AINS 22 - Segment B Questions With Complete Solutions

1. Major medical insurance - ANSWER Insurance that covers medical expenses resulting from illness or injury that are not covered by a basic medical expense plan. 2. Managed care plan - ANSWER A type of healthcare plan providing members with comprehensive services and incentives to use providers belonging to the plan. 3. Health maintenance organization (HMO) - ANSWER An organization that provides all the care needed by its members in exchange for a fixed fee. 4. Preferred provider organization (PPO) - ANSWER An administrative organization that meets the common needs of healthcare providers and clients and that identifies networks of providers and contracts for their medical services at discounted rates. 5. Point-of-service (POS) plan - ANSWER Managed care plan that combines the characteristics of an HMO and a PPO; has a network of preferred providers who, if used by the member, charge little or nothing for services; healthcare received out of the network is covered, but members must pay substantially higher coinsurance charges and a deductible. 6. Medicare - ANSWER Social insurance program that covers the medical expenses of most individuals age sixty-five and older. 7. Medicare Advantage plans - ANSWER Health insurance plan options that provide benefits in addition to basic Medicare; offered by private insurers that contract with Medicare and available to beneficiaries currently enrolled in Medicare Part A and Part B. 8. Coinsurance - ANSWER An insurance-to-value provision in many property insurance policies providing that if the property is underinsured, the amount that an insurer will pay for a covered loss is reduced. 9. Elimination period - ANSWER Initial time period in a health insurance or disability income policy during which benefits are not paid. 10. HO-2 - ANSWER Broad Form. Provides named perils coverage for dwellings, other structures, and personal property. Designed for owner-occupants. 11. HO-3 - ANSWER Special Form. Provides special form (open peril) coverage on dwellings and other structures. Personal property is covered as named peril. Designed for owner-occupants who want broader coverage. 12. HO-4 - ANSWER Contents Broad Form. Provides coverage for a tenant's personal property on a named perils basis. Designed for tenants or persons who maintain a residence in a multi-family dwelling they own. 13. HO-5 - ANSWER Comprehensive Form. Provides open perils coverage on dwellings, other structures, and personal property. Designed for owner-occupants who like the broadest coverage available. 14. HO-6 - ANSWER Unit-Owners Form. Provides coverage for personal property on a named perils basis, with limited dwelling coverage (unit improvements and betterments). Designed to meet the needs of the owners of condominium units and cooperative apartment shares. 15. HO-8 - ANSWER Modified Coverage Form. Provides coverage for a dwelling, other structures, and personal property, on a limited, named perils basis. A special valuation clause specifies that damage will be covered on a functional replacement cost basis. Designed to meet the needs of owners-occupants of dwellings that may not meet insurer underwriting standards required for other policy forms. 16. Coverage A - ANSWER Dwelling. Applies to the dwelling on the residence premises and any attached structures. 17. Coverage B - ANSWER Other Structures. Applies to structures on the residence premises other than the dwelling building. (Detached garage, shed, pool, fence) 18. Coverage C - ANSWER Personal Property. Applies to the contents of the insured property and to the insured's personal property anywhere in the world. 19. Coverage D - ANSWER Loss of Use. Applies to the insured's exposure to financial loss if their home is damaged so badly it's unfit for use. (Pays for hotel bills, extra cost of eating out and doing your laundry, or rent on an apartment if long-term) 20. Coverage E - ANSWER Personal Liability. Applies to third-party coverage for those who are injured or whose property is damaged by an insured. 21. Coverage F - ANSWER Medical Payments to Others. Covers the necessary medical expenses incurred by others (not an insured) within three years of an injury. 22. Loss reduction - ANSWER A risk control technique that reduces the severity of a particular loss. 23. Separation - ANSWER A risk control technique that isolates loss exposures from one another to minimize the adverse effect of a single loss. 24. Duplication - ANSWER A risk control technique that uses backups, spares, or copies of critical property, information, or capabilities and keeps them in reserve. 25. Diversification - ANSWER A risk control technique that spreads loss exposures over numerous projects, products, markets, or regions. 26. Retention - ANSWER A risk financing technique by which losses are retained by generating funds within the organization to pay for the losses. 27. Insurance - ANSWER A risk management technique that transfers the potential financial consequences of certain specified loss exposures from the insured to the insurer. 28. Transfer - ANSWER In the context of risk management, a risk financing technique by which the financial responsibility for losses and variability in cash flows is shifted to another party. 29. Workers compensation - ANSWER A system that pays lost wages, medical and vocational rehabilitation expenses, and death benefits to injured workers or their dependents for employment-related injuries and diseases. 30. Policy provisions - ANSWER Any phrase or clause in an insurance policy that describes the policy's coverages, exclusions, limits, conditions, or other features. 31. Declarations page - ANSWER An insurance policy information page or pages providing specific details about the insured and the subject of the insurance. 