Principles of Insurance and Legal Framework Quiz

Shifting the financial burden of potential loss from an individual to an insurer.

Protects against financial loss resulting from damage to or destruction of physical property.

Protects policyholders from the financial consequences of legal liabilities incurred due to injuries or damages to others.

The act of discontinuing an insurance policy before its scheduled end date, usually initiated by the policyholder or insurer.

Protects against the financial burden of medical expenses and loss of income resulting from illness or injury.

Specifies perils, risks, or conditions for which coverage is not provided under the insurance policy.

The requirement for complete honesty and disclosure by both parties in an insurance contract.

Restoring the insured to the same financial position they were in before the loss occurred.

Enables the insurer to pursue recovery from third parties responsible for the loss, after compensating the insured.

Requiring both parties to act with full honesty and transparency in all matters related to the insurance contract.

Allows primary insurers to protect themselves against excessive losses by transferring a portion of the risk to other insurers.

An optional add-on to an insurance policy that provides additional coverage beyond the standard terms.

Requires the insured to bear a percentage of the loss in proportion to the amount of insurance carried.

Requires the insured to bear a portion of the loss, helping to mitigate moral hazard and control premium costs.

Prevents insurers from denying a claim based on previous actions or statements that may have led the insured to reasonably believe coverage existed.

Unlike profit maximization, insurance aims to mitigate financial risk rather than solely generate profit.

Ensuring that multiple insurers proportionately share the burden of a claim when more than one policy covers the same risk.

Ensuring that the insured is compensated for the actual amount of loss suffered, without making a profit from the insurance claim.

Requires the policyholder to have a legitimate financial interest in the property or person being insured.

Empowers the insurer to pursue recovery from third parties liable for the insured loss.

Provides coverage for risks that are too high or specialized for standard insurance companies to underwrite.

Ensures that the insured is compensated for the actual loss suffered, without being over- or under-compensated.

Specifies the duration of time that must pass after the onset of disability before the insured becomes eligible to receive benefits.

Allows policyholders a specified period after purchasing a policy to review its terms and conditions and cancel it if dissatisfied.

Enables the insurer to seek reimbursement from third parties responsible for the loss after compensating the insured.