Definitions CIP Flashcards
(96 cards)
1
Q
Insurance
A
A contract where one party, for monetary consideration, agrees to reimburse the other party should the other party suffer a loss.
2
Q
Underwriter
A
An individual with the authority to accept risk and invest shareholder capital, or reject risk for the business, depending on what the company is prepared to underwrite.
3
Q
Risk
A
A chance of loss.
4
Q
Direct Writer
A
This is the insurance company selling directly to the public, not going through agents or brokers.
5
Q
Broker
A
A licensed individual or firm, that acts on behlf of the insured to conduct business with the insurance company.
6
Q
Managing General Agent (MGA)
A
A business given authority to solicit business on their behalf.
7
Q
Line Guide
A
A listing of maximum amounts of exposure an insurance company is prepared to accept on various class of risk.
8
Q
Schedule Of Insurance
A
List of items individually covered by a policy.
9
Q
Cyber Risk
A
Loss by way of a company’s information technology systems.
10
Q
Facultative Reinsurance
A
Reinsurance of risk on a case by case basis.
11
Q
Reinsurance
A
Insurance for insurance companies. Insurance purchased by a insurance company from another insurance company to provide protection against large losses on cases it already has insured.
12
Q
Treaty
A
Reinsurance where the insurer automatically agrees to a portion of the company’s class or classes of business.
13
Q
Book Of Business
A
The list of clients or accounts managed by a company.
14
Q
Pure Risk
A
A situation where there is a chance of loss or no loss. Insurable because predictable.
14
Q
Speculative Risk
A
A situation where there is a chance of loss or gain. Non-insurable.
15
Q
Moral Hazard
A
An increased chance of a loss due to a person’s character, habits, interests or lack of integrity.
15
Q
Insurer
A
The insurance company that undertakes to indemnify for losses and perform other insurance related operations.
16
Q
Physical Hazard
A
Physical conditions or characteristics of an insured object that increase the chance of a peril.
17
Q
Contra Proferentem
A
Ambiguity in a contract will have disputes relating to it awarded to the insured.
18
Q
Contract Of Adhesion
A
A non negotiable contract that one party has drafted alone, or contract with standardized wording.
19
Q
Statutory Conditions
A
Standardized conditions put in place by the federal government.
19
Q
Replacement Cost Clause
A
A clause to replace the damaged or loss property with something similar with no extra charge to the insured.
20
Q
Actual Cash Value
A
The fair market value of the insured property, taking into consideration factors that may increase or decrease its value.
21
Q
Contract
A
An agreement between two or more parties, agreeing to do or not do something. It is legally binding and can be offered or accepted through expression or implied by the conduct of the parties.
22
Consideration
Can be implied or expressed, and is the promise given in exchange for something in return. The something is the consideration and can be money or whatever is being used in substitution of money.
23
Telematics
Interdisciplinary study of computer science, vehicular technologies, telecommunications etc.
23
Utmost Good Faith
Operating at the highest standards of integrity.
23
Insurable Interest
Is the financial interest that the insured has on the property being insured. They would be impacted by the loss of this property and have a interest in having it continue to exist.
24
Indemnity
A contract to repay in the event of a loss.
24
Declarations
Statements in the policy that are agreed to by the insured.
25
Application
A request by an insured for insurance. May be done verbally, in writing or online. The insured provides information relating to the subject for insurance. The insurer then assesses this information and decides whether to accept the risk for insurance and on the terms of such acceptance.
25
Personal Lines Insurance
Insurance for individuals and families, such as private passenger auto insurance and homeowners’ policies.
26
Subscription Policy
A single policy that is divided among a number of insurers.
26
Policy Conditions
States the rights and duties of the insured and insurer.
27
Homeowners Policy
A multi-peril insurance policy for dwelling risks, combining coverages for fire and extended coverages, including theft and liability.
27
Additional Insured
A person other than the named insured who is protected by the terms of the policy. The additional insured may be named or unnamed.
27
Business Insurance
A broad name for different coverage available to a business owner to protect against losses and to insure the continuing operation of the business. Business insurance includes business property, life, accident, and sickness including that for key employees, liability, and fleet of automobile.
27
Named Insured
The person or party designated in the policy as the insured, who has certain rights under the policy, as opposed to someone who may be covered by the policy but is not specifically named and does not have the same rights as the named insured.
