Property and Casualty Insurance Terms and Related Concepts

Question 1

What type of policy insures all property at multiple locations for a single amount?

Answer 1

Blanket policy

Question 2

WAGERING on a SPORTING EVENT is known as what TYPE OF RISK?

Answer 2

Speculative

Question 3

If an INSURED PERIL was the PROXIMATE CAUSE OF LOSS, what TYPE OF LOSS is it?

Answer 3

Direct

Question 4

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 4

Indemnity

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

A policy that covers ALL CAUSES OF LOSS except for those SPECIFICALLY EXCLUDED is known as what type of policy?

Answer 6

Open peril (or special) form

Question 7

A tornado that DESTROYS A PROPERTY would be an example of what?

Answer 7

Peril

Question 8

Uncertainty of loss

Answer 8

RISK

Question 9

What PROVISION found in property policies PREVENTS AN INSURED from COLLECTING TWICE for the SAME LOSS: once from the INSURER and again from a THIRD PARTY?

Answer 9

Subrogation

Question 10

What law PROTECTS CONSUMERS from the CIRCULATION OF INACCURATE OR OBSOLETE INFORMATION?

Answer 10

The Fair Credit Reporting Act

Question 11

What term defines an EXACT, DIRECT, and UNINTERRUPTED CAUSE OF LOSS?

Answer 11

Proximate cause

Question 12

In property insurance, what is ACTUAL CASH VALUE?

Answer 12

REPLACEMENT COST at the TIME OF LOSS, minus DEPRECIATION

Question 13

What does INDEMNIFY mean in insurance?

Answer 13

To RESTORE AN INSURED to the SAME FINANCIAL STATUS as BEFORE A LOSS

Question 14

What do INDIVIDUALS use to TRANSFER THEIR RISK OF LOSS to a LARGER GROUP?

Answer 14

Insurance

Question 15

INSURANCE is a CONTRACT that PROTECTS THE INSURED from WHAT?

Answer 15

Loss

Question 16

What are the TWO TYPES of COMPENSATORY DAMAGES?

Answer 16

SPECIAL and GENERAL

Question 17

How are DIRECT AND INDIRECT LOSSES related?

Answer 17

DIRECT LOSSES can CAUSE indirect losses

Question 18

CONDITIONS that INCREASE THE CHANCE OF A LOSS are known as what?

Answer 18

Hazards

Question 19

Both ROBBERY AND BURGLARY can be considered what?

Answer 19

Theft

Question 20

What are the THREE TYPES OF HAZARDS?

Answer 20

Physical
Moral
Morale

Question 21

An INSURED’S LEGAL RIGHT TO SEEK DAMAGES from THIRD PARTIES after REIMBURSING INSUREDS for a loss

Answer 21

SUBROGATION

Question 22

What TERM describes a loss CAUSED BY CONTINUOUS EXPOSURE TO A CONDITION?

Answer 22

Occurrence

Question 23

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 23

Morale

Question 24

Under ABSOLUTE LIABILITY, does an INJURED PARTY need to PROVE NEGLIGENCE?

Answer 24

No. ABSOLUTE LIABILITY exists when a CONDITION OR CONDUCT is INHERENTLY DANGEROUS, so PROOF OF NEGLIGENCE is NOT REQUIRED

Question 25

In PROPERTY INSURANCE, what is the PURPOSE OF COINSURANCE CLAUSE?

Answer 25

To ENCOURAGE INSUREDS to insure property CLOSE TO ITS VALUE

Question 26

In PROPERTY INSURANCE, WHEN must INSURABLE INTEREST EXIST?

Answer 26

At the TIME OF LOSS

Question 27

The formula for Loss Payment

Answer 27

( Insurance Carried / Insurance Required ) x Loss Amount =

Question 28

( Insurance Carried / Insurance Required ) x Loss Amount =

Answer 28

The formula for Loss Payment

Question 29

What TYPE OF LIMITS OF LIABILITY has the LIMITS SEPARATELY STATED for DIFFERENT COVERAGES?

Answer 29

Split limits

Question 30

FAILURE TO ACT as a REASONABLE, PRUDENT PERSON under GIVEN CIRCUMSTANCES

Answer 30

NEGLIGENCE

Question 31

A SITUATION in which a person can experience ONLY A LOSS and NO GAIN presents what TYPE OF RISK?

Answer 31

Pure risk

Question 32

The REDUCTION, DECREASE, OR DISAPPEARANCE OF VALUE of the PERSON OR PROPERTY in a policy is KNOWN AS WHAT?

Answer 32

Loss

Question 33

What is the TERM for the CAUSES OF LOSS INSURED AGAINST in an INSURANCE POLICY?

Answer 33

Peril

Question 34

An INSURED’S BUSINESS is DAMAGED BY A FIRE, and TEMPORARILY SHUT DOWN for REPAIRS. As a result, the insured suffers LOSS OF INCOME. What TYPE OF LOSS is the LOSS OF INCOME?

Answer 34

INDIRECT or CONSEQUENTIAL

Question 35

If a MANUFACTURED PRODUCT is UNSAFE, what TYPE OF LIABILITY APPLIES to the MANUFACTURER?

Answer 35

Strict liability

Question 36

What determines an INSURER’S RESPONSIBILITY FOR PAYMENT, as STATED in an INSURANCE POLICY?

Answer 36

Limits of liability

Question 37

A FORCED ENTRY into ANOTHER’S PREMISES with FELONIOUS INTENT

Answer 37

What is BURGLARY?

Question 38

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 38

Moral

Question 39

What is the difference between vacancy and unoccupancy?

Answer 39

VACANCY refers to an INSURED STRUCTURE in which NO PEOPLE have been LIVING OR WORKING and NO PROPERTY HAS BEEN STORED for a SPECIFIED PERIOD OF TIME. UNOCCUPANCY refers to an INSURED STRUCTURE in which NO PEOPLE have been LIVING OR WORKING WITHIN A REQUIRED PERIOD OF TIME, but some PROPERTY IS STORED.

Question 40

refers to an INSURED STRUCTURE in which NO PEOPLE have been LIVING OR WORKING and NO PROPERTY HAS BEEN STORED for a SPECIFIED PERIOD OF TIME.

Answer 40

VACANCY

Question 41

refers to an INSURED STRUCTURE in which NO PEOPLE have been LIVING OR WORKING WITHIN A REQUIRED PERIOD OF TIME, but some PROPERTY IS STORED.

Answer 41

UNOCCUPANCY

Question 42

What is a DEDUCTIBLE in and INSURANCE POLICY?

Answer 42

A SPECIFIED DOLLAR AMOUNT that the INSURED MUST PAY before the INSURER WILL PAY THE POLICY BENEFITS

Question 43

A SPECIFIED DOLLAR AMOUNT that the INSURED MUST PAY before the INSURER WILL PAY THE POLICY BENEFITS

Answer 43

DEDUCTIBLE

Question 44

(Current replacement cost) - (depreciation)

Answer 44

How is the ACTUAL CASH VALUE of a property CALCULATED?

Question 45

How is the ACTUAL CASH VALUE of a property CALCULATED?

Answer 45

(Current replacement cost) - (depreciation)