Chapters 1-3 Fundamentals

Front 1

Types of coverage

Back 1

Automobile, property and liability

Front 2

Automobile insurance

Back 2

Largest area of insurance - greatest source of premium volume for insurers

Front 3

Property insurance

Back 3

Personal as well as business property. Second greatest source of premiums for insurers.

Front 4

Liability insurance

Back 4

Financial protection when an insured is found legally responsible for causing injury or property damage to others and required to compensate the victim.

Front 5

Peril

Back 5

The cause of a loss

Front 6

Peril

Back 6

The cause of a loss

Front 7

Amount of the payment

Back 7

The actual amount of the loss - no more no less

Front 8

Peril

Back 8

The cause of a loss

Front 9

Amount of the payment

Back 9

The actual amount of the loss - no more no less

Front 10

Principle of indemnity

Back 10

The value of the insured object immediately prior to the loss

Front 11

Peril

Back 11

The cause of a loss

Front 12

Amount of the payment

Back 12

The actual amount of the loss - no more no less

Front 13

Principle of indemnity

Back 13

The value of the insured object immediately prior to the loss

Front 14

Risks faced by every person

Back 14

Personal, property, and liability

Front 15

Peril

Back 15

The cause of a loss

Front 16

Amount of the payment

Back 16

The actual amount of the loss - no more no less

Front 17

Principle of indemnity

Back 17

The value of the insured object immediately prior to the loss

Front 18

Risks faced by every person

Back 18

Personal, property, and liability

Front 19

Personal risk

Back 19

Chance of financial hardship due to the accident or sickness or death

Front 20

Property risk

Back 20

Chance of financial loss due to damage or destruction of tangible property, risk increased with the accumulation of physical assets

Front 21

Property risk

Back 21

Chance of financial loss due to damage or destruction of tangible property, risk increased with the accumulation of physical assets

Front 22

Liability risk

Back 22

Actions of individuals or businesses that result in injuries or property damage to others (which could have been prevented) may result in payment to compensate the injured party

Front 23

Dealing with risks (4)

Back 23

Avoidance, controlling, retention, and transfer

Front 24

Dealing with risks (4)

Back 24

Avoidance, controlling, retention, and transfer

Front 25

Avoidance

Back 25

Totally eliminating all chance of financial loss, not practical

Front 26

Dealing with risks (4)

Back 26

Avoidance, controlling, retention, and transfer

Front 27

Avoidance

Back 27

Totally eliminating all chance of financial loss, not practical

Front 28

Controlling

Back 28

Reducing the frequency or severity of losses, not 100% effective, can not control windstorm or earthquake

Front 29

Dealing with risks (4)

Back 29

Avoidance, controlling, retention, and transfer

Front 30

Avoidance

Back 30

Totally eliminating all chance of financial loss, not practical

Front 31

Controlling

Back 31

Reducing the frequency or severity of losses, not 100% effective, can not control windstorm or earthquake

Front 32

Retention

Back 32

Means retaining the risks, without some form of transfer, not viable for most individuals or businesses

Front 33

Dealing with risks (4)

Back 33

Avoidance, controlling, retention, and transfer

Front 34

Avoidance

Back 34

Totally eliminating all chance of financial loss, not practical

Front 35

Controlling

Back 35

Reducing the frequency or severity of losses, not 100% effective, can not control windstorm or earthquake

Front 36

Retention

Back 36

Means retaining the risks, without some form of transfer, not viable for most individuals or businesses

Front 37

Transfer

Back 37

Means shifting financial burden to another insurance party, most practical option to deal with risk

Front 38

Two types of financial risk

Back 38

Speculative and pure risk

Front 39

Two types of financial risk

Back 39

Speculative and pure risk

Front 40

Speculative risk

Back 40

Includes chance of financial loss with the chance of financial gains at the same time, i.e. Playing the stock market

Front 41

Pure risk

Back 41

Involves chance of financial loss only with no chance of gain, only pure risk is insurable

Front 42

What is a contract?

Back 42

An agreement made between two or more parties to do or not do something

Front 43

What is a contract?

Back 43

An agreement made between two or more parties to do or not do something

Front 44

What does "legally enforceable" mean?

