Insurance terms

Question 1

What are 3 types of hazards

Answer 1

Physical, moral, and morale

Question 2

In property insurance, what is actual cash value?

Answer 2

Actual cash value is replacement cost @ the time of loss minus depreciation

Question 3

Insurance is a contract that protects the insured from what?

Answer 3

Loss

Question 4

How are direct and indirect losses related?

Answer 4

Direct losses can cause indirect causes

Question 5

What sublimit in a liability policy puts a ceiling on the payment for all claims that arise from a single accident?

Answer 5

Per occurrence

Question 6

An insurer discovers that an applicant for a policy has submitted a fraudulent insurance claim in the past. What type of hazard does this represent?

Answer 6

Moral

Question 7

What is subrogation?

Answer 7

An insurer’s legal right to seek dmgs from 3rd parties after reimbursing insureds for a loss

Question 8

What is the term for the causes of loss insured against in an insurance policy?

Answer 8

Peril

Question 9

What term defines an exact, direct, and uninterrupted cause of loss?

Answer 9

Proximate cause

Question 10

What type of limits of liability has the limits separately stated for different coverages?

Answer 10

Split limits

Question 11

What is the difference between vacancy and unoccupancy?

Answer 11

Vacancy is they’re gone, unoccupancy is when they still have stuff in the space

Question 12

What provision states that if a policy allows for greater benefits than the financial loss incurred, the insured may be compensated only for the amount lost?

Answer 12

Indemnity

Question 13

What is burglary?

Answer 13

Burglary is breaking and entering (forced entry) with fighting (felonious) intent

Question 14

An insured’s business is dmged by a fire, and temporarily shut down for repairs. As a result, the insured suffers lost of income. What type f loss is the loss of income?

Answer 14

Indirect (or consequential)

Question 15

Conditions that increase the chance of a loss are known as what?

Answer 15

Hazards

Question 16

A tornado that destroys a property would be an example of what?

Answer 16

Peril

Question 17

In property insurance, when must insurable interest exist?

Answer 17

At the time of loss

Question 18

What are the two types of compensatory dmges?

Answer 18

the 2 types of compensatory dmges are special and general.

Question 19

If an insured peril was the proximate cause of loss, what type of loss is it?

Answer 19

Direct

Question 20

What is a risk?

Answer 20

Uncertainty of loss

Question 21

A person who does not lock the doors to his or her house shows an indifferent attitude. What type of hazard does this represent?

Answer 21

Morale

Question 22

What is negligence?

Answer 22

Negligence is failure to act like a reasonable person.

Question 23

What is a deductible in an insurance policy?

Answer 23

A specified dollar amount that the insured must pay before the insurer will pay the policy benefits

Question 24

What term describes a loss caused by continuous exposure to a condition?

Answer 24

Occurrence

Question 25

What provision found in property policies prevents an insured from collecting twice for the same loss: once from the insurer and again from the third party?

Answer 25

Subrogation

Question 26

What law protects consumers from the circulation of inaccurate or obsolete information?

Answer 26

The Fair Credit Reporting Act

Question 27

A policy that covers all causes of loss except for those specifically excluded is known as what type of policy?

Answer 27

Open Peril

Question 28

How is the actual cash value of a property calculated?

Answer 28

Current replacement cost minus depreciation

Question 29

What determines an insurer's responsibility for payment, as stated in an insurance policy?

Answer 29

Limits of liability

Question 30

Wagering on a sporting event is known as what type of risk?

Answer 30

Speculative

Question 31

Both robbery and burglary can be considered what?

Answer 31

Theft

Question 32

What does indemnify mean insurance?

Answer 32

To restore an insured to the same financial status as before a loss

Question 33

Under absolute liability, does an injured party need to prove negligence?

Answer 33

No. Absolute liability exists when a condition or conduct is inherently dangerous, so proof of negligence is not required.

Question 34

What do individuals use to transfer their risk of loss to a larger group?

Answer 34

Insurance

Question 35

(Insurance Carried/Insurance Required) x Loss Amount =

Answer 35

Loss payment

Question 36

If a manufactured product is unsafe, what type of liability applies to the manufacturer?

Answer 36

Strict liability

Question 37

A situation in which a person can experience only a loss and no gain presents what type of risk?

Answer 37

Pure risk

Question 38

In property insurance, what is the purpose of a coinsurance clause?

Answer 38

To encourage insureds to insure property close to its value

Question 39

The reduction, decrease, or disappearance of value of the person or property insured in a policy is known as what?

Answer 39

Loss