Insurance Glossary: Terms and Definitions, Exams of Institutional economics

Download Insurance Glossary: Terms and Definitions and more Exams Institutional economics in PDF only on Docsity! Adjuster Pro - Florida Certified Adjuster Glossary Questions And Answers Accumulated Depreciation - correct answer The total decrease in an item's value over a period of time. Formula: (Annual Depreciation x Number of years used) Actual Cash Value (ACV) - correct answer A valuation method used by insurers to reflect an item's current market value right before being damaged or destroyed. Formula: (Replacement cost - Accumulated Depreciation) Adhesion - correct answer One of the characteristics of an insurance contract. Means that one party (the insurer) sets the terms, and the other (the insured) can 'take it or leave it.' Adjusted Gross Revenue (CropInsurance) - correct answer Narrowest (and least expensive) form of Crop Revenue Insurance. Insures farm revenue as a whole instead of individual crops. Guarantees a percentage of the insured farm's average revenue. Adjuster - correct answer An agent who, for compensation, processes insurance claims. Can represent either the insured or the insurer. Adjuster - Emergency - correct answer Adjusters who are temporarily licensed by the insurance commissioner to handle claims during catastrophes or emergencies that produce an overwhelming number of claims in a short period of time. Adjuster Pro - Florida Certified Adjuster Glossary Questions And Answers Adjuster - Independent - correct answer Self-employed adjusters who contract with multiple insurers at the same time. Paid on a commission or fee-plus-expenses basis for each claim. Also called: Fee Adjuster, Bureau Adjuster Adjuster - Public - correct answer An adjuster who is hired to represent the claimant and help determine a fair indemnification.Usually specializes in appraisals and negotiation. Paid commission, usually a percentage of final settlement. Adjuster - Staff - correct answer Salaried employee of one insurance company who can work locally, regionally, or nationally. Also called: Company Adjuster Advance Payment Settlement - correct answer A settlement option that lets the insurer offer some financial relief to the claimant before the claim has been fully settled. The insurer makes advance payments to the claimant, which are then subtracted from the final settlement amount. Often used when a claimant suffers bodily injury and is unable to work. Agency Authority - correct answer The Agent's authority to act on behalf of someone else, usually an insurer. This authority is derived from the agent's contract with the insurer. Adjuster Pro - Florida Certified Adjuster Glossary Questions And Answers Arbitrator - correct answer The mutually-agreed-upon and neutral third party in an arbitration who reviews the positions ofeach opposing side, and makes a final and legally binding decision. Auto Policy - correct answer Insurance policy designed to protect the policyholder while owning, occupying, or operating avehicle. Usually combines liability coverage and property coverage into one policy. Automobile - correct answer In Insurance policies, Automobile generally means any vehicle designed for use on publicroads. Automobile No-fault Laws - correct answer Insurance that indemnifies the insured regardless of who was at fault in an accident; also restrict the insured's right to sue the at-fault party. Aviation - correct answer Aviation insurance combines hull insurance for the aircraft and liability insurance for any damage to others' property or to people who are not passengers. Bailee - correct answer An individual or company that receives the property of someone else for a special purpose, and returns the product after use. Adjuster Pro - Florida Certified Adjuster Glossary Questions And Answers BAP - correct answer The Business Auto Policy provides property damage and liability insurance for automobiles used by a business. Binder - correct answer A temporary contract provided by an insurer that ensures coverage until the complete, permanent policy is issued. BI - correct answer (Bodily Injury): Physical damage to someone's person. Body Language - correct answer The signals we give through posture, behaviour, apparel, etc., which are involved in communication. Boiler & Machinery - correct answer Insurance designed to indemnify a business for damages to, and damages by, boilers, machinery, motors, generators and a variety of other electrical devices and appliances. Bond - correct answer A contract wherein one party guarantees the performance of a third party. Bonds involve three parties: (1) the surety agrees to pay the second party (2) the obligee if the third party (3) the principal neglects to carry out an obligation it has to the obligee. Breach of Product Warranty - correct answer The failure or falsehood of a stated promise of a product stipulation. Adjuster Pro - Florida Certified Adjuster Glossary Questions And Answers Business Personal Property - correct answer Moveable property used for business Catastrophe - correct answer An occurrence or a sequence of occurrences that causes enormous property losses; normally uninsurable by private insurers. Cause of Loss - correct answer A form included in a Commercial Package Policy or a Commercial Property Policy that lists the causes of loss from which the insured property is covered. CGL - correct answer A Commercial