Insurable Interest Valuation Indemnity Legal Liability A possibility of financial loss resulting from the ownership of property is known as: Insurable Interest Valuation Indemnity Legal Liability

A possibility of financial loss resulting from the ownership of property is known as: Insurable Interest – the insured must have an interest in the subject matter of his or her policy Valuation - The process of estimating what an item is worth Indemnity – restoration to approximate previous condition; no more, no less Legal Liability - covers a third party who has been damaged by a policyholder

A possibility of financial loss resulting from the ownership of property is known as: Insurable Interest – the insured must have an interest in the subject matter of his or her policy Valuation - The process of estimating what an item is worth Indemnity – restoration to approximate previous condition; no more, no less Legal Liability - covers a third party who has been damaged by a policyholder

In 2005, Jeff's car suffered $8230 damage to his car in an accident In 2005, Jeff's car suffered $8230 damage to his car in an accident. He received $8230 from his insurance company and $4000 from the other driver. By receiving a profit, Jeff could be in violation of: the principle of indemnity the principle of profit and loss the principle of financial status the principle of financial restoration

In 2005, Jeff's car suffered $8230 damage to his car in an accident In 2005, Jeff's car suffered $8230 damage to his car in an accident. He received $8230 from his insurance company and $4000 from the other driver. By receiving a profit, Jeff could be in violation of: the principle of indemnity - receiving a gain from a loss the principle of profit and loss - doesn't exist the principle of financial status = NIIT (not an insurance term) the principle of financial restoration = NIIT

In Piedmont, last year, a festival goer falls on Trina breaking her phone. Trina's insurance company pays her $1000 for the phone. The festival goer is apologetic and tells here he'll replace it whatever the cost. So Trina orders a $1500 phone and gives the bill to the festival goer. What principle did Trina Violated? the principle of profit and loss the principle of financial status the principle of indemnity the principle of financial restoration

How Can insurance companies afford to pay for and individual’s catastrophic loss? the insurer will only pay up to the amount already collected for each insured The insurer will deny claims if it doesn’t have enough money in the bank. The insured collects premiums from our policyholders and pools them to pay the claims of the few The insured puts each insured’s premium payment into an interest-bearing account, which is then use to pay for that insured’s claims, if they occur.

How Can insurance companies afford to pay for and individual’s catastrophic loss?

How can insurance companies afford to pay for an individual’s catastrophic loss? the insurer will only pay up to the amount already collected from each insured the insurer will deny claims if it doesn’t have enough money in the bank. the insured collects premiums from our policyholders and pools them to pay the claims of the few the insured puts each insured’s premium payment into an interest-bearing account, which is then use to pay for that insured’s claims, if they occur. an insurer collects premiums from a large number of policyholders into a pool, known as a reserve. Insurers know that, chances are, only a small percentage of those policyholders will actually experience a loss.

What is a reserve, in insurance terms? A set of rules governing how the insurance industry should work A pool of collected premiums that the insurer sets aside to pay claims The amount of revenue that the insurer sets aside to pay employee salaries A group of policyholders who pay into the same pool of premiums

What is a reserve, in insurance terms? A set of rules governing how the insurance industry should work - A pool of collected premiums that the insurer sets aside to pay claims The amount of revenue that the insurer sets aside to pay employee salaries A group of policyholders who pay into the same pool of premiums an insurer collects premiums from a large number of policyholders into a pool, known as a reserve

What is a reserve, in insurance terms? A set of rules governing how the insurance industry should work A pool of collected premiums that the insurer sets aside to pay claims The amount of revenue that the insurer sets aside to pay employee salaries A group of policyholders who pay into the same pool of premiums

Which of the following best defines premium? A legally enforceable agreement between parties A legal agreement providing temporary evidence of insurance until the policy is issued Transfer of risk of financial loss from one party to another The fee paid by the insured in exchange for an insurance policy

Which of the following best defines premium? A legally enforceable agreement between parties -Contract A legal agreement providing temporary evidence of insurance until the policy is issued – Certificate of Insurance Transfer of risk of financial loss from one party to another - insurance The fee paid by the insured in exchange for an insurance policy – (bill paid = Premium)

Which of the following best defines premium? A legally enforceable agreement between parties A legal agreement providing temporary evidence of insurance until the policy is issued Transfer of risk of financial loss from one party to another The fee paid by the insured in exchange for an insurance policy

Which of the following best describes insurance? A legally enforceable agreement between parties An economic device used to protect against the risk of unforeseen and extraordinary financial loss Transfer of risk of financial loss from one party to another Restoration to the previous financial condition, no more, no less

Which of the following best describes insurance? A legally enforceable agreement between parties [contract] An economic device used to protect against the risk of unforeseen and extraordinary financial loss [Insurance] Transfer of risk of financial loss from one party to another – Not the BEST definition Restoration to the previous financial condition, no more, no less – [indemnity]

Which of the following best describes insurance? A legally enforceable agreement between parties An economic device used to protect against the risk of unforeseen and extraordinary financial loss Transfer of risk of financial loss from one party to another Restoration to the previous financial condition, no more, no less

An offeree may legally reject a contract offer by any of the following means, EXCEPT: Proposing a new offer Asking for clarification or additional information Explicitly rejecting the offer Accepting the offer on one condition

A contract may be terminated by: Rejection by offeree Time lapse Revocation by offeror Termination by law Either party dies or becomes disabled Performance of contract becomes illegal after the offer Subject matter is destroyed Asking for more information is NOT a legal rejection

An offeree may legally reject a contract offer by any of the following means, EXCEPT: Proposing a new offer Asking for clarification or additional information Explicitly rejecting the offer Accepting the offer on one condition

A legally binding contract where the risk of financial loss is transferred in exchange for premiums is called: The principle of indemnity An insurance policy A reserve A claim

A legally binding contract where the risk of financial loss is transferred in exchange for premiums is called: The principle of indemnity – getting exactly what you had An insurance policy – a type of a contract A reserve – The reserve of premiums should always be enough to pay for individual claims. A claim - If a policyholder does experience a covered loss, she can ask the insurer to pay for it by filing a claim.

