Caib 1 Chapter 1

Alexandra Clark
Flashcards by , created about 3 years ago

2 Caib Flashcards on Caib 1 Chapter 1, created by Alexandra Clark on 09/22/2016.

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Alexandra Clark
Created by Alexandra Clark about 3 years ago
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Question Answer
Risk Chance of financial loss to which an object of insurance is exposed
Speculative Risk The chance of financial loss or gain
Pure Risk The chance of financial loss but no chance of financial gain
Insurance The undertaking by one person to indemnify another person against loss or liability for loss in respect of a certain risk or peril to which the object of insurance may be exposed, or to pay a sum of money or other thing of value upon the happening of a certain event
Contract An agreement between two or more persons which creates an obligation to do or not do a particular thing
Consideration An exchange of something of value between parties
Insurable Interest One has an insurable interest in the subject matter of the insurance when they will suffer financially by a loss
Utmost Good Faith The law requires insurance contracts maintain a higher standard of honesty than is needed of other contracts(Applies to the insured the insurer and the broker)
Indemnity Application of the principle of indemnity ensures people receive the actual amount of their loss no more and no loss
Insurance Binder A temporary agreement in which the insurer agrees to provide certain coverage's pending the issuance of the policy
Agency Agreement A written agreement or contract between the insurer and the brokerage which acknowledges their relationship
Void Contract One which is unable in law to support the purpose for which it was intended such contracts are deemed never to have existed
Voidable Contract A contract that may be voided at the option of the wronged party only and not the wrongdoer
Peril The cause of a loss
Direct Loss A direct loss occurs when the peril insured actually attacks the object of insurance
Indirect loss Losses which arise as a consequence of a direct loss
ACV New or replacement cost of the property at the time of the loss, less depreciation
Replacement Cost The cost to repair or replace the lost or damaged property with new property of like kind/quality w/o deduction for depreciation
Valued Policy Both the insured and insurer agree at the time the policy is issued as to the cash value of the property. In the event of a loss the agreed amount would be paid
Blanket Coverage's Policy which provides a single limit of insurance for all property falling within a specific class
Scheduled Coverage Covered property is itemized on the policy
Fiduciary One who occupies a special position of trust or confidence in the handling or supervising of the affairs or funds of another
Unearned Premiums Premiums not yet earned by the insurer. Such premiums are deemed to be held in trust in order to refund the insured's in the event the policy is cancelled prior to expiry date
Fire Involves the presence of visible flame and glow actual ignition or burning is required
Friendly Fire A fire that is contained in its proper receptacle
Hostile Fire A fire that passes outside of the limits assigned to it Ex a spark thrown from a fireplace that burns a carpet
Proximate result Damage which arises from a natural or continuous sequence of the peril causing the loss
Material Change Is any change within the control and knowledge of the insured and which arises after the policy has been issued and serves to increase the chance of loss
Pro Rata Basis of return premium calculation when the insurer cancels a policy. the amount of the return premium is arrived at by dividing the amount of premium paid by the number of days in the policy period. the number obtained is then multiplied by the number of days remaining in the policy period
Short Rate The basis of return premium calculation when the insured cancels the policy. the amount of the return premium is equivalent to that provided on a pro-rata basis, less any administrative charge or cancellation penalty
Notice of loss Immediate report of loss to insurer by the insured or his representative in writing
Proof of loss A formal verification under oath of the details and amounts being claimed under the policy
Fraud is a deliberate attempt to deceive with a view to securing some profit
Deductible Represents the amount the insured is required to absorb for each loss for which insurance coverage is provided before receiving any payment from the insurer
Subrogation When the insurer has paid a claim for loss caused by a third party the insurance act allows the insurer to place itself in the insured's shoes in respect of their right to recover the amount of the loss from the responsible party
Proprietary Insurers Insurance companies which exist to make a profit or return on their investment
Non-proprietary Insurers insurance companies which are organized for reasons other than profit. they are owned and controlled by their policyholders and their mandate is to secure insurance at as low a cost as possible