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Risk Management > Module 7 > Flashcards

Module 7 Flashcards

1
Q

the sources of legal principles stem from

A

judicial precedents, statutes, customs, and other sources of the law.

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2
Q

provide a pathway to interpreting legal issues and their solutions based on past remedies and the knowledge of the Constitution and other
statutes.

A

legal principles

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3
Q

TYPES OF LEGAL PRINCIPLES

A

The rule of law
The principle of equality before the law
The principle of fairness.
Due process
Separation of powers

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4
Q

is a contractual obligation of one party to compensate the
loss incurred by another party due to the relevant acts of the indemnitor or any other party.

A

indemnity

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5
Q

In a legal sense, refers to the transfer of liability for damages. A legally enforceable contract between two parties, termed an indemnity agreement, specifies the conditions related to this transfer.

A

indemnification

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6
Q

is when a Person stands to gain or benefit from the continued
existence or well-being of a Person or an Insured Property and the Person would suffer
a financial loss from the absence of the Person or the Property.

A

insurable interest

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7
Q

is the legal right of the person to insure the subject-matter with which they have a legal relationship recognized by law.

A

insurable interest

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8
Q

is one of the fundamental principles of Insurance. It
forms the legal basis on whether Insurance can be taken or not. The Insured must have an Insurable Interest in the subject matter for which they want an Insurance Policy

A

principle of insurable interest

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9
Q

What are the types of Insurable Interest?

A

Common Law
Contractual Interest
Statutory Interest

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10
Q

Insurable Interest as per relates to Self, Spouse, Children, Parents and Assets.

A

common law

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11
Q

relates to Employer-
Employee relationship, Bank-Mortgage Relationship, Company-Keyman Relationship etc.

A

Contractual Interest

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12
Q

relates to Executor-Trustee relationship and Bailee Relationship.

A

statutory interest

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13
Q

in insurance is a legal right of the insurance company to legally pursue a
third-party responsible for the damages/insurance loss caused to the insured.

A

subrogation

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14
Q

also known as uberrimae fidei, is a fundamental concept in insurance and legal contracts. This principle imposes a duty on all parties involved to act honestly and disclose all relevant information at the time the contract is formed. This principle is particularly applicable in insurance contracts and is crucial for the smooth functioning of the insurance industry.

A

principle of utmost good faith

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15
Q

refers to the practice of substituting one party for another in a legal setting.

A

subrogation

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16
Q

Key aspects of the principle of utmost good faith include:

A

Full Disclosure
Duty of Good Faith
Continuing Duty
Consequences of Breach
Application to Underwriting

17
Q

The insured party (policyholder) is obligated to provide complete and accurate information
about the subject matter of the insurance, including any known risks or factors that might
affect the insurer’s decision to underwrite the policy.

A

full disclosure

18
Q

Both parties, the insurer and the insured, are expected to deal with each other in good
faith. This means being honest, fair, and transparent in all aspects of the insurance
contract.

A

duty of good faith

19
Q

The duty of utmost good faith is not limited to the inception of the contract; it continues
throughout the life of the policy. If there are any material changes in the risk during the
policy period, the insured is generally required to inform the insurer promptly.

A

continuing duty

20
Q

Failure to adhere to the principle of utmost good faith may result in serious consequences.
If the insured provides false or incomplete information intentionally or with reckless
disregard for the truth, the insurer may have grounds to void the policy or deny a claim.

A

consequences of breach

21
Q

Insurers rely on the information provided by the insured to assess risks and determine
premiums. The principle of utmost good faith ensures that the underwriting process is
based on accurate and complete information.

A

application to underwriting

22
Q

REQUIREMENTS OF AN INSURABLE CONTRACT

A

Insurable Interest
Utmost Good Faith
Offer and Acceptance
Legal Capacity
Lawful Purpose
Certainty and Definiteness of Terms
Possibility of Loss
Offer, Payment, and Acceptance of Premium

23
Q

Agreement of 2 people/ parties
Voluntary
Should be written
Binding

A

Contract

24
Q

Basic Element of Contract

A
  1. Consideration
  2. Meeting of the Minds
  3. Capacity to Contract
  4. Offer and Acceptance
25
Q

Special Characteristics of Insurance Contracts

A
  1. Unilateral Contracts
  2. Conditional Contracts
  3. Aleatory Contracts
  4. Contracts of Adhesion
26
Q

Insurance agents are typically subject to various laws and regulations governing their
licensing, conduct, and professional responsibilities.

A

regulation

26
Q

The relationship between law and insurance agents involves several key aspects:

A

Regulation
Duties and Responsibilities
Liability
Contractual Relationships

27
Q

Insurance agents have a duty to act in the best interests of their clients and provide
accurate information about insurance products and coverage options.

A

duties and responsibilities

28
Q

Insurance agents can be held liable for negligence or misconduct in their professional
duties.

A

liability

29
Q

Insurance agents often act as intermediaries between insurance companies and clients, facilitating the purchase of insurance policies and managing ongoing interactions
between the parties.

A

contractual relationships

30
Q

Like any other contract, an insurance contract requires a clear offer by one party (typically
the insured) and an acceptance by the other party (the insurer). Both parties must agree
on the terms of the insurance contract for it to be valid.

A

offer and acceptance

31
Q

The parties involved must have the legal capacity to enter into a contract. This means
they must be of sound mind, not under the influence of drugs or alcohol, and of the legal age to contract.

A

legal capacity

32
Q

The purpose of the insurance contract must be legal and not against public policy. For
example, insurance contracts that encourage illegal activities or involve illegal gains may
be deemed unenforceable.

A

Lawful Purpose

33
Q

The terms of the insurance contract must be clear, specific, and not open to multiple
interpretations. This helps prevent disputes and ensures that both parties understand
their rights and obligations.

A

Certainty and Definiteness of Terms

34
Q

The subject matter of the insurance must involve a potential for a financial loss. If there
is no risk of loss, there is no need for insurance. Insurance is designed to provide
protection against unforeseen events that could result in financial harm.

A

Possibility of loss

35
Q

The insured typically makes an offer by applying for insurance, and the insurer accepts
this offer by issuing a policy. Premium payment is a critical component, as it represents
the consideration for the insurer’s promise to provide coverage.

A

Offer, Payment, and Acceptance of Premium

Risk Management (9 decks)

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