protection
54
Private Protection
Things done by the insured to prevent or reduce loss
55
Property Damage
Physical injury to tangible property including loss of use or loss of use of tangible property not physically injured.
56
Proprietary Insurer
A for-profit insurer
57
Pro rata
Proportional (i.e a pro rata refund)
58
Proximate Result
Injury or damage sufficiently related to event causing loss (i.e the house fire was the proximate result of arson )
59
Public Protection
Protection provided by outside sources (i.e proximity to a fire hydrant )
60
Pure Risk
Risk of financial loss with no chance of gain
61
Rebate
Discounting of premiums used by agents/brokers to induce the client to purchase from them
62
Relative
Someone connected by blood or family connection
63
Repair
To restore a damaged object/building to its original condition
64
Replacement cost
Cost to replace or repair the property (whichever is the lesser amount) on the same site with materials of same kind/quality for the same occupation
65
Retention
Paying for losses yourself (out-of-pocket)
66
Rider
Adds coverage to a policy
67
Risk
The chance of financial loss an object of insurance is exposed to
68
Risk control
Risk management technique of trying to reduce the frequency and severity of losses
69
Robbery
Criminal taking of property from another against their will using force or fear
70
Scheduled Coverage
Property is itemized on the policy with a specific limit for each
71
Short Rate
Pro rata minus an administration fee
72
Speculative Risk
Risks taken on voluntarily that could result in a gain or loss (ie investing)
73
Subrogation
The ability of an insurer to step into the shoes of the insured, after paying compensation, and assume their legal rights to sue the party the compensated party could have sued.
74
Surface Water
Water on ground where water doesn't normally accumulate (i.e not a lake)
75
Theft
Taking of property without the owner's consent
76
Third party
Someone not party to the insurance contract (but may have rights therein)
77
Tort
A legal wrong other than breach of contract for which the courts will provide remedy
78
Tortfeasor
Someone who commits a tort (defendant)
79
Total loss
Complete destruction of insured property
80
Underwriter
A person who assumes a risk in return for premium or an employee of the insurance company who accepts/rejects insurance applications
81
Unearned Premiums
Premiums collected in advance by the insurer that is subject to return if the policy ends before the policy period ends
82
Utmost Good Faith
Complete honesty and zero concealment
83
Vacant
Premises where the occupants have left with no intention to return (Typically contains little to no furniture or personal property)
84
Valued Policy
When the property is a total loss, the insurer will pay an amount equal to the previously agreed-upon value of that property
85
Vandalism
willful or ignorant destruction of property
86
Void
No legal force (Void Contract: a contract with no legal force)
87
Voidable or Voidable Contract
Able to be declared void (the wronged party-the one tricked, etc. - has the opportunity to void he contract after the fact)
88
Waive
To voluntarily give up a right
89
Waiver of Coinsurance
A commercial insurance clause that states a coinsurance penalty will not apply, even if the insured has not met the coinsurance requirement, if losses are less than 2% amount of insurance and $5000
90
Warranty
A promise that certain facts are true and will remain true

Fundamentals of Insurance (1 decks)

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