Property-Insurance Terms & Related Concepts Questions and Answers 100% Pass

Property-Insurance Terms & Related Concepts Questions and Answers 100% Pass Insurance - Correct Answer ️️ -The TRANSFER of financial responsibility associated with a potential of a loss (risk) to an insurance company, which in turn spreads the costs of unexpected losses to many individuals. Insurance - Correct Answer ️️ -Contract in which one party agrees to indemnify the other party against loss, damage, or liability arising from an unknown event. Indemnify - Correct Answer ️️ -Compensate (someone) for harm or loss: "insurance carried to indemnify the owner for loss". Insurable Interest - Correct Answer ️️ -The insured must have an insurable interest in the person or property covered by an insurance policy. In property insurance, the insured would incur a financial loss if the insured property was damaged. Maybe created by the ownership, custody, or control of a property. Must be demonstrated when policy is issued and always exists at the time of loss. Insurable Interest Example - Correct Answer ️️ -Mortgages and leaseholders may have an insurable interest in the property. 3 Elements of Insurable Risk - Correct Answer ️️ -1. Financial-a monetary interest 2. Blood-a relative 3. Business-busines partner Risk - Correct Answer ️️ -The uncertainty or chance of a loss occurring. 2 Types of Risk - Correct Answer ️️ -1. Pure 2. Speculative Pure Risk - Correct Answer ️️ -Refers to situations that can only result in a loss or no change. No opportunity for financial gain. Only type of which is insurable. Speculative Risk - Correct Answer ️️ -Involves the opportunity for either loss or gain. Not insurable. Ex. gambling or investing. Hazards - Correct Answer ️️ -Conditions or situations that increase the probability or chance of an insured loss occurring. Ex. slippery floors, congested traffic. 3 Classifications of Hazards - Correct Answer ️️ -1. Physical 2. Moral 3. Morale Physical Hazards - Correct Answer ️️ -Those arising from the material, structural, or operational features of the risk, apart from the persons owning or managing it. Ex. Faulty wiring Moral Hazards - Correct Answer ️️ -Refers to those applicants that may lie on an application for insurance, or in past have submitted fraudulent claims against insurer. Morale Hazards - Correct Answer ️️ -Refers to an increase in the hazard presented by a risk, arising from the insured indiffere