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CAIB 2 > Key Terms > Flashcards

Key Terms Flashcards

1
Q

Scheduled Coverage?

A

Refers to a policy on which coverage is provided only on that property which is specifically identified. (Reference Pg. 1-2)

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2
Q

All Property

A

Refers to a policy used to insure building, stock, and equipment under a single limit of insurance. (Reference Pg. 1-2)

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3
Q

Tenants Improvements

A

Building improvements, alterations, and betterments made at the expense of or purchased by the insured to a building that is occupied by the insured and which are not otherwise insured, provided the insured is not the actual owner of such building. (Reference Pg 1-5)

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4
Q

Actual Cash Value

A

The replacement or repair cost less depreciation (Reference Pg 1-6)

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5
Q

Replacement Value

A

Represents the costs to repair, replace, or rebuild the lost or damaged property without deduction for depreciation (Reference Pg. 1-7)

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6
Q

Reinsurance

A

Involves an insurer ceding part of the risk it has assumed to one or more other insurers (Reference Pg 1-11)

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7
Q

Subscription

A

An insurance policy under which a group of insurers has agreed to participate in providing policy insurance coverages. (Reference Pg. 1-11)

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8
Q

Condition

A

Is something imposed by the Insurer which requires the Insured to do or not to do something. (Reference Pg. 1-17)

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9
Q

Subrogation

A

Refers to the right of the insurer to “step into the shoes” of the part whom it has compensated and sue any party whom the compensated party could have sued. (Reference Pg. 1-18)

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10
Q

Warranty

A

Is a promise that certain facts are as they are represented to be and that they will remain so. (Reference Pg. 1-24)

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11
Q

Material Fact

A

A fact which if communicated to the insurer would induce it either to decline the insurance altogether, or not accept it unless a higher premium is paid. (Reference Pg 1-25)

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12
Q

Fraudulent

A

To act willfully, and with the specific intent to deceive or cheat. (Reference Pg. 1-26)

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13
Q

Void Contract

A

A void contract is one which has no “legal or binding force” and as such, “is incapable of being enforced by law” (Reference Pg. 1-26)

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14
Q

Fire Resistive

A

Building which has met minimum standards in terms of hours it will withstand a specific, carefully controlled test fire.

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15
Q

Non-Combustible

A

All structural members including floors, roofs, and their supports are constructed of steel, iron, concrete or other non-combustible materials. The exterior is also required to be of non-combustible construction. This construction falls just short of being classified as fire-resistive. (Reference Pg. 2-4)

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16
Q

Common Hazards

A

Conditions common to all buildings which influence their potential for loss. (Reference Pg. 2-4)

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17
Q

Detachment

A

Refers to the proximity of the building insured or containing the property that is insured to other commercially rated buildings. (Reference Pg. 2-5)

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18
Q

Adverse Selection

A

Occurs when the applicants for insurance are largely those most likely to suffer a loss. (Reference Pg. 2-9)

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19
Q

Risk Classification

A

Refers to the grouping or classifying of risks according to established criteria which, in large part, is based on their probability for loss as a class (Reference Pg. 2-10)

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20
Q

Soft Market

A

Characterized by intense competition between insurers. As a result, rates tend to be lower. (Reference Pg. 2-11)

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21
Q

Hard Market

A

Occurs when low profit margins force out some of the competition. As a result, insurers use a more disciplined underwriting approach. The insured normally receives little or nothing in the way of rate discounts. (Reference Pg. 2-11)

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22
Q

Hazard

A

Is a condition that may cause a peril to occur. (Reference Pg. 2-12)

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23
Q

Physical Hazard

A

A condition relating to the use of tangible property which could cause a peril to occur. (Reference Pg. 2-13/14).

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24
Q

Moral Hazard

A

Subjective characteristics of the applicant that could cause a peril to occur. (Reference Pg. 2-13/14).

A moral hazard is a situation in which one party engages in risky behaviour or fails to act in good faith because it knows the other party bears the economic consequences of their behaviour. Any time two parties come into an agreement with one another, a moral hazard can occur.

A moral hazard occurs when insured parties take more risks knowing their insurers will protect them against losses. Considered to be too big to fail, banks often take additional financial risks knowing they’ll be bailed out by the government.