28
Additional Named Insured
Any party, other than the original insured, identified as an insured in the policy declarations. An additional named insured has more rights under the policy than does an additional insured but also more responsibilities.
29
Back Dated Policy
A policy that will become effective retroactively after the applicant applies for it.
30
Morale Hazard
A hazard that is based on the insured’s attitude toward the insured belongings. This hazard exists when the insured no longer cares about the possessions because they are insured.
31
Accommodation Sharing
An arrangement set up by means of a website or mobile app in which a property primarily occupied by its owner is rented for a short time period to a third party.
32
Subrogation
The legal right for an insurer to recover the amount of a loss from those who are legally liable, after the payment of a loss.
33
Hazard
a) a risk or probability that the event insured against might occur.
b) a condition that increases the chances of a loss.
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Common Hazard
A hazard that is generally found in most occupancies.
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Special Hazards
Hazards and risks common to certain types of businesses that are not covered in an ordinary policy.
35
Automatic Sprinkler
A device to protect property from damage by fire in which water is piped to devices called sprinkler heads that melt with heat and release water to extinguish a fire.
36
Liability Insurance
Insurance that agrees to indemnify the insured for sums he or she may be required by law to pay to third parties as damages for bodily injury or damage to property. The maximum amount of insurance provided under a policy of liability insurance.
37
Statute Law
A law set down in a government act and passed by legislature.
38
Tort
A legal wrong arising from a duty fixed by law. A breach of this duty that causes injury to persons or property is repressible by legal action for damages. Liability for tort involves a private or civil wrong or injury and is distinct from that under contract in that the duty is owed to people, generally, rather than to a specified individual.
39
Negligence
Failure to use the degree of care expected from a reasonable and prudent person.
40
Private Nuisance
An unlawful interference of a person's enjoyment and use of his or her land.
41
Duty Of Care
The obligation that a person has to exercise reasonable care with respect to the interests of others, including protecting them from harm.
42
Public Nuisance
An action or a thing that interferes with the general public. It interferes with the public as a class, not merely with one person or a group of citizens.
43
Nuisance
In law, a class of wrong that arises out of unreasonable, unwarranted, or unlawful use by a person of his or her own property, whether that property be real or personal or from his or her own improper, indecent, or unlawful personal conduct and producing an annoyance, inconvenience, discomfort, or hurt to others or to their property that the law would presume a consequential damage. In insurance claims, it is most frequently met as a cause of action, arising from the escape of some obnoxious substance.
44
Occupancy
The act of holding possession of a property or premises. The term implies the use of the building for the purposes described in the policy, and no other. An occupied building has furnishings and or people in it.
45
Trespasser
A person who wrongfully enters onto someone else's land with neither the right nor permission to be there.
46
Licensee
A person who has permission to enter a premises for his or her own purposes.
46
Invitee
A person who is expressly or impliedly invited onto the premises for some purpose involving economic or potential economic benefit to the occupier of the premises.
47
Hold Harmless Agreement
An agreement that allows one party to protect another party against any future losses or claims that may result from a particular activity. Also known as indemnity agreement.
47
Contractual Entrant
A person who enters onto premises under a contract with the occupier.
48
Indemnity Agreement
A written contract entered into between indemnitor and surety in which the indemnitor secures surety against loss the surety may sustain as a result of having issued a bond for a third party or for the indemnitor.
49
Employers Liability Insurance
Coverage for the legal liability imposed on an employer to pay damages to an employee injured by the employer's negligence. This is not workers' compensation insurance, where special acts of legislation set out specifically the relationship between the employer and employees in certain circumstances and the formula by which awards in each case are computed.
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Contributory Negligence
Many accidents are the partial fault of both parties who are involved in the accident. The plaintiff who sues another party for damages may also be guilty of some negligence, which is a concurrent cause of the damage, and is therefore guilty of contributory negligence.
51
Umbrella Policy
A special form of liability policy designed to protect the insured for certain unknown contingencies over and above other coverages and to provide excess insurance.
52
Facility Association
An entity established by the Canadian automobile insurance industry to ensure that automobile insurance is available to all owners and licensed drivers of motor vehicles where such owners or drivers are unable to obtain automobile insurance through the voluntary insurance market.
