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(Re-insurnace) When one insurance company transefers risk to another company, this process is called?
Re-insurance
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What kind of re-insurance is done policy by policy?
Facultative
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What kind of re-insurance is done by class?
Treaty
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Stock Companies
- Non Participating
- Stockholders own it
- Stockholders benefit by way of dividends
- It does not pay dividends to policyholders
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Mutual Companies
- ...For the benefit of the policyholders nobody really owns it.
- Dividends to policyholders
- Dividend is NEVER guaranteed
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Fraternals
- Clubs or organizations that offer insurance.
- Offer ONLY to its members
- Knights of columbus....
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Self Insurers
- 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.
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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.
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Doctrine of Utmost good faith
Both parties rely on the good faith in one another otherwise the contract will not work.
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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.
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Contracts of adheasion
Non negotiable, take it or leave it. Ambiguious statements are ruled in favor of the insured.
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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
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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.
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Fraud
the result of a lie. The intentional act of deception to benifit financially ast the expense of another.
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Fudiciary
Someone who is responsible for the financial affairs of another. Someone who holds anothers money
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Waiver
a document that when signed states one knowingly gives up rights that they have.
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Binder
- Not a policy but temporarily instates coverage.
- Binder does not have to be in writing.
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Binder Question 2. Ways in which a binder can expire.
- Own expiration date
- Policy issue date
- Day after notice of cancellation is recieved
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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.
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Parts of a Policy (DICE)
- Declarations - limits
- Insuring Agreements - promises
- Conditions - ground rules
- Exclusions - not covered
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Law of Large Numbers
premium is based on statistics from a large group of homogeneous (similar) risks
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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
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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
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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
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