Illinois Property Insurance Exam - Basic
Principles Questions And Answers
Latest |Update| Verified Answers
How claims are resolved - CORRECT ANSWER--Settled on the basis of what each side
anticipates a court would order if the claim would go to a court hearing
-An insurance company will only pay if they determine that a court would find the
insured legally liable if it were to go to a hearing (anticipate)
-The burden of proof is on the claimant
Necessary Elements - CORRECT ANSWER-Legal requirement that a claimant must be
able to prove to a court to be successful in making a liability claim
Negligence - CORRECT ANSWER-Most important necessary element. There are two
types:
1. Omission - failing to do something that he should have done
2. Commission - doing something that he should not have done
Damages - CORRECT ANSWER-A claimant can make a liability claim claiming
damages either in the form of bodily injuries or property damages
Bodily injuries (damages) - CORRECT ANSWER--Mean physical injuries
Include...
-Reimbursement for lost wages and medical bills.
-Compensation for pain and suffering, permanent disabilities, and permanent scaring
and disfigurement
Representations - CORRECT ANSWER-statements on an application which the insured
believes to be correct.
An insurance company can contest a claim if they can prove the representation ...
1. False or concealed, and
2.Material and significant (impact premium or issue of a policy)
3. Intentional
A Lapse - CORRECT ANSWER-When a policy is terminated due to nonpayment of
premiums
, An Endorsement - CORRECT ANSWER-A form added to an insurance policy. It is
usually added for an additional premium charge to add additional coverage.
A Peril - CORRECT ANSWER-An actual cause of loss than can be insured against.
Most Common = fire
A Hazard - CORRECT ANSWER-A condition or operation in property which either
creates or increases the change of loss by a covered peril. Example = frayed wiring
Risk - CORRECT ANSWER-The likelihood, probability or degree of uncertainty that a
covered peril will cause a loss
Actuarial Tables - CORRECT ANSWER-Statistical tables used in calculating premium
rate tables. They tell the insurance companies how many people are likely to have
claims and how much the losses are likely to be.
Loss reserves - CORRECT ANSWER-Money set aside to pay claims in accordance
with the actuarial tables
Actuary - CORRECT ANSWER-An insurance company representative who keeps track
of loss statistics and calculates premium rate tables and loss reserves
Law of large numbers - CORRECT ANSWER-The more people the insurance company
insures, the more accurate the actuarial tables will be
Insurable Interest - CORRECT ANSWER--A financial interest (risk) which the insured
must posses at the time of the loss.
-Is the person in the position to lose money?
-Ex. property owner, mortgagee, lien holder
Indemnity - CORRECT ANSWER-The legal concept of one party (insurance company)
standing in the place of or making good for another (the insured)
Indemnify - CORRECT ANSWER-Means the same as reimburse
The principles of indemnity (reimbursement) and insurable interest (financial interest)... -
CORRECT ANSWER--Prohibit the insurance company from reimbursing (indemnifying)
an insured for more than the actual amount of loss.
-Can't profit in a loss!
Deductible - CORRECT ANSWER--An initial amount of loss which the insured must
suffer (pay) before the insurance company begins to indemnify
Principles Questions And Answers
Latest |Update| Verified Answers
How claims are resolved - CORRECT ANSWER--Settled on the basis of what each side
anticipates a court would order if the claim would go to a court hearing
-An insurance company will only pay if they determine that a court would find the
insured legally liable if it were to go to a hearing (anticipate)
-The burden of proof is on the claimant
Necessary Elements - CORRECT ANSWER-Legal requirement that a claimant must be
able to prove to a court to be successful in making a liability claim
Negligence - CORRECT ANSWER-Most important necessary element. There are two
types:
1. Omission - failing to do something that he should have done
2. Commission - doing something that he should not have done
Damages - CORRECT ANSWER-A claimant can make a liability claim claiming
damages either in the form of bodily injuries or property damages
Bodily injuries (damages) - CORRECT ANSWER--Mean physical injuries
Include...
-Reimbursement for lost wages and medical bills.
-Compensation for pain and suffering, permanent disabilities, and permanent scaring
and disfigurement
Representations - CORRECT ANSWER-statements on an application which the insured
believes to be correct.
An insurance company can contest a claim if they can prove the representation ...
1. False or concealed, and
2.Material and significant (impact premium or issue of a policy)
3. Intentional
A Lapse - CORRECT ANSWER-When a policy is terminated due to nonpayment of
premiums
, An Endorsement - CORRECT ANSWER-A form added to an insurance policy. It is
usually added for an additional premium charge to add additional coverage.
A Peril - CORRECT ANSWER-An actual cause of loss than can be insured against.
Most Common = fire
A Hazard - CORRECT ANSWER-A condition or operation in property which either
creates or increases the change of loss by a covered peril. Example = frayed wiring
Risk - CORRECT ANSWER-The likelihood, probability or degree of uncertainty that a
covered peril will cause a loss
Actuarial Tables - CORRECT ANSWER-Statistical tables used in calculating premium
rate tables. They tell the insurance companies how many people are likely to have
claims and how much the losses are likely to be.
Loss reserves - CORRECT ANSWER-Money set aside to pay claims in accordance
with the actuarial tables
Actuary - CORRECT ANSWER-An insurance company representative who keeps track
of loss statistics and calculates premium rate tables and loss reserves
Law of large numbers - CORRECT ANSWER-The more people the insurance company
insures, the more accurate the actuarial tables will be
Insurable Interest - CORRECT ANSWER--A financial interest (risk) which the insured
must posses at the time of the loss.
-Is the person in the position to lose money?
-Ex. property owner, mortgagee, lien holder
Indemnity - CORRECT ANSWER-The legal concept of one party (insurance company)
standing in the place of or making good for another (the insured)
Indemnify - CORRECT ANSWER-Means the same as reimburse
The principles of indemnity (reimbursement) and insurable interest (financial interest)... -
CORRECT ANSWER--Prohibit the insurance company from reimbursing (indemnifying)
an insured for more than the actual amount of loss.
-Can't profit in a loss!
Deductible - CORRECT ANSWER--An initial amount of loss which the insured must
suffer (pay) before the insurance company begins to indemnify
