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12 Cards in this Set
- Front
- Back
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DESCRIBE THE 3 LIMITS OF LIABILITY FOUND IN DECLARATIONS SECTION OF THE POLICY |
Split Limit - ex. (100,300,50) Bodily Injury - $100k per person, $300k per accident Property Damage - $50k per property, accident. Single Limit - ex. ($300,000) Combined limit to pay for bodily injury and property damage Aggregate Limit - ex. ($1,000,000) Sets the limit for all claims over a policy period. It is possible to reach the limit before the policy is up. |
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ACCIDENT v OCCURRENCE |
Accident - Has a specific time and place Occurrence - a series of accidents that occur over a period of time and are linked together |
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VACANCY v UNOCCUPANCY |
Vacancy - NO people, NO personal property inside Unoccupancy - No people, YES personal property inside |
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DIRECT LOSS v INDIRECT LOSS |
Direct Loss - fire, car accident. What happens. Indirect Loss - What happens as a result! Business burns down then you can't make money |
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CONTRACT |
Legal agreement between two competent parties that promises a certain performance in exchange for certain consideration. |
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NAME AND DESCRIBE THE 4 CHARACTERISTICS OF A CONTRACT (C,L,O,C) |
1) Competent Parties - minor, insane, under the influence are considered incompetent. 2) Legal Purpose - A contract that is against public policy or illegal is not enforceable. 3) Offer and Acceptance - one who makes the offer and one who accepts it. 4) Consideration - a thing of value exchanged for the performance promised in the contract. With insurance, insured gives premium payment, insurer consideration is the promise to pay for certain losses. |
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OTHER CONTRACT ELEMENTS PERSONAL |
An insurance contract does not insure a property, rather the person who owns the property, or has an insurable interest in it. |
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OTHER CONTRACT ELEMENTS ALEATORY |
The contract is contingent on an uncertain event (loss) that provides for unequal transfer of value between the parties. Ex. You can pay a premium for many years without having a covered loss. On the other hand, when you do have a covered loss you will most likely get more money than you were paying for the premiums. |
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OTHER CONTRACT ELEMENTS ADHESION |
Means that one party has greater power over the other party in the contract, and the latter party has to ADHERE to what the former party has put in the contract. This means that in a court when there is ambiguity in the contract the judge will more likely than not rule in the way of the less powerful party because they did not have much say in the formation of the contract. |
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OTHER CONTRACT ELEMENTS UNILATERAL |
One sided. If the insurer does not pay to cover a loss, the insured can take him to court. However, if the insured does not pay his premium the insurer just cancels the contract and cannot take him to court. |
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OTHER CONTRACT ELEMENTS CONDITIONAL |
The insurance policy includes a number of conditions that both parties must comply with. |
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WHAT 6 SECTIONS ARE IN AN INSURANCE CONTRACT? |
1) Declarations - almost always on the first page. Contains name of insured, address, amount of coverage, description of property, cost of policy etc. 2) Insuring Agreements - HEART of the policy. State what is to be covered or losses that will be indemnified, and perils against which are insured. 3) Conditions - Ground rules for the policy. Describe responsibilities and obligations of both parties. 4) Exclusions - describe losses the insured is not covered for. 5) Definitions - clarifications 6) Endorsements - attached documents that change the policy in some way. |
