Property And Casualty

The insured is the individual, organization, or entity that is covered by the insurance policy. The policyholder is the one who owns the policy, the beneficiary is the one who receives the benefits, and the underwriter is the one who assesses and assumes the risks.

Indemnity in insurance refers to the principle of restoring the insured to the same financial position they were in before the covered loss occurred. Deduction, compensation, and reimbursement are not interchangeable with the concept of indemnity in insurance.

An aleatory contract is one where the amount of money to be given up by each party is not equal, unlike bilateral contracts where there is an exchange of equally valued promises, or adhesion contracts where terms are dictated by one party.

A peril is defined as a cause of loss that is covered under an insurance policy.

Prior Approval is a process where insurance rates must be reviewed and approved by the state insurance department before being implemented. Open Enrollment refers to a period during which individuals can freely enroll in a health insurance plan. Guaranteed Issue means insurers must offer coverage to any eligible applicant regardless of health status. Self-Insurance is when a company assumes the financial risk for providing healthcare benefits to its employees.

Indemnity refers to the principle of making someone whole after a loss by restoring them to their prior financial status. Compensation, restitution, and reimbursement are related concepts but do not fully capture the idea of indemnity.

Insurance involves transferring the risk from an individual or entity to an insurance company in exchange for payment (premium). Avoidance, acceptance, and mitigation are other ways of dealing with risk but do not specifically involve transferring the risk to a third party like insurance does.

Insurable interest must exist at the time of loss in order for a claim to be valid in property and casualty insurance. This ensures that the policyholder has a financial stake in the insured property or person at the time of the covered event.

Hazards are specific sources or situations that can cause harm, while risks are the probability of harmful consequences. Threats refer to potential sources of danger, and vulnerabilities are weaknesses that can be exploited to cause harm.

A domestic insurer is one that is formed under the laws of the state in which an insurance policy is written. This means that the insurer operates within the same state where the policy is issued. An international insurer operates in multiple countries, a regional insurer operates in a specific region within a country, and a national insurer operates throughout an entire country.

Apparent authority refers to the authority that a third party reasonably believes an agent to have based on the actions or words of the principal. Express authority is specifically granted by the principal, fiduciary authority pertains to trust responsibilities, and implied authority is inferred based on the agent's position or job description.

Negligence is the failure to exercise the care that a reasonably prudent person would exercise in a similar circumstance. Recklessness involves consciously disregarding a substantial and unjustifiable risk, while carelessness implies a lack of attention or concern. Intentionality refers to acts done purposefully or deliberately.

The concept of proximate cause is vital in insurance claims as it helps determine whether the resulting injury or damage is directly linked to the insured peril.