General Insurance Terms Flashcards
Insurance
A contract whereby one party (insurer/agent) agrees to indemnify another party (insured/client) against a loss by a specifies future contingency or peril in return for payment of premium
Risk
Uncertainy of a loss
Pure risk
Insurable because it involves a chance of loss only
Speculative Risk
Not insurable because it involves a chance of loss or gain, i.e. Gambling
Hazard
Events or conditions that increase the chance of a loss
Physical ( a type of hazard )
A physical condition: medical history, blindness, deafness
Morale (MO-RAH-LEE , a type of hazard)
Doing really unsafe things
Moral (type of hazard)
A lie
Peril
The cause of a loss: fire, accident, flood
Law of Large Numbers
Predicts the number of deaths that should occur within a similar group of people; The larger the number, the more accurate the prediction 
Captain/career/exclusive agent
Works for one company and sells only their products
Independent agent
Works for self and sells products for many companies
Domestic agent
Incorporated in the state they are doing business(i.e. California)
Foreign agent
Incorporated in another state (i.e. Oregon Or Arizona) but doing business in California
Alien agent
Incorporated in a country outside of the US (i.e Canada or England) but doing business in California
Fiduciary
A person in position of financial trust. For example, an agent that collects premiums must remit them promptly to the insurance company 
Appointment
Authorization of an agent/producer by an insurer to represent the company
-company appoints the agent
Authorized/admitted
All companies (domestic, foreign , alien) must have a license to conduct business in a state regardless of where their company in Incorporated; an authorized company has a certificate of authority to conduct business in a state
Certificate of authority
A license granted by the states insurance authority which allows an insurer the right to conduct business in that state
-license granted by insurance state
Expressed
Powers specifically stated and written in the contracts 
- Word seen with this word: authority and warranties
- The truth
Implied
Not specifically stated in the contract but is assumed authority that is needed to conduct insurance business
-assumed, not facts
Commissioner
Public official in charge of the states department of insurance responsible for regulating the insurance industry by enforcing the insurance laws
-The people elect the commissioner every four years no more than two terms
Conditional receipt
A type of premium receipt that states the coverage will be effective either:  The date of the application or the date of medical exam, which ever is later, if the premium is admitted with the application and the coverage is approved as applied for 
