Principles and Structures of Insurance Quiz

Insurance aims to safeguard individuals or entities from financial losses due to unforeseen events or risks.

Property insurance provides coverage for damage or loss to physical assets, such as homes, vehicles, or other tangible properties, due to various perils like fire, theft, or natural disasters.

Liability insurance offers protection against legal liabilities arising from bodily injuries, property damage, or personal injury caused to others by the insured individual or entity, covering legal costs and damages up to the policy limits.

Term life insurance offers coverage for a predetermined period (term), typically providing a death benefit to beneficiaries if the insured passes away during the term, without accumulating cash value over time.

An exclusion in insurance refers to specific conditions, circumstances, or risks explicitly not covered by an insurance policy, limiting the scope of coverage and exempting the insurer from liability for those particular risks.

Speculation is not a basic principle of insurance; instead, insurance principles focus on risk pooling, spreading of risks, and loss compensation.

The principle of indemnity ensures that insured parties are reimbursed for their actual financial losses, maintaining fairness and preventing overcompensation.

A rider is an optional provision added to an insurance policy to provide additional coverage or benefits beyond the standard terms.

Underwriting involves evaluating risks associated with insuring a particular individual, entity, or property, and determining appropriate premiums and coverage based on those risks.

Being underinsured means having inadequate insurance coverage to fully compensate for potential losses or damages in the event of an insurable incident.

Term life insurance offers coverage for a specific term or period and pays a death benefit to the beneficiary if the insured passes away during that timeframe.