Fin 341 Liebenberg Exam 3 UPDATED ACTUAL Questions And Correct Answers
Terms in this set (111)
principle of indemnity the insurer agrees to pay no more than the actual amount of the loss
fair market value price a willing buyer would pay a willing seller in a free market
broad evidence rule means that the determination of ACV should include all relevant factors an expert
would use to determine the value of the property
valued policy pays the face amount of insurance if a total loss occurs
replacement cost insurance means there is no deduction for depreciation in determining the amount paid for a
loss
$500 an item is destroyed with a replacement cost of $1000 and depreciation of $500.
what's the actual cash value?
principle of insurable interest the insured must be in a position to lose financially if a covered loss occurs
principle of subrogation substitution of the insurer in place of the insured for the purpose of claiming
indemnity from a thrid party for a loss covered by insurance
principle of good faith a higher degree of honesty is imposed on both parties to an insurance contract
than is imposed on parties to other contracts
representations statements made by the applicant for insurance
material means that if the insurer knew the true facts, the policy wouldn't have been issued,
or would've been issued on different terms
reliance means that the insurer relies on the misrepresentation in issuing the policy at a
specified premium
innocent misrepresentation makes the contract voidable
concealment intentional failure of the applicant for insurance to reveal a material fact to the
insurer
warranty a statement that becomes part of the insurance contract and is guaranteed by the
maker to be true in all respects
legally enforceable to be ___ , an insurance contract must meet 4 requirements: 1. offer and
acceptance of the terms of the contract, 2. exchange of consideration (the value
that each party gives to the other), 3. competent parties, with legal capacity to
enter into a binding contract, and 4. the contract must exist fo a legal purpose
aleatory the values exchanged don't equal
, unilateral only the insurer makes a legally enforceable promise
conditional policy owner must comply with all policy provisions to collect for a covered loss
personal property insurance policy can't be validly assigned yo another party without the
insurer's consent
contract of adhesion the insured must accept the entire contract with all of its terms and conditions
declarations statements that provide information about the particular property/activity to be
insured
insuring agreement summarizes the major promises of the insurer
named peril coverage where only those perils specifically named in the policy are covered
open-perils/special coverage where all losses are covered except those losses specifically excluded
exclusions insurance contracts contain 3 major types of
excluded perils flood, intentional act
excluded losses a professional liability loss is excluded in the homeowners policy
excluded property pets aren't covered as personal property in the homeowners policy
conditions provisions in the policy that qualify/place limitations on the insurer's promise to
peform
named insured the person(s) named in the declarations section of the policy
first named insured has certain additional rights and responsibilities that don't apply to other named
insureds
endorsement a written provision that adds to, deletes from, or modifies the provisions in the
original contract
rider a provision that amends/changes the original policy
deductible a provision by which a specified amount is subtracted from the total loss payment
that otherwise would be payable
straight deductible the insured must pay a certain number of dollars of loss before the insurer is
required to make a payment
aggregate deductible all losses that occur during a specified time period, usually a year, are
accumulated to satisfy the deductible amount
Terms in this set (111)
principle of indemnity the insurer agrees to pay no more than the actual amount of the loss
fair market value price a willing buyer would pay a willing seller in a free market
broad evidence rule means that the determination of ACV should include all relevant factors an expert
would use to determine the value of the property
valued policy pays the face amount of insurance if a total loss occurs
replacement cost insurance means there is no deduction for depreciation in determining the amount paid for a
loss
$500 an item is destroyed with a replacement cost of $1000 and depreciation of $500.
what's the actual cash value?
principle of insurable interest the insured must be in a position to lose financially if a covered loss occurs
principle of subrogation substitution of the insurer in place of the insured for the purpose of claiming
indemnity from a thrid party for a loss covered by insurance
principle of good faith a higher degree of honesty is imposed on both parties to an insurance contract
than is imposed on parties to other contracts
representations statements made by the applicant for insurance
material means that if the insurer knew the true facts, the policy wouldn't have been issued,
or would've been issued on different terms
reliance means that the insurer relies on the misrepresentation in issuing the policy at a
specified premium
innocent misrepresentation makes the contract voidable
concealment intentional failure of the applicant for insurance to reveal a material fact to the
insurer
warranty a statement that becomes part of the insurance contract and is guaranteed by the
maker to be true in all respects
legally enforceable to be ___ , an insurance contract must meet 4 requirements: 1. offer and
acceptance of the terms of the contract, 2. exchange of consideration (the value
that each party gives to the other), 3. competent parties, with legal capacity to
enter into a binding contract, and 4. the contract must exist fo a legal purpose
aleatory the values exchanged don't equal
, unilateral only the insurer makes a legally enforceable promise
conditional policy owner must comply with all policy provisions to collect for a covered loss
personal property insurance policy can't be validly assigned yo another party without the
insurer's consent
contract of adhesion the insured must accept the entire contract with all of its terms and conditions
declarations statements that provide information about the particular property/activity to be
insured
insuring agreement summarizes the major promises of the insurer
named peril coverage where only those perils specifically named in the policy are covered
open-perils/special coverage where all losses are covered except those losses specifically excluded
exclusions insurance contracts contain 3 major types of
excluded perils flood, intentional act
excluded losses a professional liability loss is excluded in the homeowners policy
excluded property pets aren't covered as personal property in the homeowners policy
conditions provisions in the policy that qualify/place limitations on the insurer's promise to
peform
named insured the person(s) named in the declarations section of the policy
first named insured has certain additional rights and responsibilities that don't apply to other named
insureds
endorsement a written provision that adds to, deletes from, or modifies the provisions in the
original contract
rider a provision that amends/changes the original policy
deductible a provision by which a specified amount is subtracted from the total loss payment
that otherwise would be payable
straight deductible the insured must pay a certain number of dollars of loss before the insurer is
required to make a payment
aggregate deductible all losses that occur during a specified time period, usually a year, are
accumulated to satisfy the deductible amount
