Insurance Policies: Coverage, Exclusions, and Types, Exams of Nursing

Download Insurance Policies: Coverage, Exclusions, and Types and more Exams Nursing in PDF only on Docsity! Adjuster Pro - Insurance Adjuster Test Questions with Answers What is insurance? - Correct answer protection against financial loss What is a premium - Correct answer a scheduled amount to be paid for an insurance policy? What are premiums used for - Correct answer premiums are collected into a "pool" or "reserve to pay out claimants when needed. How can insurance companies afford to pay for an individual’s catastrophic loss? - Correct answer the insurer collects premiums from all policy holders and uses them to pay out the claims of a few. What is Indemnity - Correct answer payment for damages that is not more or less than the amount caused by the damage. Principle of indemnity - Correct answer insurance will pay no more or less than the actual financial loss suffered Indemnification may also include - Correct answer repairs to property Reimbursement for additional living expenses Rental cars and hotels Costs directly associated with a loss 4 Parts of Legal Contract - Correct answer 1. Agreement 2. Consideration 3. Competent Parties 4. Legal Purpose Legal contract - agreement - Correct answer mutual intent by offer or and offered Six special characteristics of insurance contracts - Correct answer 1. Personal 2. Adhesion 3. Utmost good faith 4. Lavatory 5. Unilateral 6. Conditional What kind of contract is an insurance policy? - Correct answer Personal contract What is a contract of adhesion - Correct answer the insured must accept the entire contract with all of its terms and conditions Utmost Good Faith - Correct answer an obligation to act in complete honesty and to disclose all relevant facts. Lavatory Contract - Correct answer a contract where the values exchanged may not be equal but depend on an uncertain event Unilateral Contract - Correct answer insurance agrees that they must pay in event of a claim. The insured can stop paying premiums at any point. Only the insurer has promised to perform an action. Conditional Contract - Correct answer a type of an agreement in which both parties must perform certain duties and follow rules of conduct to make the contract enforceable. Acronym for the four sections of an Insurance policy - Correct answer DICE D - Declarations page I - Insuring Agreement C- Conditions E - Exclusions Decelerations section - Correct answer always the first section - establishes the following Names of both parties Policy number Location and description of insured item Dates of the policy Amount and limit of coverage Deductible Premium Definitions section - Correct answer Defines terms used to write policy including "collusion" "decay" "like kind and quality" Includes important language for adjusters to know Insuring agreement section - Correct answer what is covered and how Which causes of loss are covered? Any services provided Any exclusions to coverage The maximum limit of policy coverage in dollars Conditions section - Correct answer Insurer specifies any limits or qualifications the policy holder must meet Peril - Correct answer the actual cause of loss or damage Insurable risk - Correct answer adequate premiums Definable risk Unexpected losses Substantial loss Exclusions Law of large numbers Adequate Premiums - Correct answer Potential loss can't be too much for insurer to pay Insurer must be able to cover claims and expenses If premiums must be set too high, the risk is not insurable Definable risk - Correct answer Insurer can define exact conditions under which the item is covered by the policy Item it's self is definable Item has precise value Unexpected loss - Correct answer Unforeseeable Unexpected Reasonably unpreventable Random in nature Substantial loss - Correct answer must cause substantial economic hardship Exclusions - Correct answer Insurer must be able to exclude large scale disasters and catastrophic events Law of large numbers - Correct answer Insurer must be able to cover large numbers of similar risks Spreads risk across more policies Helps insurers predict losses more accurately Similar risks can mean cars houses, person’s lives, similar business etc. Adverse Selection - Correct answer when someone buys health insurance because they know they will probably file a claim 4 risk management techniques - Correct answer Avoidance Reduction Transference Retention Risk avoidance - Correct answer Eliminates risk by not taking action that involves risk Risk reduction - Correct answer Taking measures to reduce risk that is involved Also called risk mitigation Risk Transference - Correct answer Management of sever risk by transferring risk to someone else Most common example is Insurance Risk retention - Correct answer acknowledging the risks and preparing to handle the unexpected losses as they occur Policy Period - Correct answer the time frame, beginning with the inception date to the expiration date, during which insurance coverage applies. Binder - Correct answer providing temporary coverage until the policy is issued Blanket coverage vs. specific coverage - Correct answer Blankets cover more than one property, type of property, or coverage under a single limit Specific limits - limits that apply to on specific type of property Representation - Correct answer Statement of fact Misrepresentation - Correct answer a false, distorted or deceptive statements Warranty - Correct answer Promise or guarantee certain conditions are met Warranties are found on the conditions page If policy holder breaks up warranty the insurer can deny coverage Concealment - Correct answer Concealment is hiding the truth Deliberately withholding information Waiver - Correct answer voluntarily surrender of a right, claim, or privilege Expressed waiver - Correct answer in writing or signed Implied waiver - Correct answer assumed based on actions Estoppel - Correct answer Legal principle that prevents an insurer from denying coverage if the insured has reasonably come to believe that he has such coverage based on insurer’s practices Types of hazards - Correct answer Physical, Moral, Morale, legal Moral hazard - Correct answer Results from the policy holders deliberate decision Involves reckless behavior because of the financial security offered by insurance Is a type of behavioral hazard? Morale hazard - Correct answer Occur when someone exhibits risky behavior because of having insurance. Physical hazard - Correct answer Physical conditions that increase the chance of loss. Types of physical hazards - Correct answer Environmental - pot holes in road Material - asbestos in an old house Operational - poorly managed engine Occupant - working in a coal mine