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USVI Insurance Laws > Lesson 1 Part 2 > Flashcards

Lesson 1 Part 2 Flashcards

1
Q

Contract

A

Agreement between 2 or more competent parties under the terms which each promises to perform in manner specified

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2
Q

4 components for contract to be legal and enforceable

A

1) Offer & Acceptance (Agreement)
2) Competent Parties
3) Legal Object (Purpose)
4) Consideration

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3
Q

Entities deemed incompetent for legal contract

A

Minors, Mentally incompetent individuals, those under influence of alcohol

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4
Q

Aleatory Contract

A

The value given up by one party does not equal that given up by the other party

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5
Q

Contract of Adhesion / One Sided Contract

A

Where one party creates the contract terms & the other party must comply with them

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6
Q

Courts interpret policies to include coverages that an average person would understand them to include

A

Doctrine of Reasonable Expectations

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7
Q

When a party does not enter into agreement in _____________, the other party may void contract.

A

Utmost Good Faith

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8
Q

Executory Contracts

A

Like an insurance policy, act in contract remains to be performed by one of the parties

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9
Q

Unilateral feature

A

Contract where only the insurer promises to perform; promise made by only one party

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10
Q

Contract subject to numerous conditions

A

Conditional Contract

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11
Q

Waiver

A

Intentional or voluntary relinquishment of a known right in an insurance contract

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12
Q

Estoppel

A

Where there is a form of broken promise from insurer who makes a statement and insured relies on statement, but later insurer doesn’t want to abide by original statement

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13
Q

3 required elements of estoppel

A

1) False representation of material fact
2) Reasonable reliance
3) Harm would result

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14
Q

Errors & Omissions (E&O) policies

A

Claims which result from negligent act(s) of a producer

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15
Q

4 parts that make up insurance contract

A

1) Declarations
2) Insuring Agreement
3) Conditions
4) Exclusions

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16
Q

Illustrations of conditions places upon insureds

A

1) Proof of Loss
2) Assistance of the insured
3) Insured duties in event of loss
4) Notice of loss

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17
Q

Modify policies insuring agreements to eliminate uninsurable perils or other coverages not under the term of contract; prevents duplication of coverage

A

Exclusions

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18
Q

Representation

A

Oral or written statements made by individual seeking to enter consideration contract

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19
Q

Warranties

A

Statements made by applicant regarding nature of the risk to be insured

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20
Q

Fraud

A

Intentional misrepresentation of material fact that may void a contract

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21
Q

Binder

A

Temporary policy that’s subject to terms of contract to be written later

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22
Q

Endorsements

A

Attachment added to policy when changes occur mid term

23
Q

Outline of coverage & premium without any coverage in force

A

Proposal

24
Q

Price per unit of exposure

A

Rate

25
Q

Portion of rate needed to pay losses & loss adjustment expenses (loss costs)

A

Pure premium

26
Q

Loading

A

Amount added to pure premium for other expenses

27
Q

Pure premium plus loading element

A

Gross rate

28
Q

Gross premium

A

Gross rate multiplied by # of exposure units

29
Q

Class rates

A

Applied to large group of homogeneous loss exposures

30
Q

When large numbers of homogeneous exposures do not exist

A

Individual/ Specific rate

31
Q

Judgement rating

A

Determined by underwriter & used when credible statistics are lacking

32
Q

Retrospective rating

A

Considers actual losses during policy period when final premium for coverage is determined

33
Q

Purpose of rating bureau?

A

1) Accumulate/Analyze statistical data to develop rates
2) Calculate rates for line of insurance
3) File rates with state authority for approval

34
Q

Insurers who wish to remain outside a rating bureau & file independently

A

Non bureau insurers

35
Q

Adverse Selection

A

Tendency of persons whose exposure to loss is higher than average to purchase/continue insurance

36
Q

Underwriting process

A

1) Selection of insureds
2) Pricing
3) Evaluation of risks
4) Determination of contract conditions

37
Q

4 external sources of info for underwriting department

A

1) Producer
2) Consumer Reports
3) Government Records
4) Financial Rating Service

38
Q

What is the Insurance Services Office (ISO) 6 basic types of construction?

A

1) Frame
2) Joisted Masonry
3) Non-Combustible
4) Masonry Non-Combustible
5) Modified Fire Resistive
6) Fire Resistive

39
Q

Appointed by producer to take applications & collect premiums, but unable to countersign policies

A

Solicitor

40
Q

Insurer specialists not required to be licensed, that help producers sell/service insurance & receive a salary

A

Service Representative

41
Q

Fiduciary Capacity

A

Requiring a high degree of trust & confidence

42
Q

Express Authority

A

Anything an insurer specifically instructs producer to do

43
Q

Authority not specifically given to a producer by insurer

A

Apparent authority

44
Q

Parol Evidence Rule

A

When parties place their contract in writing, all previous oral agreements merge into the written contract

45
Q

Frame

A

Buildings with combustible construction or buildings with walls noncombustible but floor & roof combustible

46
Q

Joisted Masonry

A

Buildings with fire resistive construction & combustible floor & roof

47
Q

Non-Combustible

A

Buildings with wall/floor/roof non-combustible or slow burning material supported by non-combustible or slow burning support

48
Q

Masonry Non-Combustible

A

Buildings with walls of fire resistive construction & with non-combustible or slow burning floor & roof

49
Q

Modified Fire Resistive

A

Buildings with fire resistive wall/floor/roof, but with fire resistive rating of less than 2 hours, but more than 1.

50
Q

Fire Resistive

A

Certain thickness of masonry material & fire resistance rating must be at least 2hrs

51
Q

Field Underwriting

A

Producers evaluate moral quality of applicants

52
Q

Captive Producer

A

Represents a single company that actually owns the business placed by the producer

53
Q

Producer Responsibilities

A

1) Identify client needs
2) Suggest/Explain coverage
3) Powers granted to producer by company
4) Record binder information
5) Handle application
6) Deliver policy
7) Maintain records
8) Fiduciary capacity

54
Q

Independent Producer

A

Owns their “book of business” that is generally placed with different companies

USVI Insurance Laws (10 decks)

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