Insurance Terminology and Concepts, Exams of Nursing

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and Answers (latest Update 2024)

Accumulated Depreciation - Correct Answer ✅The total decrease in an item's value over a period of time. Formula:(Annual Depreciation x Number ofyears used) 1-J Acreage Reporting Date - Correct Answer ✅The deadline for providing the insurer with an acreage report, which is used to determine the amount of coverage needed and the premium charged for a particular crop. 3-E Actual Cash Value (ACV) - Correct Answer ✅A valuation method used by insurers to reflect an item's current market value right before being damaged or destroyed. Formula: (Replacement cost - Accumulated Depreciation) 1-J Actual Production History - Correct Answer ✅A history of a farmer's crop yields over a multi-year period, which is used to determine the normal production level of a farm. 3-E Adhesion - Correct Answer ✅Characteristic of an insurance contract. Means that one party (the insurer) sets the terms, and the other (the policyholder) can "take it or leave it."1-B

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Adjusted Gross Revenue (Crop Insurance) - Correct Answer ✅Narrowest (and least expensive) form of Crop Revenue Insurance. Insures farm revenue as a whole instead of individual crops. Guarantees a percentage of the insured farm's average revenue. 3-E Adjuster - Correct Answer ✅An agent who, for compensation, processes insurance claims. Can represent either the insured or the insurer. 2-B Adjuster - Emergency - Correct Answer ✅Adjusters who are temporarily licensed by the insurance commissioner to handle claims during catastrophes or emergencies that produce an overwhelming number of claims in a short period of time. 2-B Adjuster - Independent - Correct Answer ✅Self-employed adjusters who contract with multiple insurers at the same time. Paid on a commission or fee-plus-expenses basis for each claim. Also called: Fee Adjuster, Bureau Adjuster 2-B

and Answers (latest Update 2024)

Adjuster - Public - Correct Answer ✅An adjuster who is hired to represent the claimant and help determine a fair indemnification. Usually specializes in appraisals and negotiation. Paid commission, usually a percentage of final settlement. 2-B Adjuster - Staff - Correct Answer ✅Salaried employee of one insurance company who can work locally, regionally, or nationally. Also called: Company Adjuster 2-B Advance Payment Settlement - Correct Answer ✅A settlement option that lets the insurer offer some financial relief to the claimant before the claim has been fully settled. The insurer makes advance payments to the claimant, which are then subtracted from the final settlement amount. Often used when a claimant suffers bodily injury and is unable to work.2-D Agency Authority - Correct Answer ✅The Agent's authority to act on behalf of someone else, usually an insurer. This authority is derived from the agent's contract with the insurer. 2-A

and Answers (latest Update 2024)

Agency Authority - express - Correct Answer ✅Authority that is expressly given to the agent in writing. Allows agent to act on behalf of the principal. 2-A Agency Authority - implied - Correct Answer ✅Authority that an agent possesses by implication of her behavior, regardless of whether this authority is granted in writing. 2-A Agency Authority - apparent - Correct Answer ✅Authority that an agent possesses based on the appearance of representing the insurer. 2-A Agent - Correct Answer ✅Someone who has received authority from an insurer to sell or service insurance policies. 2-A Aggregate Limit - Correct Answer ✅A type of policy limit found in some health, liability, and property damage policies. It represents the total amount the insurer will pay for all losses (as opposed to an occurrence limit, which denotes the total amount the insurer will pay per occurrence). 1-K

and Answers (latest Update 2024)

Agreement - Correct Answer ✅One of the four requirements of a legally binding contract. All parties involved must agree to the terms of the contract. Can also refer to a binder, which is the preliminary substance of a contract. 1-A Agricultural Producer - Correct Answer ✅A business that grows, harvests, and sells crops for profit. 3-E Aleatory - Correct Answer ✅A characteristic of an insurance contract. Means "depending on an unknown future event." An insurance contract will only pay IF and WHEN covered damages occur. Neither party knows how much the contract will end up paying when they enter into the contract. 1-B Answer - Correct Answer ✅In liability cases, the defendant's response to a complaint. There are three possible answers: 1) accept complaint and pay for damages, 2) deny the complaint, or 3) accept the complaint with a right to insert evidence into the case. 1-L Annual Depreciation - Correct Answer ✅An item's Replacement cost divided by the number of years in its expected lifespan. 1-J

and Answers (latest Update 2024)

