ch.2- Insurance contracts Flashcards
1
Q
3 major categories of risk (PPL)
A
- personal risk (health/life)
- property risk (property lost/damaged)
- liability risk (persons actions)
2
Q
4 options of dealing with risk (CART)
A
- Controlling
- Avoidance
- Retention
- Transfer
3
Q
controlling risk
A
- taking measures to reduce frequency/severity of losses
- reduces/mitigates risk
4
Q
Avoidance of risk
A
not practical
5
Q
Retention of risk (incl deductible)
A
- retention/self insurance
- less expensive (premium?)
- few ppl can afford to finance own losses
- deductibles: partial retention of risk
6
Q
Transfer of risk
A
- transfer all/some risk
- most popular option
7
Q
types of risk (2)
A
- speculative risk
- pure risk
8
Q
speculative risk
A
- chance of financial loss/gain
- NOT insurable
9
Q
Pure risk
A
- Chance of financial loss only
- no gain
- INSURABLE
10
Q
contract
A
agreement btwn 2 or more ppl enforceable by law
11
Q
5 elements of Common law contracts
(A Cool Cat Gets Lucky)
A
- Agreement
- Consideration
- Legality of object
- Legal capacity of parties
- Genuine intention
12
Q
3 ADDITIONAL essential elements to insurance contracts
(In It’s Underwear)
A
- Insurable Interest
- Indemnity (Salvage,Subrogation, Contribution)
- Utmost good faith
13
Q
Status of contract where essential elements missing
A
- void
- voidable
14
Q
Void
A
Unable in law to support purpose which it was inteded
as if it never existed
15
Q
Voidable
A
void to wrongdoer, not the wronged