32. Endorsement - ANSWER A document that amends an insurance policy. 33. Definitions - ANSWER A preliminary section of a homeowners policy identifying the insured, the insurance company, and the commonly used terms found throughout the policy. 34. Insuring agreement - ANSWER A statement in an insurance policy that the insurer will, under described circumstances, make a loss payment or provide a service. 35. Policy condition - ANSWER Any provision that qualifies an otherwise enforceable promise made in the policy. 36. Exclusion - ANSWER A policy provision that eliminates coverage for specified exposures. 37. Financial responsibility laws - ANSWER Laws enacted to ensure that motorists have the financial ability to pay for any property damage or bodily injury they might cause as a result of driving or owning an auto. 38. Compulsory auto insurance law - ANSWER Law that requires the owners or operators of automobiles to carry automobile liability insurance at least equal to certain minimum limits before the vehicle can be licensed or registered. 39. First party - ANSWER The insured in an insurance contract. 40. Unsatisfied judgment fund - ANSWER A fund designed to provide a source of recovery for victims of motor vehicle accidents when an at-fault motorist is unable to pay any judgment. 41. Uninsured motorists (UM) coverage - ANSWER Coverage that provides a source of recovery for occupants of a covered auto or for qualifying pedestrians who are injured in an accident caused by an at-fault motorist who does not have the state minimum liability insurance or by a hit-and-run driver. 42. Underinsured motorists (UIM) coverage - ANSWER Coverage that applies when a negligent driver has liability insurance at the time of the accident but has limits lower than those of the injured person's coverage. 43. No-fault automobile insurance - ANSWER Insurance that covers automobile accident victims on a first-party basis, allowing them to collect damages from their own insurers regardless of who was at fault. 44. No-fault laws - ANSWER State statutes that require motorists to purchase (or require insurers to make available) insurance that provides minimum first-party benefits to injured persons regardless of fault. 45. Monetary threshold (dollar threshold) - ANSWER In a no-fault system, a dollar limit in total medical expenses an injured victim must exceed before he or she is permitted to sue the other party. 46. Verbal threshold - ANSWER In a no-fault system, the designated criteria that are verbally "set forth in the statute that limit the right to sue." 47. Add-on plan - ANSWER In a no-fault system, a plan that provides certain personal injury protection (PIP)-type benefits such as medical payments and disability coverages to injured victims, without regard to fault. 48. Choice no-fault plan - ANSWER In a no-fault system, a plan that gives the insured the option, at the time an auto insurance policy is purchased or renewed, of choosing whether to be covered on a no-fault basis. 49. Personal injury protection (PIP) coverage - ANSWER Coverage that pays benefits, regardless of fault, for medical expense, income loss, and other benefits, resulting from bodily injury to occupants of a covered auto. 50. Subrogation - ANSWER The process by which an insurer can, after it has paid a loss under the policy, recover the amount paid from any party (other than the insured) who caused the loss or is otherwise legally liable for the loss. 51. Residual market - ANSWER The term referring collectively to insurers and other organizations that make insurance available through a shared risk mechanism to those who cannot obtain coverage in the admitted market. 52. Safe driver insurance plans (SDIP) - ANSWER Plan that allows for lower basic premiums for accident-free driving records and a surcharge for accidents. 53. Automobile insurance plan - ANSWER Plan for insuring high-risk drivers in which all auto insurers doing business in the state are assigned their proportionate share of such drivers based on the total volume of auto insurance written in the state. 54. Joint underwriting association (JUA) - ANSWER Organization that designates servicing insurers to handle high-risk auto insurance business: all auto insurers in the state are assessed a proportionate share of the losses and expenses based on their percentage of the voluntary auto insurance premiums written in the state. 55. Reinsurance facility - ANSWER A state-wide reinsurance pool to which insurers can assign premiums and losses for high-risk drivers; original insurers service the policies, but all insurers in the pool share the losses and expenses of the facility in proportion to the total auto insurance they write in that state. Named insured - ANSWER A person, corporation, partnership, or other entity identified as an insured party in an insurance policy's declarations page. Policy period - ANSWER this time frame, beginning with the inception date, during which insurance coverage applies. Vehicle identification number (VIN) - ANSWER A unique number that is assigned to each vehicle and that identifies certain vehicle characteristics. Collision coverage - ANSWER Coverage for direct and accidental loss or damage to a covered auto caused by collision with another object or by overturn. Other than collision (OTC) coverage - ANSWER Coverage for physical damage to a covered auto resulting from any cause of loss except collision or a cause of loss specifically excluded. Compensatory damages - ANSWER A payment awarded by a court to reimburse a victim for actual harm. Split-limits basis - ANSWER Separate coverage limits that allow one limit for bodily injury to each person; a second usually higher limit for bodily injury to all persons in each accident; and a third limit for all property damage in each accident.