ch.2- Insurance contracts Flashcards

1
Q

3 major categories of risk (PPL)

A
  • personal risk (health/life)
  • property risk (property lost/damaged)
  • liability risk (persons actions)
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2
Q

4 options of dealing with risk (CART)

A
  • Controlling
  • Avoidance
  • Retention
  • Transfer
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3
Q

controlling risk

A
  • taking measures to reduce frequency/severity of losses
  • reduces/mitigates risk
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4
Q

Avoidance of risk

A

not practical

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5
Q

Retention of risk (incl deductible)

A
  • retention/self insurance
  • less expensive (premium?)
  • few ppl can afford to finance own losses
  • deductibles: partial retention of risk
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6
Q

Transfer of risk

A
  • transfer all/some risk
  • most popular option
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7
Q

types of risk (2)

A
  • speculative risk
  • pure risk
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8
Q

speculative risk

A
  • chance of financial loss/gain
  • NOT insurable
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9
Q

Pure risk

A
  • Chance of financial loss only
  • no gain
  • INSURABLE
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10
Q

contract

A

agreement btwn 2 or more ppl enforceable by law

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11
Q

5 elements of Common law contracts

(A Cool Cat Gets Lucky)

A
  1. Agreement
  2. Consideration
  3. Legality of object
  4. Legal capacity of parties
  5. Genuine intention
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12
Q

3 ADDITIONAL essential elements to insurance contracts

(In It’s Underwear)

A
  1. Insurable Interest
  2. Indemnity (Salvage,Subrogation, Contribution)
  3. Utmost good faith
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13
Q

Status of contract where essential elements missing

A
  • void
  • voidable
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14
Q

Void

A

Unable in law to support purpose which it was inteded

as if it never existed

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15
Q

Voidable

A

void to wrongdoer, not the wronged

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16
Q

Bind insurer on risk

A

broker committed insurer to provide contract of insurance on the matter

17
Q

documents used to make changes (SE/rF)

A
  • separate policies
  • endorsements/riders
  • floaters
18
Q

endorsements/riders

A

acknowledges a change in terms

19
Q

floaters

A

coverage for property w/ high degree of mobility

20
Q

separate policies

A

for additional coverage