Insurance Terms & Related Concepts

What do individuals use to transfer their risk of loss to a larger group?

Insurance

All of the following are factors in the determination of actual cash value EXCEPT:

Insurance Premium Paid

*Insurance is the transfer of...

Risk

An insurance policy specifies that it will pay $600 for a specific loss. The policy owner suffers a loss of $535. How much will the policy pay?

$535

When the amount of insurance written in a property policy is not subject to any coinsurance provision and that amount is paid in the event of a covered loss the coverage is said to be written as...

Stated Amount

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

With respect to the business of insurance, a hazard is...

Any condition or exposure that increases the possibility of loss

Which of the following definitions best defines the term "accident"?

A sudden, unplanned and unexpected event, not under the control of the insured, resulting in injury or damage neither expected nor intended

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 group must become...

Larger

Which of the following is defined as the legal liability arising from physical damage to the belongings of others caused by the negligence of an insured?

Property Damage Liability

What is the purpose of the coinsurance clause found in property insurance policies?

Encourage the insured to insure the property closer to its full value

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

Law of Large Numbers

Insurance is a contract by which one seeks to protect another from...

Loss

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

Pure Risk

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

The process of determining the premium charged and how much insurance is required for a particular loss is called?

Loss Valuation

For the purpose of insurance, risk is defined as...

The uncertainty or chance of loss

A man is working on the rood of his house, and his neighbor is watching from the ground. When roof shingles are thrown off the roof, they hit the neighbor in the face, injuring his eye. Which best classifies the homeowners legal liability?

Bodily Injury

*If a liability policy had split limits 50/100/30, what is the maximum amount that would be payable in the event of injury yo a single person?

$50,000

For insurance purposes, when an insured loses property to another because the person used violence to gain the property, this is defined as...

Robbery