AINS 21 (page 4 of 4)

tressinblack's version from 2015-09-12 02:34

Property and Liability Insurance Principles (5th ed.): one of several courses in the Associate in General Insurance (AINS®) designation program

Assignment 9: Insurance Policies

Question Answer
Valid contractA contract that meets all of the requirements to be enforceable.
ConsiderationSomething of value or bargained for and exchanged by the parties to a contract.
Principle of indemnityThe principle that insurance policies should provide a benefit no greater than the loss suffered by an insured.
Valued policyA policy in which the insurer pays a stated amount in the event of a specified loss (usually a total loss), regardless of the actual value of the loss.
ConcealmentAn intentional failure to disclose a material fact.
MisrepresentationA false statement of a material fact on which a party relies.
Material factIn insurance, a fact that would affect the insurer’s decision to provide or maintain insurance or to settle a claim.


Question Answer
Conditional contractA contract that one or more parties must perform only under certain conditions.
Preprinted formAn insurance form that meets the needs of many policyholders and is therefore printed in bulk for future use.
Manuscript formAn insurance form that is drafted according to terms negotiated between a specific insured (or group of insureds) and an insurer.
Coverage partA component of a CPP or a monoline policy that contains the policy provisions relating to a particular line of business, such as commercial property or commercial general liability; consists of the coverage part’s declarations page, one or more coverage forms, applicable endorsements, and in some cases a general provisions form.
Declarations page (declarations, or dec.)An insurance policy information page or pages providing specific details about the insured and the subject of the insurance.
EndorsementA document that amends an insurance policy.
Policy provisionAny phrase or clause in an insurance policy that describes the policy’s coverages, exclusions, limits, conditions, or other features.


Question Answer
Scheduled coverageInsurance for property specifically listed (scheduled) on a policy, with a limit of liability for each item.
Insuring agreementA statement in an insurance policy that the insurer will, under described circumstances, make a loss payment or provide a service.
ConditionAny provision in an insurance policy that qualifies an otherwise enforceable promise of the insurer.
ExclusionA policy provision that eliminates coverage for specified exposures.
FloaterA policy designed to cover property that floats, or moves, from location to location.
Named perilA specific cause of loss listed and described in an insurance policy. Also used to describe policies containing named perils.
Special form, or open perils policyA policy that provides coverage for any direct loss to property unless the loss is caused by a peril specifically excluded.


Question Answer
Collision coverageCoverage for direct and accidental loss or damage to a covered auto caused by collision with another object or by overturn.
Other than collision (OTC) coverageCoverage for physical damage to a covered auto resulting from any cause of loss except collision or a cause of loss specifically excluded.
Specified causes of loss coverageCoverage for direct and accidental loss caused by fire, lightning, explosion, theft, windstorm, hail, earthquake, flood, mischief, vandalism, or loss resulting from the sinking, burning, collision, or derailment of a conveyance transporting the covered auto.
Direct lossA reduction in the value of property that results directly and often immediately from damage to that property.
Time element loss (indirect loss)A loss that arises as a result of damage to property, other than the direct loss to the property.
Net incomeThe difference between revenues (such as money received for goods or services) and expenses (such as money paid for merchandise, rent, and insurance.)
Extra expensesExpenses, in addition to ordinary expenses, that an organization incurs to mitigate the effects of a business interruption.


Question Answer
Additional living expense (ALE)A coverage in homeowners policies that indemnifies the insured for the additional expenses that are incurred following a covered property loss so that the household can maintain its normal standard of living while the dwelling is being restored.
Named insuredA person, corporation, partnership, or other entity identified as an insured party in an insurance policy’s declarations page.
Loss payeeA party entitled to share in whatever loss payment an insured receives.
DeductibleA portion of a covered loss that is not paid by the insurer.
Insurance-to-value provisionA provision in property insurance policies that encourages insureds to purchase an amount of insurance that is equal to, or close to, the value of the covered property.
CoinsuranceAn insurance-to-value provision in many property insurance policies providing that if the property is underinsured, the amount that an insurer will pay for a covered loss is reduced.
Bodily injuryPhysical injury to a person, including sickness, disease, and death.


Question Answer
Property damagePhysical injury to, destruction of, or loss of use of tangible property.
Personal injuryInjury, other than bodily injury, arising from intentional torts such as libel, slander, or invasion of privacy.
ReleaseA legally binding contract between the parties to a dispute that embodies their agreement, obligates each to fulfill the agreement, and releases both parties from further obligation to one another that relates to the dispute.
Supplementary paymentsVarious expenses the insurer agrees to pay under a liability insurance policy (in addition to the liability limits) for items such as premiums of bail bonds and appeal bonds, loss of the insured’s earnings because of attendance at trials, and other reasonable expenses incurred by the insured at the insurer’s request.
Prejudgment interestInterest that may accrue on damages before a judgment has been rendered.
Postjudgment interestInterest that may accrue on damages after a judgment has been entered in a court and before the money is paid.
Medical payments coverageCoverage that pays necessary medical expenses incurred within a specified period by a claimant (and in certain policies, by an insured) for a covered injury, regardless of whether the insured was at fault.


Question Answer
Occurrence basis coverageCoverage that is triggered by the actual happening of bodily injury or property damage during the policy period.
Claims-made coverage formA coverage form that provides coverage for bodily injury or property damage that is claimed during the policy period.
Retroactive dateThe date on or after which bodily injury or property damage must occur (or a personal and advertising injury offense must be committed) in order to be covered.
Each person limitThe maximum amount an insurer will pay for injury to any one person for a coved loss.
Aggregate limitThe maximum amount an insurer will pay for all covered losses during the covered policy period.
Each occurrence limitThe maximum amount an insurer will pay for all covered losses from a single occurrence, regardless of the number of persons injured or the number of parties claiming property damage.
Split limitsSeparate limits for bodily injury and property damage liability coverage.
Single limitA single limit of liability for the combined total of bodily injury and property damage from any one accident or occurrence.

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