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25
Q

Morale Hazard

A

A term used to describe an insured person’s attitude about his or her belongings. … For example, suppose a person pays insurance for his new phone. Morale hazard arises when the model of his phone becomes outdated, and he no longer cares about it. Reference Pg. (2-13/14)

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26
Q

Accommodation Business

A

Business which is marginal or substandard but which the insurer agrees to accept as a favour or accommodation to the broker. (Reference Pg. 2-16)

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27
Q

Supporting Business

A

The existence of other insurance policies the applicant has with the same insurer. (Reference Pg. 2-16)

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28
Q

Vacant

A

“Empty” or;

When the normal occupant is absent and the contents have been removed. (Reference Pg. 3-7)

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29
Q

Unoccupied

A

Lack of habitual presence of human beings or;

When the premises are complete with its contents, except that such a person who normally occupies the premises is temporarily away. (Reference Pg. 3-7)

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30
Q

Loading

A

An additional rate charged over and above the fire rate (Reference Pg. 3-10)

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31
Q

Centrifugal Force

A

The inertia of a body that tends to move it away from the centre around which it revolves (Reference Pg. 3-27) (term relates to equipment breakdown insurance).

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32
Q

Mechanical Breakdown

A

A failure in the working mechanism of the machines…a functional defect in the moving parts of the equipment which causes the latter to cease functioning or to function improperly. (Reference Pg. 3-27)

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33
Q

Electrical Breakdown

A

A failure in the electrical mechanism of the machinery, appliance, or device. (Reference Pg. 3-27)

34
Q

Trade Losses

A

The types of losses that might be expected as part of the everyday operation of a business. (Reference Pg. 3-28)

35
Q

Wear and Tear

A

Deterioration or depreciation (i.e. value by ordinary and reasonable use of the subject matter) (Reference pg 3-33)

36
Q

Gradual Deterioration

A

The deterioration of an object that arises naturally over time. (Reference Pg. 3-33)

37
Q

Latent Defect

A

A hidden or concealed defect. One which could not be discovered by reasonable and customary inspection; one not apparent in the face of goods, product, document, etc. (Reference Pg. 3-33)

38
Q

Mysterious Disappearance

A

Disappearance under circumstances that cannot be explained. (Reference Pg. 3-34).

39
Q

Endorsement

A

Changes the terms or conditions of the policy (Reference Pg. 4-1)

40
Q

Rider

A

Adds additional coverages to those already in place. (Reference Pg. 4-1)

41
Q

Media

A

CDs, DVDs, backup hard drives and cassettes, upon which data is recorded (Reference Pg. 4-9)

42
Q

Data

A

The information stored on the media (Reference Pg. 4-9)

43
Q

Temporary Location

A

A location not specified on the policy which is not owned, rented or controlled in whole or in part by the insured. (Reference Pg. 4-23)

44
Q

Newly Acquired Location

A

A location acquired (owned, rented, or controlled) by the Insured. Such location is a newly acquired location for a period of 30 days from the acquisition. (Reference Pg. 4-24)

45
Q

Replacement Cost

A

The cost of repairing or replacing the property on the same site with new property of like kind and quality, and for like occupancy without deduction for depreciation. (Reference Pg. 4-26)

46
Q

Bailee for Hire

A

One who has temporary custody of the personal property of another for a purpose other than sale and who is compensated as a condition of such custody. (Reference Pg. 5-1)

47
Q

Ordinary Care

A

The legal duty imposed upon bailees which requires them to take the same care of the goods of others as would be taken by a prudent and diligent owner of such goods. (Reference Pg. 5-1)

48
Q

Common Carrier

A

Includes airlines, railroads, trucking companies, and other that furnish transportation to any member of the public seeking their services. (References 5-3)

49
Q

Standard (Ordinary) Bill of Lading

A

Bill of lading used to reflect the amount for which the bill of lading common carrier will be held legally liable under the tariff. (Reference Pg 5-4)

50
Q

Valued Bill of Lading

A

Serves to increase carrier’s liability - normally requested by the owner of goods when their value exceeds the value stated in the Standard Bill of Lading. (Reference pg 5-4)

51
Q

Released Bill of Lading

A

Bill of Lading used to release a carrier from any liability for the goods being transported. (Reference Pg 5-4).

52
Q

Contract Carrier

A

One that carries, for pay, the goods of certain customers only as contracted to. (Reference pg 5-4).

