Insurance Coverage Basic Terms Flashcards
Indemnity
to make whole. Provide payment of benefits to restore the insured’s economic loss
Limit of Liability
the total amount the insurer will pay for an insured risk
Premium
set cost of insurance coverage paid by the policyholder to the insurer
Deductible
the amount the insured must pay before the insurer will pay a claim
Coinsurance
A cost sharing mechanism between the insurer and the insured in a medical insurance trasaction. Example, 80/20 rule. Insurance pays 80% while insured pays 20%
claim
The insured’s notification to the insurer that a payment is requested for a covered loss
Contract
is a leagally binding agreement between tow or more parties where a promis of benefits is exchanged for valuable consideration. it contains four elements; agreement, consideration, competent parties, legal purpose
Agreement
made up of the offer and acceptance. and applicant submits an application with premium
Consideration
an exchange of value between parties of the contract
competent parties
must be of legal age, mentally capable of understanding the terms, and not influenced by drugs or alcohol
Legal Purpose
must no be against the law
Insuring clause
is the insurer’s promise to pay covered losses as long as the insured pays the premiums and abides by the terms and conditions
Representations
are statements made by the insured, to the best of his knowledge
Misrepresentations
are intentional misstatements made by the insured
warranties
statements that are guaranteed to be true and are part of the legal contract
Concealmetn
withholding information material to the risk
Fraud
intentional misrepresentation or concealment of material fact made by one party in order to cheat another party out of something that has economic value
Waiver
intentionally or voluntarily surrendering a known right
Estoppel
legal process of preventing one party from reclaiming a right that was waived
Rescission
material misrepresentation of concealment
Subrogation
right of the insurer to assume the rights of the insured and sue the responsible third party for damages inflicted upon the insured
Controlled Business
the amount of insurance issued by a producer in which most states limit the amount that may be written. if premiums or commissions on controlled business exceed a certain percentage, the producers license may be suspended, revoked or not renewed
Advertising
information must be truthful, clear, accurate, relevant. testimonials must be genuine and current
Applicant
the person applying for the policy who fills out the application to be submitted
