Principle of Indemnity - Correct Answers restoration to approximate previous financial condition; no
more, no less
Insurable Interest - Correct Answers direct financial interest in protecting something or someone
Lender Interest - Correct Answers protects a lender who loans money to a buyer
Risk - Correct Answers potential for financial loss or an insured item
Exposure - Correct Answers is openness to loss or damage
hazard - Correct Answers thing that increases the possibility to loss
moral hazard - Correct Answers results from policyholder's conscious decision
physical hazard - Correct Answers conditions that increase the chance of loss
Peril - Correct Answers the actual cause of loss or damage
Loss - Correct Answers financial loss due to an occurrence or accident
Proximate cause - Correct Answers the primary event or series of events that directly leads to an
insured loss
Direct loss - Correct Answers physical harm to tangible property caused by a peril. Ex: Tree falls on car
Indirect loss - Correct Answers added expenses or lost income because of physical damages. Ex: rental
car
,Occurrence - Correct Answers an event, incident, or condition that causes damage
ACV (Actual Cash Value) - Correct Answers Replacement cost - depreciation
replacement cost - Correct Answers method of valuation based on cost of replacing an item at current
market prices, regardless of depreciation
Functional replacement cost - Correct Answers pays to replace an outdated, obsolete item with a
functionally equivalent item
Stated amount - Correct Answers property value is stated by the insured when applying for insurance
insurance policy - Correct Answers the legal contract b/w the insurer and the insured
cancellation and nonrenewal - Correct Answers insured may cancel at any time, but the insurer is much
more restricted
declarations page - Correct Answers names of both parties
policy #
location and description of insured item
deductible
premium
first named insured - Correct Answers the 1st person or organization listed on the dec page
additional insured - Correct Answers person or org. that is added to the policy at the request of the first
named insured and benefits from policy, but is not allowed to make changed
Loss Payable Clause - Correct Answers lender listed as loss payee if a loss occurs
, policy limits - Correct Answers establish the max payout value of an insurance policy
salvage - Correct Answers the portion or value of property that remains after a loss
abandonment clause - Correct Answers insured is prohibited from forcing the insurer to take possession
of damaged property for the purpose of repair or disposal
subrogation - Correct Answers transfer of rights that allows the insurer to recover its losses after it has
indemnified a policyholder
full release settlement - Correct Answers all damaged paid at once
no release settlement - Correct Answers signing and cashing a check substitutes for the release form
appraiser - Correct Answers writes damage estimates for insurance claims
adjuster - Correct Answers investigates claims and prepares claimant statements
duties of the insured after a loss - Correct Answers -report all accidents
-cooperate with insurer's investigation, settlement, and any court proceedings
-promptly send the insurer copies of all pertinent legal papers
-submit to a physical examination if insurer requests
-submit to examination under oath and verify that your statements are true and accurate
-authorize the insurer to obtain medical reports
-provide proof of loss if insurer requests
burden of proof - Correct Answers this means the must prove the loss to the insurer
annual depreciation - Correct Answers replacement cost / expected life
more, no less
Insurable Interest - Correct Answers direct financial interest in protecting something or someone
Lender Interest - Correct Answers protects a lender who loans money to a buyer
Risk - Correct Answers potential for financial loss or an insured item
Exposure - Correct Answers is openness to loss or damage
hazard - Correct Answers thing that increases the possibility to loss
moral hazard - Correct Answers results from policyholder's conscious decision
physical hazard - Correct Answers conditions that increase the chance of loss
Peril - Correct Answers the actual cause of loss or damage
Loss - Correct Answers financial loss due to an occurrence or accident
Proximate cause - Correct Answers the primary event or series of events that directly leads to an
insured loss
Direct loss - Correct Answers physical harm to tangible property caused by a peril. Ex: Tree falls on car
Indirect loss - Correct Answers added expenses or lost income because of physical damages. Ex: rental
car
,Occurrence - Correct Answers an event, incident, or condition that causes damage
ACV (Actual Cash Value) - Correct Answers Replacement cost - depreciation
replacement cost - Correct Answers method of valuation based on cost of replacing an item at current
market prices, regardless of depreciation
Functional replacement cost - Correct Answers pays to replace an outdated, obsolete item with a
functionally equivalent item
Stated amount - Correct Answers property value is stated by the insured when applying for insurance
insurance policy - Correct Answers the legal contract b/w the insurer and the insured
cancellation and nonrenewal - Correct Answers insured may cancel at any time, but the insurer is much
more restricted
declarations page - Correct Answers names of both parties
policy #
location and description of insured item
deductible
premium
first named insured - Correct Answers the 1st person or organization listed on the dec page
additional insured - Correct Answers person or org. that is added to the policy at the request of the first
named insured and benefits from policy, but is not allowed to make changed
Loss Payable Clause - Correct Answers lender listed as loss payee if a loss occurs
, policy limits - Correct Answers establish the max payout value of an insurance policy
salvage - Correct Answers the portion or value of property that remains after a loss
abandonment clause - Correct Answers insured is prohibited from forcing the insurer to take possession
of damaged property for the purpose of repair or disposal
subrogation - Correct Answers transfer of rights that allows the insurer to recover its losses after it has
indemnified a policyholder
full release settlement - Correct Answers all damaged paid at once
no release settlement - Correct Answers signing and cashing a check substitutes for the release form
appraiser - Correct Answers writes damage estimates for insurance claims
adjuster - Correct Answers investigates claims and prepares claimant statements
duties of the insured after a loss - Correct Answers -report all accidents
-cooperate with insurer's investigation, settlement, and any court proceedings
-promptly send the insurer copies of all pertinent legal papers
-submit to a physical examination if insurer requests
-submit to examination under oath and verify that your statements are true and accurate
-authorize the insurer to obtain medical reports
-provide proof of loss if insurer requests
burden of proof - Correct Answers this means the must prove the loss to the insurer
annual depreciation - Correct Answers replacement cost / expected life
