Study 2 - Sales - Key Terms

Question 1

policy

Answer 1

Legally binding contract effecting insurance or certificates thereof, including all clauses, riders, endorsements, and renewals.

Question 2

insured

Answer 2

Any person (including a corporation covered by an insurance policy. In some policies, the term may be defined exhaustively to limit the coverage or defined broadly to expand coverage.

Question 3

exposure

Answer 3

The hazard threatening a risk because of external or internal physical conditions.

Question 4

indemnity

Answer 4

A contract, expressed or implied, to repay in the event of a loss. The insured neither gains nor loses.

Question 5

Personal Information Protection and Electronic Documents Act (PIPEDA)

Answer 5

A federal statute that governs the collection and use of personal information. It states that personal information to be collected must be relevant, and that all information that has been collected, is being collected, or will be collected must be held in the strictest confidence.

Question 6

expiry date

Answer 6

The date on which a policy ends.

Question 7

moral hazard

Answer 7

A hazard arising from the character, interest, habits, and lack of integrity of the insured or person concerned.

Question 8

broker of record

Answer 8

The broker currently receiving a commission to handle a policy.

Question 9

peril

Answer 9

The event that caused a loss covered by the policy; for example fire, windstorm.

Question 10

risk management

Answer 10

Analyzing a risk to quantify the potential for losses in a specific investment and to decide what is the appropriate action to take (or whether or not to take action).

Question 11

hazard

Answer 11

1. A risk or probability that the event insured against might occur.
2. A condition that engenders or increases the changes of a loss.

Question 12

physical hazard

Answer 12

A hazard arising from the physical condition or characteristics of the object that is insured.

Question 13

morale hazard

Answer 13

A hazard that is based in the insured’s attitude toward the insured belongings. The hazard exists when the insured no longer cares about the possessions because they are insured.

Question 14

burglary

Answer 14

Unlawful removal of property from premises involving visible forcible entry.

Question 15

theft

Answer 15

The wrongful taking of the property of another. It is a broad term and includes larceny, pilfering, holdup, robbery, and pickpocketing.