Final Exam Review

Front 1

What is riskmanagement? And how do insurance companies manage risk?

Back 1

1. Risk Management:the transfer of risk from an individual or business to an insurance company.

Risk Pool:Insurance companies spread risk among a large number of people-the pool- tomake the premiums small compared with the coverage offered.

Front 2

What is insurable interest?

Back 2

1. InsurableInterest: You have an insurable interest in property f you would sustain afinancial loss from it destruction. This interest in property must exist whenthe loss occurs.

Front 3

Explain an insurance contract? When is the contract in effect?

Back 3

The filled-inapplication form for insurance is usually attached to the policy and made apart of the insurance contract.

b.Misstatements andmisrepresentation can void the contract because the insurance company evaluatesthe risk of the individual based on the information in the application.

It can be when the insurance company accepts the applicant and aformal written policy is issued or when the application receives the by theinsurance company.

Front 4

What does it include and when does it “activate”?

Back 4

A broker is merely the agent of an applicant and the applicant normally is not insured till the broker obtains a policy.

b. The contract is not effective until the policy is issued and delivered or sent to the applicant depending on the agreement. Any loss sustained between these times cannot be recovered.

c. Coverage on an insurance policy can begin when a binder is written, when the policy issued, or depending on the terms of the contract, after a certain period of time has elapsed.

Front 5

Provision andclauses

Back 5

a. Courts interpretthe words used in an insurance contract according to their ordinary meaning andin light of the nature of overage involved. b. In somesituations, it may be unclear whether an insurance contract actually existsbecause the written policy has not been delivered. he court will presume thatthe policy is in effect unless the company can show otherwise

Front 6

Antilapse Clause:

Back 6

That the policy will not automatically lapse if no payment is made on due date.grace period of thirty or thirty-onedays

Front 7

Appraisal Clause:

Back 7

If parties cannot agree on the amount of a loss , or estimate, by an impartial qualified third party.

Front 8

Arbitration clause

Back 8

clause that calls for arbitration of disputes that arise between the insured and the insured concerning the settlement of claims.

Front 9

Incontestability Clause:

Back 9

provides that after a policy has been in force for a specified length of time- usually two or three years- the insurer cannot contest statements made in the application.

Front 10

Multiple insurance:

Back 10

a clause provides that if the insured has multiple insurance policies that over the same property the amount covered exceeds the loss, the loss will be shared proportionately by the insurance companies.

Front 11

Antilapse Clause

Back 11

That the policy will not automatically lapse if no payment is made on due date. Under such a provision, the insured has a grace period of thirty or thirty-one days within which to pay an overdue premium before the policy is canceled.

Front 12

Appraisal Clause

Back 12

If parties cannot agree on the amount of a loss covered under the policy either party can demand an appraisal, or estimate, by an impartial qualified third party.

Front 13

Arbitration clause

Back 13

clause that calls for arbitration of disputes that arise between the insured and the insured concerning the settlement of claims.

Front 14

Incontestability Clause

Back 14

provides that after a policy has been in force for a specified length of time- usually two or three years- the insurer cannot contest statements made in the application.

Front 15

Multiple insurance

Back 15

a clause provides that if the insured has multiple insurance policies that over the same property the amount covered exceeds the loss, the loss will be shared proportionately by the insurance companies.

Front 16

Automobile insurance can be canceled for

Back 16

nonpayment of premiums or suspension of licenses.

Front 17

Property insurance can be canceled for

Back 17

nonpayment, fraud, negligence or conviction for a crime that increase the risk of insured.

Front 18

Life and health policies can be cancelled due to

Back 18

false statements made by the insured in the applications.

Front 19

Defense against payment

Back 19

Fraud or misrepresentation Lack of insurable interest illegal actions

Front 20

What is personal property and what is intangible property?

Back 20

Personal Property can be tangible or intangible

Front 21

Tangible Property

Back 21

such as a flat-screen TV or a car, has physical substance

Front 22

Intangible property

Back 22

represents some set of rights and interests but has no real physical existence (stocks or bonds).

Front 23

Fee Simple

Back 23

A form of property ownership entitling the property owner to use, posses, or dispose of the property as he or she chooses during his or her life time.

Front 24

Tenancy In common

Back 24

Co-owner of property in which each party owns an undivided interest that passes to his or her heirs at death. The factional interest does not need to be equal.

Front 25

b. Joint Tenancy

Back 25

Co-ownership of property in which each party owns an undivided portion of the property. On the death of once joint tenants. His or her interest automatically passes to the others. “Right of survivorship” is the main difference between J/T and T/I/C Can be terminated at any time by gift or by sale before a joint tenant dies. If a termination occurs the co-owners become tenants in common.

Front 26

Community property

Back 26

A form of concurrent ownership in which each spouse owns an undivided one half interest in most property acquired during the marriage. Does not apply to property or inheritance acquired before the marriage.

Front 27

Possession

Back 27

a person can become the owner of personal property merely by possessing it. The killing of a wild animal is the act of owning it.

Front 28

Gift

Back 28

Is another form of acquiring ownership of real or personal property. A gift is transferred without consideration, a gift must be transferred in the present NOT the future. A promise to make a gift in the future does not constitute a gift.

Front 29

Donative intent on the part of the donor

Back 29

(Is determined by the language of the donor and the surrounding circumstances. The court will look at the relationship between the two parties and the size of the gift in relation to the donor’s other assets to determine intent)

Front 30

Delivery

Back 30

(Requires giving up complete control of the gift, Constructive delivery: an act equivalent to the physical delivery of property that cannot be physically delivered because of the difficulty or impossibility EX: stocks bonds.) “symbolic delivery”

Front 31

Gifts Inter Vivos

Back 31

A gift made during one’s life.

Front 32

Gift Causa Mortis

Back 32

is made in contemplation of imminent death from a specific cause, such as an illness.

Front 33

What are the requirements for a gift to be Causa Mortis?

Back 33

Must meet three requirements for Causa Mortis Donative intent Delivery Acceptance

Front 34

When can a gift be revoked?

Back 34

The gift is revocable at any time up to the death of the donor Accession: An addition to the value of property (adding a diamond to a ring)

Front 35

Confusion

Back 35

the commingling of goods such as extent that one personas personal property cannot be distinguished from another’s. ex. Oil, grain.

Front 36

Mislaid property

Back 36

property that the owner has voluntarily parted with and then cannot find or recover. The finder does not obtain title to the goods.

Front 37

Lost property:

Back 37

property that is left voluntarily and forgotten. The finder can claim title to it against the whole world, except the true owner.

Front 38

Conversion of Lost property

Back 38

If the trust owner of the lost property demands that it be returned, the finder must return it. In fact, many states require finders to make a reasonable diligent search to locate the true owner. If the finder knows the owner and does not return the property they have committed the tort of conversion.

Front 39

Estray Statutes

Back 39

which encourage and facilitate the turn of property to its true owner and then reward the finer for honest.

Front 40

Abandoned Property

Back 40

Someone who finds abandoned property claims title to it, and this title is good against the whole world, including the original owner.

Front 41

Bailments

Back 41

An agreement in which the personal property of a bailor is entrust to a bailee, who is obligated to return the bailed property or dispose of it as directed. If Henry loans his mountain bike to a friend a bailment is created but there is no contract because is no consideration.

Front 42

Elements of a bailment

Back 42

The property involved must be personal property (A bailment only involves personal property not a person or real property. The property must be delivered to the bailee. The bailee is given both exclusive possession of the property and control over it. The bailee knowingly accepts the property. An agreement for the return or disposal of the property must be made