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Study Guide > Key Terms > Flashcards

Key Terms Flashcards

All key terms from Chapters 1 - 8

1
Q

Risk

A

The chance of financial loss to which the object of insurance is exposed.

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2
Q

Speculative Risk

A

The possibility of financial loss or gain.

When people speculate, there is always a chance the venture will fail. Not insurable.

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3
Q

Pure Risk

A

The chance of financial loss which does not, at the same time, offer a chance of financial gain.

Only pure risk is insurable.

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4
Q

Insurance

A

The undertaking by one person to indemnify another person against loss or liability for loss in respect of a certain risk or peril to which the object of insurance may be exposed… or to pay a sum of money or other thing of value upon the happening of a certain event.

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5
Q

Contract

A

An agreement between two or more persons which creates an obligation to do or not to do a particular thing.

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6
Q

Consideration

A

An exchange of something or value between the parties.

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7
Q

Insurable Interest

A

People have an insurable interest in the subject matter of an insurance contract when they are able to show that they would suffer financially by a loss.

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8
Q

Utmost Good Faith

A

The law requires that insurance contracts maintain a higher standard of honesty than is needed of other contracts. The complete honesty of the parties is viewed as critical to the contract. (Applies to insured, insurer and broker)

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9
Q

Indemnity

A

People receive the actual amount of their loss, no more and no less.

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10
Q

Insurance Binder

A

A temporary agreement in which the insurer agrees to provide certain coverages pending the issuance of the policy.

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11
Q

Agency Agreement

A

A written agreement or contract between the insurer and the brokerage which acknowledges their relationship.

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12
Q

Void Contract

A

Unable in law to support the purpose for which it was intended. Deemed “never have existed”.

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13
Q

Voidable Contract

A

Void as to the wrongdoer but not void as to the wronged party, unless he elects to so treat it.

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14
Q

Peril

A

The cause of the loss.

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15
Q

Direct Loss

A

When the object of insurance is actually attacked by an insured peril.

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16
Q

Indirect Loss

A

Losses which arise as a consequence of direct losses (ex: loss of food in freezer when electrical motor malfunctions).

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17
Q

Actual Cash Value

A

the new or replacement cost of the property at the time of the loss, less depreciation.

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18
Q

Replacement Cost

A

The cost to repair or replace the lost or damaged property with new property of like kind and quality, without deduction for depreciation.

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19
Q

Valued Policy

A

Both the insured and the insurer will agree at the time the policy is issued as to the cash value of the property. In the event of a loss, the agreed amount would be paid.

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20
Q

Blanket Coverage

A

Policy which provides a single limit of insurance for all property falling within a specific class.

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21
Q

Scheduled Coverage

A

Covered property is itemized on the policy.

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22
Q

Fiduciary

A

One who occupies a position of special trust or confidence in the handling or supervising of the affairs or funds of another.

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23
Q

Unearned Premiums

A

Premiums not yet earned by the insurer. Unearned premiums are deemed to be held in trust in order to refund the insureds in event the policy is cancelled prior to expiry date.

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24
Q

Fire

A

Involves the presence of a visible flame or glow, actual ignition or burning is required.

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25
Q

Friendly Fire

A

One that is contained to its proper receptacle.

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26
Q

Hostile Fire

A

One that passes outside the limits assigned to it. Fire insurance policies only cover hostile fires)

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27
Q

Proximate Result

A

Damages which arise from a natural and continuous sequence of the peril causing loss.

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28
Q

Material Change

A

Any change within the control and knowledge of the insured which arises after the policy has been issued and serves to increase the chance of loss.

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29
Q

Pro Rata

A

Basis of return premium calculation when the insurer cancels a policy. The amount of the return premium is arrived at by dividing the amount of premium paid by the number of days in the policy period. The number so obtained (amount to be refunded) is determined by multiplying that amount by the number of days remaining in the policy period.

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30
Q

Short Rate

A

The basis of return premium calculation when the insured cancels the policy. The amount of the return premium is equivalent to that provided on a pro rata basis, less any administrative charge or cancellation penalty.

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31
Q

Notice of Loss

A

Immediate report of loss to insurer by the insured or his representative (agent) in writing.

