Insurance Terminology and Concepts

The video tutorial explains the fundamental concepts of insurance, including the nature of insurance as a contract, the roles of the insurer and insured, and the legal framework governing insurance policies. It covers financial obligations like premiums, deductibles, co-pays, and coinsurance. The structure of insurance policies, including declarations and endorsements, is discussed, along with the process of making claims and the concept of subrogation. The video also addresses how policies are interpreted and the conditions under which they can be terminated.

What is the primary purpose of an insurance contract?

• To offer legal advice

• To ensure profit for the insurer

• To transfer risk from one party to another

• To provide investment opportunities

What is a deductible in an insurance policy?

• A fixed amount paid by the insurer

• A bonus given to the insured

• A percentage of the total premium

• An amount the insured must pay before the insurer covers costs

How does coinsurance differ from a co-pay?

• Both are percentages of costs

• Both are fixed amounts

• Coinsurance is a percentage of costs, while co-pay is a fixed amount

• Coinsurance is a fixed amount, while co-pay is a percentage

What are declarations in an insurance policy?

• The exclusions of the policy

• The identification of parties and specific terms that may vary

• The legal terms of the policy

• The payment terms of the policy

What is an endorsement or rider in an insurance policy?

• A legal dispute over the policy

• A summary of the policy

• A change to the policy that adds or removes coverage

• A cancellation of the policy

What is subrogation in the context of insurance?

• The insured's obligation to pay a deductible

• The process of policy renewal

• The insurer's right to recover costs from a third party

• The insurer's decision to cancel a policy

What principle is applied when interpreting ambiguous insurance policies?

• The principle of subrogation

• The principle of indemnity

• The principle of utmost good faith

• The ambiguity principle, favoring the insured