Appraisal - Correct Answer ✅A negotiation method which allows the claimant and the insurer each to select an appraiser. The two appraisers in turn select an Umpire. The appraisers then work together to determine a settlement amount. If they cannot agree, the Umpire steps in. Agreement by any two of the three is binding. 2-D Arbitration - Correct Answer ✅A negotiation method in which the opposing parties each submit their evidence to a mutually-agreed-upon and neutral third party, called an arbitrator. The arbitrator reviews the positions of each opposing side, and makes a final and legally binding decision. Arbitrator - Correct Answer ✅The mutually-agreed-upon and neutral third party in an arbitration who reviews the positions of each opposing side, and makes a final and legally binding decision. 2-D Artificially Generated Current - Correct Answer ✅Also called "artificial current." A peril covered in some property insurance policies. It includes sudden and accidental damage from any electrical current, except currents that are naturally generated, such as lightning or static electricity.3-A

and Answers (latest Update 2024)

Auto Policy - Correct Answer ✅Insurance policy designed to protect the policyholder while owning, occupying, or operating a vehicle. Usually combines liability coverage and property coverage into one policy. 3-C Automobile In Insurance policies - Correct Answer ✅Automobile generally means any vehicle designed for use on public roads. 3-C Automobile No-Fault Laws - Correct Answer ✅Laws in effect in some states that require any owner of a vehicle to purchase no-fault insurance; that is,insurance that indemnifies the insured regardless of who was at fault in an accident. No-fault laws also restrict the insured's right to sue the at-fault party.3-C Aviation - Correct Answer ✅Aviation insurance combines hull insurance for the aircraft and liability insurance for any damage toothers' property or to people who are not passengers. 5-F Bailee - Correct Answer ✅An individual or company that receives the property of someone else for a special purpose, and returns the product after use. 5-E

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BAP - Correct Answer ✅The Business Auto Policy provides property damage and liability insurance for automobiles used by a business. 4-F Binder - Correct Answer ✅A temporary contract provided by an insurer that ensures coverage until the complete, permanent policy is issued. 1-F BI - Correct Answer ✅(Bodily Injury): Physical damage to someone's person. Liability insurance covers bodily injury that the insured might cause to another person through negligence. 1-K Boiler & Machinery - Correct Answer ✅Boiler and machinery insurance is designed to indemnify a business for damages to, and damages by, boilers, machinery, motors, generators and a variety of other electrical devices and appliances. 4-H Bond - Correct Answer ✅A contract wherein one party guarantees the performance of a third party. Bonds involve three parties:(1) the surety agrees to pay the second party, (2) the obligee, if the third party, (3) the principal, neglects to carry out an obligation it has to the obligee.4-D

and Answers (latest Update 2024)

Breach of Product Warranty - Correct Answer ✅The failure or falsehood of a stated promise of a product stipulation. 1-L Business Personal Property - Correct Answer ✅Moveable property used for business 4-A Catastrophe - Correct Answer ✅An occurrence or a sequence of occurrences that causes enormous property losses. Catastrophes are normally uninsurable by private insurers. 2-B Cause of Loss - Correct Answer ✅A form included in a Commercial Package Policy or a Commercial Property Policy that lists the causes of loss from which the insured property is covered. 1-H CGL - Correct Answer ✅A Commercial General Liability policy protects businesses against damages and injuries to third parties. 4-B Civil - Correct Answer ✅Civil law observes court cases of one citizen charging another citizen for damages caused by tort; it differs from criminal law. 1-L

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Claim - Correct Answer ✅The request for settlement that the policyholder files with an insurer after she experiences a loss. 2-C Claims-Made Form - Correct Answer ✅A liability policy in which the insurer pays only those claims arising during the policy period (as opposed to those claims arising after the policy period is over, regardless of whether the incident took place during the policy period).4-B Claims Management - Correct Answer ✅The practice of the insurance adjuster of managing a claim by processing it in a prompt and effective manner from the time the claim is filed until a settlement is reached, while adhering to all local and federal laws.2-B Claimant - Correct Answer ✅One who files a claim with an insurer for a loss. 2-B Coarse Grains - Correct Answer ✅In Crop Insurance, a provision that covers reduction in crop quality, as well as crop-yield losses. Coarse grains are corn, grain sorghum, and soybeans. 3-E

and Answers (latest Update 2024)

