Chapter 1: General Insurance Flashcards
Acceptance
The acceptance of an insurance contact takes place when the insurance company agrees to issue insurance.
Assignment
Specifies that the insured may not transfer rights of ownership or interest in an insurance policy to another party without the insurer’s written consent.
Attained Age
Insured’s age at any point in time at renewal or conversation.
Average Value Method
A loss reserve established based on average settlements of particular claim types.
Broker
Person that negotiates insurance contracts on behalf of the insured, thereby representing the clients interest, not the insurer.
Career Agency System
Agents are recruited, trained and supervised by either a managing employee or General Agent who is contracted with the insurance company.
Case Reserve Method
A loss reserve established for each claim, when reported.
Certificate of Authority
Authorization granted by the Department of Insurance to an agency or insurer to transact insurance in this state.
Class Rating
A group of insureds who have similar exposures and experience are charged the same rate.
Combined Ratio
Sum of the loss ratio and expense ratio.
Competent Parties
All parties to a contract; minors, mentally incompetent, persons, under influence of drugs or alcohol do not have legal capacity.
Concealment
The withholding of known(material) facts so important that the disclosure of them would change the decision of an insurer with respect to underwriting, settling a loss, or determining premium.
Conditional Contract
Both parties to a contract must perform certain duties and follow rules of conduct to make the contract enforceable.
Consideration
Insured pays premium, insurer promises to pay claims.
Contract Law
Law that pertains to the formation and enforcement of contracts.
Contract of Adhesion
One party prepares a contract (Insurer) and submits it to the other party on a take-it-or leave-it basis (insured).
Contract of Utmost Good Faith
Both parties bargain in good faith in forming the contract, and rely upon the statements and promises of each other.
Deductable
A specified dollar amount of each covered property loss that an insured must pay.
Direct Mail
- A marketing system utilizing direct mail, newspapers, magazines, radio, television, internet, web sites, call centers and vending machines.
- Sells insurance policies directly to the public with licensed employees or contractors.
Direct Response Company
Sells insurance policies directly to the public with licensed employees or contractors utilizing direct mail, newspapers, magazines, radio, television, internet web sites, call centers and vending machines.
Direct Writing System
An insurer deals directly with the insured through an employee agent.
Domestic Insurer
An insurer organized under the laws of this state, whether or not it is admitted to do business in this state.
Effective or Issue Date
The date when insurance coverage begins. (aka: inception date)
Endorsement
A form changing the provisions of a policy.
Attached as a rider
