Insurance Law Flashcards
What is the insurance act?
The statute regulating insurance in AB, recently revised to reduce rates charged for automobile insurance.
Who is the insurer?
Party agreeing to make the compensation.
Who is the insured?
Party receiving the compensation.
What is the premium?
the consideration (price) paid for the policy.
What are risks or perils?
Events insured against.
What are insurance agents?
Those who sell insurance contracts; may represent several insurance companies.
What are insurance brokers?
Those retained by the insured to secure the necessary coverage, shop around to find the best plan.
What are insurance adjusters?
Those who investigate and settle insurance claims on behalf of insurance companies.
What is insurance?
A contract where the insured pays premium in exchange for the insurer’s promise to cover the risk.
As risk increases, what happens to premium?
Premium also increases.
What is the Contra Proferentum rule?
Since most insurance contracts drafter by insurer, the courts have tried to balance resulting inequities by interpreting any ambiguities in the contract in FAVOR OF THE INSURED.
What are the 5 common types of insurance?
- Property Insurance
- Business interruption insurance
- Life and Health insurance
- Liability Insurance
- Bonding
What is property insurance?
Covers losses to property, fire for e.g.
What happens if the insured is insured under several policies?
Still cannot collect more than the loss. Multiple insurers are entitled to contribute only a portion of the loss.
What is business interruption insurance?
Insurance to cover lost profits and added expenses incurred to bring a business back into production.
Why might a business insure lives of some personnel?
The personnel must have an insurable interest, something to lose for the business.
What does liability insurance cover and not cover?
Only covers if insured is at unintentional fault. Does not cover willful, deliberate acts.
What are the two types of insurance bonds?
- Fidelity Bonds
2. Surety Bonds
What is a fidelity bond?
A bond where the employer pays to have an employee bonded, in case the employee commits a wrong, the employer recovers from the insurer.
What is a surety bond?
A bond that provides assurance that a party to a contract will perform that contract.
What are the two principles of legality in terms of insurance?
- If one commits a wrongful act that results in a loss, on public policy grounds, contract lacks legality and becomes unenforceable.
- Contracts of insurance are unenforceable, if there does not exist an insurable interest
What is utmost good faith?
The idea that the duty to disclose falls on the insured to come forward with risk information.
What is the prompt notice?
The insured is required to promptly notify the insurer of any changes that impact upon the risk?
What is subrogation?
Stepping into the position of the insured, once the insurer pays out the policy, steps into the insured’s shoes and can bring any lawsuit that the insured was entitled to bring.
What is salvage?
A concept which allows the property to be sold by the insurer and the proceeds kept by the insurer, if the item is damaged beyond repair. Enables insurer to minimize its loss.
What is the forfeiture rule?
The insured cannot collect if they deliberately cause the loss.