Coinsurance - Correct Answer ✅The Coinsurance Clause applies to policyholders who purchase an inadequate amount of property insurance. These policyholders must pay a percentage of the claim. In health insurance, coinsurance refers to the portion of a covered claim that the insured is responsible for paying out-of-pocket, after the deductible has been paid. 1-J Code of Ethics - Correct Answer ✅A set of governing professional standards of conduct, usually created by regulatory bodies or government regulatory agencies. These standards may also be formally codified with statutes. 6-C Coercion - Correct Answer ✅The practice of forcing another party to behave in an involuntary manner (whether through action or inaction) by use of threats or intimidation or some other form of pressure or force. 6-D Commerce - Correct Answer ✅The exchange or transport of goods or property. 4-A Commercial - Correct Answer ✅Having to do with commerce or business activity in general. 4-A

and Answers (latest Update 2024)

Commercial Crime Insurance - Correct Answer ✅Commercial insurance that covers employee dishonesty and theft by employees or others. 4-G Commercial Lines - Correct Answer ✅A variety of insurance coverages that protect those involved in the business of creating, selling, displaying, evaluating, or shipping, etc. Example include: Business Owner's Policy; Commercial Property; Commercial General Liability; Workers Compensation; Professional Liability (D&O), Errors and Omissions(E&O) and Employment- Related Practices Liability.4-A Commercial Property Floater - Correct Answer ✅A means of protecting a business' property that is not in one fixed location. 5-E Common Crop Insurance Policy - Correct Answer ✅A single uniform policy that combines Crop Revenue Coverage, Revenue Assurance, Income Protection, and Indexed Income Protection. 3-E Common Law - Correct Answer ✅Based on court decisions and customs when statutory law does not provide an answer; creates precedent. 1-L

and Answers (latest Update 2024)

Compensatory Damages - Correct Answer ✅Money awarded in civil court for tangible and intangible damages caused by a policyholder. 1-L Compensatory damages - Special - Correct Answer ✅Money awarded for the exact value of the physical damage caused to the plaintiff up to the trial date.This is an objective value determined by receipts and medical bills. 1-L Compensatory damages - General - Correct Answer ✅Money awarded for the emotional losses of the plaintiff that will continue after the trial date. These are a subjective value and are determined by the court. 1-L Competence - Correct Answer ✅One of the four qualifications of a legally binding contract. All parties must be competent, with the necessary legal and mental capacity. 1-A Complaint - Correct Answer ✅A complaint initiates a civil lawsuit by a claimant requesting financial relief from damages caused by a policyholder. 1-L

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Concealment - Correct Answer ✅The act of withholding relevant material facts from an insurer. 1-F Conditions - Correct Answer ✅The section of a policy that qualifies or limits an insurer's promise to pay or perform. 1-B Consideration - Correct Answer ✅One of the four qualifications of a legally binding contract. All parties must bring something of value to the contract. 1-A Contract - Correct Answer ✅An agreement entered into voluntarily by two parties or more with the intention of creating a legal obligation. 1-A Coverages - Correct Answer ✅The amount and extent of protection provided by an insurance policy. 1-B Crime - Correct Answer ✅An offense against the State or Federal Government, or a breach of law, for which the offender shall make satisfaction to the public. 4-G

and Answers (latest Update 2024)

Criminal - Correct Answer ✅Someone who has been convicted of a criminal act in a court of law. 1-L Crop Hail Insurance - Correct Answer ✅A form of Crop Yield Insurance that is usually provided by private insurers without government subsidy. It offers named-peril protection on an acreage basis. 3-E Crop Insurance - Correct Answer ✅Insurance coverage designed to protect a farmer's financial investment in his or her crops. Covers losses to a crop's profitability. 3-E Crop Revenue Insurance - Correct Answer ✅Crop insurance that combines crop-yield insurance and price insurance to protect against losses to crop value. 3-E Crop Yield Insurance - Correct Answer ✅Crop insurance that covers physical losses to actual crops. Damages - general - Correct Answer ✅Intangible losses such as pain and suffering, or mental anguish. 1-L

and Answers (latest Update 2024)

