Please remember that you must do your own work. Any plagiarism will result in a grade ofzero for all students involved. Please use your own words even if you are using the textbookfor answers. Always provide a citation when a reference is used.1. The following questions refer to the principle of indemnity:a. Why is the principle of indemnity important in the insurance product?b. How is actual cash
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Please remember that you must do your own work. Any plagiarism will result in a grade of
zero for all students involved. Please use your own words even if you are using the textbook
for answers. Always provide a citation when a reference is used.
1. The following questions refer to the principle of indemnity:
a. Why is the principle of indemnity important in the insurance product?
b. How is actual cash value calculated?
c. Does the concept of actual cash value support the principle of indemnity? Explain.
2. Answer the following:
a. What is a valued policy and why is it used?
b. What is a valued policy law?
c. What is a replacement cost policy?
3. The following refer to insurable interests:
a. Explain the meaning of an insurable interest.
b. Provide an example of an insurable interest.
c. Why is an insurable interest required in every insurance contract?
4. Ashley purchased a dining room set for $5000 and insured the furniture on an actual
cash value basis. Three years later, the set was destroyed in a fire. At the time of loss,
the property had depreciated in value by 50%. The replacement cost of a new dining
room set at the time of loss was $6000 dollars. Ignoring any deductible, how much
will Ashley collect from her insurer? Show any work and explain your answer.
5. A drunk driver ran a red light and smashed into Kris’s car. The cost to repair the car is
$8000 dollars. She has collision insurance on her car with a $500 deductible.
a. Explain how the principle of subrogation would be relevant in this case.
b. Explain how subrogation supports the principle of indemnity.
6. Identify the basic parts of an insurance contract and list two components of each.
7. Can other parties be insured under a policy even though they are not specifically
named? Explain your answer and give two examples, if this is true.
8. Explain the purposes of deductibles in property insurance contracts. Briefly discuss
three types of deductibles.
9. The following refer to the coinsurance clause:
a. Explain how a coinsurance clause in property insurance works.
b. What is the fundamental purpose of a coinsurance clause?
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