First Section Flashcards
What is insurance ?
A contract in which one party [insurance company] agrees to indemnify [reimburse] the insured party against loss
What is risk?
chance of a loss occurring
Pure risk- situations resulting in a loss or no change
Speculative risk- involves opportunity for either loss or gain
Example: gambling
What are the 3 types of hazards?
Physical - material , structural, or operational features
Moral - fraud claims
Morale - “I won’t fix this because If it breaks insurance will cover me
What is peril and the 4 types?
Causes of loss insured against in an insurance policy
Life insurance - financial loss due to premature death
Health insurance - against medical expenses or loss of income due to sickness or injury
Property insurance- physical damage or loss of income producing abilities
Casualty insurance - damage If property resulting in liability
What are the 5 elements of insurance risk?
Due to chance - loss that is outside of the customers control
Definite and measurable - a loss that is specific to a cause , time , place , and amount. Determine how much it will be and when it becomes payable
Statistical predictability
Not catastrophic - insurers need to be reasonably certain their losses won’t exceed specific limits
Randomly selected and large loss -
Large pool of the insured that represents random selection of risks such as age, gender, occupation , health and economic status and location
What is the difference between an authorized/ admitted insurer
Vs
Unauthorized/non admitted insurer
Authorized/ admitted- insurers who meet the states financial requirements and are approved to transact business in the state
Unauthorized/ non admitted- not been approved to do business in the state
What is the difference between domestic , foreign , and alien insurance companies ?
Domestic - incorporated in this state
Foreign- incorporated in another state or territorial possession
Ex. California would be foreign to NY
Alien- outside of the US
What are the 3 types of agent authority?
Implied - not expressed or written into contrary
Apparent- aka perceived , assumption of authority based on words or actions
Expressed - authority a principal intends to grant to an agent by means of the agents contract
What are the 4 elements of an insurance contract?
ACCL
Agreement
Consideration
Competent parties
Legal purpose
What does indemnify mean?
Or reimbursement , states that in the event of a loss , an insured or beneficiary is permitted to collect only to the extent of the financial loss
Ex. House burns down .. policy is for 200k but only 150k needed in damages. Granted 150k instead of 200
How does representation differ from warranty ?
Representations are statements believed to be true but aren’t guaranteed to be true
Warranty is an absolute statement upon which the validity of the insurance policy depends
What is fraud in insurance
Give a few examples
For any person engage in the business to willfully , with the intent to deceive , make any oral or written statement that contains either false statement or omissions of material fact.
False material statements , acting as an officer director or agent caught embezzling funds
What is a 1033 waiver?
Residents in massachusetts with felony can apply for licensing with this waiver
