Insurance Flashcards
Insurable Risk Elements
1) There must be sufficiently large numbers of homogeneous exposure units to make losses reasonably predictable
2) The loss produced by the risk bust be definite and measurable
3) Loss must be fortuitous and Measurable
4) Loss must not be catastrophic to insurance company
Self-Insurance Disadvantages
- Catastrophic loss to the company
- Replace services the insurance company would handle
- Possibility of high income taxes on self insurance fund
- Law of large numbers will not operate
Avoidance of Risk
Renting instead of buying
Avoid buying a house with a pool
Diversification of Risk
Store assets in different locations
Retention of Risk
Deductibles on insurance
Coinsurance
Self-Insurance
Reduction of Risk
Install Smoke detectors, House alarms
Safety Equipment
create safety programs for business
Transfer of Risk
Insurance
Risk Sharing
- Harmless agreements
- Incorporation of business
4 Principles of Indemnity
Insurable Interest
Concept of Actual Cash Value
Other Insurance (limit the ability to profit from loss)
Subrogation
Tort
a wrongful act other than a breach of contract for which civil action may be brought against the Tortfeasor
Intentional Tort
A deliberately performed act such as assault, battery, false arrest
Unintentional Tort
Negligence or carelessness
Attractive Nuisance
A situation in which high degree of care is imposed on the land occupier for certain conditions on the land
Ex. Pool that isn’t screened
Negligence Per Se
a situation where the standards of care is set by a statute
ex. school zones and crosswalks
Strict Liability
limited to manufactures and distributors of products found to be defective.
Ex. Romain lettuce with e. coli, Cars with defective parts, Pharmaceuticals that cause illness or death
Absolute Liability
Extra hazardous conditions which result in losses to others
Ex. Keeping of wild animals, Workers comp.
Vicarious Liability
When one person is held liable for another persons negligence.
Ex. a Manager is responsible for his agents
Assumption of Risk
If one person recognizes and understands danger in an activity yet voluntarily chooses to encounter it. Another part CAN NOT be held responsible
Ex. Signing a waiver to do dangerous activity
Contributory Negligence
Driving drunk or j-walking Defeats the claim to the injured
Comparative Negligence
A Degree of negligence
-Injured was 20% negligent, Driver was 80% Negligent
Last Clear Chance
Contributory negligence of the injured party will not bar recovery of damages
Not avoiding a risk even with ample amount of time
Ex. Not swerving when a car cuts you off even when you had time to avoid the crash
Capital Retention/Preservation
Method presumes that only interest is distributed . The original capital is still left at the end of the income period.
5% Rule (or % of assume interest) - inflation
When a problem doesn’t give # of years assume capital Retenion
Disability Typical Coverage amount
50-60% of earned income
Workers Compensation is an Example of?
Absolute Liability
Medicare Part A
Hospital insurance
- Hospitals Stays
- Post Hospital Extended Care
- Post Hospital Home Health Service
- Hospice
- Blood after the first 3 Pints