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32
Q

Proof of Loss

A

A formal verification, under oath, of the details and amounts being claimed under the policy.

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33
Q

Fraud

A

A deliberate attempt to deceive, with a view to securing some profit.

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34
Q

Deductible

A

The amount the insured is required to absorb for each loss for which insurance coverage is provided before receiving any payment from the insurer.

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35
Q

Subrogation

A

When the insurer has paid a claim for loss caused by a third party, the Insurance Act allows the insurer to place itself “in the insureds shoes” in respect of their right to recover the amount of the loss from the responsible party.

36
Q

Proprietary Insurers

A

Insurance companies who exist to make a profit or return on their investment. May be incorporated or unincorporated.

37
Q

Non-Proprietary Insurers

A

Insurance companies which are organized for reasons other than profit. They are owned and controlled by their policy holders who have banded together to secure insurance at as low a cost as possible. No stock or share capital involved.

38
Q

Personal Property

A

Contents of insured’s dwelling and other personal property owned, worn or used by the insured while on the premises, which is usual to the ownership or maintenance of a dwelling.

39
Q

Additional Living Expense

A

Coverage that provides for additional cost of living elsewhere when the dwelling is damaged by an insured peril and the damage is sufficient to make the dwelling unfit for occupancy, or requires that the insured move out while repairs are being made. Also provides for loss of fair rental value if part of the dwelling was rented or being held for rental at the time of the loss.

40
Q

Vandalism

A

The wilful or ignorant destruction of property

41
Q

Vacant

A

Referring to the circumstances where, regardless of the presence of furnishing, all occupants have moved out with no intention of returning and no new occupant has taken up residence; or, in the case of a newly constructed house, no occupant has yet taken up residence

42
Q

Theft

A

Includes all means of taking property without the owner’s consent

43
Q

Mobile Home

A

A home which is factory built on its own chassis and which can be easily moved

44
Q

Condominium

A

A system of separate ownership of individual units in (a) multiple unit building

45
Q

Endorsement

A

An extra sheet(s) or slip(s) of paper attached to the policy indicating in writing that the insured and the insurer have agreed to a change in the terms of the insurance contract

46
Q

Fine Arts

A

Traditionally includes paintings, pictures, etchings, tapestries and other bona fide works of art of rarity, historical value or artistic merit

47
Q

Criminal Law

A

Category of law that deals with wrongs against society

48
Q

Civil Law

A

Law that concerns itself with settling disputes between individuals or other legal entities in matters not involving a criminal act

49
Q

Plaintiff

A

The party making the complaint (suing someone)

50
Q

Defendant

A

The party who allegedly committed the wrong

51
Q

Tort

A

A wrong done to another in breach of a duty laid down by law

52
Q

Strict Liability

A

Doctrine in law in which “a person is guilty until proven innocent”

53
Q

Negligence

A

The omission to do something which a reasonable man, guided by those ordinary considerations which ordinarily regulate human affairs, would do, or the doing of something which a reasonable and prudent man would not do

54
Q

Special Damages

A

Damages which can be accurately measured and which are intended to reimburse the plaintiff for out-of-pocket expenses

55
Q

General Damages

A

Damages which cannot be exactly determined but which reflect an amount the court believes necessary to compensate the aggrieved party fairly

56
Q

Trespasser

A

Is one who is on another’s premises for his/her own purpose without the express or implied permission of the occupier. Their presence is of no value to the occupier and such persons are viewed as having temporarily appropriated the property for their own use

57
Q

Licensee

A

A licensee is someone who comes on to the premises for his own purpose but with the occupiers consents
OR
A licensee is someone who goes upon the lands of another with express or implied invitation to transact business with the owner or occupant or to do some act to his advantage or to the mutual advantage of both the licensee and the owner or occupant

58
Q

Invitee

A

Someone who enters by invitation, be it express or implied. His entry is connected with the owner’s business or with an activity the owner conducts or permits to be conducted on his land and there is a mutual benefit or benefit to the owner

59
Q

Visitor

A

Classification given to a licensee or invitee under Provincial Occupier’s Liability Acts

60
Q

Joint Liability

A

When two or three people act together so as to cause injury or damage, they are held to be jointly liable

