Insurance Basics Flashcards
Factors to be Insurable
large # sim exp
sig in scope
measurable
accidental
non catastrophic
3 Requirements: Ins Contracts
unilateral
conditional
good faith
Traditional Insurance
Traditional
-stock (sells stock) and mutual (owned by policy holders)
Reciprocal
subscribers insure other members
Automatic treaty
(reinsurance)
comp accepts risk of other comp (allstate)
Excess of Loss (reinsurance)
up to an amount
the primary insurer pays the amount of each claim for each risk UP TO A LIMIT determined in advance, and the reinsurer pays the amount of the claim above that specific limit
Quota Share (reinsurance)
the primary insurer and the reinsurer(s) involved will pay claims in direct relationship with the percentage of the risk that each is insuring
predetermined %s
Domestic Insurer
formed under laws of NC
Foreign Insurer
laws of other state operating in NC
Alien Insurers
company formed under laws of other country
Valued Contract
insurer agrees to a certain sum of money (life insurance)
Reimbursement Contract (type of contract)
reimburses expenses - typically medical
Adverse Selection
more than normal share of risk
Assigned Risk
high risk factors, insurance is required
an individual or business that is not insurable under regular insurance contracts due to high risk factors is assigned to an insurance company when insurance is required to be carried.
For example, some states require automobile liability insurance
Described Location
the house, structures and grounds of property, where you live
Law of Large Numbers
greater chance of calculating risk price
Facultative (optional) Reinsurance
form of reinsurance that is negotiated separately for each insurance contract.
The reinsuring company decides whether to insure or reject individual risks from a ceding company.
Lloyds of London
Attorney-in-fact
Supporting capital is provided by investment institutions, specialist investors, international insurance companies and individuals.
Lloyd’s is famous for insuring unusual and even speculative risks.
Automatic (Treaty)
-Reinsurance
a ceding company is contractually bound to cede (give up or surrender) a percentage of the risk, and a Reinsurer is bound by contract (treaty) to accept some portion of the of risk
Valued Contract
type of contract in which the insurer agrees to pay a specific sum of money no matter what the amount of loss may be
Reimbursement Contract
type of contract which reimburses expenses. Typically, this refers to medical insurance contracts in which the insured receives reimbursement for medical expenses that he or she paid
Indemnity Contract
type of contract that promises to pay an amount equal to the loss covered under the policy. Although all insurance contracts promise to pay some amount for loss, only property contracts follow the strict definition of indemnity
Casualty Insurance
term for non-property insurance coverage
Estoppel
legal impediment to one party denying the consequences of its own actions
Expiration Date
date on which coverage terminates under a policy.
Friendly Fire
a fire that is set intentionally in a fireplace, stove, furnace or other containment that has not spread beyond the container
Hostile Fire
fire that is not confined to its normal habitat, such as a fireplace, or has been started by accident
Libel
a form of personal injury that is communicated through material that can be seen such as a printed publication
Warranty
a provision in a policy pledging by the insured that a condition does or will exist when the insurance policy is issued
Short Rate
if the insured cancelled the policy before the expected expiration date of the policy
Pro-Rata
insurance company must return any advanced unused premium paid by the policyowner
if the insurance company terminates the contract before the policy period ends
Age for Life insurance or Annuity
15
Representation
true to the best of one’s knowledge
Insuarable Risk Requirements
