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P&C Ins Terms
P&C Insurance Terms Flash Cards
| Question | Answer |
|---|---|
| What term defines an exact, direct, and uninterrupted cause of loss? | Proximate cause |
| In property insurance, when must insurable interest exist? | At the time of loss |
| What is subrogation? | An insurer’s legal right to seek damages from third parties after reimbursing insureds for a loss |
| What is negligence? | Failure to act as a reasonable, prudent person under given circumstances |
| What is a deductible in an insurance policy? | A specified dollar amount that the insured must pay before the insurer will pay the policy benefits |
| What is burglary? | A forced entry into another’s premises with felonious intent |
| Both robbery and burglary can be considered what? | Theft |
| What term describes a loss caused by continuous exposure to a condition? | Occurrence |
| What provision found in property policies prevents an insured from collecting twice for the same loss: once from the insurer and again from a third party? | Subrogation |
| What is the difference between vacancy and unoccupancy? | Vacancy refers to an insured structure in which no people have been living or working and no property has been stored for the specified period of time. |
| What is the difference between vacancy and unoccupancy? | Unoccupancy refers to an insured structure in which no people have been living or working within the required period of time, but some property is stored |
| If a manufactured product is unsafe, what type of liability applies to the manufacturer? | Strict liability |
| (Insurance Carried ÷ Insurance Required) x Loss Amount = | Loss payment |
| In property insurance, what is the purpose of a coinsurance clause? | To encourage insureds to insure property close to its value |
| An insured’s business is damaged by a fire, and temporarily shut down for repairs. As a result, the insured suffers loss of income. What type of loss is the loss of income? | Indirect or consequential |
| If an insured peril was the proximate cause of loss, what type of loss is it? | Direct |
| What law protects consumers from the circulation of inaccurate or obsolete information? | The Fair Credit Reporting Act |
| Under absolute liability, does an injured party need to prove negligence? | No. Absolute liability exists when a condition or conduct is inherently dangerous, so proof of negligence is not required. |
| How is the actual cash value of a property calculated? | Current replacement cost minus depreciation |
| Conditions that increase the chance of a loss are known as what? | Hazards |
| What are the two types of compensatory damages? | Special and general |
| What type of policy insures all property at multiple locations for a single amount? | Blanket policy |
| What sublimit in a liability policy puts a ceiling on the payment for all claims that arise from a single accident? | Per occurrence |
| What is the term for the causes of loss insured against in an insurance policy? | Peril |
| A situation in which a person can experience only a loss and no gain presents what type of risk? | Pure risk |
| What are the three types of hazards? | Physical, moral, and morale |
| What type of limits of liability has the limits separately stated for different coverages? | Split limits |
| The reduction, decrease, or disappearance of value of the person or property insured in a policy is known as what? | Loss |
| Insurance is a contract that protects the insured from what? | Loss |
| A tornado that destroys a property would be an example of what? | Peril |
| What does indemnify mean in insurance? | To restore an insured to the same financial status as before a loss |
| What do individuals use to transfer their risk of loss to a larger group? | Insurance |
| How are direct and indirect losses related? | Direct losses can cause indirect losses. |
| What is a risk? | Uncertainty of loss |
| What provision states that if a policy allows for greater benefits than the financial loss incurred, the insured may be compensated only for the amount lost? | Indemnity |
| A person who does not lock the doors to his or her house shows an indifferent attitude. What type of hazard does this represent? | Morale |
| An insurer discovers that an applicant for a policy has submitted a fraudulent insurance claim in the past. What type of hazard does this represent? | Moral |
| What determines an insurer’s responsibility for payment, as stated in an insurance policy? | Limits of liability |
| In property insurance, what is actual cash value? | Replacement cost at the time of loss, minus depreciation |
| Wagering on a sporting event is known as what type of risk? | Speculative |
| A policy that covers all causes of loss except for those specifically excluded is known as what type of policy? | Open peril (or special) form |
Created by:
Chase1life
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