which of the following refers to being restored to the financial condition you were in before a loss? - ANSWER-indemnification
mark incurred 8000$
... [Show More] damage to his car in an accident. he received 8000$ from his insurance company and 4000$ from the other driver. by receiving a profit from the loss, Mark is in violation of.. - ANSWER-principle of indemnity
the transfer of risk from one party to another is called - ANSWER-insurance
the principle of indemnity is designed to prevent - ANSWER-keeps the insured from making a profit from an insured loss.
the fee paid by the insured in exchange for an insurance policy is called a - ANSWER-premium
insurance - ANSWER-transfers risk of financial losses from one party to another
insured - ANSWER-individual or organization that pays premiums in exchange for protection
insurer - ANSWER-company group or government agency offering financial protection
insurance policy - ANSWER-a legally binding contract in which the insurer agrees to take on specified risks in exchange for the insured's premiums
principle of indemnity - ANSWER-restoration to previous financial condition; no more, no less.
what are the four qualifications of a contract - ANSWER-agreement, consideration, competent parties, and legal purpose. must be 18 years of age
what is not a requirement for a legally binding contract - ANSWER-notarization
when an insurer issues an insurance policy, the actual item, person or organization that is being insured is called the - ANSWER-the risk
what is a reserve, in insurance terms - ANSWER-a pool of collected premiums that the insurer sets aside to pay claims
aleatory - ANSWER-of or pertaining to accidental causes; of luck or chance; unpredictable
unilateral - ANSWER-one-sided
utmost good faith - ANSWER-both parties must act honestly and openly in order for the contract to be valid
adhesion - ANSWER-one party sets the terms of the contract; the other may simply agree or not agree
unilateral - ANSWER-only the insurer makes a promise to act; the insured can void contract at any time
personal - ANSWER-the insured person is protected from losses, not the covered property.
conditional - ANSWER-the insurer must only honor the contract if the insured meets certain conditions.
aleatory - ANSWER-the exectution of the contract depends on an unknown future event.
an insurance applicat revealing his convictions for drunk driving to an insurer is an example of - ANSWER-utmost good faith.
tom purchases a new car from his local car dealer. he also decides to get insurance coverage that will pay to repair the car if he were to get into an accident. this is because tom wants to protect - ANSWER-his own financial interest in the car.
tom decides to purchase an insurance policy to protect his home. according to the definition of a personal contract, which of the following most accurately describes what tomes insurance actually protects - ANSWER-toms financial interest in thee home
what is not true about an aleatory contract - ANSWER-in an aleatory contract, the amount of benefit to the insured and insurer is equal.
what does D.I.C.E stand for? - ANSWER-declarations page (and definitions), insuring agreement, conditions and exclusions (and endorsements)
'we will provide the insurance described in this policy in return for the premium and compliance with all applicable provisions of this policy.' in which section of the insurance policy might this statement be found? - ANSWER-insuring agreement
in which section of the policy might you find the following statement ? 'damage to insured property must be reported within 15 days of the damaging occurrence.' - ANSWER-conditions
which of these causes of loss is least likely to be covered by a typical insurance policy? - ANSWER-nuclear hazard
edna loses some of her property in a hailstorm. when an adjuster comes to investigate the loss, he gives an estimate that edna thinks is far too lowl. as negotiations continue, neither edna nor the adjuster will budge. where in Ednas policy would you find the procedure to follow in this situation? - ANSWER-conditions
conditions - ANSWER-lists requirements that the insured must meet for coverage to apply
declarations - ANSWER-information that makes the policy unique to a specific insured.
exclusions - ANSWER-causes of loss or items of property that are not covered by the policy
endorsements - ANSWER-add, reduce, or change the coverage of the policy in some way
definitions - ANSWER-explains exactly what specific words mean in the context of the policy
insuring agreement - ANSWER-the essence of the contract. often only a single sentence
Xavier owns a small insurance company. recently the company won a bid to insure a new housing development in Omaha, NE. his company can hangle any claims that arise, but if a series of tornados were to tear through the area, destroying the entire development, Xaviers company would be hit extremely hard financially. which type of insurer could help Xaviers company protect itself the most from this potential loss? - ANSWER-a re-insurer
what type of insurance provider operates on a for-profit basis? - ANSWER-mutual insurance companies
what type of insurer sells shares to the public and is owned by its shareholders - ANSWER-a stock insurance company
publicly traded acme insurance is listed on the new York stock exchange, and would therefore be considered - ANSWER-a non-participating insurance company.
