AINS 101 COMPLETE QUESTIONS AND
ANSWERS
Actual cash value (ACV) - CORRECT ANSWER-The cost to
replace property with new property of like kind and quality less
depreciation.
Adverse selection - CORRECT ANSWER-Insuring individuals
with a high probability of loss at a cost lower than the insu...
Actual cash value (ACV) - CORRECT ANSWER-The cost to
replace property with new property of like kind and quality less
depreciation.
Adverse selection - CORRECT ANSWER-Insuring individuals
with a high probability of loss at a cost lower than the insurer
would normally charge for that risk because it wasn't aware of
the actual risk involved.
Binder - CORRECT ANSWER-A temporary written or oral
agreement to provide insurance coverage until a formal written
policy is issued.
Book of business - CORRECT ANSWER-A group of policies
with a common characteristic, such as territory or type of
coverage, or all policies written by a particular insurer or
agency.
Broker - CORRECT ANSWER-An independent producer who
represents insurance customers.
Brokerage - CORRECT ANSWER-Compensation in the form of
a flat fee or a commission that is paid by the reinsurer to the
reinsurance intermediary for services provided.
, Capacity - CORRECT ANSWER-The amount of business an
insurer is able to write, usually based on a comparison of the
insurer's written premiums to its policyholders' surplus
Catastrophe model - CORRECT ANSWER-A type of computer
program that estimates losses from future potential catastrophic
events.
Certificate of insurance - CORRECT ANSWER-A brief
description of insurance coverage prepared by an insurer or its
agent and commonly used by policyholders to provide evidence
of insurance.
Claim - CORRECT ANSWER-A demand by a person or
business seeking to recover from an insurer for a loss that may
be covered by an insurance policy.
Claimant - CORRECT ANSWER-A party that makes a claim
and that can be either a first-party claimant or a third-party
claimant.
Claims representative - CORRECT ANSWER-A person
responsible for investigating, evaluating, and settling claims.
Compensatory damages - CORRECT ANSWER-A payment
awarded by a court to reimburse a victim for actual harm.
Condition - CORRECT ANSWER-Any provision in an insurance
policy that qualifies an otherwise enforceable promise of the
insurer.
Conditional contract - CORRECT ANSWER-A contract that one
or more parties must perform only under certain conditions.
Contract of adhesion - CORRECT ANSWER-Any contract in
which one party must either accept the agreement as written by
the other party or reject it.
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