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26 Cards in this Set
- Front
- Back
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risk |
chance of financial loss (to which)
object of insurance (is) exposed |
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(three) categories of risk
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personal
property liability |
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(four) ways to deal with risk
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avoidance
controlling retention transfer |
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avoidance (definition)
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eliminate all chance (of)
financial loss (rent vs. buy) |
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controlling (definition, 2 ex's)
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reducing frequency, severity (of losses)
(EX. intrusion detection equipment fire detection alarms) |
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retention (definition, 3)
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self-insurance
assuming financial responsibility for own loss share-risk deductibles only insuring certain types of losses |
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transfer (definition, for both insured and insurer)
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purchasing insurance
in exchange for premium insurer agrees to assume the financial responsibility for losses |
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(two ex's) of control measures taken to reduce frequency/severity of losses
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intrusion detection equipment
fire detection alarms |
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(two) reasons why loss control measures are not total solution in eliminating financial loss
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equipment will not work 100% of the time
certain types of losses (wind, hail, lightning) cannot be effectively controlled |
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Which of the ways people can deal with risk is not effective?
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avoidance
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which of the ways people can deal with risk is the most popular?
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transfer
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speculative risk (definition)
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possibility of both loss and gain (placing bet at blackjack table)
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pure risk (definition, 4)
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chance of financial loss
does not offer chance of financial gain no opportunity to profit from loss ex. your house burning down |
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speculative/pure risk - which will insurers not provide policy for?
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speculative
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(five) elements all contracts contain?
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agreement
consideration legality of object legal capacity genuine intention |
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agreement (definition)
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meeting of the minds
to subject matter, terms of contract first test of enforceability at law of any contract |
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consideration (definition, 3)
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exchange (of) something of value between parties
insured: payment of premium/promise insurer: promise to indemnify insured (return promise, act performed, agreement not to act) |
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legality of object (definition; 2, 3 ex's)
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must be legal and
not contrary to public policy (ex. no killing/maiming importing illicit drugs contract purchased on illegally acquired property payment of fraudulent claim) |
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legal capacity of parties to contract (definition, 2)
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legal capacity
competent |
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genuine intention (definition, 2)
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parties actually intended
to enter into contract |
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required for proper agreement/meeting of the minds, to be valid (2)
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offer made
unconditional acceptance of terms |
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is it necessary for the two items required for proper agreement (meeting of the minds) to be in writing?
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no
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obligation/time constraint upon applicant for insurance when policy issued differently than requested?
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courts may rule have accepted
if fail to promptly return policy to insurer |
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(4) persons/incompetents who do not have legal capacity
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minors
incompetents (mental) drugs, alcohol (under influence of) trade (names) |
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(three) "necessities" of life for which minors are permitted to contract
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food
clothing lodging |
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(four) items that might affect the presence of genuine intention
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fraud
duress (threats, etc.) concealment mistake |
