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EXAM FAM: Qualitative > S1: Intro and Automobile > Flashcards

S1: Intro and Automobile Flashcards

1
Q

Insurance Mechanism (2 main components)

A
  1. Law of Large Numbers
  2. Decrease Marginal Utility
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2
Q

Law of Large Numbers

A

As observation increase, average of results should converge to expected value

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3
Q

Decreasing Marginal Utility

A

As extra unit of income added, utility or satisfaction derived from units decrease

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4
Q

Risk Adverse

A

Tendency when faced with two scenarios to choose less risky one. Pay more than expected loss as utility gained from not incurring loss

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5
Q

Insurable Risk (6)

A

Economically Feasible
Economic value calculated
Loss is definite
Loss is random
exposures homogenous
Exposure units spatial and independent

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6
Q

Anti Selection

A

policyholder knows more information and withholds from insurer

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7
Q

Insurance Short Term Products

A

6-12 months, insure auto, property, homeowner, marine, workers comp, fire,

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8
Q

Insurance Long Term Products

A

year - decades till claim. Life Products: medical, dental, disability, life, vision and health

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9
Q

Automobile:
Section A
Section B
Section -
Section C

A

A: Third Party Liability
B: Medical Benefits
- : Uninsured and underinsured motorist
C: collision and other than collision

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10
Q

Section A:
Third Party Liability

A

indemnification (compensation) to third party (innocent) for accident

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11
Q

What if accident was intentional by insured or covered under workers compensation?

A

Insurance company will not pay

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12
Q

Section A:
Bodily Injury (TPLBI) and examples

A

cost associated with injuries of third party -> medical, funeral, emergency

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13
Q

Section A:
Property Damage (TPLPD) and examples

A

cost associated with repairs or replace property of third party ex car, house, lawn damages

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14
Q

Insured is sued…what is the process? What if insured is liable?

A
  • will provide legal defence for their insured if not settled before court
  • if liable insurance pays damages (compensation)
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15
Q

Section A:
Split limits
what is it written in
example 50/100/10

A
  • Liability limits are separated (policy limit of insurance paying out)
  • written in thousands
  • 50000 to person, 100000 to BI, 10000 to PD
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16
Q

What does automobile premium depend on (3)

A

rating factors, coverage limits, and deductibles,

17
Q

Section B: Medical Payments are payments to….

A

Payments to insured, not third party

18
Q

Section B: Medical Payments
Other names for section B

A

Medical Payment (MP), Personal Injury Protection (PIP), Accident Benefit (AB)

19
Q

Section B: Medical Payments
What name do we used in Canada?
What name is no fault system?

A

Accident Benefit
Personal Injury Protection

20
Q

Section B: Medical Payments
At-Fault (Tort)

A

insured party is required to prove other party is at fault to receive compensation

21
Q

Section B: Medical Payments
At-Fault (Tort) - You at fault in accident or with injured then you are insured….

A

up to policy limit for section B and Property for C

22
Q

Section B: Medical Payments
At-Fault (Tort) - You are not fault in accident or with injured then your insurer…

A

covers expenses up to limit while obtaining compensation from at fault party

23
Q

Section B: Medical Payments
No-Fault
1. Definition
2. What is received?
3. what does insurer pay?

A
  1. Insured party doesn’t need to sue or prove other party is at fault to receive compensation.
  2. Personal Injury Protection received
  3. Pays their own policyholder damages
24
Q

Section B: Medical Payments ?
What system is used in Canada

A

No-Fault

25
Q

Section B: Medical Payments
Threshold no-fault

A

similar to no fault but if cost of injuries > policy limit, then injured party can sue at fault party for compensation

26
Q

Section B: Medical Payments
Government Monopoly etc MPI
what does the at-fault determine?

A

Government is sole provider of auto insurance.
Determines who pays deductible and new premium for at fault driver

27
Q

Section - : Uninsured and Underinsured Motorist Coverage

A

protects insured and family members from unidentified, underinsured or uninsured motorists in case of accident

28
Q

Section - : Uninsured and Underinsured Motorist Coverage

How is insured covered

A

covered by their own insurer for amount that liable motorist is personally responsible for

29
Q

Section C: Collision and Other than Collision:
Collision

A

indemnifies insured if covered auto is damaged by colliding with object, vehicle or person

30
Q

Section C: Collision and Other than Collision:
Collision Limit - Insurer pays (cheapest of)

A
  1. loss to insured
  2. cost to repair/replace vehicle
31
Q

Section C: Collision and Other than Collision:
Other Than Collision (OTC)

A

Damage to vehicles by other perils etc hail, theft, fire, vandalism

32
Q

Section C: Collision and Other than Collision:
What is not included in OTC

A

War, Wear and Tear, Nuclear

33
Q

Section C: Collision and Other than Collision:
Comprehensive Coverage

A

Coverage provided for all perils not collision and ones excluded

34
Q

Section C: Collision and Other than Collision:
Specified Perils

A

Coverage provided for specific perils listed on the policy

35
Q

Factors not included in OTC

A

Claim History, Use of vehicle, age, gender, marital status

36
Q

Subrogation

A

ability of insurer to assume their insured rights to sue an at fault party to recover indemnification costs

37
Q

Subrogation Benefits (2)

A

lower premium for collision, raise premium for liability,

38
Q

Salvage

A

Insurer must indemnify full value of vehicle, insurer has right to salvage components to recover remaining value.

39
Q

When is a car written off

A

cost to recover > value of vehicle

EXAM FAM: Qualitative (19 decks)

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