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Flashcards in Chap2 Deck (38):
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What are the 5 principles of insurance?

1) Principle of indemnity
2) incurable interest
3) reasonable expectation
4) subrogation
5) utmost good faith

1

Principle of indemnity

The individual is restored to the same financial position as before the loss

2

Insurable interest

The insured loss must have a financial impact on the insured

3

Reasonable expectation

The insurer will provide the agreed upon coverage for the expected loss

4

Subrogation

If the damage is caused by negligence of a third party, the insurer has right to recover its loss from said third party

5

Utmost good faith

No intentional misleading or withholding of critical information

6

What are the 4 basic characteristics of an insurance contract?

1) pooling of loss
2) loss must be fortuitous
3) transfer of pure risk
4) indemnification of pure losses

7

Contract (law)

Agreement between 2 parties that can be enforced in a court of law

8

5 elements of a valid contract

1)Offer and and acceptance
2)Consideration
3)Legal objective
4)Competent parties
5)Intention to create legal relationship

9

Offers and acceptance (insurance contract)

The offer is made by the person who wants to buy the insurance

10

Consideration (insurance contract)

In the case of an insurance: premiums. A life insurance is not valid until the insurer has received the first premium

11

Legal objective (insurance contract)

For a contract to be binding the purpose of the contract must be legal

12

Competent parties (insurance contract)

A contract involves a meeting of the mind for which all parties must be able to consent

13

Negligence

Failure to exercise standard of care

14

Standard of care

Care required of a reasonably prudent person

15

4 elements of negligence

1) duty of care
2) failure to perform that duty
3) proximate cause
4) damages

16

4 defences against negligence

1) contributory negligence
2) comparative negligence
3) last chance rule
4) assumption of risk

17

Contributory negligence

The insured person's conduct falls bellow the standard of care for their protection and contributed to the injury

18

Comparative negligence

Both injured and injuring party share damages

19

Last chance rule

The injuring party had a last clear chance to avoid the accident but failed to do so

20

Assumption of risk

The person recognize and understand the danger inherent to a particular activity

21

Imputed negligence

Negligence resulting for a party's special relationship with the original negligent party

22

6 imputed negligences

1)Employees employer relationship
2) vicarious liability
3) family purpose doctrine
4)joint venture and partnership
5) dram shop law
6) Res ispa loquitur (the thing speaks for itself)

23

Tort law

Civil wrong or injuries either intentional or by negligence

24

2 conditions under which a contract can be voided

-discharge
-voidable or unenforceable contract

25

4 reasons for a contract to be discharged

1) performance
2) agreement
3) frustration
4) breach

26

6 reasons a contract may become void or voidable

-mistake
-misrepresentation
-concealment
-warranty
-Duress
-undue influence

27

Common mistake

Both parties make the same mistake

28

Mutual mistake

Each party makes a different mistake

29

Misrepresentation

One of the parties makes a wrong statement about some material element of the contract

30

Concealment

Hiding of material element that invalidate the contract

31

Warranty

A statement that is part of the contract and is guaranteed to be true in all respects

32

Duress

Using coercion and intimidation to force another person into a contract

33

Undue influence

A person in a dominant position deprives another person of an independent decision

34

Aleatory V commutative contract

Theoretically in a commutative contact the considerations are exchanged at the beginning of the contract and are of equal value. Insurance contract are aleatory

35

Bargaining V adhesion contract

There is no bargaining in an insurance contract

36

Unilateral V bilateral contract

In a unilateral contract such as an insurance contract, only one party makes a legally enforceable promise that can't be canceled by that party

37

9 elements of an insurance policy

1) declaration
2) definitions
3) insuring agreement
4) exclusion and restrictions
5) conditions
6) miscellaneous provision
7) endorsement and riders
8) deductible
9) co-insurance requirement