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RMIN 4000 Test 3 Brown Exam Questions and Answers 100% Solved 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 f$9.99
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RMIN 4000 Test 3 Brown Exam Questions and Answers 100% Solved 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 f
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Course
RMIN
Institution
RMIN
RMIN 4000 Test 3 Brown Exam
Questions and Answers 100% Solved
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)
...
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
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