Terms Unit 1-5

Question 1

Risk?

Answer 1

Possibility that a loss will occur.

Question 2

Speculative risk?

Answer 2

Possibility of loss with the possibility of gain…. Such as Gambling & investing

Question 3

Pure risk?

Answer 3

Possibility of expecting a loss, not a gain.
Chance of being in car accident is pure risk.
ARE covered on insurance.

Question 4

Peril?

Answer 4

Cause of loss.
Example: house burns down.. the peril is fire.

Question 5

Physical Hazard?

Answer 5

Factors that increase a chance of loss.
Examples: slick tires in car. Dead tree in yard with potential to fall & caused damage.

Question 6

Hazard?

Answer 6

Anything that increases the chance that a loss will occur.

Question 7

Moral?

Answer 7

Individuals character! Dishonesty; people who lack morals tend to LIE!

Question 8

Morale?

Answer 8

State of mind or careless attitude.
Change in persons actins or behaviors.
Example: leaving doors in locked… speeding… failing to stop at stop signs.

Question 9

Law of large numbers?

Answer 9

Principal that makes insurance possible.
The larger the group - the more accurate losses can be predicted

Question 10

Stock insurers?

Answer 10

Non participating company business formed as a corporation and owned by its stockholders. (Aldo’s know a as shareholders)?

Question 11

Mutual insurers?

Answer 11

Does not have stock it stock holders.
Owned by its policy holders/ policy owners.

Question 12

Home state… the state which the insurer was formed. State of domicile.

Answer 12

Domestic

Question 13

Another state or U.S. Territory insurer that was domiciled (domestic) in Texas would be?

Answer 13

Foreign

Question 14

Insurer formed under the laws of any country other than the United States & it’s territories. Such as Puerto Rico it Guam is?

Answer 14

Alien

Question 15

Person in a financial trust?

Answer 15

Fiduciary:
Agents have a fiduciary responsibility to applicants, insureds, & insurance company

Question 16

Refers to and exchange of value l… when you hear consideration think.. MONEY! money and statements made on an application.

Answer 16

Consideration

Question 17

Indemnity

Answer 17

Contract is intended to restore the insured to the financial state he or she enjoyed prior to the occurrence of a loss - no more, no less.
Gives the value of what you lost.

Question 18

Aleatory

Answer 18

Unequal value; value received from the contract by each patty he unequal. Pay a small premium & have large claim or pay premiums for many years without a claim.

Question 19

Warranty

Answer 19

Statement that is guaranteed to be true

Question 20

Failure to disclose known facts?

Answer 20

Concealment

Question 21

Intentional act to cheat another

Answer 21

Fraud

Question 22

Waiver

Answer 22

Voluntarily giving up a right.

Question 23

Estoppel

Answer 23

Once a waiver has been created it can not be changed.

Question 24

Declaration

Answer 24

Who, what, when, where, & how much.

Question 25

Promise to pay any perils covered

Answer 25

Insuring agreements

Question 26

Conditions

Answer 26

Rules for the policy

Question 27

Exclusions

Answer 27

Items not covered

Question 28

Pro rata

Answer 28

Method of preventing overpayment if a claim

Question 29

Subrogation

Answer 29

Transfer to the insurance company of the insured right if reviver against others.
Subrogation provisions may also be called transfer of right of recovery against others to us.

Question 30

Direct loss

Answer 30

A property loss caused by and unbroken chain of events covered under an insurance policy.
Living room furniture destroyed in a fire originating in the home is a direct loss

Question 31

Indirect loss

Answer 31

Comes as a result or consequence of the original loss; it is also mine and consequential loss. A loss of a business income caused by a fire(direct loss) is an example of indirect loss.

Question 32

Third-party losses

Answer 32

Occur when a person claims to have been injured by an insured, or when a persons property has been damaged by the insured claim.

Liability is third party claim

Question 33

Absolute/strict liability

Answer 33

Imposed by law in those participating in certain activities that are considered especially hazardous.
Animals and pets

Question 34

Vicarious Liability

Answer 34

When a person may be held responsible for the negligent acts of another person who has direct liability.
Such as your child.

Question 35

Liability
25/50/25

Answer 35

Limit per person/limit for all person in accident/property damage

Question 36

Body injury (BI)

Answer 36

Injury, sickness, disease, & death arising out of injury, sickness & disease l. <lost wages, medical bills, pain & suffering, & death>

Question 37

Damage to or destruction of property, including loss of use of the property (car not body)

Answer 37

Property damage (PD)

Question 38

Slander, libel, false arrest & invasion of privacy. <persons></persons>

Answer 38

Personal injury (PI)

Question 39

Contributory negligence

Answer 39

Doctrine says that if a person contributed to his/her own damage in any way, another party cannot be held liable for the damages

Question 40

Comparative negligence

Answer 40

Laws allow a finding of liability to be made even when both parties have contributed to the loss, with and award based in the extent of each party’s negligence.

Question 41

Proximate cause

Answer 41

The proximate cause of the Damage to the other persons car was the insured by swerving into the next lane. The loss would not have occurred if the insured would have stayed in her lane.