A contract in which one party agrees to idemnify the insured party against loss.
Situation that can only result in a loss or no change.
Involves opportunity for loss or gain, for example gambling.
Not insurance risks
Unit of measure used to determine rates charged for insurance coverage.
A large number of units have the same or similar exposure to loss is known as this.
A condition that increases the probability of an insured loss occurring.
Individual characteristics that increase the chances of the cause of loss. They exist because of a physical condition, past medical history, or a condition at birth.
Tendencies towards increased risk. Involve evaluating the character and reputation of the proposed insured.
Similar to Moral risks, except that they arise from a state of mind that causes indifference to loss, such as carelessness.
The reduction, decrease, or disappearance of value of the person or property insured in a policy, caused, by a named peril
Eliminating exposure to a loss
The planned assumption of risk by an insured through the use of deductibles, copays, or self-insurance.
Method of dealing with risk for a group of individual persons or businesses with the same or similar exposure to loss to share the losses that occur with in the group.
Ways to lessen the possibility or severity of a loss.
The insuring of risks that are more prone to losses than the average risk
Law of Large Numbers
This law states the larger the number of people with a similar exposure to loss the more predictable the actual losses will be
Insurance companies owned by stockholders who provide the capital necessary to establish and operate the insurance company and who share in any profits or losses.
Insurance companies that have no capital stock, but are owned by the policyholders
Fraternal Benefit Societies
An Organization formed to provide insurance benefits for members of an affiliated lodge, religious organization, or fraternal organization with a representative form of government.
Organizations that provide support facilities for underwriters or groups of individuals that accept insurance risk
Insurance resulting from an interchange of reciprocal agreements of indemnity among persons know as subscribers collectively known as Reciprocal Insurance Company or Exchange.
Risk Retention Group
A liability insurance company owned by its members. Purpose of Risk retention groups is to assume and spread all or part of the liability of its group members
Organized and owned by a corporation or firm to serve the parent organization's insurance needs at lower rates than other insurers and without the uncertainties of commercial insurance
Admitted or Authorized
An insurance company that has qualified and has received a Certificate of Authority from the Department of Insurance to transact insurance in that state
Certificate of Authority
A license from the State Department of Insurance that states an insurance company has the power to write insurance contracts in the state
An insurance company that is incorporated in this state.
An Insurance company that is incorporated in another state or territorial possession
An Insurance company that is incorporated outside of the United States
A contract under which one insurance company (The reinsurer) indemnifies another insurance company for part or all of its liabilities
The authority a principal intends to grant to an agent by means of the agent's contract. It is the authority that is written in the contract
Authority that is not expressed or written into the contract but which the agent is assumed to have in order to transact the business
Aka perceived authority. The appearance or the assumption of authority based on the actions, words, or deeds of the principal because of circumstances the principal created.
An agreement between two or more parties enforceable by law
Something of value that each party gives to the other
Contract of Adhesion
A contract that is prepared by one of the parties (insurer) and accepted or rejected by the other party (insured)
The exchange of unequal amounts
Only one of the parties to the contract is legally bound to do anything
A contract that requires that certain conditions be met by the policyowner and the company in order for the contract to be executed, and before the party fulfills its obligations
To restore the insured to the same condition as prior to loss with no intent of loss or gain
Utmost Good Faith
This implies that there will be no fraud, misrepresentation, or concealment between the parties.
Statements believed to be true to the best of one's knowledge
Statement that if discovered would alter the underwriting decision of the insurance company
An absolutely true statement upon which the validity of the insurance policy depends
The legal term for the intentional withholding of information of a material fact that is crucial in making a decision
The intentional misrepresentation or intentional concealment of a material fact used to induce another party to make or refrain from making a contract, or to deceive or a cheat a party
The voluntary act of relinquishing a legal right, claim or privilege
A legal process that can be used to prevent a party to a contract from re-asserting a right or privilege after that right or privilege has been waived. Estoppel is a legal consequence of a waiver