Damages - special - Correct Answer ✅Tangible, financial losses that can be documented. 1-L Dangerous Instrumentality Doctrine - Correct Answer ✅States that anyone involved in the use of inherently dangerous products or machines is held 100% liable for their own damages. 1-K Dec Page - Correct Answer ✅Also called the Declarations Page. First page of a policy, which provides a summary of the contract; includes names of insured, addresses, coverage limits, policy period, etc. 1-B Declined Coverage - Correct Answer ✅takes place when an insurance company rejects an application for coverage. 1-D Deductible - Correct Answer ✅the amount the policyholder must pay out-of- pocket before the insurance company will paythe remaining costs. 1-J

and Answers (latest Update 2024)

Deductible - fixed - Correct Answer ✅A fixed deductible is one specific, predetermined amount that a policyholder must pay out-of-pocket before he can be indemnified. 1-J Deductible - percentage - Correct Answer ✅A deductible that is calculated as a percentage of the value of the insured risk. 1-J Deductible - franchise - Correct Answer ✅franchise deductible states that the policyholder only pays for damages that are less than his deductible. If the cost of damages equals or exceeds his deductible, the insurer pays the full amount and the policyholder pays nothing. 1-J Defamation - Correct Answer ✅Damage to another's name or reputation, whether by libel, which is in print, or by slander, which is in speech. 6-D Default Judgement - Correct Answer ✅Default Judgement is entered by the court against the party who failed to defend against a claim brought on by another party. In other words, if the person fails to show up and answer the claim the court will find in favor of the other party. 1-L

and Answers (latest Update 2024)

Definitions - Correct Answer ✅Page in policy that gives specific limited meaning to terms used in policy. 1-B Depreciation - Correct Answer ✅A decline in value of property caused by wear or loss of usefulness usually measured by a specific formula. 1-J Direct Loss - Correct Answer ✅Physical harm to tangible property caused by a peril. 1-H Discoverable - Correct Answer ✅Capable of being demanded and handed over as evidence in a court of law; during litigation proceedings, the adjuster's claims file is discoverable. 2-E Eligiblity - Correct Answer ✅Eligibility Requirements are found in some insurance policies. They identify the conditions that must be met by the policyholder in order to qualify for coverage under a policy. 3-A End of Insurance Date - Correct Answer ✅The date that crop insurance coverage will end. It is the earliest of: total crop destruction, harvest of the

and Answers (latest Update 2024)

crop, final adjustment of a loss, abandonment of a crop, or a date predesignated by crop type. 3-E Endorsement(s) - Correct Answer ✅An optional provision that can be added to a policy to increase, reduce, or modify coverage for specific property types or perils. 1-B Errors and Omissions - Correct Answer ✅Liability insurance that indemnifies professionals for errors or oversights on the part of the insured that caused harm to their clients. 4-C Estoppel - Correct Answer ✅A legal principle that bars a party from asserting something contrary to what has been implied by his previous actions or statements. 1-F Ethical - Correct Answer ✅Adhering to moral laws and to principles of fairness. 6-C Evaluation - Correct Answer ✅Evaluation, determining the approximate value of damages relevant to a claim i.e. total of medical bills, costs of repair &

and Answers (latest Update 2024)

replacement of damaged property and the consideration of the financial provisions of the insurance policy. 1-I Exclusions - Correct Answer ✅A section of an insurance policy that reduces coverage by listing specific individuals, property, or perils that are NOT covered by the policy. 1 B Exposure - Correct Answer ✅The extent to which an item is open to damage or loss. More exposure means a loss is more likely. 1-DF Fair Credit Reporting - Correct Answer ✅Federal legislation that gives an applicant for insurance the right to investigate the reasons his insurance application was denied. 6-D False Advertising - Correct Answer ✅Presenting something in a deceptive or untrue manner to the consumer; misrepresentations in advertisements. 6-D Farm - Correct Answer ✅A property where a farmer or rancher both resides and conducts commercial business. 3-D

and Answers (latest Update 2024)

