Chapter 2 Flashcards
Adhesion
A contract of [term] describes a contract that has been prepared by line party (the insurance company) with no negotiation between the applicant & insurer. The applicant adheres to the terms of the contract on a “take it or leave it” basis when accepted.
Agent
Represents themselves & the insurer at the time of application
Aleatory
A [term] contract presents the potential for an unequal exchange of value or consideration between both parties. These are conditioned upon the occurrence of the event.
Apparent Authority
The appearance of the insurer providing the agent authority to perform unspecified tasks based on the agent-insurer relationship.
Broker
Represents themselves & the insured at the time of application
Competent Party
One who is capable of understanding the contract being agreed to. All parties must be of legal competence, meaning they must be of legal age, mentally capable of understanding the terms & not influenced by drugs or alcohol
Concealment
The failure of the applicant to disclose a known material fact when applying for insurance
Conditional
A [term] Policy describes the insurer’s promise to pay benefits depends on the occurrence of an event covered by the contract.
Consideration
The part of an insurance contract setting forth the amount of initial & renewal premiums & frequency of future payments.
Applicants
Provide the insurer with a completed application & initial premium as consideration for insurance.
Estoppel
Legal impediment to one party denying the consequences of its own actions or deeds if such actions or deeds result in another party acting in a specific manner or if certain inclusion are drawn.
Express Authority
The explicit authority granted to the agent by the insurer, as written in the agency contract.
Fiduciary
The responsibility an insurance producer has to account for all premiums collected & provide sound financial advice to clients. A [term] is in a position of trust with regards to the funds of their clients & the insurer.
Fraud
Includes the deliberate knowledge of or intentional deceit to make false statements to be compensated by an insurance company.
Implied Authority
An authority not explicitly granted to the agent in the contract of agency, but which common sense dictates the agent has. It enables the agent to carry out routine responsibilities.
Indemnity Contract
attempt to return the insured to their original financial position.
Insurable Interest
The financial, economic, & emotional impact associated with a person experiencing a specified loss. A person has an insurable interest in a loss if they have more to gain by not suffering the loss.
Insurance Policy
Written contract in which one party promises to indemnify another against loss that arises from an unknown event.
Legal Purpose
An insurance contract must be legal in nature & not in opposition to public policy.
Material Misrepresentation
A false statement made by an applicant that would influence an insurer in determining whether or not to accept the risk.
Patrol Evidence Rule
Involves parties put their agreement in writing, all previous verbal statements come together in writing, & a written contract cannot be changed or modified by parol (oral) evidence.
Policy Rider or Endorsement
An amendment added to an insurance contract that overrides terms in the original policy; endorsements may add or remove coverages, change deductibles, or revise any other policy feature.
Reasonable Expectations
The insured is entitled to coverage under the policy that any sensible & prudent person would expect it to provide.
Representations
Statements made by the applicant that they consider to be true & accurate to the best of the applicant’s belief.