53
Q

Private Carrier

A

Ones who haul their own goods or goods entrusted to them as bailees or lessees and includes shippers who own or lease their vehicles and carry their own goods (Reference Pg. 5-4)

54
Q

Catastrophe Limit

A

The maximum amount an insurer will pay in only one disaster or occurrence. (Reference Pg. 5-8)

55
Q

Physical Protection

A

Is concerned with setting up physical barriers to restrict unauthorized access to the property (Reference pg. 6-3)

56
Q

Electronic Protection

A

Is concerned with setting up electronic barriers to restrict unauthorized access to the property. (Reference Pg 6-3)

57
Q

Perimeter Protection

A

Refers to the methods used by owners to secure access to the premises when the business is closed. (Reference Pg. 6-4)

58
Q

Area Protection

A

Refers to the protection provided to areas within the building where the valuable property is being stored. (Reference Pg. 6-4/5)

59
Q

Point Protection

A

Provides direct security for individual items such as safes, vaults, chests, filing cabinets, display cases, expensive equipment. (Reference Pg. 6-6)

60
Q

Line Security

A

Refers to the ability of a telephone line to withstand tampering. (Reference Pg. 6-7)

61
Q

Money

A

Currency and coins in current use and having a face value. (Reference 6-12)

62
Q

Securities

A

All negotiable and non-negotiable instruments or contracts representing money or other property and includes revenue and other stamps in current use, tokens and tickets but does not include money. (Reference 6-12)

63
Q

Burglary (Insurance Definition)

A

The unlawful taking of property by a person unlawfully entering or leaving the premises as evidenced by marks of forceable entry or exit (Reference 6-14)

64
Q

Robbery (Insurance Definition)

A

Robbery means the taking of insured property from a custodian by a person or persons who have:

  • caused or threatened to cause the custodian bodily harm
  • taken such property from a custodian who has been killed or rendered unconscious (Reference 6-16)
65
Q

Custodian

A

Includes the Insured(S), their partner(s), or any employee authorized by them to have the care and custody of insured property (Reference 6-17)

66
Q

Theft (Insurance Definition)

A

All means of taking property without the owner’s consent.

67
Q

Employee Dishonesty

A

Loss which the Insured shall sustain resulting directly from one or more fraudulent or dishonest acts committed by an employee, acting alone or in collusion with others. (Reference 6-23)

68
Q

Discovery Period

A

The time permitted by an Insurer, commencing with the expiry date of the policy, in which a claim must be discovered by the Insured if it is to be covered by the policy. (Reference 6-26)

69
Q

Messenger

A

The Insured or a partner of the Insured or any employee who is duly authorized by the Insured to have the care and custody of the Insured property outside the premises. (Reference 6-32)

70
Q

Forgery

A

A person is guilty of forgery if he fraudulently alters any writing of another without his authority or makes, completes, executes, authenticates, issues, or transfers any writing so it purports to be the act of another who did not authorize that act. (Reference 6-33)

71
Q

Income

A

Includes all monies from sales or services rendered by a business. (Reference 7-6)

72
Q

Fixed Expense

A

Expenses that continue during the period of an interruption. (Rent, Utilities, etc.) (Reference (7-6)

73
Q

Semi-Variable Expenses

A

Expenses that may or may not continue during the period of interruption. (Reference (7-6)

74
Q

Gross Profit

A

The sum produced by adding to the net profit the amount of the insured standing charges.

See IBC 4030 - Profits Endorsement Form definition item 4(a)

Note: Technically - gross earnings under the Gross Earnings Endorsement Form (IBC4029) has its own definition and is not the same as the “gross profit” amount insured by the Profits Form. Under the Gross Earnings Form, “gross earnings” is the amount arrived at after subtracting the cost of merchandise and other allowable deductions from the business’ total net sales.

(Reference 7-7)

75
Q

Net Profit

A

Gross Profit minus All Other Expenses earned by the business (Reference 7-7)

76
Q

Actual Loss Sustained

A

The measure of recovery under the Gross Earnings Form - refers to the amount the business would actually have earned had the loss not occurred (Reference 7-15)

77
Q

Ordinary Payroll Expense

A

Entire payroll expense for all employees of the Insured, except officers, executives, department managers, employees under contract, and other important employees whose services would not be dispensed with should the business be interfered or interrupted. (Reference 7-17)

78
Q

Contributing Properties

A

The manufacturer or supplier upon whom the Insured depends for materials or goods. (Reference 7-35)

79
Q

Recipient Properties

A

The customer(s) who the Insured depends upon to purchase its products (Reference 7-35)

80
Q

Magnet Properties

A

Businesses which attract a large number of customers to an area (Reference 7-35)

CAIB 2 (3 decks)

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