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Property &Liability
| Term | Definition |
|---|---|
| risk | The chance of loss. |
| policy | A written contract for effecting insurance and includes clauses, riders, endorsements, and papers which are part of the contract |
| insurance | A contract where one undertakes to indemnify another or pay a specified amount determined on contingencies. |
| binder | Temporary insurance which can be made orally or written |
| property insurance | Where payment is made directly to the insured or other named interests. |
| appointment | The authority given by an insurer or employer to transact insurance or adjust claims |
| liability insurance | Where payment is made on behalf of the insured to another |
| missed appointment | An applicant failure to present a valid form of identification and requires the exam to be rescheduled is called |
| Controlled Business | When more then 50% of an agent's income is anticipated to come from transactions for which has business( Friends and family) |
| Speculative Risk | The chance of loss or gain |
| Law of large numbers | a statistical concept that suggest that the more exposure units we have to study the more likely that any projections we make are likely to equal what actually occurs. |
| Endorsement | A modification to the original policy which changes it in some way |
| Black's Law Dictionary | defines a contract as an agreement between two or more parties creating obligations which are legally enforceable |
| offer | Made by one party to others. Promise one party makes in exchange for another party's performance; characteristic of Black Law Dictionary |
| Comunnication | communication of the acceptance in the prescribed manner and time frame; characteristic of Black Law Dictionary |
| Mutuality of Obligation | all parties must have an obligation to act; characteristic of Black Law Dictionary |
| Capacity | a person must have legal status to enter into contracts (age and state of mind); characteristic of Black Law Dictionary |
| Consideration | Something of value (usually money) exchanged between the parties ("kinda like you scratch my back I'll scratch yours"); Characteristic of Black Law Dictionary |
| acceptance | unequivocal(indisputable) acceptance of the offer.an express act that demonstrates an agreement in a manner required by the offer so that a binding contract is formed.; Characteristic of Black Law Dictionary |
| Competency | all parties must have the mental wherewithal to fairly engage in the agreement; Characteristic of Black Law Dictionary |
| Legality | the agreement must have a legal intent; Characteristic of Black Law Dictionary |
| Contract | a promise or agreement that is enforceable under the law. |
| indemnity | the principle of insurance where, after a loss, the insured is restored to the approximate financial condition occupied before the loss occurred (return to the way it was before) |
| Mutual assent | when two parties have agreed upon something and are prepared to enter into a contract. In other words, both parties agree to the same thing. |
| statute | a written law passed by a legislature on the state or federal level. |
| Binders Precede Policy Issuance | Coverage is put into effect, or "bound," prior to the issuance of a policy. |
| Binders Enable Immediate Coverage | Agents can put insurance into effect immediately and provide the insured with a Binder to evidence the coverage and its terms prior to the issuance of the "paper" policy |
| Certificates of Insurance | are issued to "prove" to a third party that coverage is in effect. |
| Policy limits | in the policy specifically express the responsibility of the insurance company to pay the insured or on behalf of the insured; the limits represent how the policy will respond (that is "how much" will be paid) in the event of a covered loss. |
| Insurance contracts | require the person insured to have an insurable interest at the time of the insured-against contingency (that is, at the time of a loss) |
| personal contract | wherein property and liability insurance policies cover losses sustained by persons.The focus is on the person or persons, NOT the insured property or insured operations (Characteristic of insurance contract) |
| actual cash value of a loss | the cost to replace an item of property at the time of loss taking depreciation into account; this provides that the insured is no better or worse than before the loss occurred |
| insurable interest | measures the extent to which an insured might be indemnified by loss, injury, or impairment thereof. |
| insurance contracts | are made up of four (4) basic parts or section: the Declarations Page, Insuring Agreements, Exclusions, and Conditions. |
| Declarations Page | describes the insurance company's name and address, the named insured's name and address, the subject(s) of insurance, policy period, coverages types, coverage limits, and the cost/premium for the policy |
| Insuring Agreements | broadly define the coverages given under the policy; |
| Exclusions | sections establish property, situations, persons, or perils not covered by the policy. |
| conditions | section establishes the "rights and duties" of the insurance company and the insured to each other;section qualifies and places limitations on the insurer's responsibility to perform and/or pay |
| Liberalization Clause | broadens policy coverage if policy language has been broadened (60 days prior to or during policy) |
| subrogation | the assignment of recovery from the insured to the insurance company after a claim payment has been made to the insured. The assumption of the insured's rights against responsible third party to the insurance company. |
| other insurance | states how the insurance policy will coordinate with any other "valid and collectible" insurance |
| conditional contract | Obligation of insurer to perform may depend on the insured satisfying certain conditions. (characteristic of property/liability contract) |
| contract of adhesion | Parties have unequal bargaining power such as the insured cannot negotiate the terms of the insurer. Ambiguities found in the policy are usually found in favor of the insured. |
| indemnity contract | One party should be put back in the same financial condition they were before the loss and never profit from a loss (characteristic of property/liability contracts) |
| peril | a contingency that may cause a loss? |
| hazard | a condition that increases the likelihood of a loss from a covered peril |
| physical hazard | Physical characteristics that increase the probability and severity of loss. |
| moral hazard | Intentional loss |
| morale hazard | Accident-prone or carelessness. |
| proximate cause | A doctrine that states when there is an unbroken connection between an occurrence and damage that grows out of the occurrence, then the resultant damage is all part of the occurrence. |
| direct loss | Physical harm to tangible property. |
| indirect loss | Economic loss which flows as a consequence of the direct loss |
| lender interest | Varies policy to policy; virtually all property insurance covering real property provides for naming mortgagees and gives them special protection such as: 1. Advanced notice of cancellation 2. Protected even if insured is prevented from recovery 3. All |
| replacement cost | The actual cost to repair or replace property |
| valued policy law | States that for a total loss by a covered peril to a building, the insurer must pay the amount provided in the policy for which the premium has been paid. |
| valued policy | Where the insurer agrees, in advance, that the coverage limit applicable to the item will be considered its value. This applies to items where ACV or replacement cost is difficult to establish, such as with antiques or fine arts. |
| coinsurance | A method of encouraging the insured to accept the responsibility of insuring for the amount close to the value of the property. |
| percentage deductible | Percentage of loss of the value of the property or a percentage of the policy limits |
| franchise deductible | No payment is made until the loss equals or exceeds a prescribed amount, then loss is paid in full |
| aggregate limit | A limit is applied which represents the total insurance coverage that will be paid for the policy term. |
| "assignment" clause | Specifies that transferring the policy to another will not be valid unless the insurer consents in writing. |
Created by:
Mindyinthehouse
Popular Insurance sets