ch2 Flashcards
principle of indemnity
a person is entitled to compensation only to the extent that financial loss has been suffered
subrogation
a person cannot indemnify himself from the insurance company and a neglect third party for the same claim
insurable interest
the insured must be subject to emotional or financial hardship resulting from the loss
good faith
The insured and insurer must both be forthcoming with all relevant facts about the insured risk and coverage provided for that risk.
Morale Hazard
the indifference to a loss created because the insured has insurance
Moral Hazard
the potential loss occurring because of the moral character of the insured, and the filing of a false claim for the insurance company
adhesion
take it or leave it
adverse selection
the tendency of those that most need insurance seek it out
aleatory
a type of insurance contract where the amounts exchanges are uneven
apparent authority
when the third party believes implied or express authority exists, but no authority actually exists
concealment
when the insured is intentionally silent regarding a material fact during the application process
estoppel
legal process of denying a right you might otherwise be entitled to under the law
express authority
authority given to an agent through a formal written document
particular risk
a risk that can impact a particular individual, such as death or the inability to work because of a sickness or accident
peril
immediate cause and reason for a loss occuring