General Liability policy protects businesses against damages and injuries to thirdparties. Civil Law - correct answer Observes court cases of one citizen charging another citizen for damages caused by tort; it differs from criminal law. Claim - correct answer The "offer of settlement" that the policyholder files with an insurer after she experiences a loss. Claims-made Form - correct answer A liability policy in which the insurer pays only those claims arising during the policy period (as opposed to those claims arising after the policy period is over, regardless of whether the incident took place during the policy period). Adjuster Pro - Florida Certified Adjuster Glossary Questions And Answers Common Law - correct answer Based on court decisions and customs when statutory law does not provide an answer; creates precedent. Compensatory Damages - correct answer Money awarded in civil court for tangible and intangible damages caused by a policyholder Compensatory damages -Special - correct answer Money awarded for the exact value of the physical damage caused to the plaintiff up to the trial date; objective value determined by receipts and medical bills. Compensatory damages -General - correct answer Money awarded for the emotional losses of the plaintiff that will continue after the trial date; subjective value determined by the court. Competence - correct answer One of the four qualifications of a legally binding contract. All parties must be competent, with the necessary legal and mental capacity. Complaint - correct answer Initiates a civil lawsuit by a claimant requesting financial relief from damages caused by a policyholder. Concealment - correct answer The act of withholding relevant material facts from an insurer. Adjuster Pro - Florida Certified Adjuster Glossary Questions And Answers Conditions - correct answer The section of a policy that qualifies or limits an insurer's promise to pay or perform. Consideration - correct answer One of the four qualifications of a legally binding contract. All parties must bring something of value to the contract. Contract - correct answer An agreement entered into voluntarily by two parties or more with the intention of creating a legal obligation. Coverages - correct answer The amount and extent of protection provided by an insurance policy. Crime - correct answer An offense against the State or Federal Government, or a breach of law, for which the offender shall make satisfaction to the public. Criminal - correct answer Someone who has been convicted of a criminal act in a court of law. Crop Hail Insurance - correct answer A form of Crop Yield Insurance that is usually provided by private insurers without government subsidy. It offers named-peril protection on an acreage basis. Adjuster Pro - Florida Certified Adjuster Glossary Questions And Answers Crop Insurance - correct answer Insurance coverage designed to protect a farmer's financial investment in his or her crops; covers losses to a crop's profitability. Crop Revenue Insurance - correct answer Crop insurance that combines crop-yield insurance and price insurance to protect against losses to crop value. Crop Yield Insurance - correct answer Crop insurance that covers losses to actual crops. Damages - general - correct answer Intangible losses such as pain and suffering, or mental anguish. Damages - special - correct answer Tangible, financial losses that can be documented. Dangerous Instrumentality Doctrine - correct answer States that anyone involved in the use of inherently dangerous products or machines is held100% liable for their own damages. Adjuster Pro - Florida Certified Adjuster Glossary Questions And Answers Endorsement(s) - correct answer An optional provision that can be added to a policy to increase, reduce, or modify coverage forspecific property types or perils. Errors and Omissions - correct answer Liability insurance that indemnifies professionals for errors or oversights on the part of theinsured that caused harm to their clients. Estoppel - correct answer A legal principle that bars a party from asserting something contrary to what has been impliedby his previous actions or statements. Ethical - correct answer Adhering to moral laws and to principles of fairness. Evaluation - correct answer Evaluation, determining the approximate value of damages relevant to a claim i.e. total ofmedical bills, costs of repair & replacement of damaged property and the consideration of thefinancial provisions of the insurance policy. Exclusions - correct answer A section of an insurance policy that reduces coverage by listing specific individuals, property,or perils that are NOT covered by the policy. Adjuster Pro - Florida Certified Adjuster Glossary Questions And Answers Exposure - correct answer The extent to which an item is open to damage or loss. More exposure means a loss is morelikely. Fair Credit Reporting - correct answer Federal legislation that gives an applicant for insurance the right to investigate the reasons hisinsurance application was denied. Fall Down Case - correct answer A lawsuit brought against a property owner by someone who has fallen down on the property. False Advertising - correct answer Presenting something in a deceptive or untrue manner to the consumer; misrepresentations inadvertisements. Farm - correct answer A property where a farmer or rancher both resides and conducts commercial business. Farmer - correct answer