GA Property & casualty Insurance Exam
Replacement cost - correct answer-the full cost to repair damage property or replace
damaged property, with property of like kind and quality, at current pricing , without deduction
for depreciation
Market Value - correct answer-the price a willing buyer would pay for property purchased
from a willing seller under fair market conditions.
Stated Value - correct answer-means that the insurer bases the policy premium on the
insureds statement of the property value. (However the insurers will pay the lesser the
amount between the stated amount or the actual cash value)
Salvage Value - correct answer-the amount for which property can be sold at the end of it's
useful life
Proximate Cause - correct answer-also known as primary cause of loss / the first peril that
occurs /direct or most important cause of loss
Deductible - correct answer-is specified amount of each loss that the insured must pay as a
way to share the cost of loss with the insurance company/ must pay before insurance can
give coverage
Indemnity - correct answer-in the event of loss
Limits of liability - correct answer-is the maximum a liability policy will pay in the event of
loss, regardless of the number of insureds, claims made, lawsuits filled, or parties making or
filling lawsuits
Coinsurance/ insurance to value - correct answer-requires insured to carry a certain a
certain percentage of the property total valuation (usually 80%) in order for losses to be paid
in full / prevents losses from not being covered in full
Occurence - correct answer-an accident, including continuous or repeated exposure to the
same generally harmful conditions that results of loss or damage
Cancellation - correct answer-is the termination of a policy before its expiration date, and
coverage is not provide as of the effective date it is suppose to end
Nonrenewal - correct answer-when the insurer chooses not the renew the policy, and
coverage ends at the expiration of the policy term must also be provided in advance with the
requirements set by law
Vacancy - correct answer-property with NO personal items or occupants
unoccupancy - correct answer-Property with NO occupants but does have personal items
, Liability - correct answer-risk arise without the involvement of negligence/ can be civil or
criminal/ Civil requires compensation and criminal is NOT covered by insurance
Absolute Liability - correct answer-most associated with dangerous animal ownership,
storage of firearms or weapons , and possession of explosive or highly flammable material
Strict Liability - correct answer-used in the context of manufacturer or seller of a product who
is liable for all damages caused by a defective product
Vicarious - correct answer-also know as inputed negligence/ is when someone else is legally
liable for the person who has been negligent
Example: Parents are liable for a child's actions
Binders - correct answer-temporary written or legal agreement issued by an insurance
company to provide short- term payment insurance until the real policy kick in
Endorsement - correct answer-policy form that alter the provisions of an insurance / typically
added for an additional premium
Blanket limit - correct answer-insurers multiple items of property under a single amount of
insurance
Specific limit - correct answer-insures a single item of property for a single insurance policy
Burglary - correct answer-Theft that involve the destruction or breaking and entering of a
building
Robbery - correct answer-Theft that involves the harm of a person/ individual
Mysterious Disappearance - correct answer-When property goes missing without a
reasonable explanation/ reasoning for missing property is unknown
Warranty - correct answer-Statements that are guaranteed to be true/ often the basis for
validity of a contract/ if found not to be true could void the policy
Representations - correct answer-Statements that are believed to be true to the best of the
applicants ability
Concealment - correct answer-Intentionally holding back or failure to communicate material
information
Premium audit - correct answer-Used to determine the final premium/ depending on results
the insured will pay the difference or the insurer will return access premium
Certificate of insurance - correct answer-evidence of insurance coverage
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