Property and Casualty Insurance Basics Nebraska Updated 2024/2025 Questions and Answers 100% Correct.

Funciton - operations of an insurance company where the underwriter is responsible for evaluating applications submitted to the insurer and determining whether a policy should be issued Earned Premium - the portion of premium paid in advance that now belongs to the insurer because it apples to the elapsed part of the policy Credibility - the degree of accuracy in forecasting future events based on statistical reporting of past events Depreciation - reduction in value, particularly due to wear and tear exposure units - used a measure of rating units or the premium base of a risk homogeneity - the degree to which items are similar Implied warranty - a product is suitable for its intended purpose and that it fits an ordinary buyer's expectations inception - the date at which the insurance policy goes into reffect negligence - the failure to use the care that a reasonable, prudent person would under the same or similar cirucmstances obsolescece - depreciation in the value of a property due to becoming outdated statute - a written law passed by a legislative bodyinsurable interset - the insured would incur a financial loss if the insured property is damaged. May be created by ownership, custody, or control of a property. MUST EXIST AT THE TIME OF THE LOSS 3 elements of insurable risk - 1. Financial (monetary interest) 2. Blood 3. Buisness Underwriting - process of reviewing applications for insurance and the information on the application. risk selection process loss ratio - (incured losses +loss adjusting expense)/ earned premium= Insurance rates - the amount charged for a particular amount of coverage class rating - computing a price per unit of insurance that applies to all applicants possessing a given set of characteristics Types of individual rate making approaches - 1. Judgment Rating 2. Schedule Rating 3. Experience Rating 4. Retrospective Rating 5. Merit Rating Judgment rating - is used when credible statistics are lacking or when the exposure units are so varied that is impossible to construct a class Schedule rating - rates are developed by applying a schedule of charges and credits to some base rate to determine the appropriate rate for an individual exposureExperience rating - the insured's own past loss experience enters into the determination of the final premium Retrospective rating - a self rating plan underwhich the actual losses during the policy period determine the final premium Merit rating - not on the actual loss record but on other factors that indicate the probability that loss will occur Componets - factors that determine rates including loss reserves, loss adjusting expenses, operating expenses, and profits Elements of a Negligent Act - 1. Legal duty 2. Standard of Care 3. Unbroken chain of events 4. Actual loss or damage Legal duty - must be shown for a neglegent act that the defendant had a legal duty to act or not act Standard of care - the defendant of a negligent act must not have acted the way a reasonable person wold Proximate cause - an act or event that is considered a natural and reasonably foreseealbe cause of the damage. direct liability - negligence must have been the cuase without which the accident would not have happened Assumption of risk - a person recognizes and understands that there is danger involved in an activity and voluntarily chooses to encounter itcomparative negligence - the other party's negligence or fault will not necessarily defeat the claim, but will be used to mitigate the damages payable to the other party. The fault is shared between the parties involved Contributory neglegence - the injured party must be completely free of fault in order to collect. last clear chance rule - a defense used by the negligent party who can show the injured party had the last clear chance to avoid the loss but did not