Someone in the business of growing, harvesting, and selling crops for profit. In Farm insurance,a farmer must reside and do business on the same premises. FEMA - correct answer Federal Emergency Management Agency - a branch of homeland security that coordinatesrelief programs when disaster strikes an entire community. Adjuster Pro - Florida Certified Adjuster Glossary Questions And Answers Fiduciary - correct answer One of the terms that describes the adjuster's relationship with the principal (the insurer). AsFiduciary Agent, the adjuster acts for the benefit of the principal, rather than for his own benefit. First Named Insured - correct answer The first person or entity named as insured on the declarations page of a policy. Floater - correct answer A term for Inland Marine policies that cover mobile property. Flood - correct answer An overflow of inland or tidal waters; an unusual or rapid accumulation of runoff or surfacewaters from any source; mud flows; collapse or subsidence of land along the shore of a lake orother body of water. Flood Insurance - correct answer provides relief following flood damage to communities who participate in the NFIP floodplainmanagement system; covers damages to the building and its contents Floodplain Management - correct answer maps out areas with high risk of flood, so that communities will avoid building in these areas Adjuster Pro - Florida Certified Adjuster Glossary Questions And Answers HO Forms 3 - correct answer Special form" of Homeowners Insurance; all-peril coverage for structures named-perilcoverage for contents. HO Forms 4 - correct answer Contents broad form"; named-peril renter's policy covering only personal property and anystructural improvements made at tenant's own expense. " HO Forms 5 - correct answer Comprehensive form" of Homeowners Insurance; provides all-peril coverage to both structuresand contents; the Cadillac of HO forms. " HO Forms 6 - correct answer Condo" or "unit owner's form"; named- peril homeowners policy covering personal property andthe surface structure of a condominium. " HO Forms 8 - correct answer Modified coverage form" of Homeowners Insurance; named-peril coverage for structures andcontents fewer perils covered; form for buildings with low value. Homeowner's Policy - correct answer An insurance policy that combines property coverage with liability coverage for a person'shome. Adjuster Pro - Florida Certified Adjuster Glossary Questions And Answers IIPPA - correct answer The Insurance Information and Privacy Protection Act regulates how an insurance companycan use consumers' private information. Impaired Property - correct answer Property that is defective because the insured's deficient or incomplete additions or work. Income Protection (CropInsurance) - correct answer A form of Crop Revenue Insurance. One of the cheapest available; provides a fixed revenueguarantee based on early commodity prices for the crop type. Indemnification - correct answer Reimbursement for a loss, which leaves the claimant in the same financial position that she wasin before the loss. Indemnify - correct answer To restore by payment, repair, or replacement Indemnity Insurance - correct answer Insurance that indemnify's loss as opposed to liability Indirect Loss - correct answer An economic loss that results from the direct, or physical, loss. Adjuster Pro - Florida Certified Adjuster Glossary Questions And Answers Inland Marine - correct answer Insurance that protects property being transported over land Insurance - correct answer A financial device used by people and organizations to protect themselves from unexpected,extraordinary financial losses. Insurance Company - correct answer Company which sells insurance policies to individuals or to other companies. Insurance Policy - correct answer A contract wherein an insured pays premiums to an insurer in exchange for financial protectionin the event of a covered loss. Insurance Rating Systems - correct answer Methods of evaluating the risk involved in insuring a person, property, or a corporation. Insurersuse rating systems to calculate premiums. Insured - correct answer A person or entity who is covered under an insurance policy. Insurer - correct answer The person or entity providing coverage to one or more insureds. Adjuster Pro - Florida Certified Adjuster Glossary Questions And Answers Liberalization - correct answer The liberalization clause in an insurance contract is a condition that states that the insurer can add or broaden coverage at any time without writing up a new contract. This clause guaranteesthat, in the case of legislative action that broadens insurance coverage without any increase inpremiums, this additional coverage must take effect in existing policies as well as in newpolicies. License - correct answer A document that shows that a person has been granted authority by the state to act as aninsurance agent, broker, or adjuster. Limits - correct answer The limits of an insurance policy represent the highest amount an insurer will pay. Any costabove the limits of insurance is the responsibility of the policyholder. Litigation - correct answer An action brought in court. Litigation takes place when an insurer and a policyholder disagreeabout a settlement amount and cannot resolve their differences through any sort of negotiation. Livestock Floater - correct answer Optional Farm Insurance coverage. Provides stand-alone protection