Insurance Concepts
The purpose of the principle of indemnity is:
What is: insured should be restored to his approx. financial condition before the loss, no better, no worse.
Name the term/concept describing a situation in which someone exaggerates or overstates legitimate losses in order to get a bigger indemnification.
What is:
Soft Fraud
Name this term: when completing a new policy application, an insured fills out application using an incorrect date of birth because they like to appear younger than they really are...
What is...
misrepresentation
This part of the policy is where the insurer and the insured agree to what is covered and how.
What is:
Insuring Agreement
Civil law, whereby one citizen charges another for damages caused by a tortfeasor, is sometimes also referred to as what?
What is:
Tort Law
The statute of limitations is intended to what:
What is: restrict the amount of time a claimant has to file a lawsuit.
Name the term/phrase described as when a person, business, entity opts to try and save money by not purchasing insurance on asset/property it owns rather than purchasing insurance (risk transference)
What is:
Risk Retention
Temporary coverage for an insurance applicant until the policy is issued.
What is:
binder
Part of the policy which reflects policyholder/named insured as well as any other listed drivers, the property assets being insured, the coverages and limits of liability of each coverage, as well as the policy period/term.
What is:
Declaration page
A defense in which insurer refuses to pay anything if claimant was even partially liable for the loss...
What is:
Contributory Negligence
(Bonus Points: Tennessee is classified as what type of negligence state?)
An insurance policy is a unilateral contract. Which means what exactly?
What is: only one party has an obligation to perform.
This equals replacement cost minus depreciation
What is: Actual Cash Value (ACV)
A cost/damage not part of the actual direct damage to claimant's property, but is an economic consequence of that damage
What is:
Indirect loss
This section of a policy qualifies or limits an insurer's promise to pay or perform
What is:
Conditions
James is walking down the road in Florida when Andrea, a transplant yacht crewman who is also an uninsured motorist, strikes James with her car.
Thankfully, James lives to tell the horrific tale of watching Andrea's SUV grille come into his peripheral vision, then instantaneously flipping over the hood, in what seemed to be slow motion, and while backflipping, also catching a glimpse of Andrea as she was TikTok-ing herself; completely unaware to flipping James over her hood while "barely moving" at 35-40 MPH.
Our fortunate fellow James still suffers $12,000 in injuries from the accident. He has PIP (personal injury protection) of $10,000 from his own auto insurance policy, which immediately pays him the full amount.
By accepting, James has waived the right to sue Andrea for no more than this amount?
What is: $2,000
Also known as absolute risk, this refers to situations that are beyond control and result in either a total loss or no loss at all, with no potential for profit or gain
What is Pure Risk
Assumed based on someone's (person/entity) actions.
What is: implied waiver
This can be especially problematic when it comes to the insurer in a claim scenario, especially in terms of coverage, and if insurer has not taken appropriate relevant action in past, but now in same/similar situation in current claim and wanting to take the action...
Example: an insurer accepts insured late premium payment after customer's policy lapses, and then pays a claim that happened during that timeframe where lapsed... if we know the facts which would have made denial appropriate but didn't deny coverage then, than we may not be able to deny coverage now either even if wanting...
A guarantee that certain conditions will be met.
If the policyholder violates this, typically the insurer can void the policy.
What is: warranty
This provision prohibits the policyholder from abandoning damaged property to the insurer.
What is:
Abandonment Clause
An insurance company formed in a different U.S. state doing business in <your> state, is referred to as what?
What is:
a foreign insurer
Name the term which applies to following concept: When applying for coverage for an insurance contract, ___________ this term is used to describe how one must be completely honest about how much risk insurer would take on when issuing a policy to the insured.
What is Utmost Good Faith
Term or phrase used in insurance concepts that which describes a demonstration of consciously risky behavior which is deliberate and likely fraudulent.
What is:
A moral hazard
This term describes an unbroken chain of events' and the primary cause of damages.
A dispute resolution method which allows claimant (first party) and the insurer to hire a third-party who will complete their own assessment and work with the other side's third-party and work to reach a resolution outside of formal litigation which is costly in terms of resources and time.
Appraisal Clause
Property coverage for people/business not eligible for HO insurance or do not need extensive coverage of HO policy.
What is:
Dwelling Policy (DP)