Insurance Concepts Flashcards
6 cards from real Geico Assessment Test practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Insurance Concepts flashcards as text
What is subrogation in insurance?
Answer: The process where an insurer seeks reimbursement from the at-fault party after paying a claim
After paying a claim, the insurer may pursue the at-fault party to recover the amount paid, protecting both the insurer and keeping premiums lower.
What is an insurance binder?
Answer: A temporary agreement providing immediate coverage until the formal policy is issued
A binder provides immediate proof of coverage while the full policy is being prepared, typically valid for 30-90 days.
What is an insurance endorsement?
Answer: A modification or addition to an existing insurance policy that changes its coverage terms
Endorsements (riders) add, remove, or modify coverage on an existing policy, allowing customization without issuing a new policy.
What is the difference between replacement cost and actual cash value?
Answer: Replacement cost pays to replace the item at current prices; actual cash value deducts depreciation
Replacement cost covers the full cost to replace an item with a new equivalent. Actual cash value subtracts depreciation, paying less for older items.
What is umbrella insurance?
Answer: Extra liability coverage that extends beyond the limits of your auto or home policy
Umbrella insurance provides additional liability protection above and beyond what standard policies cover, typically in $1 million increments.
What is an SR-22?
Answer: A certificate of financial responsibility filed with the state proving you carry the required minimum auto insurance
SR-22 is typically required after serious driving violations (DUI, driving without insurance) as proof that you maintain the state-mandated minimum coverage.