for six kinds ofdomesticated animals on a scheduled or unscheduled basis. Includes coverage for animalswhile in transit. Adjuster Pro - Florida Certified Adjuster Glossary Questions And Answers Loss - correct answer Bodily injury, property damage, or damage caused by the insured's negligent acts; loss is thethe basis for an insurance claim. Loss can also mean the sum the insurer will have to pay. Loss - direct - correct answer Physical loss or damage to property directly due to an incident; i.e. fire, wind, etc.. Machinery - correct answer Machines or the parts of a machine. Malpractice - correct answer Negligent or improper actions on the part of doctors, lawyers, and accountants etc., resulting indamage, injuries, or losses to the person receiving their services. Marine - correct answer Marine insurance covers items that are being transported, as well as the vehicles used fortransportation. Market Value - correct answer The price something will sell for in the open market, or fair market value." " McCarren-Ferguson Act - correct answer 1945 US Law exempting insurance from most federal regulation, and placing it under theauthority of the individual states. Adjuster Pro - Florida Certified Adjuster Glossary Questions And Answers Mechanical Breakdown - correct answer Mechanical Breakdown Insurance (MBI) covers losses due to breakdown of motor vehicles. Mediation - correct answer A method of negotiation that utilizes a neutral third party adviser to reach a mutually-agreeablesolution. Mediation differs from Appraisal in that the decision is not binding to the opposingparties. Misrepresentation - correct answer Any false or misleading statement. Mr. Insurer - correct answer In this course, Mr. Insurer represents the entity providing insurance. Multi Peril Crop Insurance - correct answer A form of Crop Yield insurance that offers broad coverage for a multitude of perils. Because it issubsidized by the government, MPCI is subject to federal regulation. Mutual - correct answer A mutual insurance company is owned by its policyholders. They have no shareholders and arenot traded publicly. Negligence - correct answer The failure to exercise a reasonable degree of care in a particular situation. Adjuster Pro - Florida Certified Adjuster Glossary Questions And Answers Personal Injury - correct answer Damages to a third party's character, reputation, or standing in the community. Personal Property Floater - correct answer Protects property owners from damage or losses to personal articles while in the process of transport. PIP - correct answer Personal Injury Protection: a form of no-fault auto insurance utilized in some states. Policy - correct answer See Insurance Policy. Policy Period - correct answer The beginning and end dates of coverage. Found on declarations page. Policyholder - correct answer A person who has purchased an insurance policy - orcontract- from an insurer. Power to bind - correct answer One manifestation of the authority given to insurance agents by the principal. The principal isbound by, or must adhere to, the guarantees and statements made by its agent. Adjuster Pro - Florida Certified Adjuster Glossary Questions And Answers Premium - correct answer A scheduled and affordable fee, paid by the policyholder to the insurer, in return for coverage. Preponderance of Evidence - correct answer A preponderance of evidence is enough evidence to make it more likely that an argument is truethan that it is false. In a civil trial, the plaintiff needs to provide a preponderance of evidence inorder to win her case. Principal - correct answer The principal refers to an agent's employer (usually an insurance company, but it could alsomean anyone who contracts the agent to work on their behalf and gives her the authority to doso). Principle of Indemnity - correct answer The principle behind all insurance contracts. It states that, when a loss occurs, the insuredshould be restored to his or her financial condition before the loss occurred, no better, no worse. The insured cannot profit from a loss. Privacy - correct answer In insurance, the right of consumers to have their personal information protected. Private - correct answer Private insurance is the term for any insurance other than social insurance. Social insuranceprograms are run by the government instead of by private individuals. Adjuster Pro - Florida Certified Adjuster Glossary Questions And Answers Professional Liability - correct answer Professional Liability Coverage is insurance that protects practitioners such as doctors, lawyers,engineers, architects, etc.. It includes two types of coverage: malpractice insurance and errorsand omissions insurance. Proof of Loss - correct answer The form or statement that the policyholder is required to submit to the insurer before she canbe indemnified for a loss. Proximate Cause - correct answer The original occurrence, the source, of all the subsequent damages. Punitive Damages - correct answer Intangible damages awarded to the plaintiff when the defendant's actions show intentionalheinous, antisocial behavior or extreme indifference to harm. They are determined by the court. Rating Systems - correct answer Measure hazards of individual risk in a given area, and sets premiums accordingly. RC - correct answer RC: Replacement Cost, It refers to the cost of repairing or replacing an insured item, based onthe item's value at the time of the loss. Adjuster