Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
56 Cards in this Set
- Front
- Back
Risk
|
the chance of loss |
|
Pure Risk
|
Only risk companies will get involved in |
|
Speculative Risk
|
|
|
Ricks Management (CARTS) |
Avoided Retained-Deductible Transferred- what you do when you buy insurance Shared-think in terms of copay |
|
Law of Large Numbers |
"collect from masses to pay for a few" |
|
Peril |
Is what physically causes the risk (lightning, fire, hail etc.) the cause of loss |
|
Hazard
|
|
|
Insurable Interest |
|
|
Adverse Selection |
(Flood insurance) |
|
Indemnity |
designed to make WHOLE again not better |
|
Types of Insurance companies |
Mutual Insurance Companies Reciprocal Reinsurance |
|
Stockholders
|
They are the shareholders and with profit comes increased in dividend check (taxed) |
|
Mutual Insurance
|
owned by policy holders profits are (not taxed) |
|
Reciprocal Insurance |
Attorney is in control of everything |
|
Reinsurance Insurance
|
ways for insurance companies to get insurance on use (they pay the premium) |
|
Company Classifications |
Foreign- in another state Alien- in another company |
|
Admitted means
|
Authorized |
|
3 marketing systems
|
Independent Agent- writes for several Direct Response- toll free number or online |
|
Expressed authority
|
written in my contract says exactly what I can and can not do |
|
Absolute Authority
|
"A" for my actions that I have the authority to do |
|
Implied Authority
|
authority "I" think I have to do my job right
|
|
Elements of a Contract (COAL)
|
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 |
|
Fraud
|
cab be done at time of application or claim |
|
Aelatory
|
|
|
Representation
|
the truth to the best of your knowledge or belief |
|
Warranty |
100% absolute actual fact |
|
Concealment |
deliberate omission of material fact |
|
Fraud |
deliberate attempt to mislead |
|
Unilateral |
only insurance company can be legally forced to honor |
|
Conditional |
things customers and insurance need to do to make things work |
|
Waiver |
voluntarily giving up a known right |
|
Estopped |
once you give up your legal right you can no longer assert it
|
|
Ambiguity |
if the insurance is unclear court will rule in favor of consumer |
|
Adhesion |
once you buy it you are stuck with it |
|
Fiduciary Duty
|
|
|
Binder |
Oral or written up to 30 days |
|
Do's and Don'ts are spelled out where?
|
Agency Contract |
|
First Party Claim
|
claim is presented by the insured to his insurer when the insured’s house burns down, for example. |
|
Third Party Claim
|
claim is presented by the claimant to his insurer when the insured runs over that party with his car, for example. |
|
Offer and Acceptance (Mutual Agreement) |
Requirement for a valid contract |
|
Doctrine of Adhesion states
|
the policy ambiguities always favor the insured |
|
Doctrine of Reasonable Expectation states
|
the reasonable claims are covered |
|
Representation
|
Truth to the best of my knowledge |
|
Breach of Warranty
|
may void the policy |
|
Indemnification
|
to make someone "Financially Whole" |
|
Surplus Lines
|
sold by unauthorized insurance companies |
|
Adhesion
|
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.
|
|
Agency
|
A legal relationship between two parties: Principal and Agent.
|
|
Agency System
|
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
|
|
Binding Authority
|
Refers to the ability to issue binders. Agents could have both oral and written binding authority; the overwhelming number of agents has both.
|
|
Conditional
|
Refers to the fact that the promise to indemnify is predicated upon conditions
|
|
Contract
|
A legal agreement between two parties for consideration, such as an insurance policy.
|
|
General Agent
|
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
|
|
Liability
|
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.
|
|
Mass Marketing System
|
Refers to an insurance distribution system that "cuts out the middle man." The public calls an 800 number and buys direct
|
|
Often called a Managing General Agent (MGA)
|
General Agent |