What Is Insurable Risk ,define These Terms Flashcards

Speculative risk is a feature of insurance. Not alll risks are insurable. Certain characteristics must be present for a particular risk to be concidered an isurable risk. A characteristic that might make a risk uninsurable is a(n) risk of loss that exists because of a catastrophic exposure. In the property and casuality insurance field, insurable interest must exist at the time the loss occurs. An insurer incorported under the laws of the state in which it is operating is considered to be a(n) insurer. domestic An insurance company owned by its policyowners, who receive a return of unused premiums in the form of policy dividends, is a(n) mutual company An available method for dealing with an exposure to risk is NOT the risk. ascertaining An agent's obligation to act in an insurance applicant's or insured's best interest, based on the faith and trust placed in the agent by members of the insurance-buying public, is known as a fiduciary duty. T or F - (An agency relationship between an insurance agent and insurer) An agent has unlimited authority over insurance matters within agency. false The authority of an insurance agent that is spelled out in the written words of the agency contract between the agent and the insurer is authority. express Under contract law, the actions of a party intentionally and voluntarily giving up a known right is a waiver. When a party appears to have given up a particular right, by acts or by inaction, that another party has relied on, the legal basis for asserting the original right may have been lost. This is known as the legal doctrine of estoppel. The element that is unnecessary for formation of a legally valid contract is signatures of each party. In the formation of a legal contract, each party must give something of value. Under contract law, this is referred to as consideration. Because an insurer writes the policy language and the insured has little or no control over the content, any ambiguityin the wording is usually resolved in favor of the insured; thus insurance policies are said to be contracts of adhesion. When an insurance applicant makes a statement on an application that becomes part of the contract and includes a promise by the insured, the statement is considered to be a representation. A group of individuals who band together to assume risks, where each individual is responsible only for the share of the risk that individual assumed, is known as Lloyd's Association. The uncertainty about loss that exists whenever more than one outcome is possible is called risk. Insurable interest exists only when a number of conditions are met. The applicant has an insurable interest if she does not share the interest with anyone else. T or F Insurance is a form of gambling because it may or may not pay off. False, Only pure risk is insurable, which is a chance of loss without any possibility for gain. Something that may increase the seriousness of a loss if loss occurs, or that increases the likelihood that a loss will occur, is called a hazard. An unincorporated group of people that provide insurance among themselves and is managed by an attorney-in-fact is a reciprocal insurer. Apparent authority of an insurance agent is the authority the public believes the agent has due to the acts of the insurer. Failure to disclose known facts when completing and insurance application is an act of concealment. In Property and Causalty and Medical-Expense Insurance, the principle of making someone "whole" again after a loss by paying only for actual losses is called indemnity.