Pro - Florida Certified Adjuster Glossary Questions And Answers Risk Purchasing Groups - correct answer Groups of people with similar insurance needs who form an organization to buy insurance as a group. Risk, Pure - correct answer Risk that does not entail the possibility of gain; the only possible outcomes are a loss or no loss. Risk Reduction - correct answer An insurer practices risk reduction when it takes precautions in order to reduce its exposure; forexample, requiring that all homes insured by a homeowners policy have fire alarms installed. Risk Retention - correct answer An insurer practices risk retention when it chooses to insure a risk instead of denying coverage. Risk Retention Groups - correct answer Groups where the members insure each other, using their own capital to write insurancepolicies. Risk, Speculative - correct answer Risk that might result in gain, loss, or no change in circumstance (as opposed to pure risk,which does not include the possibility of gain). Salvage - correct answer Salvage is damaged property that has cash value. In HO the policyholder has the option ofkeeping the salvage and Adjuster Pro - Florida Certified Adjuster Glossary Questions And Answers accepting a smaller settlement from the insurer. The insurer has theoption of keeping the salvage if they have fully indeminified the insured, but in no case can theinsured insist the insurer keep the salvage. Scheduled payment release - correct answer Sometimes called open- ended release" or "rehabilitation settlement." The insurer agrees to payall of the special damages and general damages that have accumulated so far and agrees topay special damages in the future. Settlement - correct answer A resolution of a dispute, or an agreement. Settlement allows an insurer and a claimant to resolve a case before it reaches a court of law. Small Grains - correct answer In Crop Insurance, a provision that covers reduction in crop quality, as well as crop-yield losses.Small grains are wheat, barley, and oats. See also Coarse Grains" " Statute of Limitations - correct answer A statute based on the common law legal system that specifies the maximum period of time,after damages occur, that legal proceedings based on those damages may be initiated. Statutory Law - correct answer based on laws set forth by a governing authority; i.e. state legislature Adjuster Pro - Florida Certified Adjuster Glossary Questions And Answers Stipulation - correct answer A stipulation is something specifically agreed to in a contract, such as an insurance contract. Stock - correct answer A Stock Insurance Company is owned by stockholders, as opposed to its own policyholders (asis the case with Mutual Insurance Companies). Strict Liability - correct answer Holds a party 100% liable for damages when the activity or instrument they are performing isinherently dangerous. Subrogation - correct answer The ceding of the insured rights to the insurer to seek reimbursement from liable parties. Supplementary payments - correct answer Payments by the insurer to the insured that exceed the insurance policy's limits of liability. Tort - correct answer Any civil wrongdoing, whether intentional or unintentional, resulting in a court action to remedy. Tort - negligent - correct answer When a negligent act causes unintentional damages to another party. Adjuster Pro - Florida Certified Adjuster Glossary Questions And Answers parties to an insurance contractmust act with utmost good faith. It also applies to a fiduciary agent's responsibility towards theprincipal. " Valuation - correct answer The processes of estimating what an item is worth. Value - correct answer The estimated or appraised worth of an item, used to determine the replacement cost orindemnification amount. Valued policy - correct answer A policy in which the insurer and the insured agree to a specific value prior to the start of thepolicy. If the item is lost or destroyed, the insurer pays the amount agreed upon. Vicarious Liability - correct answer When an act of negligence is transferred from one party to another, such as from employee toemployer or from child to parent. Waiver - correct answer A waiver is a voluntary act of relinquishing a known right, claim or privilege. Either an insured oran insurer may waive rights. Waiver - Express - correct answer An explicit relinquishment of a right. Adjuster Pro - Florida Certified Adjuster Glossary Questions And Answers Waiver - Implied - correct answer An implicit relinquishment of a right through behavior that seems to assume that the right doesnot exist. Waiver of Sovereign Immunity - correct answer Sovereign Immunity disallows an individual to sue a governmental entity; the waiver ofsovereign immunity allows individuals to sue governmental entities under specificcircumstances. Warranty - correct answer An ongoing assurance made by the insured that certain conditions in an insurance contract willbe met (for example, that the insured will maintain functional fire alarms). Workers Compensation - correct answer form of insurance that covers medical costs and lost wages in the event of injury, disease, ordisability sustained by an employee in the course of his work/ Purchased by employers. Wrongful Death Act - correct answer allows the individuals who are associated with a deceased person who was killed because of anegligent act to sue the responsible party. Yield Protection - correct answer Crop Insurance