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35 Cards in this Set
- Front
- Back
What is a Risk?
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The chance of loss, odds that a loss will occur
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What are the 2 types of Risk and which does Insurance cover?
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- Pure Risk = Only a chance of loss ****
- Speculative Risk = Chance of loss or gain (Gambling) |
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What is Insurance?
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An economic device that allows the individual to substitute a small certain cost for protection against a large, uncertain cost.
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What is Insurable Interest?
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When you have Insurable Interest, the loss impacts you financially
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What is a Peril?
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A Cause of Loss
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What is a Hazard?
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Increase chance of loss
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What are the 4 kinds of Hazards?
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Moral - Insured's Character/Intent
Morale - Insured's Carelessness/Neglect Physical - Defects to the risk (Slick floors) Legal - Potential that the insured causes other person's loss |
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What is a Loss?
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A reduction in economic value due to BI/PD
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What is a Direct Loss?
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• A physical loss to covered property caused by a covered peril (House Total Fire Loss)
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What is an Indirect Loss?
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A loss that follows a Direct Loss and causes the insured to suffer further financial consequences. (Renting a hotel room after a House Fire)
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What is Proximate Cause?
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• When Damage is done by an unnamed peril due to a named peril
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What is a Deductible?
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• An insured’s way of participating in the loss.
• Helps reduce the number of small claims for the insurance company. |
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What is Indemnity?
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• To make whole again. No better/No worse
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How do you calculate Actual Value Cost?
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• ACV = Replacement Cost - Depreciation
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What is Replacement Value
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• The cost to replace something at today’s value without subtracting depreciation
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What are the 3 kinds of Limits of Liability?
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• Single Limits – Paid by the Occurrence (Not per Person)
• Split Limits – (100/300/100) • Aggregate Limits – How much a policy can pay in total during a term, regardless of the number of claims |
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What is Co-Insurance?
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• Deals only with partial losses
• The insured must be insured for atleast 80% of the value – They get 100% of repair cost • If under 80% then – (Did/Should) x Loss = Amount Paid |
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What are some Extensions of Coverage
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(WCSHAVER)
A specific endorsement attached to a Standard Fire policy, usually providing coverage of windstorm, hail, explosion, riot, riot attending civil strike, aircraft, vehicular damage, smoke and civil commotion. |
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What are Additional Coverages?
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• Provided without additional cost (Debris Removal, Fire Dept. Service Charge)
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What is an Accident?
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An unexpected and unintended chance happening occurring at a known time and place
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What is an Occurrence?
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• Continuous and repeated exposures to the same conditions that could result in BI
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What is the difference between Vacant and Unoccupied?
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• Vacancy is void of people and stuff. Losses to buildings vacant for over 60 days is not covered
• Unoccupancy is temporarily void of people (No one is home) |
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What does 'Right to Salvage' mean?
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If an insurance company declares an insured piece of property to be non-repairable the company can simply pay the insured the value of the item and salvage the damaged property
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What is Abandonment?
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An attempt by an insured to receive full value for a partially damaged item by offering the damaged property to the insurance company.
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What is Liability?
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• To have responsibility for damage caused to another person or their property
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What is Negligence?
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• The basis of liability claims – “The failure to do or not do what a reasonable person would do or not do in the same similar circumstances”
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What is Theft?
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• Any act of stealing
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What is Burglary?
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The taking of property from a premises that is closed and locked - There MUST be visible signs of forced entry.
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How do you define Robbery?
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The taking of property from a person using force or threat of force
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What is a Mysterious Disappearance?
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Coverage in "All Risk" policies for property that is lost or misplaced with no likelihood or probability of theft
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What are Binders?
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• Provides temporary, interim coverage before a policy is reviewed by the insurance company. Can be oral or written
Lasts 30-90 days |
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What is a Wavier and Estoppel?
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• Waiver is voluntarily giving up a right
• Estoppel is a barrier to legal action due to a party’s prior actions. |
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What is a Valued Policy?
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• GA is a Value Policy State. In the event of a total fire loss, the company MUST pay the policy limits.
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What is the Law of Large Numbers?
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Used to predict the outcome of insuring risks. Based on previous outcomes of thousands of similar claims
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What is included in a typical Insurance Policy?
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• A policy consists of
o Declaration’s Page – Includes everyone’s information + Policy # o Insuring Agreement – How loss will be covered by the policy o Conditions – Spell out the Duties, Rights, and Responsibilities o Exclusions – Loss that aren’t covered o Endorsements – Used to modify or make changes to a policy o Definitions – Clear indication on how the policy is expected to perform |