General Insurance

Front 1

Risk

Back 1

Uncertainty that loss will occur

the chance of loss

Front 2

Pure Risk

Back 2

Only risk companies will get involved in

Front 3

Speculative Risk

Back 3

Gambling you could gain so will not insure

Front 4

Ricks Management (CARTS)

Back 4

Controlled

Avoided

Retained-Deductible

Transferred- what you do when you buy insurance

Shared-think in terms of copay

Front 5

Law of Large Numbers

Back 5

the larger the # of a nature or similar homogenous group the more we can figure what the losses will cost

"collect from masses to pay for a few"

Front 6

Peril

Back 6

Is what physically causes the risk

(lightning, fire, hail etc.)

the cause of loss

Front 7

Hazard

Back 7

increased the likelihood of loss happening

Front 8

Insurable Interest

Back 8

must have interest in the property and must be present at time of claim

Front 9

Adverse Selection

Back 9

only purchased by those who will use it

(Flood insurance)

Front 10

Indemnity

Back 10

designed to make WHOLE again not better

Front 11

Types of Insurance companies

Back 11

Stockholders

Mutual Insurance Companies

Reciprocal

Reinsurance

Front 12

Stockholders

Back 12

They are the shareholders and with profit comes increased in dividend check (taxed)

Front 13

Mutual Insurance

Back 13

owned by policy holders profits are (not taxed)

Front 14

Reciprocal Insurance

Back 14

group that comes together to form insurance

Attorney is in control of everything

Front 15

Reinsurance Insurance

Back 15

ways for insurance companies to get insurance on use (they pay the premium)

Front 16

Company Classifications

Back 16

Domestic-in state

Foreign- in another state

Alien- in another company

Front 17

Admitted means

Back 17

Authorized

Front 18

3 marketing systems

Back 18

Captive agent - writes for 1 company

Independent Agent- writes for several

Direct Response- toll free number or online

Front 19

Expressed authority

Back 19

written in my contract says exactly what I can and can not do

Front 20

Absolute Authority

Back 20

"A" for my actions that I have the authority to do

Front 21

Implied Authority

Back 21

authority "I" think I have to do my job right

Front 22

Elements of a Contract (COAL)

Back 22

Consideration- does not have to be equal

Offer- insured is the one making the offer

Accepted-policy has been activated upon renewal we make the offer

Legal Capacity- 18 year or older and sober

Front 23

Fraud

Back 23

has not statue of limitations

cab be done at time of application or claim

Front 24

Aelatory

Back 24

uneven you risk a little we risk much more

Front 25

Representation

Back 25

the truth to the best of your knowledge or belief

Front 26

Warranty

Back 26

100% absolute actual fact

Front 27

Concealment

Back 27

deliberate omission of material fact

Front 28

Fraud

Back 28

deliberate attempt to mislead

Front 29

Unilateral

Back 29

one sided

only insurance company can be legally forced to honor

Front 30

Conditional

Back 30

things customers and insurance need to do to make things work

Front 31

Waiver

Back 31

voluntarily giving up a known right

Front 32

Estopped

Back 32

once you give up your legal right you can no longer assert it

Front 33

Ambiguity

Back 33

if the insurance is unclear court will rule in favor of consumer

Front 34

Adhesion

Back 34

once you buy it you are stuck with it

Front 35

Fiduciary Duty

Back 35

obligation to act on best interested based on faith and trust placed on agent

Front 36

Binder

Back 36

Immediate/Temporary insurance until the policy or endorsement is issued

Oral or written up to 30 days

Front 37

Do's and Don'ts are spelled out where?

Back 37

Agency Contract

Front 38

First Party Claim

Back 38

claim is presented by the insured to his insurer when the insured’s house burns down, for example.

Front 39

Third Party Claim

Back 39

claim is presented by the claimant to his insurer when the insured

runs over that party with his car, for example.

Front 40

Offer and Acceptance

(Mutual Agreement)

Back 40

Requirement for a valid contract

Front 41

Doctrine of Adhesion states

Back 41

the policy ambiguities always favor the insured

Front 42

Doctrine of Reasonable Expectation states

Back 42

the reasonable claims are covered

Front 43

Representation

Back 43

Truth to the best of my knowledge

Front 44

Breach of Warranty

Back 44

may void the policy

Front 45

Indemnification

Back 45

to make someone "Financially Whole"

Front 46

Surplus Lines

Back 46

sold by unauthorized insurance companies

Front 47

Adhesion

Back 47

The principle that any ambiguity in the wording of the contract will always be ruled upon in favor of the insured, since they had no chance to negotiate the terms; one of the four characteristics of insurance contracts.

Front 48

Agency

Back 48

A legal relationship between two parties: Principal and Agent.

Front 49

Agency System

Back 49

Refers to an insurance distribution system that supports a "middle man." There is a field force of licensed agents and the public buys through them

Front 50

Binding Authority

Back 50

Refers to the ability to issue binders. Agents could have both oral and written binding authority; the overwhelming number of agents has both.

Front 51

Conditional

Back 51

Refers to the fact that the promise to indemnify is predicated upon conditions

Front 52

Contract

Back 52

A legal agreement between two parties for consideration, such as an insurance policy.

Front 53

General Agent

Back 53

An individual appointed by an insurer to administer its business in a given territory. Responsible for building the agency and service force. Compensation is on a commission basis, although there may be additional expense allowances. Often called a Managing General Agent (MGA

Front 54

Liability

Back 54

1. A legal obligation to pay for a loss. 2. Type of insurance needed to cover the situation of being responsible for someone's accident or injury or to provide a defense to settle any claim or suit against the insured. The insurer's duty to settle or defend ends when the amount paid for damages resulting from the occurrence equals the limit of liability.

Front 55

Mass Marketing System

Back 55

Refers to an insurance distribution system that "cuts out the middle man." The public calls an 800 number and buys direct

Front 56

Often called a Managing General Agent (MGA)

Back 56

General Agent