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Principles of Insurance Exam 3 Seth Pounds Questions and
Answers with Solutions UPDATED!!!!
2 things to remember about coinsurance formula - ANSWER 1)
amount paid can never exceed the amount of actual loss even
though the coinsurance formula produces such a result
2) the maximum amount paid for any loss is limited to the face
amount of insurance
Additional Insured - ANSWER a person or party who is added to
the named insured's policy by an endorsement
Aggregate Deductible - ANSWER all losses that occur during a
specified time period, usually a policy year, are accumulated to
satisfy the deductible amount.
Ex: Policy contains aggregate deductible of 10,000. Also assume
that losses of 1,000 and 2,000 occur during the policy year.
Insurer pays nothing because deductible isn't met. If a third loss
of 8,000 occurs during the same period, the insurer would pay
1,000
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Basic Parts of an Insurance Contract - ANSWER Declarations
Definitions
Insuring Agreement
Exclusions
Conditions
Miscellaneous Provisions
Borad Evidence Rule - ANSWER The determination of actual
cash value should include all relevant factors an expert would
use to determine the value of the property.
Relevant factors include replacement cost less depreciation, fair
market value, present value of expected income from the
property, comparison sales of similar property, opinion of
appraisers, and numerous other factors
Calendar year deductible - ANSWER a type of aggregate
deductible that is found in individual and group medical
expense policies.
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Coinsurance Clause - ANSWER in a property insurance contract,
encourages the insured to insure the property to a stated
percentage of its insurable value
-If the coinsurance requirement is not met at the time of the
loss, the insured must share in the loss as a coinsurer
Coinsurance Formula - ANSWER (amount of insurance
carried/amount of insurance required) x loss = amount of
recovery
in other words:
(did/should) x loss= amount of recovery
Coinsurance percentage clause - ANSWER Health contracts
typically contain a _________________, which is a provision
that required the insured to pay a specified percentage of
covered medical expenses in excess of the deductible
Principles of Insurance Exam 3 Seth Pounds Questions and
Answers with Solutions UPDATED!!!!
2 things to remember about coinsurance formula - ANSWER 1)
amount paid can never exceed the amount of actual loss even
though the coinsurance formula produces such a result
2) the maximum amount paid for any loss is limited to the face
amount of insurance
Additional Insured - ANSWER a person or party who is added to
the named insured's policy by an endorsement
Aggregate Deductible - ANSWER all losses that occur during a
specified time period, usually a policy year, are accumulated to
satisfy the deductible amount.
Ex: Policy contains aggregate deductible of 10,000. Also assume
that losses of 1,000 and 2,000 occur during the policy year.
Insurer pays nothing because deductible isn't met. If a third loss
of 8,000 occurs during the same period, the insurer would pay
1,000
, Page |2
Basic Parts of an Insurance Contract - ANSWER Declarations
Definitions
Insuring Agreement
Exclusions
Conditions
Miscellaneous Provisions
Borad Evidence Rule - ANSWER The determination of actual
cash value should include all relevant factors an expert would
use to determine the value of the property.
Relevant factors include replacement cost less depreciation, fair
market value, present value of expected income from the
property, comparison sales of similar property, opinion of
appraisers, and numerous other factors
Calendar year deductible - ANSWER a type of aggregate
deductible that is found in individual and group medical
expense policies.
, Page |3
Coinsurance Clause - ANSWER in a property insurance contract,
encourages the insured to insure the property to a stated
percentage of its insurable value
-If the coinsurance requirement is not met at the time of the
loss, the insured must share in the loss as a coinsurer
Coinsurance Formula - ANSWER (amount of insurance
carried/amount of insurance required) x loss = amount of
recovery
in other words:
(did/should) x loss= amount of recovery
Coinsurance percentage clause - ANSWER Health contracts
typically contain a _________________, which is a provision
that required the insured to pay a specified percentage of
covered medical expenses in excess of the deductible
