Policy Provisions and Concepts Flashcards
6 cards from real Property And Casualty Insurance License practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Policy Provisions and Concepts flashcards as text
What does 'utmost good faith' (uberrimae fidei) require in insurance?
Answer: Both parties must disclose all material facts relevant to the insurance contract
Utmost good faith requires both parties — especially the applicant — to fully disclose all material information that could affect the insurer's decision to provide coverage or set the premium.
What is 'misrepresentation' in insurance applications?
Answer: Making a false statement of a material fact on an insurance application
Misrepresentation is the act of providing false information on an insurance application; if material, it can allow the insurer to void the policy.
What is the 'appraisal clause' in a property policy used for?
Answer: Resolving disputes over the amount of loss when coverage is not in question
The appraisal clause provides a mechanism to resolve disagreements about the dollar amount of a covered loss by appointing independent appraisers.
What is a 'mortgagee clause' (also called a mortgage clause) in a property policy?
Answer: A provision protecting the lender's interest in insured property even if the borrower violates policy conditions
The mortgagee clause gives the lender an independent right to receive claim proceeds and protects the lender if the borrower's coverage is voided by a policy violation.
What is meant by 'assignment' of an insurance policy?
Answer: The transfer of the insured's rights and interests under the policy to another party
Assignment transfers the policyholder's rights to another party; property and casualty policies generally require the insurer's written consent for assignment because coverage is personal to the insured.
What does 'liberalization' clause in a property policy provide?
Answer: Automatic extension of broader coverage to in-force policies if the insurer broadens coverage with no additional premium
The liberalization clause ensures that if the insurer expands coverage on new policies with no extra charge, existing policyholders automatically receive the broader coverage.