RIBO - Principles and Practices Flashcards
Who owns a mutual insurance company?
The Policy Holders
What did factory mutual companies specialize in?
Fire Risk Management
How often will a policy with an occurrence limit pay out claims?
Every time a loss occurs
What is the difference between an agent and a broker?
Agent- One Company. Broker- Multiple Companies.
What is the difference between cash value and replacement cost?
Actual Cash Value- Replacement cost less depreciation
Replacement Cost- is the cost of the item at the time of loss without depreciation
What is a Bailee?
Someone in the care custody of someone else’s property.
What are the four reasons a properly insurance policy may be automatically assigned?
Bankruptcy, Death, Operation of Law, and Succession
What is binding authority and who grants it to a broker?
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
What is binding authority and who grands it to a broker?
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.
What are the three elements necessary for a contract of insurance only?
Utmost Good Faith, Indemnity, and Insurable Interest
What is a claim reserve?
Once a claim reported, insurers are required to put money aside to pay the claim.
To whom are the rights of subrogation granted once a claim if paid?
The Insurance Company
What value is depreciation taken off in the settlement of a claim on an actual cash value basis?
It is taken off the replacement cost of the item at the time of the loss
Is proximate cause the last event that occurs and causes a loss?
No. It is the immediate and effective cause of the loss but not necessarily the last in a chain of events.
What is earned premium?
The premium that is used up while unearned premium is the premium that has not yet been used up yet.
What does exclusion mean?
Not Included
What type of refund is required when an insurer cancels an insurance policy?
Pro Rata
What type of refund is required when an insured cancels his insurance policy?
Short Rate
What is a franchise or disappearing deductible?
A deductible that no longer exists once the loss reaches a certain point
What is a material fact?
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
What is a misrepresentation?
A lie about a material fact?
What is a hazard?
A condition that may cause a loss to occur
What are the two types of hazards?
Physical and Moral
When is the principle of general average used?
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
