Insurance 101 Glossary Quiz

Insurance 101

• Insurer: The main insurance company
• Insured: The person who purchased the insurance (the customer)
• Named Insured: The person whose insurance is covered by the company (owner of the property)
• First Named Insured: The business owner with full rights and responsibilities
• Additional Insured: People added to the policy with an interest (e.g., mortgage holder)
• Principle of Indemnity: Insurance covers losses to restore the insured to their prior state, not to profit from them
• Underwriting: The process of making sure the insurer can pay the claim
• Insurable Interest: The principle that insurance is used for protection, not profit
• Accident: An unplanned event causing damage (e.g., car accident)
• Occurrence: Damage resulting from prolonged exposure (e.g., mold growth)
• Cancellation: Policy termination due to non-payment
• Non-renewal: Deciding not to renew the policy
• Binder: Temporary insurance until the final policy is issued
• Certificate of Insurance: Proof of coverage, including details about the policy

Endorsements, Arbitration, and Appraisal

• Endorsement: Modifies an existing policy to adapt to changing needs
• Arbitration: A third-party process to settle insurance claims (determines if a claim is valid and how much)
• Appraisal: Process determining the value of damaged property
• Commissioner of Insurance: Public official overseeing the insurance industry in a state
• Examination of Records: Regular review of insurer operations
• Investigation/Notice of Hearing: Investigating claims of bad practices by an insurer

Cease and Desist Orders, Penalties, and Civil Penalties

• Cease and Desist Orders: Orders issued by agencies to stop specific activities (and serves as warning)
• Administrative Penalty: Fines for violating cease and desist orders (up to $1000 per violation, and up to $5000 in aggregate)
• Civil Penalty: Penalties imposed by a court if cease and desist orders are not followed
• Reinsurance Reserved: Fund to protect policyholders
• Domicile of Insurer: State/country laws applicable to an insurance company
• Domestic: Insurance company with its home office in the same state

Foreign, Alien, Admitted Insurers, Sanctions

• Foreign Insurers: Insurance companies based outside of the state
• Alien Insurers: Insurance companies based outside of the US
• Admitted Insurer: Insurance companies licensed to operate within a specific state
• Certificate of Authority: Official permission from a state to conduct insurance business
• Sanctions and Penalties: Action taken when insurers fail to meet regulations

Non-Admitted Insurers, Surplus Lines, and Associations

• Non-Admitted Insurers: Insurance companies not licensed to operate within a specific state
• Surplus Lines: Insurance for unusual or high-risk situations unavailable from standard insurers
• Texas Property & Casualty Guaranty Association: Protects consumers if their insurer fails (provides partial compensation)

Test your knowledge about key terms in the insurance industry with this Insurance 101 quiz. From understanding the roles of insurers and insureds to grasping concepts like indemnity and underwriting, this quiz covers essential terminology. Perfect for beginners and those looking to refresh their understanding of insurance basics.