General Insurance

Front 1

Stock Insurance

Back 1

Owned by stock holders - non-participating policies

Front 2

Mutual Insurance

Back 2

Owned by policy holders - participating policies

Front 3

Reciprocal Insurance

Back 3

Group owned insurance - risk sharing by unrelated individuals

Front 4

Lloyds of London

Back 4

Group of syndicates - specialize in a particular risk

Front 5

Fraternal Benefit Society

Back 5

Social, non-profit organization base on a lodge or fraternal system

Front 6

Risk Retention Group (RRG)

Back 6

Group owned insurer spreading liability risk of a member with a similar need

Front 7

Reinsurance

Back 7

A device used by insurers to transfer/share a risk

Front 8

Ceding company

Back 8

The insurer originating the application

Front 9

Reinsurer

Back 9

The insurer that shares the risk

Front 10

Financial Rating Services

Back 10

Evaluate and rate the financial stability of the insurance company (shared publicly)

Front 11

Domestic Insurer

Back 11

Organized under the law of a specific state

Front 12

Foreign Insurer

Back 12

Organized under the law of any state other than "that state"

Front 13

Alien Insurer

Back 13

Outside of the US

Front 14

Admitted

Back 14

Certified to insure in a state

Front 15

Non-Admitted

Back 15

Not certified to insure in a state

Front 16

Surplus Lines Insurance

Back 16

High-risk - can transact w/out certification (Unauthorized in a state)

Front 17

Independent Agent

Back 17

Person who enter into an agency with more than 1 insurer & has ownership of the business

Front 18

Exclusive Agent

Back 18

Represents one insurer having common ownership. Insurer provides office space, clerical support, prepares contract, mailing renewals, handles claims, etc.

Front 19

Direct Writer

Back 19

Insurer that deals with public through an agent

Front 20

Direct Mail

Back 20

Markets from home

Front 21

Career Agency Systems

Back 21

Agents are recruited, trained, and managed

Front 22

Personal Producing General Agency

Back 22

Doesn't recruit, sells insurance for carriers they are already contracted with

Front 23

Agent

Back 23

Represents an insurer

Front 24

Expressed Authority

Back 24

Written on paper

Front 25

Implied Authority

Back 25

Assumed

Front 26

Apparent Authority

Back 26

Exceeds authority

Front 27

Insurance Broker

Back 27

Negotiates contracts

Front 28

Fair Credit Reporting Act

Back 28

Makes sure data is safe and private

Front 29

Violent Crime Control Act

Back 29

Possible employees cannot be convicted of a crime involving dishonesty or trust

Front 30

Risk

Back 30

Is the uncertainty of a loss

Front 31

Speculative Risk

Back 31

Possibility of a loss or gain

EX: Gambling

Front 32

Pure Risk

Back 32

Possibility of a loss or no loss

EX: Death

Front 33

Peril

Back 33

The cause of a loss

Front 34

Hazards

Back 34

Increase the chance of a loss

Front 35

Physical Hazard

Back 35

Physical condition that increases the probability of a loss

EX: if you buy an old grass thatched wooden house, the wooden walls and the grass roofing are physical hazards that increase the chance of fire

Front 36

Moral Hazard

Back 36

Dishonest tendencies

EX: Maxing out credit cards and then filing for bankcruptcy

Front 37

Morale Hazard

Back 37

Indifference to a loss or failure to protect ones property from loss

EX: Leaving your house w/out locking your door

Front 38

Adverse Selection

Back 38

Insuring of risks more prone to losses than average risks

Front 39

Sharing Risks

Back 39

Pooling finds to spread the risk

Front 40

Transferring Risks

Back 40

By purchasing insurance, an insured transfers the risk

Front 41

Avoiding Risks

Back 41

After potential risks have been identified some exposure can be eliminated entirely

EX: Not purchasing a car, and never riding in one, eliminates the risk of getting into an accident

Front 42

Reduction

Back 42

Prevention of a potential loss

Front 43

Retention

Back 43

Taking the responsibility of a loss - carrying a deductible

Front 44

Elements of Insurable Risk

Back 44

There must be a large number of homogeneous unites

Loss must be definite

Loss must be accidental and unexpected

Loss must cause financial hardship

Loss must be calculable and premiums affordable

Loss must not include catastrophic perils

Front 45

The Law of Large Numbers

Back 45

The larger the number of exposures the closer the losses will equal the underlying probability of a loss

Front 46

Insured

Back 46

A person, organization, or company protected by an insurance policy

Front 47

Insurer

Back 47

The party who indemnifies for losses (Insurance Company)

Front 48

Insurable events

Back 48

An event that may cause loss or damage (must be accidental)

Front 49

Underwriting

Back 49

The process of evaluating a risk for the purpose of issuing insurance coverage - to be accepted or rejected

Front 50

Insurable Interest

Back 50

The reasonable concern of a person to obtain insurance for any individual or property against unforeseen events

Front 51

Elements of a Legal Contract

Back 51

Competent parties - Legal to enter into a contract (of age)

Legal purpose - May not be issued or illegal/immoral purposes

Agreement - Offer and Acceptance

Consideration - What the two parties exchange in value to abide by the conditions of the contract

Front 52

Indemnity Contract

Back 52

Pays specific $$ amount for a loss

Front 53

Parole Evident Rule

Back 53

Written contract can't be altered without the written consent of both parties

Front 54

Valued Contract

Back 54

Pays a stated amount in the event of a loss

EX Life insurance Contract

Front 55

Subrogation

Back 55

When a claim is paid by the insurer

Front 56

Contract of Adhesion

Back 56

One party prepares a contract and submits it to the other party of a "Take-it-or-leave-it" basis

Front 57

Aleatory Contract

Back 57

Parties to a contract exchange unequal amounts of money - the premium paid is less than the potential benefit.

Front 58

Personal Contract

Back 58

Cannot transfer/assign any policy and covers the insurable interest of the insured

EX: Life insurance contract are not personal contracts

Front 59

Unilateral Contract

Back 59

Enforces the promises of only the insurer

Front 60

Conditional Contract

Back 60

To make the contract enforceable, both parties must perform duties

Front 61

Principle of indemnity

Back 61

An insured is to be restored to the same financial condition as before the loss (cannot profit)

Front 62

Utmost Good Faith

Back 62

Both parties rely upon statements and promises of each other

Front 63

Representation

Back 63

Statements on the application believed to be true to the best of one's knowledge

Front 64

Misrepresentation

Back 64

A false statement on the application that voids the acceptance of the risk

Front 65

Warranties

Back 65

Guaranteed to be true

Front 66

Concealment

Back 66

Intentional withholding of known facts

Front 67

Fraud

Back 67

Intentional misrepresentation or concealment with intent to deceive

Front 68

Waiver

Back 68

Voluntary abandonment of a known or legal right or advantage

Front 69

Estoppel

Back 69

Legal doctrine that prevents the denial of a fact, if the fact was admitted to be tried by a previous action