Virginia Personal Lines Agent
Licensing Course
1.What is insurance?: Insurance is a social device for spreading the
chance of financial loss among a large number of people. By purchasing
insurance, a "person" shares risk with a group of others, thereby
reducing the individual potential for disastrous financial consequences.
2.What is insurance based on?: the law of large numbers; by
combining a large number of homogeneous units, the insurer is able to
make predictions of possible loss. Using the law of large numbers,
insurers are able to calculate probable losses and to establish the rates
for premiums that will cover their losses and their operating expenses.
3.What is underwriting?: the process of selecting certain types of
risks that have historically produced a profit and rejecting those risks
that do not fit the underwriting criteria of the insurer; normally produces
a favorable loss ratio
4.Adverse selection: assess risk and charge too little; the tendency
of insureds with a greater-than-average chance of loss to purchase
insurance
5.Reinsurace: a contract of indemnity against liability by which an
insurance com- pany procures another insurance company to insure it
against loss or liability by reason of the original insurance; insurance
companies have a company that insures them
6.What are the 6 parts of an insurance contract?: Declarations,
Insuring Agree- ment, Conditions, Exclusions and Limitations,
Definitions, Endorsements
7.Declarations: includes the identity and address of the named
, Virginia Personal Lines Agent
Licensing Course
insured, the policy term or period, the amount of insurance or limits of
liability, the policy premium, and any applicable deductibles; include
property description and any applicable deductibles as well as list any
endorsements; who is insured, what is insured, deductibles... etc.
8.Insuring Agreement: describes the covered perils, or risks
assumed, or nature of coverage, or makes some reference to the
contractual agreement between insurer and insured; what insurer will
cover for you.
9.Conditions: set provisions, rules of conduct, duties, and obligations
for the par- ties; describes things such as the policy period and territory,
the insured's obligation to provide proof of loss, how settlements are
handled when other insurance is involved, and the right of each party to
cancel the policy
10.Exclusions and Limitations: Exclusions: may describe property ,
perils, haz- ards, or losses arising from specific causes that are not
covered by the policy; Limitations; may eliminate or reduce coverage,
but only under certain circumstances or when specified conditions
apply; Exclusions and Limitations: when the insurance company wont
cover you.
11.Definitions: Define important terms used in the policy language;
explanation
, Virginia Personal Lines Agent
Licensing Course
12.Endorsements: used to add, delete, or change any of the policy
parts; written modification of the policy; additional coverages to contract
--> extra money premium.
13.Peril: potential cause of loss
14.Hazard: increases the seriousness of a loss or increases the
likelihood that a loss will occur; increased potential of peril
15.Direct Loss: direct consequence of a particular peril (example: fire
damage to an apartment building
16.Indirect Loss: loss that is a result of a covered peril but is not
caused directly and immediately by that peril (example: loss of rental
income)
17.Salvage: If the insurer pays a loss on behalf of the insured, the
insurer is entitled to the salvage to reduce the claim (example: totaled
care --> belongs to insurance company)
18.Abandonment: insured cannot simply abandon the property to
the insurance company in exchange for the full-insured value.
19.Pair or Set Clause: if part of a pair or set is lost or damaged, the
loss will be valued as a fair proportion of the total value of the set,
giving consideration to the importance of the damaged article to the
set; initial - appraised = payout
20.Deductible: Self-insured part of an insured loss, the insured must
bear this loss; amount you pay before insurance comes in --> you are
responsible.
21.Vacancy and Unoccupancy: Vacancy: building is void of contents
, Virginia Personal Lines Agent
Licensing Course
and people; 60 or more days; Unoccupancy: premises are void of
people, will not affect the coverage provided by the policy.
22.Assignment: Insurance policy cannot be assigned to another
party without consent of the insurance company
23.Liberalization: if the policy or endorsement forms are broadened
and no addi- tional premium is required, then all existing similar policies
or endorsements will be construed to include the broadened coverage
24.Binder: temporary evidence that coverage is in effect until the polic
is issued
--> oral or written
25.Primary Insurance: in cases where more than one policy is in
force, the primary policy pays first; example: you borrow your friends
car and get into an accident --> that car's insurance covers you, then
you can use your own insurance.
26.Excess Insurance: insurance policy that pays benefits only
when coverage under other applicable insurance policies have
become exhausted
27.Accident: sudden and unforeseen event resulting in a financial loss
28.Occurance: continuous or repeated exposure to an event that
results in financial loss; also sudden and unforeseen
29.Appraisal and Arbitration: Appraisal: both parties select an
appraiser to de- termine the value of the loss, appraiser chooses an
umpire, each party will pay its
Licensing Course
1.What is insurance?: Insurance is a social device for spreading the
chance of financial loss among a large number of people. By purchasing
insurance, a "person" shares risk with a group of others, thereby
reducing the individual potential for disastrous financial consequences.
