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BUSFIN 3300: Insurance Midterm 2 Detailed Questions & Expert Answers $11.99
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Exam (elaborations)

BUSFIN 3300: Insurance Midterm 2 Detailed Questions & Expert Answers

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Principle of Indemnity - ANS >> the insurer agrees to pay no more than the amount of the loss; the insured should not profit from the loss Actual Cash Value - ANS >> replacement cost less depreciation Fair Market Value - ANS >> the price a willing buyer would pay...

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  • October 15, 2024
  • 7
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers

Subjects

  • principle of indemnity the insurer agrees to pay n
  • actual cash value replacement cost less depreciati
  • fair market value the price a willing buyer would
  • broad evidence rule the determination of actual

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  • BUSFIN 3300

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BUSFIN 3300: Insurance Midterm 2 Detailed
Questions & Expert Answers
Principle of Indemnity - ANS >> the insurer agrees to pay no more than the amount of
the loss; the insured should not profit from the loss

Actual Cash Value - ANS >> replacement cost less depreciation

Fair Market Value - ANS >> the price a willing buyer would pay a willing seller in a
free market

Broad Evidence Rule - ANS >> the determination of actual cash value should include
all relevant factors an expert would use to determine the value of the property

Valued Policy - ANS >> a policy that pays the face amount of insurance if a total loss
occurs

Valued Policy Law - ANS >> A law that exists in some states that requires payment of
the face amount of insurance to the insured if a total loss to real property occurs from a
peril specified in the law

Replacement Cost Insurance - ANS >> there is no deduction for physical
depreciation in determining the amount paid for a loss

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

pecuniary interest - ANS >> insurable interest requirement is met by this when there
is no relationship with the person but the person may be financially harmed by the death
of another. Example.) business partner insuring life of other business partner

subrogation - ANS >> 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; the
insurer is entitled to recover from a negligent third party any loss payments made to the
insured

Principle of Utmost Good Faith - ANS >> a higher degree of honesty is imposed on
both parties to an insurance contract than is imposed on parties to other contracts

Representations - ANS >> statements made by the applicants for insurance

Material - ANS >> if the insurer knew the true facts, the policy would not have been
issued, or it would have been issued on different terms

Innocent Misrepresentation - ANS >> makes the contract voidable even though it is
unintentional

, Concealment - ANS >> intentional failure of the applicant for insurance to reveal a
material fact to the insurer; contract may be voidable because of this

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

binder - ANS >> a temporary contract for insurance and can be either written or oral

conditional premium receipt - ANS >> a receipt given to the applicant for life
insurance; if the applicant is found insurable according to the insurer's underwriting
standards, the life insurance becomes effective as of the date of application, or in some
premium receipts, the date of application or the date of the medical exam, whatever is
later

exchange of consideration - ANS >> the value that each party gives to the other

legally competent - ANS >> the parties must have legal capacity to enter into a
binding contract

aleatory contract - ANS >> a contract where the values exchanged may not be equal
but depend on an uncertain event

commutative contract - ANS >> one in which the values exchanged by both parties
are theoretically equal

unilateral contract - ANS >> only one party makes a legally enforceable promise

conditional contract - ANS >> the insurer's obligation to pay a claim depends on
whether the insured or the beneficiary has complied with all policy conditions

conditions - ANS >> provisions inserted in the policy that qualify or place limitations
on the insurer's promise to perform

personal contract - ANS >> the contract is between the insured and the insurer

contract of adhesion - ANS >> the insured must accept the entire contract, with all of
its terms and conditions

principle of reasonable expectations - ANS >> an insured is entitled to coverage
under a policy that he or she reasonably expects it to provide, regardless of policy
provisions

express authority - ANS >> powers specifically conferred on the agent

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