Insurance CHAPTER 2

Appraisal

A policy condition that stipulates how the amount of damaged or lost property will be determined if the insured and the principal do not agree on the value of a property loss is known as

Proof of loss

Before an insurer will pay any loss under a policy, what is usually required from the insured?

Definitions

Component of an insurance policy clarifies terms used in the policy.

Legal and not against public policy

For a contract to be enforceable by law, the purpose of the contract must be?

Consideration

If the insurer neglects to pay a legitimate claim that is covered under the terms of the policy, which insurance principle has the insurer violated?

Declarations

Mandatory part of an insurance policy that varies with each individual policy

Policy Limits

Maximum amount an insured may collect, or for which an insured is protected under the terms of the policy.

Marital Status

Not considered a source of insurability information by an insurer?

Endorsements

Printed addendums to a contract that are used to change the policy's original terms, conditions, or coverages.

In Writing

Proof of loss statement must be?

The Gramm-Leach-Bliley

Protect private customer information filed with a financial institution.

Additional or Supplementary Coverage

Provision in an insurance policy that provides an additional amount of coverage for specific loss expense, at no additional premium.

Declarations

Section of an insurance policy containing the basic underwriting information, such as the insured's name, address, amount of coverage and premiums, and description of insureds locations.

Binder

Temporary agreement issued by an agent or insurer providing temporary coverage until a policy can be issued.

Cancellation

Termination of an in-force insurance policy prior to the expiration date shown in the policy is known as?

Declarations

The part of a property policy that shows the amount of insurance, premium, and policy term is?

How parties to the contract must act following a loss.

The policy conditions define

$8,000

Using the pro rata method, if a property is covered by Company A for $20,000 and Company B covers the same property for $40,000, how much will Company A pay on a $24,000 loss?

The Fair Credit Reporting Act

What protects consumers against the circulation of inaccurate or obsolete personal or financial information?

Concealment

legal term for the intentional withholding of information of a material fact that is crucial in making a decision.

The Federal Fair Credit Report Act

Regulates consumer reports

Material misrepresentation

An insured stated on her application for life insurance that she had never had a heart attack, when in fact she had a series of minor heart attacks last year for which she sought medical attention. Why was she denied a death benefit claim?

4 essential elements

1. Agreement - offer and acceptance 2. Consideration 3. Competent parties 4. Legal purpose

When an insurer's underwriter approves coverage

In forming an insurance contract, when does acceptance usually occur?

The completed application is submitted

In insurance, an offer is usually made when?

Exclusions

Section of an insurance policy details the perils that are not insured against and what persons are not insured.

Insuring Agreement

Section of an insurance policy that establishes the obligation of the insurance company to provide the insurance coverages as stated in the policy.

Conditions

Section of an insurance policy that indicates the general rules or procedures that the insurer and insured agree to follow under the terms of policy.

Consideration

Something of value that is transferred between two parties to form a legal contract.

Consideration

When an insured makes truthful statements on the application for insurance and pays the required premium, it is known as

Arbitration

When the insured and insurer can't agree on how to settle a claim.

Warranty

Which of the following is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract?

Additional Coverage

Part of an insurance policy covers claims-related expenses, reasonable expenses incurred by an insured to protect damaged property from further loss, or defense expenses?

Conditions

Part of the policy that sets fourth the rules of conduct, duties, and obligations of the parties is called what?

Warranty

Statement guaranteed to be true, and if untrue, may breach an insurance contract.

Representations

Statements believed to be true to the best of one's knowledge, but are not guaranteed to be true.

Insurance Department

monitors the financial conditions of insurers. The insurers report to the state, not the policyholders.