Legal hazard - Correct answer Increased chance of loss because of legal action Fraud - Correct answer deceiving an insurer to profit from an insurance policy Hard and soft fraud - Correct answer hard fraud - planning or faking a loss Soft fraud - exaggerating a claim to inflate the indemnity Proximate cause - Correct answer Unbroken chain of events between an occurrence and a loss - then that occurrence is the proximate cause of the loss Occurrence - Correct answer an event, incident, or condition that causes damage Occurrence as proximate cause - Correct answer the original occurrence causes damage that leads to more damage Direct loss - Correct answer Physical harm to tangible property Indirect loss - Correct answer Economic loss that results from the direct or physical loss Insurance claims - Correct answer Demand for payment in accordance with terms of the policy First party claims - Correct answer Claim filed by a policy holder against his or her own insurance policy Third party claims - Correct answer Claim filed against an insurance policy by a third party not named on that policy Acknowledgement - Correct answer Insurer require by law to respond Begin investigating all pertinent facts and issues Investigation - Correct answer finding the proximate cause of the loss Examining all damages Noting circumstances 4 elements of negligence - Correct answer 1. Defendant had a legal duty to act or not act in a prescribed manner 2. The defendant failed to act accordingly 3. The plaintiff suffered actual loss or injury due to the defendant’s action or inaction 4. The loss or injury to the plaintiff was a direct result of the breach of duty of the defendant Degrees of Liability - Correct answer Full liability- the insured party is 100% at fault for damages to a third party Partial liability - the insured party is only partially at fault, or shares fault, with a third party. The third party had some parts in his own damages No liability - the insured party has 0% or no liability Assumption of risk - Correct answer Claimant knew he had the potential to experience damage Contributory Negligence - Correct answer a legal defense that may be raised when the defendant feels that the conduct of the plaintiff somehow contributed to any injuries or damages that were sustained by the plaintiff. Comparative Negligence - Correct answer A theory in tort law under which the liability for injuries resulting from negligent acts is shared by all parties who were negligent (including the injured party); on the basis of each person's proportionate negligence. Dangerous Instrumentality Doctrine - Correct answer States that anyone involved in the use of inherently dangerous products or machines is held 100% liable for their own damages. Strict (absolute) liability - Correct answer liability is imposed regardless of negligence or fault Policy limit - Correct answer the maximum amount the insurance company will pay for covered losses Single limits - Correct answer establishes maximum payout for liability damages caused by the policy holder Split limits - Correct answer Establishes 3 different limits on how much the policy will pay out 1. Maximum payout for bodily injury for each person injured 2. Maximum payout for multiple persons 3. Maximum payout for property damage Aggregate limits - Correct answer 2 limits 1. Max payout for damage or injury per occurrence 2. Maximum payout amount the policy will pay per term Res Pisa - Correct answer Means "the thing speaks for itself" and is only applied in rare instances when no one knows how exactly the accident happened Statutory law - Correct answer Based on written laws Common law - Correct answer Based on court decisions and customs when statutory law does not provide an answer Tort - Correct answer any civil wrongdoing, whether intentional or unintentional Tort law - Correct answer Body of law that addresses and provides remedies for any civil wrongdoing performed on another party. Tortfeasor (defendant) - Correct answer person who commits a tort Joint Tortfeasors - Correct answer two or more people who join together in committing a tort Intentional tort - Correct answer a premeditated act that causes injury to a third party Negligent tort - Correct answer a negligent act that causes unintentional injury to a third party Reservation of rights letter - Correct answer must include - Insurers name, policy number, and event or loss - Clearly explain the situation especially that the policy holder may not receive compensation or may have to defend himself in court - inform the policy holder about potential consequences Non-waiver agreement - Correct answer - Also used when the insurer thinks coverage may not apply to a claim - allows insurer to keep its right to deny coverage - must be signed by the policy holder (but insurer may not force a policy holder to sign) Two types of damages - Correct answer punitive and compensatory Compensatory Damages - Correct answer Money awarded for tangible and intangible economic losses Special damages - money awarded for tangible losses - proven by medical bills etc. General damages - awarded for non-quantifiable damages Punitive damages - money awarded to punish egregious misconduct The Statute of Limitations - Correct answer Law limiting time an injured party has to file a complaint after an occurrence Wrongful death act - Correct answer when someone dies because of a negligent act, allows family to sue Workers compensation - Correct answer Restrict right of an employee to sue his employer for injuries that occurred on the job Automobile no fault laws - Correct answer Restrict an individual's rights to sue the driver of a motorized vehicle Breach of product warranty - Correct answer if a product is not suitable for its intended purpose and causes injury or damage. Waiver of Sovereign Immunity - Correct answer Allows individuals to sue go entities in certain cases Agent - Correct answer one who receives the authority to act on behalf of someone else Sales agent - Correct answer contracted to sell and service insurance policies on behalf of the insurer Adjusters - Correct answer Contracted to settle claims that arise against the insurer Power to bind - Correct answer what the agent says or does can bind the insurer Agents should take the utmost care in what they say and do Even if the agent makes mistakes, the insurer may have to accept them Responsibilities of an agent - Correct answer Adhere to or follow the contract Use reasonable judgment Provide all necessary information and documentation to the insurer Three types of authority - Correct answer express, implied, apparent Express Authority - Correct answer Authority directly granted to an agent via the contract -sell polices -collect premiums