Chapter 2 History and Functions of Insurance Flashcards
How has insurance developed over the centuries?
2000 BC - The Code of Hammurabi written by the King of Babylon contains one of the earliest known applications of the principle of insurance. Babylon caravan owners pledged their own assets as security for the safe transport of goods. (robbery, life, cargo and marine)
1666 - The great fire in London sparked the formation of insurance companies and was the beginning of modern insurance.
1735 - In the U.S the first fire insurance was established in Charleston South Carolina.
1809 - The first Canadian insurance company grew from the Nova Scotia Fire Insurance Association founded in Halifax in 1809. The Gore District Mutual and the Halifax Fire Assurance Company launched prior to 1840 still exist as distinct operating entities.
How were early insurance companies involved in fire loss prevention.
Early fire brigades were owned and operated by insurance companies.
Rates were based on whether or not the dwelling was serviced by fire-fighting equipment.
Early British insurance companies each had their fire mark, a plaque bearing the company name. When a fire occurred, the company’s fire brigade would respond only if the building was insured by them.
Identify the THREE (3) major categories of insurance and give an example of each.
Social Insurance - Hospital and Medical Plans; unemployment insurance benefits; workers compensation.
Life and Health Insurance - life; accident and sickness; disability
General Insurance/Property and Casualty Insurance - automobile; home; liability; commercial; crime
What is the difference between general insurance and property/casualty insurance.
General Insurance is also referred to as Property and Casualty Insurance.
Includes all insurance not covered by Social and Life Insurance.
What is a multi-peril policy?
Multi-peril policies include crime coverage (theft, burglary and robbery) from fire insurance.
Give example of an automobile insurance and explain what it covers.
Largest single class of general insurance. Covers:
- legal liability to third parties
- accident benefits for the insured
- direct damage to the described vehicle
Motorcycle Insurance.
What is an all-risk policy?
All risk policies - insure loss or damage resulting from all risks except what is specifically excluded.
What does marine insurance provide?
Covers:
-hull (the ship itself)
-cargo insurance
-insurance against liability arising out of bodily injury or death of a person or loss of or damage to property of others.
What is a surety bond?
Is a guarantee that the principal will perform the obligation or undertaking he or she has with a third party.
Is not actually insurance
Give an example of a property insurance and explain what it covers.
Insures against loss or damage to property.
- personally owned property
- commercial property
Tenant’s Insurance
Give an example of Boiler and Machinery Insurance and explain what it covers.
Covers:
- heating and air conditioning installations
- industrial machinery and equipment.
Give an example of Business Interruption insurance and explain what it covers.
- provides coverage against loss of income while the damaged property is being rebuilt or the business is being restored.
**- certain extra expenses incurred after the loss **
Give an example of Crime Insurance and explain what it covers.
Covers:
- burglary
- robbery
- theft
**- fidelity **
(fidelity refers to the dishonest acts of employees)
Give an example of Liability Insurance and explain what it covers.
Covers:
- against claims arising out of bodily injury or death of another person
- loss or damage to property of others resulting from insured’s negligence
Give an example of Aviation Insurance and explain what it covers.
Aviation insurance - provides hull (the aircraft) and insurance against liability.
Aviation general liability policy covers ownership, maintenance or operation of airports.
