Property Chapter 1- Ins. Terms and related Concepts Flashcards
(19 cards)
Risk
uncertainty of loss.
Insurance
a transfer of risk from the insured to the insurer.
Pure Risk
there is no chance of gain. Pure risk is insurable.
Speculative Risk
there is a chance of a loss or a gain. Speculative risks are not insurable.
A Hazard
something that increases the risk.
The Principle of indemnity
governs property and casualty policies. It states that the purpose of the policy is to restore the insured financially to where they were prior to their loss.
Insurable Interest
must exist on a casualty policy at time of loss in order for the policy to provide coverage.
The Law of Large Numbers
used to predict the likelihood of loss.
Negligence, what is it grounds for?
a tort, or a civil wrong; it is grounds for a lawsuit.
Actual Cash Value
replacement cost minus depreciation.
Negligence Def.
the failure to act as a reasonable person would in the same set of circumstances.
An Occurrence
happens over a period of time.
What ways can a Binder be accepted?
Oral or Written
Binder Cov. Until?
provides coverage until the policy is issued.
What does a Binder inc.?
includes all coverages provided by the policy.
A Warranty
a literal truth
Representation
a substantial truth.
In insurance, statements of the applicant/policyowner are representations – true to the best of their knowledge.
Concealment
an omission of a material fact.
What are the INSURER’s RIGHTS?
has the right to sue a negligent third party for damages paid to an insured under the concept of subrogation.
