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Exam (elaborations)

RMIN 4000 Test 3 Brown/Questions and Solutions

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  • Course
  • RMIN 4000
  • Institution
  • RMIN 4000

RMIN 4000 Test 3 Brown/Questions and Solutions

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  • November 6, 2024
  • 9
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers
  • RMIN 4000
  • RMIN 4000
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Nursephil2023
RMIN 4000 Test 3 Brown/Questions
and Solutions
Principal of Indemnity - -insurer pays no more than actual amount of the
loss; insurer should not profit from the loss

- Replacement cost - -the cost to replace an inventory item in its identical
form (similar workmanship and quality)

- Actual Cash Value - -replacement cost - depreciation

in property ins, usually based on the actual cash value of the property at the
time of loss

- Market Value - -the price at which property would sell

- Valued Policy - -a policy that pays the face amount of insurance if a total
loss occurs (life insurance)

- Value Policy Law - -requires payment of the face amount of insurance if a
total loss to real property occurs from a peril specified in law

- Principle of Insurable Interest - -The insured must be in a position to lose
financially if a covered loss occurs

- Examples of Insurable Interest - --ownership of property (house, car)
-potential legal liability (business owners)
-secured creditors
-contractual rights (goods in transit)

- When must an insurable interest legally exist in life insurance? - -at
inception of the policy; ex-spouse can still collect on life insurance if listed as
policy beneficiary

- Principle of Subrogation - -substitution of the insurer in place of the
insured for the purpose of claiming indemnity from a third party for a loss
covered by insurance

- Reasons for subrogation - --prevents insured from collecting twice (once
from insurer, once from responsible party)
- holds the negligent party responsible for the loss
- reduces insurance claims costs and therefore rates

, - principle of upmost good faith - -a higher degree of honesty is imposed on
both parties to insurance contracts than is imposed on parties to other
contracts

- What three legal doctrines support the principle of upmost good faith? - --
representations
-concealment
-warranty

- Representations - -statements made by the applicant for insurance

- What makes a contract voidable on the premise of misrepresentation? - -
1. material
2. false, and
3. relied on by the insurance company

- concealment - -intentional failure of the applicant for insurance to reveal a
material fact to the insurer

- What makes a contract voidable on the premise of concealment? - --
concealed fact was known by the insured to be material
-insured intended to defraud the insurer

- Warranty - -a statement that becomes part of the insurance contract and
is guaranteed by the maker to be true in all respects

a condition agreed to by an insured in order to receive coverage

- What is bad faith? - -law that allows lawsuits against insurance companies
for: improper denial of claims and improper delay of claims

- Bad faith damages can exceed policy limits and include: - --attorney's fees
-emotional distress
-punitive damages

- Requirements of an Insurance Contract - -1. offer and acceptance
2. consideration
3. competent parties
4. legal purpose

- Offer and Acceptance - -insured completes application (offer) and
insurance company issues a binder or policy (acceptance) or company
rejects the offer

- conditional premium receipt - -Provides temporary insurance coverage
only if specified conditions are met

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