INSURANCE TERMS AND RELATED CONCEPTS- CHAPTER QUIZ

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

Stated amount

What type of compensatory damages will pay for pain and suffering and disfigurement?

General

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

An additional loss that results from a direct loss of property is called a/an

Indirect loss

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

Law of large numbers

Losses caused by continuous or repeated exposure to conditions resulting in injury to persons or damage to property that is neither intended nor expected is the definition of which of the following terms?

Occurrence

A situation in which a person can only lose or have no change represents

Pure risk

Which of the following is used in the formula for calculating the actual cash value of a property?

Replacement cost

Which of the following best describes negligence?

The failure to use reasonable and prudent care

Which of the following best expresses the purpose of a stated value contract?

To pre-establish the amount of coverage available for property items that are difficult to value

What are the two types of compensatory damages?

special and general

The policy provision found in property insurance policies that prevents the insured from collecting twice for the same loss is called

subrogation