RMIN 4000 UGA Brown Exam 3 Latest Version Graded A+

RMIN 4000 UGA Brown Exam 3 Latest Version Graded A+ principle of indemnity The insurer agrees to pay no more than the actual amount of the loss (prevent the insured from profiting from loss) replacement cost (RC) the cost to replace property with an item of like kind and quality (similar workmanship and materials) (not the same as historical cost!) actual cash value (ACV) - replacement cost - depreciation - in property insurance, indemnification is usually based on the actual cash value of the property at the time of loss market value price buyer would be willing to pay in a free market valued policy a policy that pays the face amount of insurance if a total loss occurs (life insurance) valued policy law (in some states) requires payment of the face amount of insurance if a total loss to real property occurs from a peril specified in law principle of insurable interest the insured/ beneficiary must be in a position to lose financially if a covered loss occurs - prevents gambling on losses - reduces moral hazard examples of insurable interest - ownership of property (house, car) - potential legal liability (business owner) - secured creditors ( mtg co, auto lender) - contractual right (goods in transit property insurance - must exist at time of loss - can't collect on an insurance policy after you sell your home life insurance - exists at inception of policy - ex-spouse can still collect on life insurance if listed as policy beneficiary principle of subrogation substitution of the insurer in place of the insured for the purpose of claiming indemnity from a third party for a loss covered by insurance reasons for subrogation - prevents insured from collecting twice - holds negligent party responsible for the loss - reduces insurance claims costs (and therefore, rates) principle of utmost good faith A higher degree of honesty is imposed on both parties to an insurance contract than is imposed on parties to other contracts - representations - concealment - warranty representations statements made by the applicant for insurance - contract is voidable if the misrepresentation is: material, false, and relied on by the insurer concealment intentional failure of the applicant for insurance to reveal a material fact to the insurer - contract can be voidable if: concealed fact was known by the insured to be material and insured intended to defraud the insurer warranty - a statement that becomes part of the insurance contract and is guaranteed by the maker to be true in all respects - a condition agreed to by an insured in order to receive coverage - violation of a warranty may result in a claim being denied bad faith law that allows lawsuits against insurance companies for: - improper denial of claims - improper delay of claims bad fait damages can exceed policy limits and include: - attorney's fees - emotional distress - punitive distress requirements of an insurance contract - offer and acceptance - exchange of consideration - competent parties - legal purpose offer and acceptance - insured completes an application (the offer) - insurance company issues a binder or policy (acceptance) - the insurance company can also reject the offer - conditional premium receipt conditional premium receipt -receipt given to applicant for life insurance -if policy is approved, coverage becomes effective as of the date of the application exchange of consideration - the value that each party gives one another - insured pays a premium - the insurer promises to pay future claims covered by