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29 Cards in this Set
- Front
- Back
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Financial consequences of loss |
1) reduction in value of property (your car runs into a tree and lowers the value of the car) 2) increased expenses (dwelling has a fire so you need to stay in a hotel) 3) lost income (if you rent a home and the property is damaged so you cant rent it) |
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Three elements of personal liability loss exposures |
1) assets exposed to loss 2) causes of loss 3) financial consequences of loss |
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general damages |
monetary awards to compensate victims for losses, such as pain and suffering, don't involve specific measurable expenses |
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special damages |
form of compensatory damages that compensate for specific, identifiable expenses associated with the injured person's loss, such as medical expenses or lost wages |
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Punitive damages (exemplary damages) |
payment awarded by a court to punish a defendant for reckless, malicious, or deceitful act to deter similar conduct; the award need not bear any relation to a party's actual damages |
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civil law |
classification of law that applies to legal matters not governed by criminal law and that protects rights and provides remedies for breaches of duties owed to others |
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tort |
a wrongful act or an omission, other than a crime or breach of contract, that invades a legally protected right |
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Legal elements of negligence |
1) a duty to act (family to keep home safe) 2) breach of duty (family lets child leave ball on steps) 3) injury or damage occurs (guest breaks leg on stairs by tripping on ball) 4) break of duty is a direct cause of injury or damage (broken leg direct result of ball left on stairs) |
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intentional torts |
libel slander assault battery trespass nuisance |
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statutory liability |
exists because of the passage of a statue or law |
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risk control |
a conscious act or decision not to act that reduces the frequency and/or severity of losses or makes losses more predictable ex: individual avoids auto accident by not driving alters frequency and severity of loss |
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risk financing |
a conscious act or decision not to act that generates the funds to pay for losses and risk control measures or to offset variability in cash flows ex: insurance |
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Risk control techniques |
avoidance loss prevention loss reduction separation duplication diversification |
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risk financing techniques |
transfer retention |
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Avoidance (risk control) |
risk control technique that involves ceasing or never undertaking an activity so the risk of loss is eliminated |
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loss prevention (risk control) |
reduces frequency of a particular loss .. ex installing fire alarms |
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loss reduction (risk control) |
reduces the severity of a particular loss ex: fire resistant shingles means family expects reduced losses from fire compared to standard shingles |
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separation (risk control) |
risk control technique that isolates loss exposures from one another to minimize the adverse effect of a single loss ex: moving jewelry to deposit box.. risk that it increases frequency by having some jewelry at home, some at the bank |
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duplication (risk control) |
risk control technique that uses backups, spares, or copies of critical property, information, or capabilities and keeps them in reserve ex: copies of a will in safety deposit box |
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diversification (risk control) |
risk control technique that spreads loss exposures over numerous projects, products, markets, or regions ex: mix of stocks and bonds from companies in different industry sectors (reduces loss severity, makes losses more predictable, can increase frequency) |
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Retention (risk financing) |
risk financing technique by which losses are retained by generating funds within the organization to pay for the losses ex: not getting insurance on appliances they can afford to replace... keeping $1k deductible on car is the default risk financing technique that resultss if people dont identify a risk to transfer |
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risk transfer (risk financing) |
most prevalent is insurance... financial responsibility for losses and variability in cash flows is shifted to another party |
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financial responsibility law |
enacted to ensure that motorists have the financial ability to pay for any property damage or bi they might cause as a result of driving or owning an auto.. (such as liability insurance) |
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compulsory auto insurance law |
requires the owners or operators of automobiles to carry automobile liability insurance at least equal to certain minimum limits before the vehicle can be licensed or registered |
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unsatisfied judgment fund |
fund designed to provide a source of recovery for victims of motor vehicle accidents when an at-fault motorist is unable to pay any judgment |
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Uninsured motorists (UM) |
coverage that provides a source of recovery for occupants of a covered auto or for qualifying pedestrians who are injured in an accident caused by an at-fault motorist who does not have the state minimum liability insurance or by a hit and run driver.. applies with BI is caused by an uninsured motorist, a hit and run driver, or a driver whose insurer is insolvent |
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Underinsured Motorists Coverage |
provides additional limits of protection to the victim of an auto accident when the negligent driver's insurance limits are insufficient to pay for the damages.. can be added by endorsement to an auto policy in some state it is automatically included - applies only when the at-fault driver has liability insurance with lower liability limits than the limits provided by the injured person's UIM coverage |
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No-fault automobile insurance |
insurance that covers automobile accident victims on a first-party basis, allowing them to collect damages from their own insurers regardless of who was at fault |
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no fault laws |
state statutes that require motorists to purchase (or require insurers to make available) insurance that provides minimum first-party benefits to injured persons regardless of fault |
