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LA Property & Casualty Insurance > General Insurance > Flashcards

General Insurance Flashcards

1
Q

What is the most common form of risk management?

A

Insurance

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2
Q

One party is transferring the risk of financial loss to an insurance company so that the insurer absorbs the costs associated with the risk instead of the loss being suffered by that policy.

A

Policy Contract

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3
Q

Uncertainty or chance of a loss occuring

A

Risk

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4
Q

What is an insurance policy’s main intent?

A

To indemnify a party with insurable interest in a financial loss of a person or some property.

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5
Q

To make whole or to restore a person back to where they were before the financial loss.

A

Indemnify

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6
Q

Insurable, no opportunity for financial gain, only loss is suffered, but not all are insurable

A

Pure Risks

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7
Q

Not insurable, opportunity for financial gain, loss, or reward is possible.

A

Speculative Risks

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8
Q

Many units having similar risks present

A

Homogenous

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9
Q

A situation increasing the odds of a loss or circumstance that increases risks or exposure to risks.

A

Hazard(s)

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10
Q

What are the 3 main classes of hazards?

A
  1. Physical Hazards
  2. Moral Hazards
  3. Morale Hazards
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11
Q

A physical condition or status that increases the chance of loss.

A

Physical Hazards

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12
Q

Dishonest acts & fraud.

A

Moral Hazards

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13
Q

Reckless & irresponsible or blatant lack of concern for handling risks in a prudent manner.

A

Morale Hazards

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14
Q

Causes of loss or actual events from which decreases are suffered that are covered by the policy.

A

Peril

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15
Q

he decline in value of a person or thing, the decrease that is suffered after a peril occurs.

A

Loss

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16
Q

What are the 5 methods commonly used in risk management?

A
  1. Avoidance
  2. Retention
  3. Sharing
  4. Reduction
  5. Transfer
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17
Q

Staying away from a risk altogether

A

Avoidance

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18
Q

Involves bearing the loss yourself if the loss occurs

A

Retention

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19
Q

Establishing a homogenous group with which to _________the risks for similar losses so that losses are less per individual.

A

Share

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20
Q

Decrease the possibility or significance of loss when the loss can’t be avoided.

A

Reduction

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21
Q

Shifting the loss from a risk to another party by contract & done through the purchase of an insurance policy

A

Transfer

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22
Q

What are the elements in risk?

A
  1. unexpected
  2. measurable
  3. large homogenous group
  4. not completely disastrous
  5. not mandetory
  6. predictable frequencies
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23
Q

Groups of investors willing to back the risk of a policy in exchange for receiving a premium with people who want insurance.

A

Lloyd’s Underwriters

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24
Q

What are groups of investors called?

A

Syndicate

25
Q

___ have a certificate of authority from the state department to sell it’s insurance products in the state.

A

Authorized (Admitted) Insurer

26
Q

___ don’t have certificate of authority.

A

Unauthorized insurers

27
Q

What are the categories insurers are categorized by their state of incorporation or where their coporate charter was organized?

A

Domestic
Foreign
Alien

28
Q

What category does an insurer fall under if they are incorporated in Louisiana?

A

Domestic

29
Q

What category does an insurer fall under when they are incorporated in the U.S. & U.S. territories othan than Louisiana?

A

Foreign

30
Q

What category does an insurer fall under when they are formed outside the U.S.?

A

Alien

31
Q

What is it called when agencies publish regular information about the strength & stability of insurers stay tup to date on the insurer’s claims, reserves, profits, & investments?

A

Financial Status
aka
Independant Rating Services

32
Q

A legal term that applies to someone representing someone else.

A

Agent

33
Q

Who do client’s pay?

A

Insurer

34
Q

Who does the insurer pay?

A

Agent

35
Q

Who does the producer legally represent?

A

Insurer

36
Q

What are the types of authority?

A
  1. Express
  2. Implied
  3. Apparent
37
Q

_____ given authority to do certain things on behalf of the insurance company because functions were expressed orally or in writing.

A

Express Authority

38
Q

Inherent to the nature of sales contracts & the expectations.

A

Implied Authority

39
Q

___ understood as part of the job but are not specifically spelled out, point-by-point, in the contract.

A

Implied Authority

40
Q

___ when insurance companies indicate by their actions.

A

Apparent Authority

41
Q

What are the elements of a legal contract?

A
  1. Offer & Acceptance
  2. Consideration
  3. Competent Parties
  4. Legal Purpose
42
Q

___ an agreement between two parties or more that is enforceable by law.

A

Legal contract

43
Q

Take it or leave it contracts

A

Contract of Adhesion

44
Q

Consideration that is being exchanged is unequal or unrelated o the consideration given by the other party.

A

Aleatory Contract

45
Q

___ only one party in the contract has made a legally enforceable promise & is bound by law to act.

A

Unilateral Contract

46
Q

___ both parties have conditions to meet to execute the contract.

A

Conditional contract

47
Q

___When contract language has more than one meaning.

A

Ambiguity

48
Q

____ when the ambiguity is obvious.

A

Patent

49
Q

___ hidden ambiguities.

A

Latent

50
Q

___ when a producer or insurer can lead the customer to beleive that certain coverages are in existence during the sales process.

A

Reasonable Expectations

51
Q

What are the legal interpretations affecting contracts?

A
  1. Ambiguous terms in contract of adhesion
  2. Reasonable expectaions
  3. Indemnity
  4. Utmost Good Faith
  5. Representation/Misrepresentation
  6. Warranties
  7. Concealment
  8. Fraud
  9. Waiver/Estoppel
52
Q

___ a policy will only be as good as the information submitted in the application.

A

Utmost Good Faith

53
Q

___ smething a person states that they believe to be true.

A

Representation

54
Q

___ when people answer questions dishonestly.

A

Misrepresentations

55
Q

____ an engagement by the insured party that certain statements are true or that certain conditions shall be fulfilled, the breach of it invalidating the policy

A

Warranties

56
Q

___ withholding substantial & relevant information that is needed for an insurer to decide about a policy or its benefits.

A

Concealment

57
Q

___ the intent to deceive & mislead for a specific benefit or gain.

A

Fraud

58
Q

___ legal term for giving up a right or privilage.

A

Waiver

59
Q

___ the legal process used to stop someone from trying to get a right or privilage back that they already waived.

A

Estoppel

LA Property & Casualty Insurance (11 decks)

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