Chap2

Question 0

Principle of indemnity

Answer 0

The individual is restored to the same financial position as before the loss

Question 1

What are the 5 principles of insurance?

Answer 1

1) Principle of indemnity
2) incurable interest
3) reasonable expectation
4) subrogation
5) utmost good faith

Question 2

Insurable interest

Answer 2

The insured loss must have a financial impact on the insured

Question 3

Reasonable expectation

Answer 3

The insurer will provide the agreed upon coverage for the expected loss

Question 4

Subrogation

Answer 4

If the damage is caused by negligence of a third party, the insurer has right to recover its loss from said third party

Question 5

Utmost good faith

Answer 5

No intentional misleading or withholding of critical information

Question 6

What are the 4 basic characteristics of an insurance contract?

Answer 6

1) pooling of loss
2) loss must be fortuitous
3) transfer of pure risk
4) indemnification of pure losses

Question 7

Contract (law)

Answer 7

Agreement between 2 parties that can be enforced in a court of law

Question 8

5 elements of a valid contract

Answer 8

1) Offer and and acceptance
2) Consideration
3) Legal objective
4) Competent parties
5) Intention to create legal relationship

Question 9

Offers and acceptance (insurance contract)

Answer 9

The offer is made by the person who wants to buy the insurance

Question 10

Consideration (insurance contract)

Answer 10

In the case of an insurance: premiums. A life insurance is not valid until the insurer has received the first premium

Question 11

Legal objective (insurance contract)

Answer 11

For a contract to be binding the purpose of the contract must be legal

Question 12

Competent parties (insurance contract)

Answer 12

A contract involves a meeting of the mind for which all parties must be able to consent

Question 13

Negligence

Answer 13

Failure to exercise standard of care

Question 14

Standard of care

Answer 14

Care required of a reasonably prudent person

Question 15

4 elements of negligence

Answer 15

1) duty of care
2) failure to perform that duty
3) proximate cause
4) damages

Question 16

4 defences against negligence

Answer 16

1) contributory negligence
2) comparative negligence
3) last chance rule
4) assumption of risk

Question 17

Contributory negligence

Answer 17

The insured person’s conduct falls bellow the standard of care for their protection and contributed to the injury

Question 18

Comparative negligence

Answer 18

Both injured and injuring party share damages

Question 19

Last chance rule

Answer 19

The injuring party had a last clear chance to avoid the accident but failed to do so

Question 20

Assumption of risk

Answer 20

The person recognize and understand the danger inherent to a particular activity

Question 21

Imputed negligence

Answer 21

Negligence resulting for a party’s special relationship with the original negligent party

Question 22

6 imputed negligences

Answer 22

1) Employees employer relationship
2) vicarious liability
3) family purpose doctrine
4) joint venture and partnership
5) dram shop law
6) Res ispa loquitur (the thing speaks for itself)

Question 23

Tort law

Answer 23

Civil wrong or injuries either intentional or by negligence

Question 24

2 conditions under which a contract can be voided

Answer 24

• discharge

- voidable or unenforceable contract

Question 25

4 reasons for a contract to be discharged

Answer 25

1) performance
2) agreement
3) frustration
4) breach

Question 26

6 reasons a contract may become void or voidable

Answer 26

• mistake
• misrepresentation
• concealment
• warranty
• Duress
• undue influence

Question 27

Common mistake

Answer 27

Both parties make the same mistake

Question 28

Mutual mistake

Answer 28

Each party makes a different mistake

Question 29

Misrepresentation

Answer 29

One of the parties makes a wrong statement about some material element of the contract

Question 30

Concealment

Answer 30

Hiding of material element that invalidate the contract

Question 31

Warranty

Answer 31

A statement that is part of the contract and is guaranteed to be true in all respects

Question 32

Duress

Answer 32

Using coercion and intimidation to force another person into a contract

Question 33

Undue influence

Answer 33

A person in a dominant position deprives another person of an independent decision

Question 34

Aleatory V commutative contract

Answer 34

Theoretically in a commutative contact the considerations are exchanged at the beginning of the contract and are of equal value. Insurance contract are aleatory

Question 35

Bargaining V adhesion contract

Answer 35

There is no bargaining in an insurance contract

Question 36

Unilateral V bilateral contract

Answer 36

In a unilateral contract such as an insurance contract, only one party makes a legally enforceable promise that can’t be canceled by that party

Question 37

9 elements of an insurance policy

Answer 37

1) declaration
2) definitions
3) insuring agreement
4) exclusion and restrictions
5) conditions
6) miscellaneous provision
7) endorsement and riders
8) deductible
9) co-insurance requirement