property and casualty

Open Peril

Term used in property insurance to describe the breadth of coverage provided under an insurance policy form that insures against "any risk of loss" that is not specifically excluded.

Express Authority

The authority granted to an agent through the agents contract is referred to as the

risk

Uncertainty of loss

merit rating

a bad driving record but no at fault accidents would be an example of what rating

statue

a law passed by legislature

pure risk

a risk that presents the chance of loss but no opportunity for gain

Speculative Risk

a situation in which either profit or loss is possible

Material Representation

a statement by the applicant that, upon, discovery, would affect the underwriting decision of the insurance company

peril

a tornado is an example of

agent

according to the law of agency, a principal is related to an

Insurer

agent/insurer relationship: who is the principal

reinsurance

agreement between a ceding insurer and assuming insurer

conditional

an insurance contract entails that both the insured and insurer meet certain conditions in order for the contract to be enforceable. What contract characteristic does this describe

captive agent

an insurance producer who by contract is bound to write insurance for only one company is called

mutual

an insured purchased a policy 5 years ago. last year, she received a dividend check from the company that was not taxable. This year she did not get a check . From what type of insurer did the insured purchase the policy.

consideration

an insurer neglects to pay a legitimate claim that is covered under the terms of the policy. what has the insurer violated

Express powers

are written into the contract between the insurer and the agent

experience rating

based off of past losses that the individual has experienced

peril

causes of loss insured against in an insurance policy

Unequal values are exchanged between the parties to a contract

contracts are aleatory in nature, what does this mean?

Contracts of Adhesion

contracts that are prepared by one party and submitted to the other party to take it-or leave- it basis are classified as

in the favor of the insured

courts will interpret any ambiguity in an insurance contract in the favor of

actual cash value

current replacement cost- depreciation =?

obsolescence

depreciation when the item gets outdated

retrospective rating

for what rating is a deposit premium needed at the inception of the policy

Reasonable Expectations

if a court ordered payment for a loss that was not covered in the policy even if it was clearly worded, it would be an example of what concept?

apparent authority

if an agent is using stationary with the logo of an insurance company , applicants for insurance assume that the agent is authorized to transact on the behalf of that insurer.

authorized or admitted

if an insurer holds a certificate of authority , it is known as what type of insurer

unilateral

if only one party of the contract has made a promise then what kind of contract is it?

when the application is submitted

in insurance contracts, when is the offter usually made

unilateral

in insurance policies, the insured is not legally bound to any particular action in the insurance contract, but the insurer is legally obligated to pay losses covered by the policy. What contract element does this describe?

at the time of the loss

in property and casualty insurance when should the insurable interest exist?

merit

in this method of rating the insureds premium is based on other factors that that indicate the probability that loss will occur

pure risk

in which a person can only lose or have no change

risk reduction

installing deadbolt locks in a home is an example of

Lloyd's Association

insurance provided by individual underwriters not companies

retrospective rating

is a self-rating plan under which the actual losses during the policy period determine the final premium, subject to a minimum and maximum premium

Named Peril

is a term used in property insurance to describe the breadth of coverage provided under an insurance policy form that lists specific covered perils. No coverage is provided for unlisted perils.

speculative

like gambling

not taxable since the IRS treats them as a return of a portion of the premium paid

on a participating insurance policy issued by a mutual insurance company, dividends paid to the policy holders are

Unilateral Contract

one sided; only one party makes a promise

unilateral contract

one sided; only one party makes a promise

direct loss

property insurance only covers what type of loss

class rating (manual rating)

refers to the practice of computing a price per unit of insurance that applies to all applicants possessing a given set of characteristics

indemnity

reimbursement

underwriting

risk selection process

adverse selection

risks with higher probability of loss seeking insurance more often than other risks

risk reduction

steps taken to prevent loss are

Concealment

term best describes the act of withholding material information that would be crucial to the underwriting process

Reciprocal Insurance Exchange

the chief administrative of the insurer is called "an- attorney-of fact" of what

inception

the date that the policy goes into effect

certificate of authority

the document that indicates that an insurer has been approved and is authorized to transact insurance in a particular state is known as

