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