Florida 2-20 General Lines Practice Flashcards

Vocabulary flashcards covering fundamental insurance concepts selected from the Florida 2-20 General Lines agent exam preparation materials.

Law of Large Numbers

As the number of similar exposure units increases, actual loss experience tends to become more predictable and closer to expected loss experience.

Insurable Interest

A financial or other recognized interest in property such that the insured would suffer a loss if the property were damaged.

Pure Risk

A situation involving only the possibility of loss or no loss, not gain.

Moral Hazard

A hazard arising from dishonesty or character defects that increase the chance or severity of loss.

Physical Hazard

A tangible condition that increases the chance or severity of loss.

Peril

The direct cause of a loss, such as fire, wind, theft, or collision.

Actual Cash Value

Usually replacement cost minus depreciation.

Indemnity

The principle of restoring the insured approximately to the financial position held before a covered loss, without profit.

Negligence

Failure to use the degree of care a reasonable person would use under similar circumstances.

Subrogation

The insurer's right, after paying a covered loss, to pursue a responsible third party to recover what it paid.