Terms

Question 1

The abdication of insured property into the hands of another, or into the possession of no one in particular.

Answer 1

Abandonment

Question 2

A type of liability that occurs due to extremely dangerous operations, such as the use of explosives or working at extreme heights.

Answer 2

Absolute Liability

Question 3

An unplanned, unforeseen event which occurs suddenly and at a specific place.

Answer 3

Accident

Question 4

The required amount to pay damages or for property loss, which is calculated based on the property’s current replacement value minus depreciation.

Answer 4

Actual Cash Value ( ACV)

Question 5

Individuals or business that are not named as the insured on the declaration page, but are protected by the policy, usually in regard to a specific interest.

Answer 5

Additional Insureds

Question 6

A provision in an insurance policy that allows for more coverage for specific loss expense without increase in premium.

Answer 6

Additional Coverage

Question 7

A contract offered on a “take-it-or-leave-it” basis by an insurer, in which the insured’s only option is to accept or reject the contract, Any ambiguities in the contract will be settled in favor of the insured,

Answer 7

Adhesion

Question 8

An insurance company authorized and licensed to transact business in a particular state.

Answer 8

Admitted Insurer

Question 9

The tendency of risks with higher probability of loss to purchase and maintain insurance more often than the risks who present lower probability.

Answer 9

Adverse Selection

Question 10

An individual who is licensed to sell, negotiate, or effect insurance contracts on behalf of an insurer.

Answer 10

Agent

Question 11

The maximum limit of coverage available under a liability policy during a policy year regardless on the number of claims that may be made of the number of accidents that may occur.

Answer 11

Aggregate Limit

Question 12

A property policy with a provision agreed upon by the insurer and the insured as to the amount of insurance that represents a fair valuation for the property at the time the insurance is written

Answer 12

Agreed Value

Question 13

A contract in which the participating parties agree to exchange unequal amounts. Insurance contracts are aleatory in that the amount the insured will pay in premiums is unequal to the amount the insurer will pay in the event of a loss.

Answer 13

Aleatory

Question 14

An insurance company that is incorporated outside the United States.

Answer 14

Alien Insurer

Question 15

The appearance or the assumption of authority based on the actions, words, or deeds of the principal of because of circumstances the principal created.

Answer 15

Apparent Authority

Question 16

An assessment of property to determine either the correct amount of insurance to be written or the amount of loss to be paid.

Answer 16

Appraisal

Question 17

Method of claim settlement used when the insured and insurer cannot agree upon the amount of loss.

Answer 17

Arbitration

Question 18

The transfer of a legal right or interest in an insurance policy. In property and casualty insurance, assignments of policies are usually valid only with prior written consent of the insurer

Answer 18

Assignment

Question 19

An insurance company that has qualified and received a Certificate of Authority from the department of Insurance to transact insurance in the state.

Answer 19

Authorized insurer

Question 20

A land motor vehicle, trailer of semi trailer designed for use on public roads, including attached machinery of equipment; auto does not include mobile equipment.

Answer 20

Auto

Question 21

A method of dealing with risk by deliberately keeping away for it.

Answer 21

Avoidance

Question 22

A person or entity that has possession of personal property entrusted to him/her by the owner.

Answer 22

Bailee