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55 Cards in this Set
- Front
- Back
Cause of loss (P&C Insurance) |
Peril |
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Law of Large Numbers |
The more an event occurs, the more predictable the outcome |
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What do we call the loss exposure associated with death, sickness, or disability of a key employee? |
Personnel Loss Exposure |
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What constitutes a Preferred or Ideal risk? |
1) applicant belongs to large group 2) facing economic hardship 3) not catastrophic 4) measurable 5) predictable losses |
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Insurance Events refer to events relating to _____ & _____ insurance. |
Life & Disability |
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An Insurable Interest refers to loss of a financial or legal interest. (_____ & _____ Insurance) |
Property & Casualty |
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Indemnity |
Insured for equal exchange |
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What are some examples of adverse selection in both L&H and P&C coverage? |
Life & Health- applicant may not proclaim his drinking problem or diabetes Property & Casualty- applicant lies about zip code for better auto rates |
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Spread of Risk doesn’t just mean an insurer accepts multiple level risks to assure profit (Substandard->Standard->Preferred), it also means an insurer will accept _____________. |
Special coverage for wide geographic regions due to geographic reasons (like Florida shorelines) |
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Benefits of deductibles include: |
-helps eliminate small claims -affordable premiums |
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What are the 4 elements referred to as an endorsement in an insurance policy? |
Addition (+) Deletion (-) Amendment (change) Excludable (exclude event or group) |
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What is a rider? When do you use one? |
An additional-only endorsement to Life and Disability Insurance Policy Contract |
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Contract Law -VS- Tort Law |
Constitution -VS- Non-Constitutional Specified -VS- Implied (libel and slander) |
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What are the 4 conditions for a Contract to be made? |
Competent Parties (18+, right minded) Legal Purpose Offer and Acceptance Compensation (Consideration) |
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A _____ is a type of contract based on contingent, or unknown, events. |
Aleatory Contract |
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A _____ is a type of contract based on contingent, or unknown, events. |
Aleatory Contract |
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A _____ is a type of contract where one party has significantly more power than the other. |
Adhesion Contract |
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A _____ is a type of contract based on contingent, or unknown, events. |
Aleatory Contract |
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A _____ is a type of contract where one party has significantly more power than the other. |
Adhesion Contract |
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A _____ is a type of contract based on one or more conditional events occurring. |
Conditional Contract |
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What is a Unilateral Contract? |
One in which a promise is only made to one party (opposed to a Multilateral Contract) |
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What is a Unilateral Contract? |
One in which a promise is only made to one party (opposed to a Multilateral Contract) |
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Insurance contracts are considered _____ and cannot be transferred between people. Which line of insurance is the exception to this rule? |
Personal Contract; Life Insurance |
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When you rescind/ void a contract it’s called _____. |
Rescission |
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When you rescind/ void a contract it’s called _____. |
Rescission |
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Why is Materiality, the estimated measure of the potential risk exposure of having mis or withheld information, important to a policy? |
Helps measure loss |
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What’s an example of Estoppel, a party taking action due to its own inconsistent behavior or words? |
If your landlord goes after you for being late on rent after they stopped sending out reminder notices. |
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When asked a question, your Representation is not considered a promise because it is _____. |
A response believed to be true to your best knowledge |
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When may representations be made or withdrawn? |
At or before the time of the policy’s execution. |
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When giving insurer information based on what you hear from others, you must _____. |
explain the information is based on knowledge of others |
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What is the PENALTY of Misrepresentation for a person? |
Fine: up to $25,000 (or 3x victims loss if over $10,000) —and/or— Imprisonments: up to 1 year |
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What is the PENALTY of Misrepresentation for an agent/broker/solicitor? |
Imprisonment: up to 3 years in prison |
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What is the PENALTY of Misrepresentation for an insurer? |
Having their Certificate of Authority revoked |
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In terms of insurance a Warranty is a _____. |
a more weighted representation in the form of a legal promise |
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What is the different between an Express Warranty and an Implied Warranty? |
Express- statements expressed in policy Implied- statements implied about policy (your ship must be able to sail) |
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What form offers a warning in writing from the CIC about fraudulent activity? |
Claim Form |
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What are the 4 reasons an Insurer can rescind a policy? |
1) Concealment 2) Fraudulent Omission 3) Material Representation is false 4) Material Warranty Violated |
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What are the 4 reasons an Insurer can rescind a policy? |
1) Concealment 2) Fraudulent Omission 3) Material Representation is false 4) Material Warranty Violated |
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What 6 items must be listed on an Insurance Policy? |
1) Parties Involved 2) Person/Property being Insured 3) Policy Period 4) Risks 5) Premium 6) Insured’s Interest (if property they’re not owner of) |
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What is NOT a requirement for Insurance Policies? |
The Insurer’s financial rating |
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What are some thing that would cause a Policy Cancelation? |
Non-Payment of a Premium Insurer Property Sold Etc. |
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Other than a policy expiration, what would cause a Non-Renewal? |
Insurer not renewing contract but allowing period to finish |
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What is the Grace Period? |
time allowed for insured to be covered after non-payment to make payment |
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What happens when you Lapse due to the end of the Grace Period? |
You non-pay during period and coverage is terminated |
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What does an Exposure Unit, used to measure loss potential, come in? |
Usually $100s or $1000s |
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What does an Exposure Unit, used to measure loss potential, come in? |
Usually $100s or $1000s |
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The portion of your policy you _____ payed is called Earned Premium; and the portion you ____ pat is called the Unearned Premium. |
Have; didn’t |
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A _____ is an agent who only works with one insurer. |
Captive Agent |
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An _____ is an agent who works for multiple insurers. |
Independant Agent |
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Direct Response, when insurers use advertisements to sell to consumers, use _____ instead of contracted agents. |
Employees |
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In terms of an Agent, what is Express Authority? |
Authority of what he expressly can/cannot do on behalf of the Principal |
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In terms of an agent, what is considered Implied Authority? |
Collecting premiums is expected but not expressed |
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In terms of an agent, what is considered Implied Authority? |
Collecting premiums is expected but not expressed |
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What does the term Apparent Authority mean? |
When a party believes the agent has certain authority because he has no reason not to believe him |
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Even though they both help negotiate Policy Contracts, What’s the difference between an Agent and a Broker? |
Agents- behalf of insurer Broker- behalf of applicant |