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Definition
| involves the chance of loss or gain and is not insurable |
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| involves the chance of loss and is insurable |
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| an unintended, unforseen event caused directly by a covered peril (ex: fire loss to a structure) |
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Definition
| the subsequent loss of use claim the insured files for the loss incurred after the peril (ex: hotel accomodations) |
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Definition
something that directly causes a loss
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| a condition that increases the frequency or severity of a loss that is visible |
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| a condition that increases the frequency or severity of a loss that is dishonest |
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| a condition that increases the frequency or severity of a loss that is careless or a result of irresponsible attitudes |
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Definition
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Definition
| those with high risk situations attempt to purchase insurance before those with average or below-average risks |
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Definition
| a transfer of risk from one to many |
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Definition
| as the number of similar risk exposures increases, the accuracy of the insurance company's loss projections will increase |
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Definition
| the insured pays a certain amount per loss before the insurer is required to make a payment |
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Definition
| the insured pays for all losses until they exceed a certain amount; typically apply per policy period; "build up" |
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Term
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Definition
-insurers can charge lower premiums
-insureds are more careful because they must assume part of the loss
-helps to eliminate small claims |
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Term
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Definition
applied in the transitional area between basic coverage and major medical expense coverage.
benefits are paid by the basic health policy first. when these benefits are exhausted, _____is applied before benefits under the major medical plan are paid |
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Term
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Definition
requires the insurer pay for an entire loss if the loss exceeds a certain dollar amount
if the loss does not exceed this amount, the insured is required to pay for the entire loss
"all or nothing" |
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Term
| elimination period deductible |
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Definition
| payments used with disability income policies and long-term care insurance |
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Term
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Definition
an unbroken chain of events leading to the direct loss
an insured peril is required
"had it not been for this occuring, that would not have occured" |
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Term
Elements of an Insurable Risk
Calculable*
Affordable
Non-catastrophic
Homogenous
Accidental
Measurable* |
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Definition
| CANHAM--what insurers require |
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Term
Sharing
Transfer
Avoidance
Retention
Reduction |
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Definition
| methods of managing risk--STARR |
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Term
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Definition
restoring the insured to the same position the insured was in before a loss
prevents the insured from making a profit from a loss |
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Term
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Definition
| replacement cost - depreciation |
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Term
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Definition
pays the face amount for a total loss regardless of the actual cash value of the insured property
life insurance is a valued policy that pays a stated sum to the beneficiary upon the death of the insured
an exception to the indemnity principle |
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Term
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Definition
if more than 1 policy covers the same loss, each insurer will pay a proportional share of the loss
used with life/health and property/casualty insurance |
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Term
| primary and excess coverage |
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Definition
coverage where the primary insurer pays first
once that coverage has been exhausted, the excess insurer pays
used in life/health and property/casualty insurance |
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Term
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Definition
applies when more than 1 group health insurance policy covers the same loss
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Term
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Definition
the policyholder must incur a financial loss or some other type of harm should a loss occur
in life & health insurance, _____ must exist at the time of the application |
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Term
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Definition
gives the insurer the right to collect from a negligent 3rd party after making a loss payment to the insured
it prevents the insured from collecting twice for the same loss
ex: an insurance company that sues the company that caused your injury because the injury should not have even happened |
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Term
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Definition
| statements in the application that are believed to be entirely true |
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Term
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Definition
| incorrect statements in the application that do no affect the applicant's insurability |
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Term
| material misrepresentations |
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Definition
incorrect statements in the app that involve info used to make an underwriting decision
insurers will usually void coverage
matters to the policy |
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Term
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Definition
intentionally hiding material underwriting info from the insurer
this is a form of insurance fraud |
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Term
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Definition
a statement found in the policy that must be true at the time a loss occurs
not a condition of coverage, and the insurer is not obligated to pay a claim if this has been breached |
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Term
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Definition
unique feature of insurance contracts
only 1 party makes a legally enforceable promise |
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Term
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Definition
a unique feature of insurance contracts
the insured must accept the contract as-is
any ambiguities will be interpreted in favor of the insured |
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Term
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Definition
a unique feature of insurance contracts
an unequal value is exchanged between the parties to the contract
benefit coverage > premium, ALWAYS |
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Term
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Definition
a unique feature of insurance contracts
the contract may be voided if all policy conditions are not met |
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Term
Declarations
Insuring agreement
Conditions
Exclusions
Riders |
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Definition
| basic parts of an insurance contract |
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Term
| declarations for life/health insurance |
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Definition
-parties to the contract
-the policy limit
-age of the insured at issue date |
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Term
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Definition
| policies only cover losses from perils that are specifically listed in the policy |
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Term
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Definition
| policies cover all losses excpet those listed in the policy |
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