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Risk, Loss & Limits
Ga P& C Insurance Exam - Risk, Loss & Limits
| Answer | |
|---|---|
| What type of risk implies a chance to lose or gain $? | speculative |
| What type of risk implies a chance for loss only (no gain)? | pure |
| What type of risk do ins. co's cover? | pure |
| To indemnify a victim is to pay him/her back without what? | gain or profit |
| Catastrophic losses must be what? | predictable |
| If a house worth $100k suffers a $20k loss and owner does NOT do repairs, what is the risk value of the house after the loss? | $80k |
| What is the $ set aside by ins. co.'s to pay claims? | Loss Reserve |
| What is the chief parameter of a loss reserve? | it never exceeds the max limit to be paid for potential losses |
| The burden of proof for establishing an insured's insurable interest in a loss is with whom? | the insured |
| If 2 people own a house worth $100k with equal 0.50 share, insured at $100k in one person's name and the house burns down, then how much will be paid to insured? | $50k (paid by named insured and share % of risk) |
| What type of indemnity / loss payment pays full cost without regard to depreciation? | replacement cost |
| What type of indemnity pays replacement cost minus depreciation? | Actual Cash Value (ACV) |
| Fine arts are irreplaceable so losses are paid according to what? | market value |
| What is used to separate expensive pers. prop. from regular pers. prop? | Personal Articles Floater |
| What law states that a total loss to a structure by fire must be paid to policy limits regardless of structure value? | Valued Policy Law |
| What is the main implication of the Value Policy Law for insurers? | It is vital to insure structures at their proper value in case of total loss to fire requiring max limit payment. |
| What type of cause of a loss is not listed on a policy but still covered? | Proximate cause |
| When there is an unbroken chain of perils caused by one another, a loss is paid according to which peril? | Dominant peril |
| When figuring payment for a loss, a liab. policy pays up t the limit according to what? | per occurrence of a loss (not per person) |
| In a liab. policy with split limits of $100k / $300k / $100k where insured has a single wreck that damages two dif. vehicles for a total of $150k, how much total will the policy pay victims? | $100k (still per occurrence) |
| What is the term for the max amount an ins. policy can pay in any single policy term regardless of # claims? | Aggregate limit |
| When can an exhausted aggregate limit be replenished? | only at time of policy renewal |
| When will a property loss be paid according to coinsurance methods? | When the property is insured at <80% value and a partial loss occurs |
| What is the formula for calculating loss payments via coinsurance? | = (policy limit / 80% value of property) x amount of loss |
| What are the three main char. of an accident? | 1. sudden 2. unexpected 3. unplanned |
| What is the term for an ins. co.'s right to collect damages from a 3rd party when that 3rd party is responsible for the ins. co.'s loss? | Subrogation |
| Are gradual , expected losses covered by ins policies? | No- only sudden, unexpected losses |
Created by:
jkbick
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