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(Re-insurnace) When one insurance company transefers risk to another company, this process is called?
What kind of re-insurance is done policy by policy?
What kind of re-insurance is done by class?
- Non Participating
- Stockholders own it
- Stockholders benefit by way of dividends
- It does not pay dividends to policyholders
- ...For the benefit of the policyholders nobody really owns it.
- Dividends to policyholders
- Dividend is NEVER guaranteed
- Clubs or organizations that offer insurance.
- Offer ONLY to its members
- Knights of columbus....
- Retain Risk
- Basically, if you have the money, a really high deductable. So much moeny you will cover before the insurance company starts to pay out on a loss.
Risk Retention Groups
- Group self insurance.
- Must be in same line of work
- No one company is large enough to self insure so they go in together.
Doctrine of Utmost good faith
Both parties rely on the good faith in one another otherwise the contract will not work.
Doctrine of Reasonable Expectations
If my house is burnt down I can REASONABLY EXPECT that the insurance company will do something to compensate me for my loss based on the terms in the contract.
Contracts of adheasion
Non negotiable, take it or leave it. Ambiguious statements are ruled in favor of the insured.
Required Elements of a Contract (5)
- Offer - Offer Coverage
- Acceptance - Agreement to accept Coverage
- Consideration - Something of Value (Premium and Ins. Co. promise)
- Competant Parties - No minors, intoxicated people, or insane people
- Legal Purpose- enforcable by law by being legal
3 pairs of 2
- Warranty- Absolute literal truth usually notorized
- Representation- True to best knowledge and belief
- Misrepresentation- a lie. false statement of material fact
- Concealment- Hiding the truth or telling partial truths. Lies of omission.
- Intentional- on purpose
- Material - something needed for contract
- The "lies" must have both intentional and material factors to effect policy.
the result of a lie. The intentional act of deception to benifit financially ast the expense of another.
Someone who is responsible for the financial affairs of another. Someone who holds anothers money
a document that when signed states one knowingly gives up rights that they have.
- Not a policy but temporarily instates coverage.
- Binder does not have to be in writing.
Binder Question 2. Ways in which a binder can expire.
- Own expiration date
- Policy issue date
- Day after notice of cancellation is recieved
Distinct Characteristics of an insurance policy
- Personal Contract - Personal in nature (special)
- Conditional - If, then statements
- Unilateral - only one party does the promising
- Aleatory - one party many obtain a far greater value than the other.
- Adhesion - The company wrote it, take it or leave it.
Parts of a Policy (DICE)
- Declarations - limits
- Insuring Agreements - promises
- Conditions - ground rules
- Exclusions - not covered
Law of Large Numbers
premium is based on statistics from a large group of homogeneous (similar) risks
Fair Credit Reporting Act.
- Cannot get credit report w/o consent of insured
- If turned down because of something in report you must tell client
- you do not have to give your copy but you do have to tell them where you got it from.
- negitive info stays for 7 years
- bankruptcy 10 years
- consumers can question validity
Powers of the Agnecy
- Agent- a legal representative of the company
- Agent Extentds Colmpanies Liability- your words and actions are the companies
- Agents knowledge - Your knowledge is the companies knowledge
Agent Authority - Expressed vs. Implied vs. Apparent
- Expressed - Specifically granted to you in your agency agreement
- Implied - Powers that arent specifically stated but are implied that you have so you can do your job
- Apparent - between you and your customers, they believe you have the power to act in ways as a representative of your company