53
Lessor
One that conveys property by lease.
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Risk Sharing Plan
A self insurance method of managing or reducing exposure to risk by spreading the burden of loss among several units of an enterprise or business syndicate. Risk retention pools formed with the contributions of participants are often utilized as a way to self insure risks among multiple entities.
54
Lessee
One that holds real or personal property under a lease.
55
Lienholder
One who holds a registered claim against a given property as security or collateral against a loan or workmanship performed in relation to that property. The financial commitment associated with a registered lien must be fully discharged and satisfied before the property in question may be liquidated, sold, or transferred to another party.
56
Non Owned Automobile Insurance
A policy that protects the insured against third party claims arising out of some other person driving or using his or her own vehicle in the business of the insured.
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Other Automobile
A non owned automobile; that is, not owned by anyone in the household and does not have insurance coverage.
58
Canadian Loss Experience Automobile Rating (CLEAR)
A method for classifying different models of cars for insurance purposes by using historical claims data, including collision, comprehensive, direct compensation- property damage, and accident benefits coverages.
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Manufacturer's Suggested Retail Price (MSRP)
The price for a product as recommended by the manufacturer of that product.
59
Pure Premium
Portion of the total premium that is needed to pay expected losses. It does not take into account money needed for company expenses.
60
Acquisition Cost
The cost of putting business on the books and acquiring the premium. The items involved are not standard with all insurers, but generally may include such items as agents/brokers commissions, field representatives costs, premium tax, and perhaps some of the relevant head office costs of operation.
61
Commission
Compensation based upon the amount of production.
62
Underwriting Profit
The amount of money an insurance company gains as a result of its insurance operations. Excess of earned premiums collected over loss payments and expenses.
63
Ratemaking
The process of compiling and analyzing data to establish rates that accurately reflect the level of risk. Usually performed by actuaries.
63
Underwriting Loss
The amount of money that an insurance company loses as a result of its insurance operations. It excludes investment transactions and income taxes.
64
Premium
The price of insurance protection for a specified risk for a specified period of time.
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Actuary
One who specializes in the mathematics of insurance, mortality rates, and the like.
65
Schedule Rating
A method of rating risks by measuring them against fixed standards of construction and protection. Risks below standards earn a charge that increases the rate; risks above earn a credit that reduces the rate.
65
Rate
Amount charged to an insured that reflects the expectation of loss for a covered risk, insurance company expenses, and profit. In other words, it is the basis of premium calculation for the insurance provided for the exposure.
65
Loading
An additional charge included in an insurance rate to reflect a hazard not contemplated in the basic rate for the class.
66
Class Rating
A rating approach that uses rates that reflect the average probability of loss for business within large groups of similar risks; the predominant method used for rating commercial properties.
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Law Of Large Numbers
The mathematical premise that states that the degree of uncertainty is reduced as the number of events increases.
67
Loss Ratio
The loss ratio is the ratio of total losses paid out in claims plus adjustment expenses divided by the total earned premiums. Usually expressed as a percentage.
68
Automobile Statistical Plan (ASP)
A collection of statistical information that all automobile insurers who write business in Canada must record and file as prescribed by the superintendents of insurance. Commonly known as the Green Book.
69
Risk Management
Analyzing a risk to quantify the potential for losses in a specific investment and to decide what is the appropriate action to take.
70
Loss Reserve
An amount carried as a liability in an insurer's balance sheet representing, in respect of each claim, an amount equal to the estimated final settlement cost less any amounts already paid.
71
Product Recall Insurance
Insurance that indemnifies the insured for the cost of recalling products known or suspected to be defective.
72
Warranty
Statement of stipulation or promise in an insurance contract, the breach of which may nullify the contract.
73
Errors And Omissions (E&O) Insurance
An insurance form that protects the insured against liability for committing an error or omission in the performance of professional duties. Generally, such policies are designed to cover financial losses rather than liability for bodily injury or property damage.
74
Directors And Officers (D&O) Liability Insurance
Protection for officers and directors of a corporation against damages resulting from negligent or wrongful acts in the course of their duties. Also covers the corporation for expenses incurred in defending lawsuits arising from alleged wrongful acts of officers or directors. These policies always require the insured to retain part of the risk uninsured. Also called D&O liability insurance.
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