Personal Lines License 20-44 2025/2026 QUESTIONS AND
ANSWERS GUARANTEE A+
Severability - insurance applies separately to each insureds
Arbitration Clause - in the event the insured and the insurer cannot agree on amount of claim
settlement, each appoints an appraiser
Liberalization - if insurer broadens coverage w/out additional premium w/in some period of time
prior to the policy period (60 days) or during the policy period, the insured receives the benefit
Pro Rata - pay the proportion (limit: all limits) (i.e.$25,000/$100,000 =1/4)
Primary - applies 1st up to its limit
Excess - all other insurances exhausted before the policy will apply
Equal Shares - contribution based on the amount of policies regardless of their limits
Assignment - policy transfer from one insured to another
Subrogation - insured has the right to collect damages from another party but elects to claim the
damages from her own insurance policy
Indemnity - a principle of insurance which provides that when a loss occurs, the insured should
be restored to the approximate financial condition occupied before the loss occured, no better, no
worse
, Loss Payee - the person designated on an insurance policy as the one to be paid in case the
property is damaged/destroyed
Damages - money amount w/ which liability insurance is concerned
Special Damages - reimbursement for out of pocket expenses
General Damages - reimbursement for damages that do not readily have quantitative
measurement
Punitive Damages - due to negligence by defendent
Insurance - a contract whereby one undertakes to indemnify another or pay or allow a specified
amount or a determinable benefit upon determinable contingencies
Binder - an oral/written statement providing immediate insurance protection, valid for a specified
period. Designed to provide temporary coverage until a policy can be issued or denied
Contracts of Adhesion - the parties are of unequal bargaining power, and the insured cannot
negotiate the terms having to take the offer of the insurer as made
Controlled Business - when the majority of insurance written is for family members
Insurer - every person engaed as indemnitor, surety, or contractor in the business of entering into
contracts of insurance or of annuity
Comparative Negligence Rule - reduces a plaintiff's damages by the plaintiff's degree of
negligence
ANSWERS GUARANTEE A+
Severability - insurance applies separately to each insureds
Arbitration Clause - in the event the insured and the insurer cannot agree on amount of claim
settlement, each appoints an appraiser
Liberalization - if insurer broadens coverage w/out additional premium w/in some period of time
prior to the policy period (60 days) or during the policy period, the insured receives the benefit
Pro Rata - pay the proportion (limit: all limits) (i.e.$25,000/$100,000 =1/4)
Primary - applies 1st up to its limit
Excess - all other insurances exhausted before the policy will apply
Equal Shares - contribution based on the amount of policies regardless of their limits
Assignment - policy transfer from one insured to another
Subrogation - insured has the right to collect damages from another party but elects to claim the
damages from her own insurance policy
Indemnity - a principle of insurance which provides that when a loss occurs, the insured should
be restored to the approximate financial condition occupied before the loss occured, no better, no
worse
, Loss Payee - the person designated on an insurance policy as the one to be paid in case the
property is damaged/destroyed
Damages - money amount w/ which liability insurance is concerned
Special Damages - reimbursement for out of pocket expenses
General Damages - reimbursement for damages that do not readily have quantitative
measurement
Punitive Damages - due to negligence by defendent
Insurance - a contract whereby one undertakes to indemnify another or pay or allow a specified
amount or a determinable benefit upon determinable contingencies
Binder - an oral/written statement providing immediate insurance protection, valid for a specified
period. Designed to provide temporary coverage until a policy can be issued or denied
Contracts of Adhesion - the parties are of unequal bargaining power, and the insured cannot
negotiate the terms having to take the offer of the insurer as made
Controlled Business - when the majority of insurance written is for family members
Insurer - every person engaed as indemnitor, surety, or contractor in the business of entering into
contracts of insurance or of annuity
Comparative Negligence Rule - reduces a plaintiff's damages by the plaintiff's degree of
negligence
