Insurance Terms and Related Concepts

An insured is planning on taking out a casualty insurance policy. One of the conditions of the policy allows the insurance company to inspect the insured's books at the end of the policy terms, this is know as?

Deposit Premium Audit

Replacement cost is defined as...

Full replacement of property at its current cost, new and without reduction for depreciation.

What type of compensatory damages will pay for mental anguish and disfigurement?

General damages

Which insurance principle states that if a policy allows for greater compensation than the financial loss incurred, the insured may only receive benefits for the amount lost?

Indemnity

To purchase insurance, the policy owner must have financial interest in the property being insured, this is called?

Insurable Interest

For the reported losses of an insured group to become more likely to equal the statistical probability of loss for that particular class, the insured must become

Larger

Which law is the foundation of the statistical prediction of loss upon which rates for insurance are calculated?

Law of large numbers

What is the basis of a claim for an insurance policy?

Loss

A property insurance policy that is not subject to any coinsurance requirements but has a set amount scheduled for the property would use what loss valuation method?

Stated amount

The policy provision that prevents the insured from collection twice on a loss is called ....

Subrogation

Loss Valuation

The process of determining how much insurance is required for a particular loss

A woman move to another state due to work, but she owns, maintains, and insures a home in her previous state. No one has lived in the residence for 3 months, but the owner stores furniture there. This home is an example of what?

Unoccupied

When a parent is required to pay damages for their children, this is an example of what kind of liability?

Vicarious Liability

What best defines an "accident"?

a sudden unplanned, unexpected event, not under the control of the insured resulting in either damage or injury that was neither planned or intended

This does not apply to the coinsurance clause

the coinsurance formula will also be applied to total losses

Payment for medical expenses, loss of wages, funeral expenses, or the cost to repair or replace damaged property are known as what type of compensatory damages?

Special Damages

How is actual cash value calculated?

Current Replacement cost - Depreciation = Actual Cash Value

The causes of loss insured against in an insurance policy are know as?

Perils

With respect to the business of insurance, a hazard is

any condition or exposure that increases the possibility of loss

Most insurance policies exclude losses by...

mysterious disappearance

A situation in which can only result in a loss or no change

pure risk

Peril is most easily defined as....

the causes of loss that are insured against in an insurance policy

What type of liability would a person who owns wild animals have?

Absolute Liability

The causes of loss insured against in an insurance policy are...

Perils

The legal process that gives the insurer, after the payment of loss, the right to seek recovery from a third party that was responsible for the loss is called...

Subrogation

A tornado that destroys a property would be an example of what?

A peril