CLASS GAME Flashcards
To better understand Chapters 1-6
Materiality
questions to find facts about both the insurer & the insured before a contract is made
Speculative Risk
chance of loss, but also chance of an insured gaining
FREE MONEY
NOT FAVORABLE TO COVER
Pure Risk
chance of a loss, but no chance of a gain
More favorable to cover
Absolute Liability
having a risky job
when you’re an absolute liability because of your job
Steve Irving
4 Elements of a Contract
C onsideration
L egal purpose
O ffer & acceptance
C ompetent parties
Concealment
hiding facts
hiding working for Uber/Lyft from insurer
CONCEALER
Recission
Revoking a contract
cancelling an existing policy because of failure of payment or fraud
Unintentional Tort
> accidentally injuring someone else without meaning to do so
>negligence
Intentional Tort
> purposely injuring someone else
knowingly doing something to hurt another
gross negligence
expressed warranty
> written coverage
>specifically related contracts
implied warranty
> assumed coverage
>relates to contracts
law of large number
> statistics
asking a large number of people for information, vs. asking a small number of people for information
the more input (info) the better the outcome
fboys sending a lot of dm’s for a reply
strict liability
> manufacturer provides a fix because of a faulty product after too many complaints
deals with products
manufacturer takes care of the problem
airbag recalls
independent rating organizations
> ISO Insurance Services Office
AAIS American Association of Insurance Services
regulate insurance industry
misrepresentation
a lie
insurable interest
Me as a client having something I want to protect
>mi raptor/house
legal hazard
loss resulting from legal actions
>going to court & then losing $
Error & Omission Insurance
protects the insurance company from an agent’s negligence
>agent writes the wrong VIN number & the payout is for a non-owned vehicle
3 elements of negligence
D uty
I njury
B reach
slander
> spoken gossip that injures a person/company’s reputation/livelihood
amber heard talking smack
deductible
what you need to pay first before the insurance company pays their part
vicarious liability
assuming responsibility for another person’s actions
>parents paying for damages child did
ideally insurable risk
> a risk a company wants to cover because there’s a low chance of it happening
something (person/thing) that I as a company want to insure because the chance of a loss is low
*hurricane insurance in California
Estoppel
> legal action taken after a waiver
once you have waived a right/etc, you can’t collect benefits from what you have denied, & it must be enforced by law
saying no to getting insurance for a TV, TV breaks & you can’t get it fixed because you said no to the insurance
Agent
> represents the insurance company
>captive/exclusive
Broker
> represents the client
>works with several companies
adverse selection
> choosing to cover a high risk driver
*covering someone with a bad driving record
how do companies protect themselves from adverse selection?
> charging high premiums
*high risk=high rate
not offering coverage
self-funded insurance
when an individual chooses to pay for damages themselves instead of going through the insurer
admitted
> insurer has meet state requirements & is licensed to sell in that state
state license
non-admitted
> insurer has not met state requirements & cannot sell in that state
must go through a surplus lines broker
libel
> letter/written gossip that injures a person/company’s reputation/livelihood
johnny depp vs magazines
assumption of risk
> doing dangerous things for fun
>skydiving/roller coasters
insolvency
> when the insurer doesn’t have the funds to pay out a claim
>insurer is bankrupt
waiver
> the voluntary act of relinquishing a legal right, claim, or privilege
signing a waiver for the slingshot, where you can’t sue if you get hurt
gross negligence
> purposely putting yourself & others at risk
drunk driving with friends in the same car
*directly puts friends at risk
open peril
> covers anything that’s not excluded
>”i can cover all damages, except those caused by theft/fire”
named peril
> covers anything that’s listed, nothing else
>”i can only cover damages caused by flooding” that’s it. i can’t cover any other damages
5 ways to manage risk
S hare T ransfer A void R educe R etention
4 types of hazards
L egal
M oral
M orale
P hysical
4 types of hazards
L egal
M oral
M orale
P hysical
utmost good faith
> exchanging trust
exchanging insured’s representations for insurer’s coverage
trust
indemnity
=payout
>insurer is to pay for damages
>payout to fix/total loss
>company pays
comparative negligence
> % of payment depending on who is more at fault
>in comparison to how at fault everyone was
contributory negligence
> when parties involved are all at fault, no one gets paid
>when i contributed, i won’t be paid
special/surplus lines brokers
> middle man
reinsurance
> multiple insurance companies come together to cover the loss
Twin Towers covered by multiple insurances to pay for damages (commercial/auto/medical/etc)
expressed authority
written/said duties as an agent
*selling insurance
implied authority
assumed duties as an agent
*cleaning the restroom
warranty
=contract
authority
=agent
insurance solicitor
> does all the office work, but not the actual sale
>receptionist
unilateral contract
> one party is legally responsible
>the insurer is responsible for paying out losses, not the insured
peril
> the actual cause for a loss
reason for a loss
natural disasters/pothole/tree/accidents
moral hazard
> being dishonest
>people’s ACTIONS
physical hazard
> anything you can see, touch, hear
>potholes/debris
morale hazard
> being careless because you have insurance
the way people THINK
tony’s kids
GAP coverage (beast)
> insurance for the loan on the vehicle
>when beast got totaled
CAARP
> only certified agents can sell it
must be done through EEDP
INSURANCE FOR THE UNINSURABLE
CAIP
> commercial version of CAARP
only certified agents can sell it
no limit on car’s worth
Medical payments
> Who: me, my passengers, family
What: medical & funeral expenses in an accident & as a pedestrian
is paid out regardless of who’s at fault
Physical Damage
> alternative to Collision & comprehension (OTC)
>Actual Cash Value is the payout
4 features of liability
SOS/E
Supplementary payments
Out of state coverage
Split/combined limits
Exclusions
Share the expense
> driving with friends
>carpool
For hire
> paying for a driving service
>uber/lyft
3 principles of rating factor
DMY
Driving record
Mileage (annual)
Years of experience driving
audio, visual, media & data
> covers $200 for damages
>examples: disks, dvds, tapes, records, dj equipment
Remission
> why I, as a company, would want to break up our contract with you, the client
increase in risk
failure to pay first payment
finding fraud/concealment
registration/ drivers license gets revoked/suspended
Towing & labor coverage
> covers $25 or up to an hour of labor for repairs done to car where it was disabled
Split limit
>$ amount is itemized >$ each is max >per person/per occurrence/property damage >person/occurrence is for BI >90% common
Combined limit
> one $ amount
is for entire accident, regardless of bi & pd amounts
one max amount total
less common
Split vs Combined
> is one or the other/not both
payout depends on company
payout is on an “up to” basis
Nonstandard physical coverage
> alternative to COLL/OTC
>THEFT & FIRE ONLY
