Finance | Chapter 15

bodily injury liability

covers injuries caused by a motor vehicle accident for which the insured is responsible

medical payments coverage

applies to the medical expenses of anyone who is injured in the insurance vehicle including the insured

replacement value

the method by which an insurance company payment is based on the full cost of repairing or replacing an item

actual cash value

insurance payment based on what the item cost to replace minus depreciation

negligence

the failure to take ordinary or reasonable care to prevent accidents from happening

endorsement

in addition of coverage to homeowners policy

deductible

the set amount that a policyholder must pay per loss on an insurance policy

claim

a request for insurance payment to cover a financial loss

liability

the legal responsibility for the financial cost of another person's losses or injuries

personal property floater

covers the damage or loss of a specific valuable item

collision insurance

covers damage to the vehicle of the insured person no matter who is at fault

depreciation

refers to the loss in value as an item gets older

household inventory

documentation of personal belongings

policy

a contract between the insurance company and the insured

peril

In insurance anything that may possibly cause a loss is known as a

liability risk

Insurance risk involving losses caused by negligence

risk shifting

occurs when you buy insurance to cover financial losses caused by damaging events, such as fire, theft, injury, or death

risk assumption

the process of accepting the consequences of risk, like having a saving account to cover your deductible.

risk avoidance

avoiding an act that would create a risk, not driving in an ice storm.