Chapter 1 Flashcards

Question

What is negligence

Answer 1

doing something a reasonable person would not do, or not something a reasonable person would do - is the peril insured in liability insurance

Answer 2

Is a condition that may cause a peril to occur or make the loss more severe.

Answer 3

physical moral

Answer 4

Subject matter of insurance and concerns those facts that can be ascertained by inspection of the risk, such as Construction of property, manufacturing process, age of a vehicle, location in relation to water supplies for firefighting Slippery floors, loose tiles, debris piled in basement or stairwells, poorly maintained heating and air conditioning units

Answer 5

Human element of risk Steams from mental attitudes and depends on the character of the insured and the insured’s employee Dishonesty, carelessness, and poor management

Answer 6

Characteristics of the insured that increase the probability or severity of loss A particular attitude on the part of the insured

Answer 7

Does not relate to dishonesty but to a particular attitude on part of the insured Typically about care and maintenance Example: Upkeep of your property

Answer 8

When a loss occurs, the peril that was the proximate cause of the loss must be one of the perils insured Proximate cause is the immediate and effective cause of the loss Not always the last event to occur Clare has a building and it collapses after being damaged and weakened by a raging fire in another building. Although the building collapsed, the fire next door directly precipitated the collapse and qualifies as the proximate cause of the loss

Answer 9

A cause that is not proximate Example Clare's building is not damaged by fire but when Clare's neighbour hires a contractor to repair the other building, the contractor negligently causes Clare’s building to collapse. The fire is the remote cause and the proximate cause if the action of the contractor

Answer 10

The last link in the chain to the events

Answer 11

Determine the exposures clients need to make Provide a plan of action manage those risk Recommend insurance coverage for those risk best served by insurance cover

Answer 12

Social responsibility Peace of mind (tolerance level of uncertainty) Externally imposed obligations Cost of risk

Answer 13

Social responsibility Survival Operational continuity Stable earnings Sustained growth

Answer 14

Step 1: identifying and analyzing exposures Step 2: Formulating options Step 3: Selecting the best techniques Step 4: Implementing the risk management plan Step 5: Monitoring the results and modifying the plan

Answer 15

To treat loss exposure, it must first be identified. Insurance professionals have a broader perspective of the risks organizations are exposed to Outside resources may be accessed; ex. fire department Methods to identify loss exposures: Surveys, Flow Charts, Financial Statements & Inspections

Answer 16

Asset subject to loss Potential cause of loss (peril) Financial consequences of the occurrence

Answer 17

Physical, tangible property Loss of use, physical asset damaged/destroyed Legal liability, duty of care issues; slipping on an icy sidewalk in front of a business Intangible assets, not physical; patent expiring causing financial loss Human, employees; owner of business dies

Answer 18

Humans - perils caused by human behaviour, such as arson, theft Natural - perils caused by natural forces in the weather and the earth, such as earthquakes, floods Economic - such events as changes in consumer tastes, currency fluctuations, crock market declines

Answer 19

to formulate the nest technique or combo of techniques for dealing with each exposure

Answer 20

Loss control techniques to control exposure to prevent losses or reduce their severity Loss financing techniques to pay for losses that occur

Answer 21

Retention Transfer

Answer 22

Avoidance loss prevention loss reduction non insurance risk transfer separation or diversification