61
Q

Farming

A

Ownership, maintenance or use of premises for the production of crops or the raising or care of livestock, including all necessary operations
*Includes the operation of roadside stands and farm markets maintained principally for the sale of the insureds own farm products

62
Q

Custom Farming

A

Use of insured’s farm machinery or equipment for others away from insured’s farm premises for compensation. It does not include work done for others in return for work done by them

63
Q

Residence Employee

A

Those whose duties are exclusively in connection or maintenance and use of the residence premises

64
Q

Farm Employee

A

Those paid for their work and who are hired on a part time, seasonal or full time basis to perform duties principally connected with farming activities
OR
Persons engaged in farm related work on behalf of the insured in a neighbourly exchange of assistance for which the insured is not obliged to pay any money

65
Q

Pink Card

A

In provinces where automobile insurance is provided by private insurers, a PINK CARD is used to provide proof of financial responsibility
OR
In provinces having compulsory government insurance plans, the PINK COPY of the certificate or registration serves as proof of financial responsibility

66
Q

Facility Association

A

An insurance pool in which all licensed automobile insurers participate and which provides insurance to those who may be refused insurance by private insurers

67
Q

Driver’s Abstract

A

A record of the driver history of the applicant and other drivers which can be obtained from provincial licensing authorities

68
Q

Pure No Fault Auto Plan

A

Removes the right of legal action against owners or drivers who cause injury or death to others. Instead, all accident victims, or their legal representatives, may claim compensation from their own insurers
(This plan is used in Manitoba and Quebec)

69
Q

Threshold No Fault Auto Plan

A

Used in Ontario. Under this plan, legal action against the responsible party is not permitted unless a certain “threshold” is exceeded. While this threshold may be monetary, it may also relate to the severity of injuries sustained

70
Q

Unsatisfied Judgement Fund

A

When losses are caused by uninsured drivers, the innocent victim(s) may be left with no compensation for their losses. Funds have been established in all provinces to ensure that the victims of these accidents are provided with some level of compensation

71
Q

Uninsured Automobile

A

One in which neither the driver nor the owner has collectible bodily injury liability insurance (as defined in Accident Benefits Coverage)

72
Q

Unidentified Automobile

A

One in which the identity of either the owner or driver cannot be ascertained and which causes bodily injury or death to an insured person arising out of actual contact of that automobile with the automobile in which the insured is an occupant

73
Q

General Average

A

Designed to provide payment for ocean marine losses voluntarily incurred for the safety of the entire venture. The insurers of the parties whose property was saved shall contribute to the losses of the parties whose property was sacrificed

74
Q

Temporary Substitute Automobile

A

One which is temporarily being used as a substitute for the automobile described on the policy. It qualifies only if the described automobile cannot be used because of its breakdown, repair, servicing, loss, destruction or sale

75
Q

Occupant

A

Any person who drives the automobile or is being carried on or upon or entering into or leaving the automobile

76
Q

Newly Acquired Automobile

A

One which replaces an automobile described on the policy or is in addition to others owned by the insured which are all insured by the same insurer

77
Q

Step Licensing

A

A step licensing system is a system which requires a higher degree of knowledge for each increasing step

78
Q

Ethics

A

The principles of conduct governing an individual or group

79
Q

Professional/Professionalism

A

A professional is one who posses special skills or knowledge

80
Q

Self-Regulation

A

The right of an industry to govern its own affairs

81
Q

Insured

A

An Insured Applicant, his Spouse and any Dependent Children

82
Q

Insured Applicant

A

A Canadian resident under age 65, insured under the government health insurance plan of his Province or Territory of Residence, who has been named on an invoice/application issued by his broker

83
Q

Extended Family

A

The dependent child, spouse, parent, guardian, brother, sister and grandparent of the Insured Applicant or spouse

84
Q

Accident

A

An unforeseen and unintended occurrence due to external, violent, sudden, fortuitous caused beyond the Insured’s control

85
Q

Sickness

A

Bodily sickness or disease, contracted and commencing after the policy is issued and while the policy is in effect

86
Q

Injury

A

Bodily injury caused by an Accident occurring while the Insured is insured here under

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