Insurance Flashcards
When must there be an insurable interest for property and casualty?
At time of policy and loss
You only need an insurable interest at the time of issuance for life insurance.
True
Reformation
When the contract fails to express original intent, contract can be amended. “I didn’t have the intention to spend $1,000 at Reformation…”
Should the measure of damage be mitigated by payments received from sources other than the negligent party?
No
Subrogation - Insurer pays claim and takes over legal rights the insured had against the negligent
If you think SUBway is good food, you no longer have legal rights to eat anywhere else.
Is there a possibility of higher income taxes with self-insurance?
Yes, because contributions to the self-insurance fund are not deductible during the tax year.
High deductibles are an example of what?
Risk retention
What are the four principles of indemnity?
- Insurable interest
- The concept of actual cash value
- Other insurance (limit the ability to profit from a loss)
- Subrogation
Why can’t an employer purchase or own a policy in a cross-purchase agreement?
In a cross-purchase agreement, no insurable interest exists for the company (stockholder buys another stockholder’s interest)
Is insurance unilateral or bilateral?
Unilateral; one of the parties (insurer) makes a binding promise, that if broken, breaches the contract
What increases either frequency or severity of loss?
Hazards
What are the requirements for an insurable risk?
Accidental
Plenty of homogenous exposure units
Must not be catastrophic
Definite and Measurable
Loss exposure is _______ by having a _____ pool of insured people share in the financial losses suffered by members of the pool
Reduced; Large
Law of Large Numbers
Stop-loss coverage to partially self-insure its employee medical insurance program might be used by?
Companies with as few as 100 employees
Peril
Cause of a loss
Indemnified
Made whole
Under the insuring agreement(s),…
the insurance company promises to pay for the loss if the loss should result from the covered perils
Factual statements identifying the specific person, property, or activity being insured; descriptive information about the insurance being provided
Declarations; D.I.C.E
Attractive Nuissance
High degree of care is imposed on the land occupier for certain conditions on the land (pool that isn’t screened or fenced, vacant land where children play, land with access to water)
The lifeguard is so ATTRACTIVE…there’s easy access to him because there’s no fence!
Negligence per se
situation where the standard of care is set by a statute (school zones, cross walks)
Strict Liability
Generally limited to manufacturers and distributors of defective products (e. coli)
Absolute Liability
Extra hazardous condition which results in losses to others (keeping of wild animals)
Vicarious Liability (respondeat superior)
when one person is held responsible for negligent behavior of another person (branch manager of a B/D)
Assumption of risk
Ski lift ticket with assumption of risk disclosure, voluntarily choosing to encounter risk
