Subrogation. When insureds accept loss payment from the insurance company, they must transfer their rights to recovery to the insurer. This prevents the insured from collecting twice for the same loss, and allows the insurer to indemnify the insurance company.
What is the term for the causes of loss insured against in an insurance policy?
Peril - A specific risk or cause of loss covered by a property insurance policy, such as a fire, windstorm, flood, or theft. A named-peril policy covers the policyholder only for the risks named in the policy.
What is subrogation principle?
To make up for the compensation paid, your insurer can claim the (insured) right over that third party. You surrender your rights over the third party to the insurer. This transfer of all the rights, and remedies, from insured to insurer is called subrogation.
What is the purpose of the coinsurance clause?
Coinsurance is a clause used in insurance contracts by insurance companies on property insurance policies such as buildings. This clause ensures policyholders insure their property to an appropriate value and that the insurer receives a fair premium for the risk. Coinsurance is usually expressed as a percentage.
Which term describes coverage that applies only to loss by the perils stated in a policy?
Named–perils coverage, under which only those perils specifically listed in the policy are covered. If the peril is not listed, it is not covered. All–risk coverage, under which all losses are covered except those losses specifically excluded. If the loss is not excluded, then it is covered.