Insurance Concepts and Policy Provisions

Fill-in-the-blank flashcards covering fundamental insurance concepts, legal terms, contract requirements, and policy definitions from Cards 125 to 164.

A written agreement in which the insurer promises to compensate the insured for covered losses or events is an __________ .

Insurance Policy

A legal attachment that modifies, adds to, or changes the terms of an insurance policy is a Policy Rider or __________.

Endorsement

The voluntary relinquishment of a known right is known as a __________.

Waiver

A waiver stated directly and clearly by the insurer is an __________ waiver.

Explicit

A waiver created when the insurer accepts something, such as a premium, despite knowing facts that could allow denial or forfeiture is a Waiver by __________.

Acceptance

A waiver that may arise when the insurer fails to object or act when it had the opportunity or duty to do so is a Waiver by __________.

Silence

__________ prevents a party from denying the consequences of its words or actions when another party relied on them and was harmed.

Estoppel

The 3 requirements for estoppel are false representation or conduct, __________ by the other party, and resulting harm or financial loss.

reliance

Under __________, both parties must fully and honestly disclose all material information relevant to the insurance contract.

Utmost Good Faith

A statement guaranteed to be true in all respects and treated as part of the contract is a __________.

Warranty

A statement believed to be true to the best of the applicant's knowledge is a __________.

Representation

Failure to reveal a known material fact is defined as __________.

Concealment

An inaccurate statement important enough to affect the insurer's decision to accept the risk or determine policy terms is a __________ misrepresentation.

Material

Intentional deceit or false statements made to obtain benefits from an insurer is defined as __________.

Fraud

The limited period, usually __________ years from policy issue, during which the insurer may contest the policy for certain fraud or misrepresentation is the contestability period.

2

Making an insurance contract null and void is known as __________.

Rescission

A contract with no legal effect because an essential element is missing or its purpose is illegal is a __________ contract.

Void

A valid contract that one party may legally set aside for a valid reason is a __________ contract.

Voidable

A contract that pays a predetermined amount regardless of the exact financial loss is a __________ contract.

Valued

A contract that pays according to actual loss to restore the insured to the financial position held before the loss is an __________ contract.

Indemnity

A financial or economic stake in a person or property such that the policyowner would suffer loss from death, disability, or damage is __________ interest.

Insurable

For Life & Health insurance, insurable interest is required at the time of __________, but generally does not have to exist at the time of claim.

application

For Property & Casualty insurance, insurable interest must exist both when the policy is obtained and at the time of __________ or claim.

loss

STOLI stands for __________-Originated Life Insurance.

Stranger

The 4 essential elements of a contract are Offer and Acceptance, Consideration, Legal Purpose, and __________ Parties.

Competent

Agreement between parties is created when one party makes an offer and the other party __________ it.

accepts

Something of value exchanged by both parties in an insurance contract is __________.

Consideration

An insurance contract must have a __________ purpose to be valid and enforceable.

Legal

__________ do not have to be competent contracting parties, but the parties entering the contract must have legal capacity to contract.

Beneficiaries

A contract in which the values exchanged may be unequal because performance depends on an uncertain event is an __________ contract.

Aleatory

A contract in which the insurer drafts the policy and the insured accepts or rejects it as written is a contract of __________.

Adhesion

A contract in which only the insurer makes an enforceable promise to perform after the insured meets required conditions is a __________ contract.

Unilateral

A contract based on the characteristics of the insured is a __________ contract.

Personal

A contract in which the insurer's obligation to perform depends on the insured satisfying the policy's conditions is a __________ contract.

Conditional

An insurance application submitted without the initial premium is generally an __________, not a completed offer.

invitation

The concept that the insured should receive the coverage a reasonable person would expect is known as __________ expectations.

Reasonable

In insurance sales, an agent represents the insurer, while a __________ generally represents the insured or applicant seeking coverage.

broker

A position of trust involving financial responsibility for money or property entrusted to a person is a __________.

Fiduciary

The insurer's right, after paying a loss, to seek reimbursement from the responsible third party is __________.

Subrogation

Errors & Omissions (E&O) insurance generally excludes intentional, fraudulent, criminal, or __________ acts.

unlawful