Term
| Define "Insurable Interest". |
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Definition
| People who are able to show that they would suffer financially by a loss are said to have this. |
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Term
| Define "Utmost Good Faith" |
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Definition
| A requirement of insurance contracts; implies complete honesty, concealing nothing. |
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Term
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Definition
| A required component of all insurance contracts, which attempts to reimburse insureds with the actual amount of their loss . . . no more, no less. |
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Term
| Identify 3 major categories of insurance needs. |
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Definition
i.) Personal risk
ii.) Property risk
iii.) Liability risk |
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Term
| Identify 4 options and insured may use in dealing with risk. |
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Definition
1. Avoidance of risk
2. Controlling of risk
3. Retention of risk
4. Transfer of risk |
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Term
| Which risk option is least practical? |
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Definition
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Term
| There are two types of risk. Identify them and provide a brief description of each. |
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Definition
Speculative Risk - involves the possiblility of financial loss or gain.
Pure Risk - involves the chance of financial loss, with no chance of financial gain. |
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Term
| Of Speculative Risk and Pure Risk, only one is insurable, which is it? |
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Definition
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Term
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Definition
| Agreement between two or more parties, enforceable by law. |
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Term
| Identify 5 elements required to be present in all contracts. |
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Definition
1. Agreement
2. Consideration
3. Legality of Object
4. Legal Capacity of the Parties to Contract
5. Genuine Intention |
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Term
| Identify 3 elements unique to insurance contracts, and which must be present for an insurance contract to be enforceable by law. |
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Definition
1. Insurable Interest
2. Utmost Good Faith
3. Indemnity |
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Term
| In the insurance business, it is common for brokers to "bind" an insurer on a risk. Explain. |
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Definition
Means that a broker has committed insurer to provide contract of insurance on subject matter under discussion with client (potential insured).
Can be a written or oral agreement. |
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Term
| Identify two document sources which brokers can refer to in order to determine the extent of "binding authority" given to them by an insurer. |
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Definition
1. Agency Agreement
2. Insurer's rate manual |
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Term
| Identify 3 types of insurance forms used by insurers to make changes to an existing policy. State the purpose of each form. |
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Definition
1. Endorsements or Riders - to acknowledge a change in the terms of the contract.
2. Floaters - to provide coverage for property having a high degree of mobility.
3. Separate policies - to provide additional coverages needed by insured. |
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Term
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Definition
| A written or oral agreement in which the broker has committed the insurer to provide a contract of insurance, on the subject matter under discussion with a potential insured. |
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Term
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Definition
| Said to exist where an unconditional acceptance of an offer has been made. |
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Term
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Definition
An exchange for something of value.
i.e. premium in exchange for insurance coverage. |
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Term
| Define "Legality of Object". |
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Definition
| When a contract insures property which is stolen, this element is said not to be present. |
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Term
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Definition
| Persons said to be competent to contract are said to have this . . . while a minor does not. |
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Term
| Define "Genuine Intention". |
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Definition
| Not affected by fraud, duress, concealment or mistake. |
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