#1
What is the primary function of an insurance contract?
To transfer risk from the insured to the insurer
ExplanationRisk transfer mechanism
#2
What is the role of the 'declaration page' in an insurance policy?
It provides a summary of the policy terms and conditions
ExplanationSummary of policy terms
#3
What is 'coinsurance' in the context of insurance?
The sharing of costs between the insured and the insurer after the deductible is met
ExplanationCost sharing after deductible
#4
What is the 'waiting period' in insurance policies?
The period during which the insured cannot make a claim after policy inception
ExplanationClaim restriction period
#5
What is 'underinsured motorist coverage' in auto insurance?
Coverage for medical expenses if the insured is injured by a driver with insufficient insurance
ExplanationCoverage for injuries caused by underinsured drivers
#6
What does the term 'premium' refer to in insurance?
The initial payment made by the insured to the insurer
ExplanationInitial payment for coverage
#7
What is the 'insurable interest' requirement in insurance contracts?
The insured must have a legitimate financial interest in the insured property or person
ExplanationFinancial stake in insured item/person
#8
In insurance terminology, what does 'indemnity' mean?
The principle of restoring the insured to the same financial position as before a loss
ExplanationFinancial restoration after loss
#9
What is the purpose of a 'rider' in an insurance policy?
To provide additional coverage beyond the standard policy terms
ExplanationExtra coverage option
#10
What does the term 'underwriting' refer to in insurance?
The process of assessing and accepting risk for insurance coverage
ExplanationRisk assessment and acceptance process
#11
What is 'reinsurance' in the insurance industry?
Insurance purchased by an insurance company from another insurer to limit its risk exposure
ExplanationInsurance for insurers to limit risk
#12
What is 'subrogation' in the context of insurance?
The right of the insurer to pursue a third party that caused a loss to the insured
ExplanationInsurer's pursuit of third-party responsible for loss
#13
What is the principle of 'utmost good faith' in insurance contracts?
Both parties are required to disclose all relevant information to each other
ExplanationRequirement of full disclosure
#14
What does 'exclusion' mean in the context of insurance policies?
A clause that limits coverage for specific risks
ExplanationLimitation of coverage
#15
What is the significance of the 'statute of limitations' in insurance claims?
It sets a time limit for filing a lawsuit or claim after an event occurs
ExplanationTime limit for claim submission
#16
What is the purpose of an 'endorsement' in an insurance policy?
To provide additional coverage or modify existing coverage
ExplanationModification or addition of coverage
#17
What does 'cancellation' mean in the context of insurance policies?
The termination of an insurance policy by the insurer or the insured
ExplanationTermination of policy