Section 2.3 - 2.4 Flashcards

1
Q

Insurer as principal refers to

A

the situation where an insurance company is the main party that engages in the business of insurance.

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2
Q

Express authority is

A

authorities written in an agent contract

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3
Q

Implied authority is

A

authorities not written in a contract, but tasks agents must preform.

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4
Q

Apparent authority is

A

tasks the agent does that a reasonable person would assume as authority

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5
Q

Law of Agency

A

the knowledge of the agent is assumed to be the knowledge of the principal, therefore the principal is liable for the statements/actions of their agents.

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6
Q

Law of Agency - define agent

A

The person authorized to act of behalf of another.

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6
Q

Law of Agency - define principal

A

The person on whose behalf the agent acts

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6
Q

Law of Agency - define agency

A

a relationship where one person is authorized to represent and act for a person/corporation

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6
Q

CLOAC

A

Consideration, Legal Purpose, Offer, Acceptance, Competent Parties.

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6
Q

What is a Fiduciary

A

a person in a position of financial trust

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6
Q

CLOAC - Consideration

A

exchange of value, premium payments

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6
Q

Legal Purpose

A

assuring risk transfer won’t violate the law

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6
Q

CLOAC - Offer and Acceptance

A

O - a proposal made by one of the parties to the contract
A - unconditional and unqualified

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7
Q

What is a Contract of Adhesion

A

Adhesion (glue)
insurance provisions are written by one party, and the other party is required to ADHERE to the contract.
a contract is written with no input from the insured

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7
Q

CLOAC - Competent Parties

A

applicants must be of legal age, sane, sober.

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7
Q

What are the characteristics of an insurance contract?

A

Adhesion, Aleatory, Utmost Good Faith and Reasonable Expectations, Unilateral, Personal, Conditional, Indemnity, Representations, Misrepresentations, Warrenties

7
Q

What is an Aleatory Contract

A

The value received from the contract of each policy is unequal
- you can pay a small premium and have a large loss, or you can pay premiums for many years without having a loss

7
Q

What does Personal Contract mean

A

Contracts are nontransferrable

8
Q

What is a unilateral contract?

A

Insurance contracts are one sided
the insured may abandon the insurance contract at anytime
the insurer is required to pay for losses

9
Q

What is a Conditional Contract?

A

an insurance contract may be voided / a claim will not be paid if the insured does not pay premiums / provide required documents on a loss

10
Q

What is Indemnity?

A

Restoring an insured to their pre loss state.
No more, No less

11
Q

What is a Representation

A

A statement that an applicant believes to be true

12
Q

What is a Misrepresentation

A

A statement that is false, may not void the contract

13
Q

What is Material Misrepresentation?

A

False information that was a determining factor in the insured’s decision to write a contract, will void a contract

14
Q

What is a warranty?

A

A promise, breach of warranty may void a contract.

15
Q

What is concealment

A

failure to disclose known facts, if intentional a contract will be voided, if unintentional it may or may not be voided

16
Q

What is a waiver

A

Intentionally and voluntarily giving up a known right

17
Q

What is Estoppel

A

once a waiver has been created it cannot be changed or used against the opposing party

18
Q

What is Fraud?

A

an intentional act to deceive / cheat another party.