General Insurance - Property and Casualty Insurance

What is reinsurance?

An agreement between a ceding insurer and assuming insurer

Under what circumstances can you transfer an insurance policy to a friend?

Must get written consent from insurer

What is implied authority?

Not specifically stated but included based on other statements or authority.

Dividends paint to policy holders are what?

Not taxable, the IRS treats them as a return

What is a unilateral contract?

One Sided: only one party can make an enforceable Promise

What is Express Authority

Powers that are written into the contract between the insurer and the agent

What is a contract of adhesion?

Prepared only by the insurer on a take it or leave it basis

What is a captive agent?

Produces business for only one company that they are contacted with

What is a Peril?

cause of loss

What is Indemnity?

A provision that states in the event of a loss, a person can only collect to the extent of the loss, not allowed to gain financially, and restores a person to the same financial state as before the loss

What is a Hazard?

Conditions that Increase the probability of an insured loss

What are the 3 elements of a contract?

Consideration, Legal Purpose, Offer and Acceptance

What is Reciprocal Insurance

Insurance companies made up of subscribers

The Authority granted to an agent through the agent's contract is referred to as:

Express Authority

Name 4 Perils

Flood, Tornado, Hail, Wind

What is a Loss?

Reduction, decrease, or disappearance of value.

What is an aleatory contract?

Small Premium, covers a large amount of risk exchange of unequal values

What is a morale hazard?

Someone who has an indifferent attitude or careless because he knows his loss will be covered by insurance

Apparent Authority

The appearance or the assumption of authority based on actions, words, or deeds