Insurance
The transfer of risk.
Indemnity
To restore the insurance to the same financial condition as before the loss.
Risk
Unknown outcome or uncertainty of loss.
Pure risk
Only chance of loss, no chance of gain. (Ex. car or house.)
Speculative risk
Chance of loss or gain. (Ex. gambling or stock market.)
Direct loss
Direct damage to the item itself.
Indirect loss
An expense or loss of use, results from a direct loss.
Peril
The cause of loss (Ex. Fire, theft, lighting.)
Hazard
Anything that increases the risk.
Physical hazard
Something that is visible and that can increase the possibility of a loss. (Ex. Bad tires.)
Moral hazard
Morals or habits of an insured that may increase the chance of loss. (Ex. Dishonest tendencies, bad credit.)
Morale
The insured's indifference to a loss.
Accident
A sudden and unexpected event.
Occurence
Happens over time.
Limits of Liability
The maximum amount that an insurance company agrees to pay for a single accident or injury.
30/60/25
Minimum limits of liability on an auto policy.
Deductable
A stated amount that the insured is responsible for paying in the event of a loss.
Expressed authority
The authority given to an agent through the agency agreement. (In writing)
Implied authority
Authority that is not given to an agent in writing, but which is understood.
Insuring agreement
States what coverages are provided. It is the heart of the policy.
Extensions
Other coverages provided by the policy, at no extra cost.
Conditions
States the obligation of the parties.
Proof of loss
Is a sworn statement of the facts by the insured.
Subrogation
The right to recover against a third-party.
Appraisal
Settlement method used when insurer and insured can not agree on the value of loss.
Arbitration
Settlement method used when your insurance company does not want to pay your claim.
Assignment of Policy
states that an insurance policy can not be assigned without written permission from the insurance company.
Exclusions
States which losses and perils are not covered.
Endorsements
Used to make changes to a policy. ( Adds, subtracts, or modifies coverages.)
Fair Credit Reporting Act
Protects consumers and ensures accurate credit reporting.
Texas Commissioner of Insurance
Appointed by Governor for 2 years. Enforces and oversees Insurance laws.
Surplus Lines
Insurance for high risk.
Domestic
Domiciled in the same state.
Foreign
Domiciled in a different state.
Alien
Domiciled in a different country.
Stock Company
Type of insurance that is owned by stockholders.
Mutual Company
Type of insurance company that is owned by policyholders.
Transact insurance
You must have have an insurance license to.
Captive agent
Sell for only one insurance company.
Independent agent
Sells for several insurance companies.
Temporary license
A person may obtain a " " before obtaining a permanent license.
Limited lines
A person that holds a " " may sell growing crops.
Misrepresentation
When an agent makes false claims to a customer to make a sale.
Defamation
Making false statements about the financial condition of any insurance company.
Controlled business
Refers to insurance policies written for the agent, agent's family, or their own interests.
Rebating
Offering money or something of value to get a customer to purchase insurance.
Discrimination
An insurance company may not charge more to persons of the same risk group based on race, ethnicity, etc.
Concealment
Failure to disclose a material fact.
Fraud
Intentionally deceiving an insurance company.
Fiduciary
Is a person that holds a position of financial trust with another.