Stock Insurance Company
Owned by stockholders and shareholders
Mutual Insurance Company
Owned by policy holders and has a board of trustees or directors elected by policy holders
Reciprocal Insurance Company
Group-owned and risk is shared; each member is a subscriber
Risk Retention Groups (RRG)
Spreading all or any portion of the liability exposure of its group members (theme parks, go-carts, water slides)
Reinsurance Companies
The insurer who shares the risk with the primary insurer/ceding company
Domestic Insurer
An insurer organized under the laws of California
Foreign Insurer
An insurer not organized under the laws of California
Alien Insurer
An insurer organized under the laws of any jurisdiction out side of the United States
Excess and Surplus Line Insurance
High risk
Actuarial
Gathers and interprets statistical information to aid in rate-making/setting
Underwriting
Responsible for risk selection
Marketing/Sales
Responsible for advertising and selling insurance policies
Claims
Provides service to the policyholder in the event of a loss
Executive Staff
Oversees and regulates the business
independant agency
is a person who enters into an agency agreement with more than one insurer
Exclusive Agent/Captive Agent
is a person under agreement to represent a single insurer, or a group of insurers, having common ownership
Express authority
written contract
Implied Authority
is the authority that the public assumes a producer has based on his/her actions
Apparent Authority
is created when a producer/agent exceeds the authority expressed in his/her contract
Transacting Insurance
Solicitation, Negotiations, Execution and Transaction (SNET)
Insurance Information and Privacy Protection Act
establishes standards for the collection, use, preservation, and disclosure of information gathered during insurance transactions
HIPAA
Health Insurance Portability and Accountability Act
Speculative Risk
Possibility of loss, no loss, or gain
Pure Risk
Possibility of loss or no loss; there is no possibility for gain
Hazard
Increases the chance of loss
Physical Hazard
a physical condition that increases the probability of loss
Moral Hazard
A disposition to be dishonest which increases the chance of a loss
Morale Hazard
Failure to take proper care
Legal Hazard
Breach of contract
Peril
Cause of Loss
Managing Risk
Sharing, Transfer, Avoidance, Reduction, Retention (STARR)
Insurable Event
Any contingent or unknown event that causes loss or damage to a person having an insurable interest
Contract of Adhesion
take it or leave it"; without negotation
Aleatory Contract
Exchange level is unequal; premium payment is less than the potential benefit
Indemnity Contract
An agreement to pay on behalf of another party under specified circumstances, such as when a loss occurs.
Personal Contract
Insurance policies cover the insurable interest of the insured.
Unilateral Contract
Only one party is legally bound to the contractual obligations
Conditional Contract
Both parties must perform certain duties
Utmost Good Faith
Both parties bargain in good faith in forming a contract
Representations
Oral or written statement believed to be true
Misrepresentation
A false statement
Materiality
A statement is material if its disclosure or lack of disclosure would change the insurers decision to issue a policy for the same premium
Material Misrepresentation
If material to the issuance of coverage, meaning the insurer would not have issued coverage had the misrepresentation not been made, coverage does not apply.
Concealment
Neglect to communicate known information that is material
Warranties
Statements in the application or stipulations in the policy that are guaranteed true in all respects
Recission
Termination of a contract from the beginning (as if it never existed)
Fraud
Intentional Deception
Waiver
Voluntary abandonment
Estoppel
Legal doctrine that prevents the denial of a fact
Manual Rating
Rates are based on classes of insured who have similar exposures
Accident
A sudden, unforeseen, unintended and unplanned eent
Occurance
Continuous or repeated exposure to harmful conditions that results in property damage
Pro Rata Cancellation
Cancellation of a policy for which a refund is made in the unearned premium calculated in proportion to the time the policy was in force.
Short Rate Cancellation
Cancellation of a policy for which the premium refund is calculated according to a short rate table whereby the insurer retains a portion of the unearned premium as a penalty.
Flat Cancellation
The cancellation of a policy on the date the policy becomes effective.
Proximate Cause
Immediate or actual cause of loss
Binder
Temporary contract in force for up to 90 days or until the policy is issued
Actual Cash Value
The policy pays for the cost to repair or replace the damaged property at the time of loss, minus depreication
Coinsurance
Amount of insurance carried/minimum amount of insurance required x loss
Who
Names of Insured
What
Description of property being insured
Where
Legal address or discription of property being insured
Insuring agreement
description of the covered causes of loss (perils)
Insured
Includes insured's spouse, resident relatives of either, and others under 21 that are in their care, custody and control
Named Insured
Any person, firm, or organization specifically designated by name of dec page
First Named Insured
The person, firm, or organization whose name appears in the first position of the Declarations Page of a policy when several names are listed.