2.What is insurance based on?: the law of large numbers; by
combining a large number of homogeneous units, the insurer is able to
make predictions of possible loss. Using the law of large numbers,
insurers are able to calculate probable losses and to establish the rates
for premiums that will cover their losses and their operating expenses.
3.What is underwriting?: the process of selecting certain types of
risks that have historically produced a profit and rejecting those risks
that do not fit the underwriting criteria of the insurer; normally produces
a favorable loss ratio
4.Adverse selection: assess risk and charge too little; the tendency
of insureds with a greater-than-average chance of loss to purchase
insurance
5.Reinsurace: a contract of indemnity against liability by which an
insurance com- pany procures another insurance company to insure it
against loss or liability by reason of the original insurance; insurance
companies have a company that insures them
6.What are the 6 parts of an insurance contract?: Declarations,
Insuring Agree- ment, Conditions, Exclusions and Limitations,
Definitions, Endorsements
7.Declarations: includes the identity and address of the named
, Virginia Personal Lines Agent
Licensing Course
insured, the policy term or period, the amount of insurance or limits of
liability, the policy premium, and any applicable deductibles; include
property description and any applicable deductibles as well as list any
endorsements; who is insured, what is insured, deductibles... etc.
8.Insuring Agreement: describes the covered perils, or risks
assumed, or nature of coverage, or makes some reference to the
contractual agreement between insurer and insured; what insurer will
cover for you.
9.Conditions: set provisions, rules of conduct, duties, and obligations
for the par- ties; describes things such as the policy period and territory,
the insured's obligation to provide proof of loss, how settlements are
handled when other insurance is involved, and the right of each party to
cancel the policy
10.Exclusions and Limitations: Exclusions: may describe property ,
perils, haz- ards, or losses arising from specific causes that are not
covered by the policy; Limitations; may eliminate or reduce coverage,
but only under certain circumstances or when specified conditions
apply; Exclusions and Limitations: when the insurance company wont
cover you.
11.Definitions: Define important terms used in the policy language;
explanation
, Virginia Personal Lines Agent
Licensing Course
12.Endorsements: used to add, delete, or change any of the policy
parts; written modification of the policy; additional coverages to contract
--> extra money premium.
13.Peril: potential cause of loss
14.Hazard: increases the seriousness of a loss or increases the
likelihood that a loss will occur; increased potential of peril
15.Direct Loss: direct consequence of a particular peril (example: fire
damage to an apartment building
16.Indirect Loss: loss that is a result of a covered peril but is not
caused directly and immediately by that peril (example: loss of rental
income)
17.Salvage: If the insurer pays a loss on behalf of the insured, the
insurer is entitled to the salvage to reduce the claim (example: totaled
care --> belongs to insurance company)
18.Abandonment: insured cannot simply abandon the property to
the insurance company in exchange for the full-insured value.
19.Pair or Set Clause: if part of a pair or set is lost or damaged, the
loss will be valued as a fair proportion of the total value of the set,
giving consideration to the importance of the damaged article to the
set; initial - appraised = payout
20.Deductible: Self-insured part of an insured loss, the insured must
bear this loss; amount you pay before insurance comes in --> you are
responsible.
21.Vacancy and Unoccupancy: Vacancy: building is void of contents
, Virginia Personal Lines Agent
Licensing Course
and people; 60 or more days; Unoccupancy: premises are void of
people, will not affect the coverage provided by the policy.
22.Assignment: Insurance policy cannot be assigned to another
party without consent of the insurance company
23.Liberalization: if the policy or endorsement forms are broadened
and no addi- tional premium is required, then all existing similar policies
or endorsements will be construed to include the broadened coverage
24.Binder: temporary evidence that coverage is in effect until the polic
is issued
--> oral or written
25.Primary Insurance: in cases where more than one policy is in
force, the primary policy pays first; example: you borrow your friends
car and get into an accident --> that car's insurance covers you, then
you can use your own insurance.
26.Excess Insurance: insurance policy that pays benefits only
when coverage under other applicable insurance policies have
become exhausted
27.Accident: sudden and unforeseen event resulting in a financial loss
28.Occurance: continuous or repeated exposure to an event that
results in financial loss; also sudden and unforeseen
29.Appraisal and Arbitration: Appraisal: both parties select an
appraiser to de- termine the value of the loss, appraiser chooses an
umpire, each party will pay its
