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RIBO > RIBO - Principles and Practices > Flashcards

RIBO - Principles and Practices Flashcards

1
Q

Who owns a mutual insurance company?

A

The Policy Holders

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2
Q

What did factory mutual companies specialize in?

A

Fire Risk Management

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3
Q

How often will a policy with an occurrence limit pay out claims?

A

Every time a loss occurs

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4
Q

What is the difference between an agent and a broker?

A

Agent- One Company. Broker- Multiple Companies.

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5
Q

What is the difference between cash value and replacement cost?

A

Actual Cash Value- Replacement cost less depreciation
Replacement Cost- is the cost of the item at the time of loss without depreciation

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6
Q

What is a Bailee?

A

Someone in the care custody of someone else’s property.

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7
Q

What are the four reasons a properly insurance policy may be automatically assigned?

A

Bankruptcy, Death, Operation of Law, and Succession

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8
Q

What is binding authority and who grants it to a broker?

A

Binding Authority is the authority to put a contract of insurance in effect without contacting the insurer for permission and it is granted by the insurer

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9
Q

What is binding authority and who grands it to a broker?

A

Binding authority is the authority to put a contract of insurance in effect without contacting the insurer for permission and it is granted by the insurer.

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10
Q

What are the three elements necessary for a contract of insurance only?

A

Utmost Good Faith, Indemnity, and Insurable Interest

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11
Q

What is a claim reserve?

A

Once a claim reported, insurers are required to put money aside to pay the claim.

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12
Q

To whom are the rights of subrogation granted once a claim if paid?

A

The Insurance Company

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13
Q

What value is depreciation taken off in the settlement of a claim on an actual cash value basis?

A

It is taken off the replacement cost of the item at the time of the loss

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14
Q

Is proximate cause the last event that occurs and causes a loss?

A

No. It is the immediate and effective cause of the loss but not necessarily the last in a chain of events.

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15
Q

What is earned premium?

A

The premium that is used up while unearned premium is the premium that has not yet been used up yet.

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16
Q

What does exclusion mean?

A

Not Included

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17
Q

What type of refund is required when an insurer cancels an insurance policy?

A

Pro Rata

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18
Q

What type of refund is required when an insured cancels his insurance policy?

A

Short Rate

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19
Q

What is a franchise or disappearing deductible?

A

A deductible that no longer exists once the loss reaches a certain point

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20
Q

What is a material fact?

A

A fact that is so important that it determines its own whether a risk is acceptable or not and the vasis on which the premium will be determined

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21
Q

What is a misrepresentation?

A

A lie about a material fact?

22
Q

What is a hazard?

A

A condition that may cause a loss to occur

23
Q

What are the two types of hazards?

A

Physical and Moral

24
Q

When is the principle of general average used?

A

When cargo on a ship or cars on a ferry are jettisoned to save the ship or ferry. All the insurers of the cargo or cars not jettisoned will contribute towards the loss

25
Q

What is a a stock insurance company?

A

An insurance company that trades on the stock market and is owned by its shareholders

26
Q

What is an endorsement used to do?

A

Used to change or amend a policy

27
Q

Who makes up groups of syndicates in regards to Lloyds of London?

A

Investors

28
Q

What is common law based on?

A

Law of the common people and precedents

29
Q

What is the statute law?

A

Law enacted by the government

30
Q

Who is the lessee? Who is the lessor?

A

Lessee- person leasing the car. Lessor- Leasing company

31
Q

What is a lien?

A

A loan or financial interest someone holds on a property

32
Q

How does the mortgage clause protect the mortgagee if the insured violates the policy?

A

If insured violated the policy they will not receive any benefits from the policy but the insurable interest of the mortgagee is protected

33
Q

What insurance coverage requires that the insured be negligent before it will pay out?

A

Liability

34
Q

What is a peril?

A

An event that may cause a loss to occur

35
Q

What is risk? What type of risk can be insured?

A

Risk is the chance of a loss. Only pure risk can be insured.

36
Q

What is reinsurance?

A

Insurance companies taking out insurance on what they insure

37
Q

What is a rate?

A

A price of a unit of insurance.

38
Q

What three types of policies require statutory conditions?

A

Accident, sickness, auto and fire

39
Q

Who is the first party and who is the third party in a contract of insurance?

A

First party is the insured and the third party is anyone else involved in claiming from the insurance contract

40
Q

What is time on risk?

A

The length of time in days that the policy has been in force

41
Q

What is tort? What does it usually result in?

A

A tort is a legal wrong done against another and it usually results in the injured party sueing the person who caused their injury

42
Q

What is the unearned premium reserve fund?

A

A fund to guarantee an insurer’s unearned premium as of any given valuation date

43
Q

What does a valued policy do?

A

It guarantees the amount set out in the policy

44
Q

What is the difference between vacant and unoccupied?

A

Intent to return

45
Q

What occurs when a policy is made void?

A

It is treated as if it never existed, cancelled back to inception date and all premium is returned

46
Q

An insurance policy will pay the lesser of these three things?

A

Actual Cash Value, Insurable Interest, Policy Limit

47
Q

When does an insurance policy expire?

A

12:01am of the date stated

48
Q

What is an example of a contract of compensation?

A

A Life Insurance Policy

49
Q

What is necessary when determining what name an insurance policy will be set up in?

A

The owner of the property of vehicle, whether it be a person or an organization

50
Q

What is a Writ?

A

A notice that someone is being sued

RIBO (5 decks)

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