General Insurance Flashcards
Party covered by an insurance policy
INSURED
Person that pays for the policy and can make changes to it
POLICYOWNER
Person who sells, solicits and markets insurance for the insurer
Producer
Employee of the insurance company who checks application, issues policy and sets premiums prices
Underwriter
When financial loss is the only outcome and there is no chance for financial gain
Pure risk
Examples of pure risk
Things out of policy owner’s control…
Accidents, sickness, fire, disabilities
Risk where there is a chance of financial gain
Speculative Risk
Speculative Risk examples
Gambling, investing in stocks, Realestate, commodities
Unit of measurement determining how prone a risk is
Exposure
Hazards that can be physically touch
Physical hazard
When insured is dishonest, it is a
Moral hazard
Hazards that pertain to state of mind
Morale hazard
What is the name for the case of loss as pertains to insurance
PERILS
Methods of handling risk
Avoidance, Retention, Sharing, Reduction, Transfer
What is AVOIDANCE as pertains to insurance
Avoiding activity entirely
What is RETENTION?
Insured retains portion of risk
Examples of retention
High deductible
Copayment
Self insurance
What is an example of transfer of risk
Insurance
Example of REDUCTION as pertains to insurance
Lower the chance of loss through maintenance
What is SHARING
Splitting up risk into many parts
Elements of pure risk
Loss must be definite and measurable
Loss must not be catastrophic
Insurance must not be mandatory
Loss must be due to chance
Loss must be predictable to insurer
What is ADVERSE SELECTION
High risk people
Dividend
Return of excess premium
Types of insurers
Stock - NON-Participating
Mutual - PARTICIPATING
FRATERNAL
RECIPROCAL
LLOYD’s ASSOCIATION
RISK RETENTION & purchasing groups
Self insurer
Surplus Lines
Domestic insurer
Admitted insurer.
Elements of a legal contract
Offer and acceptance
Consideration
Competent parties
Legal purpose
Adhesion
Non negotiable
Aleatory
Unequal
Insurance contracts are one sided or…
Unilateral
An insurance company (Blue Cross Blue Shield, State Farm, Americo) is the …
INSURER
