CPCU 553 Ch. 1 Flashcards
Any condition or situation that presents a possibility of loss, whether or not an actual loss occurs
Loss exposure
The actual means by which property is damaged or destroyed
Cause of loss (peril)
A condition that presents the possibility that a person or an organization will sustain a loss resulting from damage (including destruction, taking, or loss of use) to property in which that person or organization has a financial interet
Property loss exposure
Tangible property consisting of land, all structures permanently attached to the land, and whatever is growing on the land
Real property (realty)
All tangible or intangible property that is not real property
Personal property
Any condition or situation that presents possibility of a claim alleging legal responsibility of a person or business for injury or damage suffered by another party
Liability loss exposure
Money claimed by, or monetary award to, a party who has suffered bodily injury or property damage for which another party is legally responsible
Damages
A monetary award to compensate a victim for losses, such as pain and suffering, that does not involve specific, measurable expenses
General damages
A form of compensatory damages that awards a sum of money for specified, identifiable expenses associated with the injured person’s loss, such as medical expenses or lost wages
Special damages
A payment awarded by court to punish a defendant for a reckless, malicious, or deceitful act to deter similar conduct; award need not bear any relation to party’s actual damage
Punitive damages (exemplary damages)
A classification of law that applies to legal matters not governed by criminal law and that protects rights and provides remedies for breaches of duties owed to others
Civil law
A wrongful act or an omission other than a crime or breach of contract, that invades a legally protected right
Tort
The failure to exercise the degree of care that reasonable person in similar situation would exercise to avoid harming others
Negligence
Life, health, and retirement related loss exposures
Personal financial planning loss exposures
A disability caused by work related injury or disease that temporarily limits the extent to which a worker can perform job duties; the worker is eventually able to return to full duties and hours
Temporary partial disability (TPD)
A disability caused by work-related injury or disease that temporarily renders an injured worker unable to perform any job duties for a period of time
Temporary total disability (TTD)
A disability caused by work-related injury or disease that impairs the injured employee’s earning capacity for life, but the employee is able to work at reduced efficiencies
Permanent partial disability (PPD)
A disability caused by work-related injury or disease that renders an injured employee unable to ever return to gainful employment
Permanent total disability (PTD)
The method of making, implementing, and monitoring decisions that minimize the adverse effects of risk on an organization
Risk management process
A conscious act or decision not to act that reduces the frequency and/or severity of losses or makes losses more predictable
Risk control
A conscious act or decision not to act that generates the funds to pay for losses and risk control measures or to offset variability in cash flows
Risk financing
A risk control technique that involves ceasing or never undertaking an activity so that the possibility of a future loss occurring from that activity is eliminated
Avoidance
A risk control technique that reduces the frequency of a particular loss
Loss prevention
A risk control technique that reduces the severity of a particular loss
Loss reduction
A risk control technique that isolates loss exposures from one another to minimize the adverse effect of a single loss
Seperation
A risk control technique that uses backups, spares, or copies of critical property, information, or capabilities and keeps them in reserve
Duplication
A risk control technique that spreads loss exposures over numerous projects, products, markets, or regions
Diversification
A risk financing techniques by which losses are retained by generating funds within the organization to pay for the losses
Retention
A risk management technique that transfers the potential financial consequences of certain specified loss exposures from the insured to insurer
insurance
In the context of risk management, a risk financing technique by which the financial responsibility for losses and variability in cash flows is shifted to another party
Transfer
A system that pays lost wages, medical, and vocational rehabilitation expenses, and death benefits to injured workers or their dependents for employment related to injuries and diseases
Workers Compensation
Any phrase or clause in an insurance policy that describes the policy’s coverage, exclusions, limits, conditions, or other features
Policy provision
An insurance policy information page or pages providing specific details about the insured and subject of insurance
Declarations page
A document that amends and insurance policy
Endorsement
A section of an insurance policy that defines terms used throughout the policy form
Definitions
A statement in an insurance policy that the insurer will, under describes circumstances, makes a loss payment or provide a service
Insuring agreement
Any policy provision that qualifies an otherwise enforceable promise made on the policy
Policy condition
A policy provision that eliminates coverage for specified exposures
Exclusion
