Study 2: Underwriting the Risk: An Overview - Key Terms Flashcards
Utmost good faith
A legal principle calling for the highest standards of integrity on the part of the insured and the insurer.
Telematics
An interdisciplinary field with telecommunications, vehicular technologies, road transportation, road safety, electrical engineering (sensors, instrumentation, wireless communications), and computer science (multimedia, Internet, GPS).
Contra proferentem
A legal term that provides that any ambiguity in a contract must be interpreted against the person who drew the contract because that person had the opportunity to make it clear.
Consideration
The value received to bind a contract. It is an essential part of a binding contract. Consideration is either expressed or implied. The money, or whatever is being used in substitution of money, paid for the article or contract is “the consideration.”
Contract
An agreement or promise between two or more parties that is intended to be legally enforceable and is constituted by the acceptance by one party of an offer made by another party, to do or to abstain from doing a specific act. The offer and acceptance may either be expressed or be inferred through the conduct of the parties.
Actual cash value (ACV)
The fair market value of property, taking into account factors that might augment or reduce the value of the property in question. Actual cash value (ACV) is usually calculated in one of three ways: (1) cost to repair or replace less depreciation; (2) fair market value; or (3) consideration of all relevant evidence of the value of the damaged property.
Indemnity
A contract, expressed or implied, to repay in the event of a loss. The insured neither gains nor loses.
Statutory conditions
Special prescribed and standardized conditions that the provincial and territorial insurance acts require to be included in insurance policies.
Subscription policy
A single policy covering a risk that is divided among a number of insurers; the policy is issued by the “lead” company (usually the one with the largest percentage) and signed by all participating companies.
Insurable interest
An interest that the insured must have in the subject matter of the insurance purchased so that if the event insured against occurs, the insured will suffer an economic loss.
Policy conditions
Provisions that state the rights and duties of the insured or insurer.
Replacement cost clause
A provision, generally in property insurance coverage, to provide a substitute of the damaged or lost property with something similar, including having the same use but not necessarily identical to the property being replaced, without extra cost to the insured.
Contract of adhesion
A type of contract that is effectively non-negotiable because one party drafts the policy wording or offers a standardized contract wording.
Declarations
Statements included in a policy that are agreed to by the insured and form the basis of the contract of insurance.
