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Risk, Loss & Limits

Ga P& C Insurance Exam - Risk, Loss & Limits

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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