Principles and Regulations in Insurance Quiz

Adhesion is a basic principle of insurance where the terms are non-negotiable and drafted by the insurer.

'Utmost Good Faith' in insurance requires full disclosure of relevant information by both the insured and insurer.

'Cancellation' in insurance refers to ending the policy before its scheduled expiration date.

'Lapse' in insurance occurs when a policy is terminated due to the insured's failure to pay premiums.

'Policyholder' is the individual who purchases and possesses the insurance policy.

The principle of Indemnity ensures that the insured is compensated for the actual loss suffered, preventing unjust enrichment.

'Subrogation' grants the insurer the right to pursue claims against third parties to recover the amount paid to the insured.

A deductible in insurance limits the insurer's liability by requiring the insured to bear a specified amount of the loss.

NAIC is the regulatory body overseeing insurance companies in the United States, ensuring compliance and consumer protection.

The Principle of Clarity asserts that insurance contracts should be clear, unambiguous, and free from uncertainties.

Insurable Interest principle ensures that the insured has a valid financial stake in the insured property or person.

An insurance underwriter assesses risks and sets policy terms, determining the coverage and premium based on risk evaluation.

'Reinsurance' involves transferring risk from the primary insurer to another, providing an additional layer of coverage.

'Cession' in reinsurance refers to the portion of risk that the primary insurer transfers to a reinsurer.