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Property & Casualty

Property & Casualty concepts

TermDefinition
Insurance A contract that binds the insurer to compensate the insured against specified types of loss in return for money
Indemnity To restore an insured to the same financial position that existed before the loss occurred
Loss The source of a claim for damages under an insurance policy
Direct physical loss A loss in which damage occurs as the result of an occurance without an intervening cause
Intervening cause (proximate cause) An event that interrupts the chain of causation by providing an independent cause of the final result
Indirect or consequential loss Damage occurs as the result of a direct loss
Risk The property or party that is insured. The uncertainty of loss
Pure risk Involves only the chance of loss
Speculative risk Involves the chance of either loss or gain
Negligence The failure to do something reasonable
Self insurance Making financial preparations to meet risks by setting aside funds in advance to meet estimated losses.
Applicant The person who applies for a policy
Insurer Another name for an Insurance company
Named insured The person listed as an insured in the declaration page
First named insured This is the first insured listed and the person who receives all correspondence
Additional insured This is entity or individual other than the named insured who qualifies as an insured under the policy. Ex mortgage company
Agent /producer An individual who is state licensed to sell or solicit insurance for one or more companies. Must be authorized by an insurer
Policy owner The person who appless for the policy, is responsible for the premium , has the right to make changes on policy
Binder A written or oral contract made by an agent that puts a policy immediately and temporarily in force
Certificate of insurance Document issued by insurance company that is used to verify insurance
Endorsement An attachment to a document that amends or adds a provision to sn insurance policy
Waiver The voluntary abandonment of a known or legal right
Estoppel The idea that once a fact has been admitted to be true it can no longer be denied
Accident An unforseen or unintentional event
Occurrence An event including continuous and repeated exposure to conditions which results in bodily injury or property damage neither expected or intended
Exposure The condition of being at risk for financial loss due to hazards
Hazard Increases the chance of loss
Physical hazard Created by the use, condition of property. Ex worn steps
Moral hazard Created by the insureds habits , such as dishonesty
Morale hazard Created by insureds attitude , such as indifference
Legal hazard Created when legal authority in a certain situation is unclear
Peril The cause of a loss
Named-peril policy Only provides insurance for perils that are specifically listed or named in a policy
Open.-peril policy Provides insurance for all perils except the ones specifically excluded
NAIC ( national association of insurance commissoners) All state directors an commissoners are members. They do not pass laws, but enforce them in their state
Tort A civil wrong that unfairly causes someone else to suffer loss or harm resulting in legal liability for the person who commits the act
Coinsurance Requires a specific amount of insurance based on the value of the insureds property. Mostly used in commercial insurance Amount of coverage ÷ actual amount that should be covered× the amount of loss
Deposit premium Th initial amount of money needed to start a policy
Burglary Breaking and entering with felonious intent
Robbery Is the taking of property of another by force
Larceny Removal of another's property with the intent to permanently deprive them of it
Theft The unlawful taking of property
Mysterious disappearance Means personal property is missing , but there is no provable cause for the disappearance
Liability A legall or enforceable debt or obligation
Actual cash value Replacement cost minus depreciation
Avoidance (method of handling risk) Refraining from engaging in activities that are high risk
Retention Assuming responsibility for a loss
Sharing risk Spreading risk among several entities
Reduction Reduces the chance of loss by removing the hazards
Insurable risks Be accidental, measurable , predictable
Adverse selection The tendency of person who present a greater than average risk For loss
Reinsurance Insurance companies that insure other companies against catastrophic risk
Ceding insurer The insurer buying reinsurance
On behalf of Someone else other than the person experiencing the loss paying for the loss
Deductible The amount the insured must pay before the insurer will pay for a loss
Salvage Damaged property an insurer takes over to reduce its loss after paying a claim
Law of large numbers A theory that states it's more likely to predict a particular outcome as the number of units in a group increases
Insurable interest Concept that insurance can only be purchased when the applicant has potential for financial loss
Created by: Jenny10795