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55 Cards in this Set

  • Front
  • Back

Cause of loss (P&C Insurance)

Peril

Law of Large Numbers

The more an event occurs, the more predictable the outcome

What do we call the loss exposure associated with death, sickness, or disability of a key employee?

Personnel Loss Exposure

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

Insurance Events refer to events relating to _____ & _____ insurance.

Life & Disability

An Insurable Interest refers to loss of a financial or legal interest. (_____ & _____ Insurance)

Property & Casualty

Indemnity

Insured for equal exchange

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

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)

Benefits of deductibles include:

-helps eliminate small claims


-affordable premiums

What are the 4 elements referred to as an endorsement in an insurance policy?

Addition (+)


Deletion (-)


Amendment (change)


Excludable (exclude event or group)

What is a rider? When do you use one?

An additional-only endorsement to Life and Disability Insurance Policy Contract

Contract Law -VS- Tort Law

Constitution -VS- Non-Constitutional


Specified -VS- Implied (libel and slander)

What are the 4 conditions for a Contract to be made?

Competent Parties (18+, right


minded)


Legal Purpose


Offer and Acceptance


Compensation (Consideration)

A _____ is a type of contract based on contingent, or unknown, events.

Aleatory Contract

A _____ is a type of contract based on contingent, or unknown, events.

Aleatory Contract

A _____ is a type of contract where one party has significantly more power than the other.

Adhesion Contract

A _____ is a type of contract based on contingent, or unknown, events.

Aleatory Contract

A _____ is a type of contract where one party has significantly more power than the other.

Adhesion Contract

A _____ is a type of contract based on one or more conditional events occurring.

Conditional Contract

What is a Unilateral Contract?

One in which a promise is only made to one party (opposed to a Multilateral Contract)

What is a Unilateral Contract?

One in which a promise is only made to one party (opposed to a Multilateral Contract)

Insurance contracts are considered _____ and cannot be transferred between people. Which line of insurance is the exception to this rule?

Personal Contract; Life Insurance

When you rescind/ void a contract it’s called _____.

Rescission

When you rescind/ void a contract it’s called _____.

Rescission

Why is Materiality, the estimated measure of the potential risk exposure of having mis or withheld information, important to a policy?

Helps measure loss

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.

When asked a question, your Representation is not considered a promise because it is _____.

A response believed to be true to your best knowledge

When may representations be made or withdrawn?

At or before the time of the policy’s execution.

When giving insurer information based on what you hear from others, you must _____.

explain the information is based on knowledge of others

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

What is the PENALTY of Misrepresentation for an agent/broker/solicitor?

Imprisonment: up to 3 years in prison

What is the PENALTY of Misrepresentation for an insurer?

Having their Certificate of Authority revoked

In terms of insurance a Warranty is a _____.

a more weighted representation in the form of a legal promise

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)

What form offers a warning in writing from the CIC about fraudulent activity?

Claim Form

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

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

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)

What is NOT a requirement for Insurance Policies?

The Insurer’s financial rating

What are some thing that would cause a Policy Cancelation?

Non-Payment of a Premium


Insurer Property Sold


Etc.

Other than a policy expiration, what would cause a Non-Renewal?

Insurer not renewing contract but allowing period to finish

What is the Grace Period?

time allowed for insured to be covered after non-payment to make payment

What happens when you Lapse due to the end of the Grace Period?

You non-pay during period and coverage is terminated

What does an Exposure Unit, used to measure loss potential, come in?

Usually $100s or $1000s

What does an Exposure Unit, used to measure loss potential, come in?

Usually $100s or $1000s

The portion of your policy you _____ payed is called Earned Premium; and the portion you ____ pat is called the Unearned Premium.

Have; didn’t

A _____ is an agent who only works with one insurer.

Captive Agent

An _____ is an agent who works for multiple insurers.

Independant Agent

Direct Response, when insurers use advertisements to sell to consumers, use _____ instead of contracted agents.

Employees

In terms of an Agent, what is Express Authority?

Authority of what he expressly can/cannot do on behalf of the Principal

In terms of an agent, what is considered Implied Authority?

Collecting premiums is expected but not expressed

In terms of an agent, what is considered Implied Authority?

Collecting premiums is expected but not expressed

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

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