Principles Of Insurance Flashcards
What are the principles of insurance?
Insurable interest, indemnity, contribution, utmost good faith, proximate cause, and subrogation
What is insurable interest?
Insurable interest is when you have a law binding contract between the insurer and insured. Must be financial lost.
What is indemnity?
Indemnity is when you put the insured in the place they were before the incident happened
What is the contribution?
The right of one insurer to call on other insurers similarly but not necessarily equally liable to the same customer, to share with them the cost.
What is Utmost Good Faith?
A duty of both insurer and insured to disclose accurately and fully all facts to the risk being proposed whether requested or not
What is proximate cause?
The cause which sets a motion of chain events
What is Subrogation?
The right of one person to stand in the place of another and avail himself of all rights and remedies of that other person. Ie the insurer can stand in place of insured to recover costs.
What is insurance?
Insurance is a contract between the insured and insurer to provide compensation when suffering a loas
What are three benefits of insurance?
Risk transfer mechanism, peace of mind, and Reduction of loss
What are four key concepts of risk?
Uncertainty, level of risk, peril and hazard
What two characteristics are used to measure a risk?
Severity and frequency
What is an example of a high frequency, low severity incident?
A broken windscreen
What one word best describes risk?
Uncertainty
What is an example of A physical hazard?
Vehicle modifications
What is an example of a moral hazard?
Age
