Insurance Fundmentals Flashcards
Insurance
Is a contract in which an insurance company or government agency provides a guarantee of compensation for specified loss, damage, illness, or death and return for payment of a premium from an insured person or group
Law of large numbers
Insurance can calculate their probable losses and establish accurate premium rates to cover losses and operating expenses
Principle of indemnity
Principle assumes that insured who suffered loss should only be restored to the approximate financial condition that existed prior to the loss, no better no worse
Insurable interest
Refers to the financial interest of an individual company or organization must have in the property liability or person being insured
Adverse selection
Tendencies of insured with greater than average chance of loss of purchase insurance
First party
The insured
Second party
The insurance company
Third party
This is the party that has been damaged by the first party
Declaration page(information page)
Name an address of the insured, policy term or period, limits of liability, policy premium, and any deductions
Insuring agreement
Establishes and defines what is covered under the policy the risk assumed in the nature of the coverage
Aleatory contract
Unequal transfer value between the parties to the contract
Contract of adhesion
Written by one party with a stronger bargaining power
Executory contract
The contract will not be fully executed into the parties to the contract had performed their duties
Waiver
Intentionally relinquishing of a known, right
Estoppel
Is a legal doctrine that prevents or stop a party from traducing its own previous actions if the actions have reasonably replied upon it