Contracts of Adhesion

the insured does not have any input into the contract but simply adheres to the contract

earned premium

the portion of premium paid in advance that now belongs to the insurer for providing coverage for a specified period of time

Idemnify

to restore an insured to the same financial status from before loss

aleatory

uneven exchange of values

Material Misrepresentation

untrue statements on the application unintentionally made by insureds, that if discovered, would alter the underwriting decision of the insurance company are called

exposure units

used as a measure of rating units or the premium base of risk

schedule ratings

used by applying a schedule of charges and credits to some base rate to determine the appropriate rate for the individual

judgement ratings

used when credible statistics are lacking or super varied

physical, morale, and moral

what are 3 types of hazards

domestic, foreign, alien

what are 3 types of insurers

agreement, consideration, contractual capacity, legality

what are the 4 elements of an insurance contract

*Due to chance *Definite and measurable *Statistically Predictable *Not catastrophic *Randomly selected/ large loss exposure

what are the 5 characteristics of an ideally insurable risk

Avoidance, transfer, sharing, retention, and reduction

what are the methods of managing risks

Implied Authority

what authority is NOT in an agents contract but is required for the agent to conduct business

agents contract with the principal

what documentation grants express authority to an agent

Certain expectations for coverage that a reasonable person would have based on sources other than just the policy language

what does the term reasonable expectations mean

risk retention group

what is a liability insurance company that is owned by its members

something of value that each party gives to eachother

what is consideration

a promise to pay in the event of a loss

what is consideration on the part of the insurer

apparent

what is considered "perceived authority'

captive insurer

what is owned by a corporation to serve that organizations needs at lower rates than would otherwise be available for commercial insurance

captive insurer

what is owned by a corporation to serve that organizations needs at lower rates than would otherwise be available with commercial insurance

Consideration

what is the binding force in any contract

reinsurance

what method do insurers do to protect themselves from catastrophic losses

class rating

what rating is most common

merit rating

what rating is most common in personal auto insurance

apparent authority

what type of authority is based on what an agent says or actions

reciprocal

what type of insurance is based on mutual agreements among subscribers

facultative

what type of reinsurance arrangement is negotiated on a case by case basis

certificate of authority

when a commissioner has determined that an insurer has met all of the requirements for transacting insurance in their state, what is issued to the insurer?

insurer

when agents are acting within their scope of practice , their actions will be assumed to be the acts of the

consideration

when an insured makes truthful statements on the application for insurance and pays the required premium , it is known as

indemnity

which insurance principal states that if a policy allows for greater compensation than the financial loss incurred, the insured may only receive benefits for the amount lost?

law of large numbers

which law is the foundation of the statistical prediction of loss upon which rates for insurance are calculated

stock companies

who issues nonparticipating policies, in which the policy holders do not share in profits or losses

policy holders

who might receive dividends from a mutual insurer?

direct and inderect

2 types of property losses

class and individual

2 types of rates are

Financial, blood, and business

3 elements of insurable risk are

1.judgement 2.schedule 3.experience rating 4.retorspective 5.merit

5 basic individual rate- making approaches

Depreciation

A decrease or loss in value

Estoppel

A legal process that can be used to prevent a party to a contract from re-asserting a right or privilege after that right or privilege has been waived.

Specific Insurance

A property insurance policy that covers a specific kind or unit of property for a specific amount of insurance.

Loss Costs

A rating method developed by ISO that provides an insurer with that portion of a rate that does not include provisions of expenses or profit and are based on historical aggregate loss and loss adjustment expenses projected through development to their ultimate value and through trending to a future point in time

Blanket Insurance

A single property insurance policy that provides coverage for multiple classes of property at one location, or provides coverage for one or more classes of property at multiple locations.

warranty

An absolutely true statement upon which the validity of the insurance contract is based

unilateral contract

In what contract is the insured not legally bound to do anything but the insurer pays the loss