P&C Final Exam Review
◍ Specific insurance Answer: This type of insurance designates a
particular item to be insured
◍ Blanket insurance Answer: This type of insurance covers more than
one item of property at a single location or one more items of property at
multiple locations.
◍ Speculative Answer: possibility of both gain and loss. Not insurable.
◍ Pure Answer: only the possibility of loss. Insurable.
◍ What are the 5 methods of managing or handling risk? Answer: avoid,
control, retain, and transfer risk.
◍ Hazard Answer: A condition or situation which increases the chance
for loss
◍ Physical Hazards Answer: a hazard that arises from the condition,
occupancy, or use of the property itself.
ex: skateboard left on the steps
,◍ Moral Hazards Answer: when an individual through carelessness or
by irresponsible actions can increase the possibly for a loss.
ex: person who drives carelessly just because they know they are
insured.
◍ Morale Hazards Answer: when a person might create a loss situation
on purpose just to collect from the insurance company.
ex: Prearranged, faked theft of someone's old vehicle so they can get an
insurance payout to buy a new vehicle.
◍ Replacement Cost Answer: The amount of money it would take to
replace a damaged or destroyed item with one of like kind and quality
AT THE TIME OF LOSS. No deduction for depreciation.
◍ Actual Cash Value (ACV) Answer: Replacement Cost, minus
depreciation.
◍ Pair and Set Clause Answer: Loss to one item of a pair or set does not
constitute loss to the entire pair or set.
◍ Appraisal Answer: A method of resolving disputes between insurers
and insureds over the amount owed on a covered loss.
-both parties select an appraiser
,-the two appraisers select an umpire
-if the appraisers do not agree, the umpire is consulted
-the amount agreed on by 2 out of 3 is the amount that will be paid
◍ Subrogation Answer: An insurer's right to recover the amount of its
loss payment from the third party who is legally responsible for the loss.
◍ Arbitration Answer: this condition is similar to the Appraisal
Condition but it is not limited to disputes over the value of the loss. It
may also be used to resolve other areas of disagreement between the
insured and the insurance company.
◍ What does WC SHAVVER stand for? Answer: Windstorm, Civil
commotion, Smoke, Hail, Aircraft, Vehicles, Volcanic eruption,
Explosion, Riot
◍ What does BIG AFFECT stand for? Answer: Burglar damage, Ice &
snow weight, Glass breakage, Accidental discharge, Falling objects,
Freezing of pipes, Electrical damage, Collapse, Tearing apart.
◍ Insolvency Answer: A financial state that occurs if liabilities are
greater than assets.
◍ Law of Agency Answer: Knowledge of the Agents is Knowledge of
the Principal (Insurance Company)
, ◍ Principal Answer: Insurance Company
◍ What is the ISO? Answer: Insurance Services Office which is an
organization established for the benefit of its member insurance
companies. This organization gathers statistics, provides loss costs,
drafts policy forms and coverage provisions and conducts inspections for
rate making purposes.
◍ Coinsurance Clause Answer: Requires the insured to carry a
minimum specified amount (generally 80%) of the replacement cost
value of the insured property in order for partial losses to be paid in full.
◍ Estoppel Answer: A legal bar to changing or denying a fact because
of one's own previous actions or words to the contrary.
ex: If an insurance company representative intentionally or
unintentionally gives the impression that a specific fact exists when it
does not and a client relies on that impression and is damaged a result.
◍ Binder Answer: A temporary contract of insurance, oral or written,
offered by an insurer pending issuance of the policy. Usually written for
a period of 30-60 days and remains in force for that period or until a
permanent policy is either issued or denied by the insurer.
◍ Warranty Answer: A provision in a policy that pledges that a
condition does exist or will exist at some time in the future.
◍ Specific insurance Answer: This type of insurance designates a
particular item to be insured
◍ Blanket insurance Answer: This type of insurance covers more than
one item of property at a single location or one more items of property at
multiple locations.
◍ Speculative Answer: possibility of both gain and loss. Not insurable.
◍ Pure Answer: only the possibility of loss. Insurable.
◍ What are the 5 methods of managing or handling risk? Answer: avoid,
control, retain, and transfer risk.
◍ Hazard Answer: A condition or situation which increases the chance
for loss
◍ Physical Hazards Answer: a hazard that arises from the condition,
occupancy, or use of the property itself.
ex: skateboard left on the steps
,◍ Moral Hazards Answer: when an individual through carelessness or
by irresponsible actions can increase the possibly for a loss.
ex: person who drives carelessly just because they know they are
insured.
◍ Morale Hazards Answer: when a person might create a loss situation
on purpose just to collect from the insurance company.
ex: Prearranged, faked theft of someone's old vehicle so they can get an
insurance payout to buy a new vehicle.
◍ Replacement Cost Answer: The amount of money it would take to
replace a damaged or destroyed item with one of like kind and quality
AT THE TIME OF LOSS. No deduction for depreciation.
◍ Actual Cash Value (ACV) Answer: Replacement Cost, minus
depreciation.
◍ Pair and Set Clause Answer: Loss to one item of a pair or set does not
constitute loss to the entire pair or set.
◍ Appraisal Answer: A method of resolving disputes between insurers
and insureds over the amount owed on a covered loss.
-both parties select an appraiser
,-the two appraisers select an umpire
-if the appraisers do not agree, the umpire is consulted
-the amount agreed on by 2 out of 3 is the amount that will be paid
◍ Subrogation Answer: An insurer's right to recover the amount of its
loss payment from the third party who is legally responsible for the loss.
◍ Arbitration Answer: this condition is similar to the Appraisal
Condition but it is not limited to disputes over the value of the loss. It
may also be used to resolve other areas of disagreement between the
insured and the insurance company.
◍ What does WC SHAVVER stand for? Answer: Windstorm, Civil
commotion, Smoke, Hail, Aircraft, Vehicles, Volcanic eruption,
Explosion, Riot
◍ What does BIG AFFECT stand for? Answer: Burglar damage, Ice &
snow weight, Glass breakage, Accidental discharge, Falling objects,
Freezing of pipes, Electrical damage, Collapse, Tearing apart.
◍ Insolvency Answer: A financial state that occurs if liabilities are
greater than assets.
◍ Law of Agency Answer: Knowledge of the Agents is Knowledge of
the Principal (Insurance Company)
, ◍ Principal Answer: Insurance Company
◍ What is the ISO? Answer: Insurance Services Office which is an
organization established for the benefit of its member insurance
companies. This organization gathers statistics, provides loss costs,
drafts policy forms and coverage provisions and conducts inspections for
rate making purposes.
◍ Coinsurance Clause Answer: Requires the insured to carry a
minimum specified amount (generally 80%) of the replacement cost
value of the insured property in order for partial losses to be paid in full.
◍ Estoppel Answer: A legal bar to changing or denying a fact because
of one's own previous actions or words to the contrary.
ex: If an insurance company representative intentionally or
unintentionally gives the impression that a specific fact exists when it
does not and a client relies on that impression and is damaged a result.
◍ Binder Answer: A temporary contract of insurance, oral or written,
offered by an insurer pending issuance of the policy. Usually written for
a period of 30-60 days and remains in force for that period or until a
permanent policy is either issued or denied by the insurer.
◍ Warranty Answer: A provision in a policy that pledges that a
condition does exist or will exist at some time in the future.
