Policy Provisions and Concepts Flashcards
6 cards from real Property And Casualty Insurance License practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Policy Provisions and Concepts flashcards as text
What is 'insurable interest' and when must it exist for property insurance?
Answer: A financial stake in the property; must exist at the time the policy is issued and at the time of loss
Insurable interest means the insured would suffer a financial loss if the property is damaged; it must exist at both the time the policy is purchased and when a loss occurs.
What is the 'other insurance' clause designed to do?
Answer: Prevent the insured from collecting more than the actual loss when multiple policies cover the same risk
The other insurance clause coordinates benefits when more than one policy covers a loss, ensuring the insured is indemnified but does not profit from duplicate coverage.
What does 'pro-rata cancellation' mean?
Answer: The unearned premium is returned based on the exact portion of the policy period remaining
Pro-rata cancellation returns the exact unearned portion of the premium with no penalty, calculated on a daily basis for the remaining policy term.
What is a 'short-rate cancellation'?
Answer: Cancellation by the insured where the return premium is less than the pro-rata amount due to an earned penalty
Short-rate cancellation occurs when the insured cancels the policy mid-term; the insurer retains more than the earned pro-rata premium as compensation for expenses.
What is 'waiver' in the context of insurance?
Answer: The voluntary relinquishment of a known right by either party
A waiver is the intentional surrender of a known legal right; in insurance, an insurer may waive a policy condition, preventing it from later using that condition to deny a claim.
What is 'estoppel' in insurance law?
Answer: A legal doctrine preventing a party from asserting a right after conduct that led the other party to rely on a contrary position
Estoppel prevents an insurer from denying coverage if its prior actions or statements led the insured to reasonably believe coverage existed.