Ch3: Contracts Flashcards
1
Q
What are the 3 types of risk?
A
- Personal
- Property
- Liability
2
Q
What are the 4 ways of dealing with risk? (CART)
A
Control
Avoidance
Retention
Transfer
3
Q
What are the 2 types of financial risk?
A
- Pure Risk: you can only lose
- Speculative Risk: you may win or lose
4
Q
What are the 5 elements of all contracts?
A
- Agreement
- Genuine Intentions
- Consideration
- Legality of object
- Legal capacity of the parties
5
Q
Define “Contract”
A
a legally enforceable agreement
6
Q
What are the 3 elements special to insurance
A
- Insurable Interest
- Indemnity
- Utmost Good Faith
7
Q
Define “Insurable Interest”
A
Only those who actually suffer losses are entitled to benefit from the policy
8
Q
Define “Utmost Good Faith”
A
Both parties must be open, honest and comply with policy terms and conditions
9
Q
What is the purpose of a “Floater”
A
Insures mobile property
10
Q
What is the purpose of a “Rider”
A
Adds coverage
11
Q
Define a “Binder”
A
Temporary policy issued pending the actual policy
12
Q
Define a “Agency Agreement”
A
Gives broker authority to commit insurer to a contract
