Revision Flashcards
By sharing information about their risk, the insured satisfies which obligation?
Good faith
The proximate cause of a loss will always be the…
Dominant cause
Which insurance principal gives an insurer the right to call upon other insurers to share in the settling of a claim?
Contribution
A building valued at £250,000 is jointly owned by Karen and Terry, who each individually arrange insurance on it. Karen insures the building for £100,000, whilst Terry insures it for £150,000. If a valid claim of £55,000 occurs how much is each insurer liable to pay?
Karen’s insurer is liable for £22,000 and Terry’s for £33,000
An insurer arranges for a policyholders car to be repaired following damage by a negligent third party motorist. Under which insurance principle can the insurer recover the paid claim?
Subrogation
Which insurance principle ensures that in the event of a loss the insured is placed in the same financial position as they where immediately prior to the loss?
Indemnity
The protection of jobs is caused by which type of function of insurance?
A secondary function of insurance only
Which type of risk arises from a cause outside the control of any one individual and affects a large number of people?
Fundamental risk
For an individual, which class of risk is always uninsurable?
Speculative risk
The subjective judgment that individuals or organisations make about the characteristics and severity of a risk is known as…
Risk perception
In relation to insurance, a peril is…
An event that may give risk to a loss
The calculation of what involves the use of the law of large numbers?
Equitable premiums
What is the most likely impact, if any, on a commercial insurer if it fails to implement an effective claims-handling process?
The reputation of the insurer will be affected
A proposer for an insurance policy who has previously made fraudulent insurance claims would be classed by an underwriter as a…
Poor moral hazard
Where the premiums of the many pay the losses of the few, this is known as…
Pooling of risks
What is the basic purpose of insurance?
To transfer risks
What class of insurance protects the policyholder from the nationalisation of their overseas assets by a foreign government?
Political risks
Cargo carried by an airline will usually be covered under what class of business?
Marine
