Insurance Principles and Coverages Flashcards
7 cards from real TRIP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Insurance Principles and Coverages flashcards as text
Under the principle of indemnity, what is the maximum amount an insured can recover after a covered loss?
Answer: The actual cash value of the loss, not to exceed the policy limit
Indemnity limits recovery to the actual financial loss suffered, capped at the policy limit, preventing profit from insurance.
A trucking company insures a fleet under a commercial auto policy with a $1M per-occurrence limit. Three vehicles are damaged in the same accident. What is the maximum the insurer pays?
Answer: $1M total for all vehicles in the single occurrence
A per-occurrence limit caps total insurer payment for all damages arising from one event, regardless of how many vehicles are involved.
Which coverage under a commercial auto policy pays for damage to the insured's own vehicle caused by collision with another object?
Answer: Collision coverage
Collision coverage pays for physical damage to the insured vehicle resulting from impact with another vehicle or object.
What does 'other than collision' (comprehensive) coverage protect against on a commercial auto policy?
Answer: Physical damage from perils such as fire, theft, hail, flood, and vandalism
Comprehensive (other than collision) covers a broad range of physical damage perils that are not collision-related, including fire, theft, weather, and animal strikes.
A motor carrier's cargo policy excludes losses caused by the shipper's improper packaging. This is an example of which type of policy provision?
Answer: Exclusion
Exclusions are policy provisions that eliminate coverage for specified causes of loss, such as shipper negligence in packaging.
Which principle requires that an insured must have a financial stake in the insured property at the time of loss?
Answer: Insurable interest
Insurable interest requires the insured to suffer a direct financial loss if the property is damaged, which must exist at the time of loss for property insurance.
A transportation insurer pays a cargo claim and then sues the at-fault third-party carrier to recover the amount paid. What doctrine allows this?
Answer: Subrogation
Subrogation allows the insurer, after paying a claim, to step into the insured's shoes and pursue recovery from the responsible third party.