Principles of Insurance Exam 3 Questions and Answers with Solutions UPDATED!!!!.

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Principles of Insurance Exam 3 Questions and Answers
with Solutions UPDATED!!!!



2 fundamental purposes of indemnity - ANSWER 1. preventing
the insured from profiting from a loss
2. to reduce moral hazard


2 types of insuring agreement in property insurance - ANSWER
1. named perils coverage
2. open perils coverage


3 legal doctrines that support principle of utmost good faith -
ANSWER 1. representation
2. concealment
3. warranty


3 major types of exclusions: - ANSWER excluded perils, excluded
property, and excluded property


3 purposes of subrogation - ANSWER 1. prevents the insured
from collecting twice for the same loss

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2. used to hold the negligent person responsible for the loss
3. helps to hold down insurance rates


actual cash value - ANSWER supports the principle of
indemnity; the basic method for indemnifying the insured in
property insurance is based on the actual cash value of the
damaged property at the time of loss


actual cash value formula - ANSWER replacement cost-
deprecitation


aggregate deductible - ANSWER all losses that occur during a
specified time period, usually a policy year, are accumulated to
satisfy the deductible amount


calendar year deductible - ANSWER a type of aggregate
deductible that is found in individual and group medical
expense policies


coinsurance clause in property insurance - ANSWER encourages
the insured to insure the property to a stated percentage of its