Exam (elaborations)
RMIN 4000 test 2, UGA Questions and Answers Fully Solved
- Course
- Institution
RMIN 4000 test 2, UGA
[Show more]
Content preview
RMIN 4000 test 2, UGAPrinciple of Indemnity - answer The insurer agrees to pay no more than the actual
amount of the loss (make you whole again, no gain).
Purpose:
-To prevent the insured from profiting from a loss
-To reduce moral hazard
Indemnification in property insurance is - answer based on the actual cash value (ACV)
of the property at the time of loss
3 main methods to determine actual cash value: - answer-Replacement cost less
depreciation
-Fair market value
-Broad evidence rule
There are some exceptions to the principle of indemnity: - answer-valued policy
-Some states have a valued policy law
-Replacement cost insurance
Replacement cost insurance - answermeans there is no deduction for depreciation in
determining the amount paid for a loss
valued policy law - answerrequires 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
valued policy - answerpays the face amount of insurance if a total loss occurs
Principle of Insurable Interest - answerThe insured must be in a position to lose
financially if a covered loss occurs (ex: can't buy life insurance policy on a random
person, but if that person owes you $100,000 you can buy one for that amount).
Purposes of the principle of insurable interest - answer-To prevent gambling
-To reduce moral hazard
-To measure the amount of the insured's loss
An insurable interest can be supported by: - answer-Ownership of property
-Potential legal liability
-Serving as a secured creditor
-Contractual rights
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller julianah420. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $12.99. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
72042 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now