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General Insurance Essentials > REV Mod 1 Study 1, 2, 3 + 6 > Flashcards

REV Mod 1 Study 1, 2, 3 + 6 Flashcards

1
Q

What is a Risk?

A

The chance of a loss

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2
Q

What is the difference between Pure Risk and Speculative Risk and what one does insurance insure

A

Pure risk - only loss

Speculative risk - loss with a chance of gain (ex lottery)

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3
Q

What are the 3 types of insurable Risks

A
  1. Personal Risks
  2. Property Risks
  3. Liability Risks
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4
Q

What is Direct vs Indirect Loss

A

Direct loss involves damage or destruction to the property insured
Indirect loss occurs because of direct loss - Since there was damage to an apartment, the indirect loss is the rent incurred from that apartment.

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5
Q

There are 3 categories of risk.

Personal lines insurance relates to..

A

Individuals in their private capacity: home, auto, seasonal dwellings, boats, jewellery, furs. Further split into Personal Auto and Personal Property

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6
Q

There are 3 categories of risk.

Commercial lines insurance relates to..

A

Commercial operations: retail stores, professional offices, construction vehicles

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7
Q

There are 3 categories of risk.

Special risks insurance relates to..

A

Insurance related to marine exposures, aviation and high-risk industrial operations.

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8
Q

What is a peril

A

An event that may cause a loss

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9
Q

What is Negligence

A

The doing of something a reasonable person would not do or not doing something a reasonable person would do

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10
Q

What is a Hazard

A

A condition that may cause a peril to occur or make the loss more severe.

Physical and moral Hazards

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11
Q

What is Proximate Cause

A

The cause is the immediate and effective cause of the loss. In a chain, what leads naturally and directly to the loss.

Not necessarily the last event before the occurrence.

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12
Q

What is Remote Cause

A

The middle man in the chain of proximate and immediate cause

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13
Q

What is Immediate cause

A

The last link in the chain leading to a loss

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14
Q

The Risk Management Process is 3 points to

A

Determine the exposures clients need to manage
Provide a plan of action to manage those risks
Recommend insurance coverage for those risks

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15
Q

What are the 4 categories of pre-loss objectives

A
  1. Social responsibility
  2. Externally imposed obligations
  3. Peace of mind
  4. Cost of risk
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16
Q

What are the 5 categories of post-loss objectives

A
  1. Social Responsibility
  2. Survival
  3. Operational Continuity
  4. Stable Earnings
  5. Sustained Growth
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17
Q

What are the duties of a Risk Manager

A 
Identifying loss exposures
Preventing loss
Reducing loss
Financing loss
Educating other corporate Managers
Acting as a resource to other managers
18
Q

In order, what is the 5 step process used to minimize loss exposures

A
  1. Identifying and analyzing exposures
  2. Formulating options
  3. Selecting the best techniques
  4. Implementing the risk management plan
  5. Monitoring results and modifying the plan
19
Q

Loss control technique avoidance means to

A

Eliminate an exposure - avoid it

20
Q

Loss control technique loss prevention means to

A

Anticipatory safety measures can prevent accidents

21
Q

Loss control technique loss reduction means to

A

Lessen the severity of those losses that do occur

22
Q

Loss control technique separation or diversification means to

A

Separate locations - reduce the concentration of value should a loss occur at one location

23
Q

Loss control technique non-insurance risk transfer means to

A

Risk can be transferred to others via contractual agreements

24
Q

There are two functions of insurance. The primary function is to spread risk - the losses of the few are shared by many. What are some of the secondary functions that enhance the economy

A 
Aiding security 
Aiding credit 
Promoting loss prevention
Providing capital
Providing employment
25
Q

What is the principle of indemnity

A

To place people back in the same financial position that they were in immediately before the loss

26
Q

What is Actual Cash Value (ACV)

A

Fair market value of property. Value of an equivalent piece of property of the same age and condition and subject to the same wear and tear.

27
Q

What is Replacement Value

A

The cost to repair or replace it with property of like kind and quality, without any deduction for depreciation

28
Q

What are the two categories under General Insurance

A

Property and Casualty Insurance

29
Q

What are the conditions that must exist in forming a contract

A 
Agreement
Consideration
Genuine intent to form a legal contract
Capacity to contract
Legality of purpose
30
Q

In QC what are the 4 requirements for a valid contract

A

Consent
Capacity to contract
Cause of contract
Object of contract

31
Q

Define lesion

A

A cause for voiding a contract made by a minor under certain circumstances. Exploitation of such persons who are suppose to look after them

32
Q

Insurance contracts must have 3 distinct elements

A

Insurable interest
Indemnity
Utmost good faith

33
Q

These three principals help in the determination of a fair settlement

A

Salvage
Subrogation
Contribution

34
Q

What is Subrogation

A

The insurer is able to retrieve reimbursement for a loss they paid from third parties or other insurance coverage.

35
Q

What is Contribution

A

The sharing of loss or liability between two or more insurance companies covering the same risk

36
Q

What is excess insurance

A

Insurance that doesn’t participate until all over similar insurance on the subject is exhausted

37
Q

Uberrimae Fidei is an Italian word for

A

Utmost Good Faith

38
Q

What are the 5 sections of a Policy

A
  1. Coverage summary (name & address, date, term, exp, premium & rate, amounts insured)
  2. Insuring agreements (what is insured, perils, exclusions)
  3. Stat conditions
  4. Policy conditions (rights and duties)
  5. Signature
39
Q

When contract is terminated by Insurer it is called

A

Pro-rata - % of premium returned to insured
15 days notice by mail
5 days hand delivered

40
Q

When a contract is terminated by Insured it is called

A

Short-rate - cancellation fee. For admin work to process early termination. Can be at any time.

General Insurance Essentials (11 decks)

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