Chapter 1 Section 1 Part 1 (Done, Brainscape)

Front 1

risk

Back 1

chance of financial loss (to which)
object of insurance (is)
exposed

Front 2

(three) categories of risk

Back 2

personal
property
liability

Front 3

(four) ways to deal with risk

Back 3

avoidance
controlling
retention
transfer

Front 4

avoidance (definition)

Back 4

eliminate all chance (of)
financial loss
(rent vs. buy)

Front 5

controlling (definition, 2 ex's)

Back 5

reducing frequency, severity (of losses)
(EX. intrusion detection equipment
fire detection alarms)

Front 6

retention (definition, 3)

Back 6

self-insurance
assuming financial responsibility for own loss
share-risk deductibles
only insuring certain types of losses

Front 7

transfer (definition, for both insured and insurer)

Back 7

purchasing insurance
in exchange for premium insurer agrees to assume the financial responsibility for losses

Front 8

(two ex's) of control measures taken to reduce frequency/severity of losses

Back 8

intrusion detection equipment
fire detection alarms

Front 9

(two) reasons why loss control measures are not total solution in eliminating financial loss

Back 9

equipment will not work 100% of the time
certain types of losses (wind, hail, lightning) cannot be effectively controlled

Front 10

Which of the ways people can deal with risk is not effective?

Back 10

avoidance

Front 11

which of the ways people can deal with risk is the most popular?

Back 11

transfer

Front 12

speculative risk (definition)

Back 12

possibility of both loss and gain (placing bet at blackjack table)

Front 13

pure risk (definition, 4)

Back 13

chance of financial loss
does not offer chance of financial gain
no opportunity to profit from loss
ex. your house burning down

Front 14

speculative/pure risk - which will insurers not provide policy for?

Back 14

speculative

Front 15

(five) elements all contracts contain?

Back 15

agreement
consideration
legality of object
legal capacity
genuine intention

Front 16

agreement (definition)

Back 16

meeting of the minds
to subject matter, terms of contract
first test of enforceability at law
of any contract

Front 17

consideration (definition, 3)

Back 17

exchange (of) something of value between parties
insured: payment of premium/promise
insurer: promise to indemnify insured
(return promise, act performed, agreement not to act)

Front 18

legality of object (definition; 2, 3 ex's)

Back 18

must be legal and
not contrary to public policy
(ex. no killing/maiming
importing illicit drugs
contract purchased on illegally acquired property
payment of fraudulent claim)

Front 19

legal capacity of parties to contract (definition, 2)

Back 19

legal capacity
competent

Front 20

genuine intention (definition, 2)

Back 20

parties actually intended
to enter into contract

Front 21

required for proper agreement/meeting of the minds, to be valid (2)

Back 21

offer made
unconditional acceptance of terms

Front 22

is it necessary for the two items required for proper agreement (meeting of the minds) to be in writing?

Back 22

no

Front 23

obligation/time constraint upon applicant for insurance when policy issued differently than requested?

Back 23

courts may rule have accepted
if fail to promptly return policy to insurer

Front 24

(4) persons/incompetents who do not have legal capacity

Back 24

minors
incompetents (mental)
drugs, alcohol (under influence of)
trade (names)

Front 25

(three) "necessities" of life for which minors are permitted to contract

Back 25

food
clothing
lodging

Front 26

(four) items that might affect the presence of genuine intention

Back 26

fraud
duress (threats, etc.)
concealment
mistake