Insurance Contracts

Question 1

Categories of risk

Answer 1

Personal - owns greatest asset

Property - Incur a financial loss

Liability - results in injury or damage to others.

Question 2

Two types of risk

Answer 2

Pure risk- chance of loss with no financial gain

Speculative risk - chance of loss with financial gain.

Question 3

4 common ways to deal with risk

Answer 3

Avoidance: all chance of loss has been eliminated

Controlling risk: Reduce the frequency and severity of loss (take preventative measures.)

Retention: retention or self-insurance

Transfer of risk: Transfer through insurance company *** MOST POPULAR

Question 4

Definition of Contract

Answer 4

Agreement between two competent parties, can be oral or written

Question 5

5 elements of a contract

Answer 5

Agreement

Consideration

Legality of object

Legal capacity or parties

Genuine intention

Question 6

Definition of agreement in contract

Answer 6

Meeting of minds.

An offer made and unconditional acceptance of the terms.

Question 7

Definition of consideration in contract

Answer 7

Exchange of something of value

Question 8

Definition of legality of object in contract

Answer 8

Contract intended for a purpose which is contrary to the public good is not enforceable at law.

Question 9

Definition of Legal Capacity

Answer 9

Competent being 
Of age (19) of right mind.

Question 10

Business names aloud on contracts must contain?

Answer 10

LTD and INC

Question 11

Define Genuine intention on contract

Answer 11

Parties enter into a contract with 100% truthfulness.

Question 12

Fraud

Answer 12

When one party deliberately uses/puts false information to benefit from financial gain.

Question 13

Duress

Answer 13

Use of force or illegal imprisonment to induce people to act other the their free will

Question 14

Concealment

Answer 14

Hide the past or please take facts

Question 15

Mistake

Answer 15

Documents signed by mistake or in error or wrong age.

Question 16

3 essential elements unique to insurance contracts.

Answer 16

Insurance interest

Upmost good faith

Indemnity

Question 17

Insurance interest

Answer 17

When someone is able to show that they would suffer a financial loss

Question 18

Utmost good faith

Answer 18

The complete honestly of parties

Question 19

Indemnity

Answer 19

The actual amount of loss, no more no less.

Question 20

Void contract

Answer 20

One which is unable in law to support the purpose for which it was intended

Question 21

Voidable contract

Answer 21

Voided to the wrongdoer not void to the wronged party

Question 22

Insurance binder

Answer 22

Contracts of insurance

Brokers bind an insurer on a risk

Question 23

Oral binder

Answer 23

Just as binding as written, but should be written to avoid disagreements

Question 24

Written binder

Answer 24

An insurer has been bound on a risk details on a cover note. Subject to terms and conditions.

Question 25

Source of brokers authority in binder

Answer 25

An insurance agency agreement provides with the authority

Question 26

Termination of contract

Answer 26

Must provide a basis for termination for both parties.

Rules in contract

Question 27

3 types of changes to a contract

Answer 27

Endorsement /Rider

Floater

Separate policy

Question 28

Endorsement/rider

Answer 28

Acknowledge a change in terms

Question 29

Floater

Answer 29

Provides coverage for high degree of mobility

Question 30

Separate Policies

Answer 30

Additional policy