RMIN 4000 Test 3 Brown| Questions and Answers 100% Accurate!
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RMIN 4000 Brown
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RMIN 4000 Brown
RMIN 4000 Test 3 Brown| Questions and Answers 100% Accurate!
Principal of Indemnity - ANSWER-insurer pays no more than actual amount of the loss; insurer should not profit from the loss
Replacement cost - ANSWER-the cost to replace an inventory item in its identical form (similar workmanship ...
RMIN 4000 Test 3 Brown| Questions and Answers 100% Accurate!
Principal of Indemnity - ANSWER-insurer pays no more than actual amount of the loss; insurer should not profit from the loss
Replacement cost - ANSWER-the cost to replace an inventory item in its identical form (similar workmanship and quality)
Actual Cash Value - ANSWER-replacement cost - depreciation
in property ins, usually based on the actual cash value of the property at the time of loss
Market Value - ANSWER-the price at which property would sell
Valued Policy - ANSWER-a policy that pays the face amount of insurance if a total loss occurs (life insurance)
Value Policy Law - ANSWER-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 - ANSWER-The insured must be in a position to lose financially if a covered loss occurs
Examples of Insurable Interest - ANSWER--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? - ANSWER-at inception of the policy; ex-spouse can still collect on life insurance if listed as policy beneficiary
Principle of Subrogation - ANSWER-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 - ANSWER--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 - ANSWER-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? - ANSWER--
representations
-concealment
-warranty
Representations - ANSWER-statements made by the applicant for insurance
What makes a contract voidable on the premise of misrepresentation? - ANSWER-1. material
2. false, and 3. relied on by the insurance company
concealment - ANSWER-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? - ANSWER-- concealed fact was known by the insured to be material
-insured intended to defraud the insurer
Warranty - ANSWER-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? - ANSWER-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: - ANSWER--attorney's fees
-emotional distress
-punitive damages
Requirements of an Insurance Contract - ANSWER-1. offer and acceptance
2. consideration
3. competent parties
4. legal purpose
Offer and Acceptance - ANSWER-insured completes application (offer) and insurance company issues a binder or policy (acceptance) or company rejects the offer
conditional premium receipt - ANSWER-Provides temporary insurance coverage only if specified conditions are met
exchange of consideration - ANSWER-the value that each party gives to the other
Competent Parties - ANSWER-Those who are legally capable of entering into contracts.
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