stock insurance companies - ANSWER-always for profit, publicly traded, 'non-participating' insurers: no dividends go to policy holders
mutual insurance company - ANSWER-owned by policy holders (no shareholders), elect board directors, participate in dividends
re-insurer - ANSWER-an insurer that provides insurance for other insurers
reciprocal insurer - ANSWER-a group of ppl or organizations that insure each other. always non- profit.
government insurer vs private - ANSWER-government: mandatory, run by government, suited to needs of general public
private: offer insurance products based on customer preferences
commercial insurer vs non-commercial - ANSWER-commercial: runs for profit
non-commericial: non-profit; pass gains on to policyholders
stock insurer vs mutual - ANSWER-stock: publicly traded; stockholders participate in dividends (non-participating)
mutual: no stockholders; policyholders participate in dividends (participating)
reciprocal insurere - ANSWER-group of people or organizations that insure each other
re-insurer - ANSWER-insurance for insurers
fraternal benefit society - ANSWER-non-profit, mutual aid organization that will usually offer insurance benefits to members and their families
risk retention group - ANSWER-a form of insurer in which the members use their own capital to write insurance policies
risk purchasing group - ANSWER-people or organizations that band together to buy insurance as a group
an insurer that adheres to the laws of a state but is located outside of that state is called... - ANSWER-an foreign insurer
a _______ insurance company allows its policyholders to enjoy dividends in the form of reduced premiums and expanded benefits - ANSWER-private non- commercial
abc oil and gas drilling needs to purchase liability insurance to protect itself from the risks of the oil and gas drilling business. assuming that ABC O&G wants to use its own money to insure itself, effectively becoming both the insurer and the insured, through whom can ABC oil and gas dirlling purchase an insurance policy - ANSWER-a risk retention group
an insurer that obeys the laws of a country other than the U.S. is called - ANSWER-an alien insurer
what insurance providers uses investors money as capital against an insurance policy - ANSWER-risk retention groups
two meaning of risk - ANSWER-potential loss, the insured item
speculative risk - ANSWER-any risk in which gain is possible. not insurable
pure risk - ANSWER-any risk in which no gain is possible. insurable
exposure - ANSWER-the possibility or likelihood of damage or loss
hazard - ANSWER-anything that increases exposure. ie high crime neighborhoods, smoking
peril - ANSWER-the cause of damage or loss. ie lightning, hail, fire, vandals ect
loss - ANSWER-reduction in value, expenses caused by a covered peril, the amount an insurer pays to settle a claim
which of the following activities is a speculative risk?
-parking the company truck in a dry riverbed
-building a house on the beach
-driving into a hail storm
-betting on a horse race - ANSWER-betting on a horse race
which of the following best describes a 'risk' according to the insurance definition - ANSWER-the potential for a financial loss
which of the following statements applies to a speculative risk - ANSWER-a speculative risk involves a conscious choice.
to an insurance company, which of the following is not an example of a risk - ANSWER-a high crime neighborhood
from the point of view of an insurer, which of the following would be considered a risk - ANSWER-an automobile
during a violent summer storm, a bolt of lightning hits Mr. Jones house damaging a large portion of the roof. in this case, the insurer would call the lightning bolt a - ANSWER-peril
the law of large numbers - ANSWER-States that with high probability, the insurance company's average policyholder claim will be close to the true mortality risk of the entire population. ie if you flip a coin 10 times the ratio of heads to tails will most likely not be 50/50 but if you flip the coin 1000 times the ratio will get much closer to 50/50 the more times you flip.
which of the following is not an insurable risk?
a small town
an airplane
a collection of jewelry
a forklift - ANSWER-a small town
a hazard is defined as - ANSWER-something that increases the chance of a loss
when an insurer issues an insurance policy, the actual item, person, or organization that is being insured is called - ANSWER-the risk
four risk management techniques - ANSWER-risk avoidance, risk reduction, risk transference, risk retention
risk avoidance - ANSWER-eliminates risk by refusing to grant policy because of poor credit or high chance of loss
risk reduction - ANSWER-reduces or mitigates risk. by making a policy holder pay higher premiums or provide less coverage
risk transference - ANSWER-is re-insurance: sharing risk
risk retention - ANSWER-assumes or accepts risk
insurer - ANSWER-the company or organization offering financial protection
insured - ANSWER-the person or organization that pays premiums for financial protection. person or organization purchasing the policy
first named insured - ANSWER-the first person or organization listed on the declarations page
policy period - ANSWER-the dates during which the policy is in effect. period between inception and termination dates.
binder - ANSWER-temporary coverage for an insurance applicant until the policy is issued
warranty - ANSWER-promise or guarantee that certain conditions will be met. found on the conditions page. if a policyholder breaks a warranty, the insurer can deny coverage
concealment - ANSWER-deliberately withholding relevant i [Show Less]