Farm Liability Coverage Form - Correct Answer ✅A form added to a farm insurance policy that provides coverage for injury and damage to a third party. 3-D Farm Property Coverage Form - Correct Answer ✅A form added to a farm insurance policy that provides coverage for the dwelling, other structures, farm structures, and both household and farm personal property. 3-D Farmer - Correct Answer ✅Someone in the business of growing, harvesting, and selling crops for profit. In Farm insurance, a farmer must reside and do business on the same premises. 3-D Federal Crop Insurance Act - Correct Answer ✅Legislation passed by Congress that established the Federal crop insurance program. 3-E Federal Crop Insurance Corporation (FCIC) - Correct Answer ✅A government- owned corporation that manages the Federal crop insurance program. 3-E

and Answers (latest Update 2024)

FEMA - Correct Answer ✅Federal Emergency Management Agency - a branch of homeland security that coordinates relief programs when disaster strikes an entire community. N/A Fiduciary - Correct Answer ✅One of the terms that describes the adjuster's relationship with the principal (the insurer). As FiduciaryAgent, the adjuster acts for the benefit of the principal, rather than for his own benefit. 2-B Final planting date - Correct Answer ✅The last day to plant crops in order to receive the full insurance yield and/or revenue guarantee selected. 3-E First Named Insured - Correct Answer ✅The first person or entity named as insured on the declarations page of a policy. 1-F Floater - Correct Answer ✅A term for Inland Marine policies that cover mobile property. 5-E Flood - Correct Answer ✅An overflow of inland or tidal waters; an unusual or rapid accumulation of runoff or surface waters from any source; mud flows;

and Answers (latest Update 2024)

collapse or subsidence of land along the shore of a lake or other body of water. 5-A Flood Insurance - Correct Answer ✅provides relief following flood damage to communities who participate in the NFIP floodplain management system; covers damages to the building and its contents 5-A Floodplain Management - Correct Answer ✅maps out areas with high risk of flood, so that communities will avoid building in these areas 5-A Fraternal Benefit Societies - Correct Answer ✅Fraternal Benefit Societies, or Fraternal Associations, are non-profit, mutual aid organizations that engage primarily in charitable or benevolent activities. They offer their members insurance against death, disease, and disability.1-C Fraud - Correct Answer ✅The act of deceiving an insurance company in order to collect more money than one is legally entitled to. 1-G Fraud, Hard - Correct Answer ✅Deliberately faking or causing an incident in order to collect money. 1-G

and Answers (latest Update 2024)

Fraud, Soft - Correct Answer ✅Inflating the gravity or the extent of claims in order to receive a higher indemnification. 1-G Full and legal purpose - Correct Answer ✅See also "Legal Purpose." One of the four qualifications of a legally binding contract. The purpose of the contract must be legal (e.g. no contracts for illicit drug deals). Good faith - Correct Answer ✅Acting honestly and fairly, with good intentions and full disclosure. 1-B Group Risk Income Protection (Crop Insurance) - Correct Answer ✅A form of Crop Revenue Insurance that protects a whole county or area instead of individual farmers. Automatically indemnifies if county income falls below a certain level. 3-E Hazard, Moral - Correct Answer ✅Hazard caused by insured persons deliberately engaging in risky behavior because they know that insurance will indemnify them for the losses. 1-G

and Answers (latest Update 2024)

Hazard - Correct Answer ✅Anything that increases the chance of loss. 1-G Hazard morale - Correct Answer ✅Unconscious tendency of insured people to engage in riskier behavior. 1-G Hazard Physical - Correct Answer ✅Any physical condition that increases the chance of a loss. 1-G HIPAA - Correct Answer ✅Health Insurance Portability and Accountability Act, 1996 US law protecting consumer privacy, regulating collection, use and storage of private information. 6-D HO Forms 2 - Correct Answer ✅The "broad" or "cheap" form of Homeowners Insurance; a basic, named-peril HO form that nevertheless is less limited than the HO-8. 3-A HO Forms 3 - Correct Answer ✅"Special form" of Homeowners Insurance; all- peril coverage for structures, named-peril coverage for contents. 3-A