Insurance Principles and Regulations Quiz

Principle of indemnity ensures that the insured is compensated to the extent of the actual loss suffered.

Underwriting involves assessing risk factors to determine the insurability of a potential policyholder.

Property insurance is not a type of life insurance; it typically covers physical assets such as buildings and belongings.

Peril in insurance refers to the specific events or causes of loss that are covered by an insurance policy.

Health insurance is not a type of property insurance; it primarily covers medical expenses and related costs.

Liability insurance provides coverage for legal responsibilities and obligations to third parties, including bodily injury and property damage.

The National Association of Insurance Commissioners (NAIC) regulates insurance companies in the United States.

A rider is an additional provision in an insurance policy that adds coverage beyond the standard terms.

Coinsurance is the sharing of costs between the insurance company and the insured, typically after the deductible has been met.

An actuary is a professional who assesses and manages financial risks using mathematics, statistics, and financial theory in the insurance industry.

A deductible is the amount the policyholder must pay out of pocket before the insurance coverage kicks in, sharing the risk with the insurer.

An endorsement in insurance is a modification or addition to the insurance policy, such as changing the policyholder's address.

A waiting period is the time a policyholder must wait before certain coverage, often related to pre-existing conditions, becomes effective.

Subrogation allows the insurer to step into the insured's shoes, taking over the insured's rights and seeking reimbursement from responsible third parties.

The loss ratio is a key financial metric in insurance, representing the ratio of insurance claims paid out to the total premiums collected.

Insurable interest requires the insured to have a financial interest in the insured property, preventing the use of insurance for speculative purposes.