A legally binding contract where the risk of financial loss is transferred in exchange for premiums is called: The principle of indemnity – getting exactly what you had An insurance policy – a type of a contract A reserve – The reserve of premiums should always be enough to pay for individual claims. A claim - If a policyholder does experience a covered loss, she can ask the insurer to pay for it by filing a claim.

Which of the following is not a requirement for a legally binding contract? It must be a notarized document Both parties must bring something of value There must be a legal purpose There must be a mutual consent

Which of the following is not a requirement for a legally binding contract? 4 classification of a legal contract Consent Consideration Competent parties Legal purpose

Which of the following is not a requirement for a legally binding contract? It must be a notarized document Both parties must bring something of value There must be a legal purpose There must be a mutual consent

Which of the following best defines insurer? An individual or organization that pays premiums in exchange for protection A legally binding contract in which the insurance company agrees to pay for specified losses in exchange for premiums A company group or government agency offering financial protection Transfer of the risk of financial loss from one party to another

INSURED - An individual or organization that pays premiums in exchange for protection INSURANCE CONTRACT - A legally binding contract in which the insurance company agrees to pay for specified losses in exchange for premiums INSURER - A company, group, or government agency offering financial protection INSURANCE - Transfer of the risk of financial loss from one party to another

Which of the following best defines insurer? An individual or organization that pays premiums in exchange for protection A legally binding contract in which the insurance company agrees to pay for specified losses in exchange for premiums A company, group, or government agency offering financial protection Transfer of the risk of financial loss from one party to another

Which of the following refers to being restored to the financial condition you were in before a loss? Subrogation Restoration Indemnification Estopple

Which of the following refers to being restored to the financial condition you were in before a loss? Subrogation - Subrogation is the transfer of rights that allows insurers to recover their losses after claim of the insured is settled Restoration - Common options: Restore limits to original level Loss does not reduce limits at all Total loss payout ends policy coverage and excess premiums returned to insured Indemnification - This principle assumes that an insured, who has suffered a loss, should only be restored to the approximate financial condition that existed prior to the loss, no better and no worse. Estopple - “Estoppel” is a legal doctrine that prevents or “stops” a party from contradicting its own previous actions, if those actions have been reasonably relied upon by another party.

Which of the following refers to being restored to the financial condition you were in before a loss? Subrogation Restoration Indemnification Estopple

Trina just purchased an insurance policy for her cabin from Post Insurance which of the following would be a reason this policy may not be legally binding? ​ Trina has been diagnosed with schizophrenia by a doctor Trina paid her first premium when she and her agent agreed on a policy, but she is waiting for the policy documents to be prepared so she can sign them Trina turned 20 last week Trina has an outstanding warrant for a DUI

Trina just purchased an insurance policy for her cabin from Post Insurance which of the following would be a reason this policy may not be legally binding? ​ The “elements of a valid or legal contract” are likely to be included on your state licensing exam. An easy way to remember them is by using the mnemonic “CLOC”: C - Competent Parties/Capacity to Contract L - Legal Purpose O - Offer and Acceptance C - Consideration

Trina just purchased an insurance policy for her cabin from Post Insurance which of the following would be a reason this policy may not be legally binding? ​ Trina has been diagnosed with schizophrenia by a doctor Trina paid her first premium when she and her agent agreed on a policy, but she is waiting for the policy documents to be prepared so she can sign them Trina turned 20 last week Trina has an outstanding warrant for a DUI

If covered by an insurance policy an insured may be indemnified for all of the following except: Home remodels Rental cars Hotel bills Property repairs

If covered by an insurance policy an insured may be indemnified for all of the following except: Home remodels Rental cars Hotel bills Property repairs Indemnity - once the repair or replacement is complete, the insurer will indemnify the insured for the rest of the cost. For example, if Jack runs a red light and hits Sue's car, Jack's liability insurance will indemnify Sue for the damages and injuries caused by Jack's negligence.

If covered by an insurance policy an insured may be indemnified for all of the following except: Home remodels – improvement Rental cars – covered by insurance Hotel bills – cover by insurance Property repairs – cover by insurance

Indemnification may include all of the following except: Payment for pain and suffering Payment for repairs to property Reimbursement for rental car costs Reimbursement for hotel costs

Indemnification may include all of the following except: Payment for pain and suffering – punitive damages Payment for repairs to property – covered loss – upfront costs Reimbursement for rental car costs – covered loss – upfront costs Reimbursement for hotel costs – covered loss – upfront costs

Indemnification may include all of the following except: Payment for pain and suffering Payment for repairs to property Reimbursement for rental car costs Reimbursement for hotel costs