CAIB 1 Flashcards
Speculative risk
The category of risk that involves either financial loss or gain
Risk
The chance of financial loss to which an object of insurance is exposed
Pure risk
Pure risk involves the chance of financial loss or gain
Contract
A contract is an agreement between two or more persons which creates an obligation to do or not to do a particular thing
Consideration
An exchange of something of value between parties
Insurance interest
People have an insurance interest in the subject matter of an insurance contract when they are able to show that they would suffer financially by a loss.
Utmost good faith
The complete honesty of of the parties is critical to the contract
Indemnity
People receive the actual amount of their loss , no more, no less
Insurance binder
The broker has committed the insurer to provide a contract of insurance on the subject matter of discussion
Agency agreement
Agreement between an insurance company and a broker to represent the company
Void contract
A contract which is unable in law to support the purpose for which it is intended
Voidable contract
One which is void as to the wrongdoer but not void as to the wrong party unless he elects to treat is as such
Peril
The cause of a loss
Direct loss
When the object of insurance is actually attacked by the named peril
Indirect loss
Losses that arise as a consequence of direct loss
- loss of rental income
- loss of profits after a windstorm levels a building
Actual cash value
The new or replacement cost of the property at the time of loss, minus depreciation.
Replacement cost
Repair or replacement of lost property, with new product of like kind and quality, without deduction for depreciation
Valued policy
Both the insured and the insurer agree at the time the policy is issued as to the cash value of the property. In the event of a loss, the agreed amount would be paid
Blanket policy
Single limit without need to schedule items
Scheduled coverage
Itemized on policy
Fiduciary
Fiduciary is one who occupies a position of special trust or confidence in the handling or supervising of the affairs or funds of others
Unearned premium
Premiums paid for insurance not yet in force
Fire
The prescience of visible flame or glow
Friendly fire
Fire contained in its proper recepticle
Hostile fire
Fire outside the limits assigned to it
Proximate cause
A natural and continuous sequence of the peril causing the loss
Material change
Any change material to the risk and within the control and knowledge of the insureds.
Pro rata
The insurer divides the amount of the premium paid by the number of days in the policy
Proof of loss
Formal verification, under oath of the details and amounts being claimed under the policy
Notice of loss
Notice if an intent to make a claim
Fraud
Deliberate attempt to deceive, with a view to securing some profit
Subrogation
To put into another’s shoes. Right of the insurer to recover a loss from a responsible in the name of the insured
Proprietary insurers
Exist to make a profit, may be either incorporated or un-incorporated
Non-proprietary insurers
Organized for reasons other than profit
Owned and controlled by the policy holders
No stock or share capital involved
Vandalism
Wilful or ignorant destruction of property
Malicious act
A wrongful act done without legal justification or excuse
Vacant
When the insured has been gone for longer than four days
Theft
Theft includes all means of taking property without the owner’s consent
Criminal law
Deals with wrongs against society! defined by the criminal code
Civil law
Concerned with settling disputes between individuals or other legal entities in matters not involving a criminal act
Plaintiff
The party doing the complaining
Defendant
The party who allegedly committed the wrong
Tort
A tort is a wrong done to another in breach of a duty laid down by law, it is not a breach of contract
Strict liability
Certain activities have been determined by legislation or common law to create liability without regard to fault. Storing dangerous chemical or keeping a dangerous animal
Special damages
Special damages can be accurately measured and are intended to reimburse the plaintiff for out of pocket expenses
General damages
These are damages which cannot be quantified with precision in monetary terms, but reflect what the court believes to be necessary to compensate the aggrieved party fairly
Negligence
The omission to do something which a reasonable man, guided by those ordinary considerations which ordinarily regulate human affairs would do, or the doing of something a reasonable and prudent man would not do
Trespasser
People who are on another’s premises for their own purposes without the express or implied permission of the occupier. Their prescience is of no value to the occupier and such persons are viewed as having temporarily appropriated the property for their own use
Licensee
One who comes on the premises for his own purpose but with the occupiers consent
Postal workers, meter readers
Invitee
Enters by invitation, express or implied
His entry is connected with the owners business or with an activity the owner conducts or permits to be conducted on his land
Their is a mutuality of benefit or benefit to the owner
Visitor
Licences or invitees
Joint liability
When two or more people act together so as to cause injury or damage, they have the same legal duties as if they were working alone.
