Exam (elaborations)
ND Property Insurance Exam Practice Questions and Answers (100% Pass)
- Course
- Institution
ND Property Insurance Exam Practice Questions and Answers (100% Pass)
[Show more]
Content preview
©PREP4EXAMS @2024 [REAL EXAM DUMPS] Wednesday, July 17, 2024 1:27 AMND Property Insurance Exam Practice
Questions and Answers (100% Pass)
Insurance - ✔️✔️the transfer of financial responsibility associated with a potential of a loss
(risk) to an insurance company, which in turn spreads the cost of unexpected losses to many
individuals.
Law of Large Numbers - ✔️✔️Principal stating that the larger the number of similar exposure
units considered, the more closely the losses reported will equal the underlying probability of
loss. This law forms the basis for statistical prediction of loss upon which rates for insurance
are calculated.
Insurable Interest - ✔️✔️the insured must have an insurable interest in the person or property
covered by an insurance policy. This means the insured would incur a financial loss if the
insured property was damaged
Risk - ✔️✔️the uncertainty or chance of a loss occurring
Pure Risk - ✔️✔️Refers to situations that can only result in a loss or no change, no opportunity
for financial gain
Speculative Risk - ✔️✔️involves the opportunity for either loss or gain.
Hazard - ✔️✔️condition or situation which creates or increases the probability of or extend of
a probable loss from a peril
Moral Hazard - ✔️✔️dishonest predisposition on the part of an insured which increases the
change of loss
Morale Hazard - ✔️✔️applicants who demonstrate a careless attitude that could increase the
change of loss that would be greater than would otherwise be the case
Physical Hazard - ✔️✔️condition of the subject of insurance which creates or increases the
change of loss, such as: structural defects, occupancy, poor housekeeping, or location
Peril - ✔️✔️a specific cause of loss, insured against in standard property policies include fire,
wind, hail, explosions, etc
Page 1 of 23
,©PREP4EXAMS @2024 [REAL EXAM DUMPS] Wednesday, July 17, 2024 1:27 AM
Direct Loss - ✔️✔️direct, physical damage to buildings and/or personal property
EX: building that catches fire
Indirect Loss - ✔️✔️or consequential losses are considered losses as a result of direct loss.
Usually result from the time it takes to repair or replace damaged property.
Most Common Indirect Losses - ✔️✔️homeowners facing extra living expenses while the
home is being repaired
commercial loss of profits while a business is closed for repairs
Actual Cash Value (ACV) - ✔️✔️method of valuation reinforces the principle of indemnity
because it recognizes the reduction of value of property as it ages and becomes subject to
wear and tear and obsolescence.
= current replacement cost- depreciation
Replacement COst - ✔️✔️the cost to replace damaged property with like kind and quality at
today's price, without any deduction for depreciation
Market Value - ✔️✔️method of calculating a loss based upon the amount a willing buyer
would pay to a willing seller for the property prior to the loss.
Stated Value - ✔️✔️amount of insurance scheduled in a property policy which is not subject to
any coinsurance requirements in the event of a covered loss
Salvage Value - ✔️✔️the estimated value an asset will realize upon its sale at the end of its
useful life.
Proximate Cause - ✔️✔️Act or event considered a natural reasonably foreseeable cause of the
damage or event which occurs and damages property or injuries a plaintiff the negligence
must have been the proximate cause of the damage if the injured party is to collect for the
damage. Also referred to as direct liability.
Deductible - ✔️✔️a dollar amount an insured must pay on a claim before the insurance policy
provides coverage
Indemnity - ✔️✔️a provision in an insurance policy that states that in the event of loss, an
insured is permitted to collect only to the extent of his/her financial loss and is not allowed to
gain financially because of the existence of an insured contract. Referred to as reimbursement
Limits of Liability - ✔️✔️the insurers liability for payment as stated in an insurance policy
Page 2 of 23
, ©PREP4EXAMS @2024 [REAL EXAM DUMPS] Wednesday, July 17, 2024 1:27 AM
Coinsurance/ Insurance to Value - ✔️✔️.
Occurrence - ✔️✔️.
Cancellation - ✔️✔️the termination of an in-force insurance policy by either the insured or the
insurer prior to the expiration date shown in the policy. Termination my be voluntary,
involuntary, or in mutual accordance with provisions contained in the policy.
Nonrenewal - ✔️✔️termination of an insurance policy at its expiration date by not offering a
continuation of the existing policy or a replacement policy
Vacancy - ✔️✔️an insured structure in which no people have been living or working, and no
property have been stored for the period of time required as stated
Liability - ✔️✔️.
Absolute Liability - ✔️✔️imposed on defendants engaged in hazardous activities, such as
harboring wild animals, using explosives, etc. the injured party does not need to prove
negligence.
Strict Liability - ✔️✔️commonly applied in product liability cases, a person/business that
manufactures or sells a product makes an implied warranty that the product is safe. They are
then liable for defective products regardless of fault or negligence.
Vicarious Liability - ✔️✔️purpose is to transfer the liability for one person to another person
who would probably have a greater ability to pay.
Negligence - ✔️✔️failure to use the care that a reasonable, prudent person whould have taken
under the same or similar circumstances
Binder - ✔️✔️a temporary contract of insurance issued by an insurer or its agent that places
insurance in effect prior to the policy being issued
Endorsements - ✔️✔️printed addendum's to a contract that are used to change the policy's
original terms, conditions, or coverage's.
Medical Payments - ✔️✔️referred to as Med Pay, covers medical costs due to injury on a no-
fault basis. There is no requirement for the insured to be legally liable, only that the injury is
a result of the insured activities or on a insured location.
Page 3 of 23
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller OliviaWest. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $12.49. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
75057 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now