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BUSINESS > INSURANCE > Flashcards

INSURANCE Flashcards

1
Q

Name 3 examples of non insurable risk

A

War
Bad debt
Technology changes

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2
Q

What is indemnity

A

You will be put in the same financial position as before - not gaining or losing money

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3
Q

What is security

A

The assurance to source money in retirement or death

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4
Q

Average clause

A

Over/ under insurance - if under insured will only pay the percentage you’ve paid or over will only pay full amount and nothing more

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5
Q

Proximate cause

A

Insurer is only responsible for the damages directly relating to the risk

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6
Q

Excess

A

Predetermined amount of each claim that is not covered by policy

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7
Q

Subrogation

A

Right obtained by insurer to claim against the person who caused damage

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8
Q

Cession or cede

A

Using the build up of premium paid as collateral in order to get a loan

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9
Q

Reinsurance

A

Extent if the risk is too great and one company cannot/ doesn’t want to carry the full risk so portions of this risk is reinsured to spread the risk(this process is just the insurance companies negotiating)

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10
Q

Risk

A

Likelyhood of an uncertain event occurring. Premium is linked to this risk

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11
Q

Peril

A

Potential cause of loss

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12
Q

Hazard

A

Something that increases the risk

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13
Q

What are the 3 requirements of a valid insurance contract

A
  1. Absolute good faith
  2. Insurable interest
  3. Contractual capacity
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14
Q

What are the 3 compulsory insurance

A

-UIF
-COIDA
- RAF

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15
Q

List 3 non compulsory insurance

A
  • household, vehicle (fulle comprehensive or third party fire and theft) and fidelity insurance
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16
Q

List 2 advantages of insurance

A
  • it transfers the risk
  • provides peace of mind
17
Q

List 2 disadvantages of insurance

A
  • expensive
  • insurers often look for reasons not to pay out
18
Q

List 2 advantages of assurance

A
  • ensures the beneficiaries maintain standard if living
  • retirement annuities offer tax benefits
19
Q

List 2 disadvantaged of assurance

A
  • expensive admin fees
  • needs extensive research to ensure right policy is taken out

BUSINESS (9 decks)

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