Back 44

The courts agree to impose an obligation on a party to fulfill the terms of the agreement

Front 45

Elements of ALL contracts

Back 45

Agreement, consideration, legality of object, legal capacity of the parties, and genuine intention

Front 46

Agreement

Back 46

Has two parts: offer and acceptance

Front 47

Consideration

Back 47

Means all parties to the contract must contribute something of value

Front 48

Legality of object

Back 48

Means the purpose of the contract must be legal

Front 49

Legal capacity of the parties

Back 49

Means that all parties to the contract must have an equal understanding of the obligations undertaken by all

Front 50

Genuine intention

Back 50

Means that all parties exercised free will in coming to the agreement by being aware of all terms and conditions

Front 51

Insurable interest

Back 51

Only a party who would actually suffer a financial loss is entitled to benefit from an insurance contract

Front 52

Insurable interest

Back 52

Only a party who would actually suffer a financial loss is entitled to benefit from an insurance contract

Front 53

Utmost good faith

Back 53

Required exact compliance. Both the insurer and insured must be completely honest in all their dealings

Front 54

Insurable interest

Back 54

Only a party who would actually suffer a financial loss is entitled to benefit from an insurance contract

Front 55

Utmost good faith

Back 55

Required exact compliance. Both the insurer and insured must be completely honest in all their dealings

Front 56

Indemnity

Back 56

The actual amount of loss - no more no less

Front 57

Documents used to make changes

Back 57

Endorsement, rider and floater

Front 58

Documents used to make changes

Back 58

Endorsement, rider and floater

Front 59

Endorsement

Back 59

Doc issued by the insurer to indicate a change that ha seen made to the contract

Front 60

Documents used to make changes

Back 60

Endorsement, rider and floater

Front 61

Endorsement

Back 61

Doc issued by the insurer to indicate a change that ha seen made to the contract

Front 62

Rider

Back 62

Indicates that coverage not previously included in the contract has been added

Front 63

Documents used to make changes

Back 63

Endorsement, rider and floater

Front 64

Endorsement

Back 64

Doc issued by the insurer to indicate a change that ha seen made to the contract

Front 65

Rider

Back 65

Indicates that coverage not previously included in the contract has been added

Front 66

Floater

Back 66

Used to insure property that is highly mobile i.e. Cell phones or contractors equipment

Front 67

Solvency

Back 67

An insurer's ability to pay claims, monitored by government on an ongoing basis

Front 68

Solvency

Back 68

An insurer's ability to pay claims, monitored by government on an ongoing basis

Front 69

Property and casualty insurance compensation corporation

Back 69

To provide coverage for policyholders when an insured has been declared bankrupt until insurance has been secured with another insurer

Front 70

Fiduciary

Back 70

Someone who handles another's money (insurers, brokers, banks, accountants, lawyers)

Front 71

Removal clause

Back 71

Requires insurer to extend coverage to a location not stated in the policy when property has been necessarily removed from the location (maximum 7 days)

Front 72

Subrogation

Back 72

To place oneself into the shoes of another (assume legal rights of another)

Front 73

Subrogation

Back 73

To place oneself into the shoes of another (assume legal rights of another)

Front 74

Effect of subrogation

Back 74

Allows insured to claim with insured when loss was caused by others

Front 75

Subrogation

Back 75

To place oneself into the shoes of another (assume legal rights of another)

Front 76

Effect of subrogation

Back 76

Allows insured to claim with insured when loss was caused by others

Front 77

Result of subrogation

Back 77

Insurer after paying the claim to insured has the right to recover all amounts (including deductible) from the party responsible for the causing loss

Front 78

Two types of fires

Back 78

Friendly and hostile

Front 79

Two types of fires

Back 79

Friendly and hostile

Front 80

Friendly fire

Back 80

Contained, application is deliberate for beneficial purposes

Front 81

Two types of fires

Back 81

Friendly and hostile

Front 82

Friendly fire

Back 82

Contained, application is deliberate for beneficial purposes

Front 83

Hostile fire

Back 83

No longer contained, effects is destructive

Front 84

Two additional perils insured under fire policy

Back 84

Lightening and explosion of natural, coal or manufactured gas

Front 85

Three types of misrepresentation

Back 85

False description, misrep of material fact, and omission of a material fact

Front 86

Three types of misrepresentation

Back 86

False description, misrep of material fact, and omission of a material fact

Front 87

Misrepresentation of a material fact

Back 87

Vital info about loss history, previous insurance record and info about the applicant has not been made available to insurer

Front 88

Three types of misrepresentation

Back 88

False description, misrep of material fact, and omission of a material fact

Front 89

Misrepresentation of a material fact

Back 89

Vital info about loss history, previous insurance record and info about the applicant has not been made available to insurer

Front 90

Omission of a material fact

Back 90

Applicant deliberately withheld vital info in order to secure coverage or to obtain lower premium