Missouri Property and Casualty Insurance / Study
Guide Questions with Definitive Solutions.
Terms in this set (202)
Risk The chance or uncertainty of loss.
Exposure A condition or situation that presents a possibility of loss.
Avoid Risk control risk
Ways to manage risk
retain a risk transfer a risk
control risk techniques that limit loss severity come under the heading of
risk reduction
retain a risk if any loss occurs, they will pay for it themselves can be
intentional or unintentional
Transfer a risk Insurance
hold harmless agreement
hold harmless agreement a contractual arrangement where one party assumes the
liability of a situation and relieves the other party of
responsibility.
Purpose of Insurance to transfer risk
a contract or device for transferring risk from a person,
business, or organization to an insurance company that
insurance
agrees, in exchange for a premium, to pay for losses through
an accumulation of premiums
,Elements of Insurability Pure Risk
Insurable Interest
Definite
Unexpected
Financial Hardship
Calculable
Affordable
Losses are Predictable
Adequate Spread of Risk
Speculative risks risks in which there exists both the possibility of gain and the
possibility of loss
pure risks involve only the possibility of loss
insurable interest before you can benefit from insurance, you must have a
chance of financial loss or a financial interest in the
property
Definite Risk of loss must be defined as to time and loss and be
difficult to counterfeit or falsify
Unexpected If results are expected then it doesn't qualify as a risk.
Financial Hardship Risk must be large enough for financial hardship for the
individual involved.
Calculable Must be able to be assigned a financial value.
Affordable The cost of the insurance must be affordable to the consumer
and be able to cover an unexpected loss.
Losses are Predictable There must be a large number of persons with similar
potential loss available for the losses to become
predictable.
Adequate spread of risk Must not happen to a large number of the insured at the
same time. Not insuring every person that would be
effected by the same risk.
Peril the cause of loss
Hazard anything that increases the chance of loss
, physical hazard a hazard that arises from the condition, occupancy, or use of
the property itself
morale hazard an individual, through carelessness or by irresponsible actions,
can increase the possibility for a loss
moral hazard a person might create a loss situation on purpose just to
collect from the insurance company
contract legal agreement between two competent parties that promises
a certain performance in exchange for a certain consideration
Elements of a Valid Competent parties
Contract Legal purpose
Offer and acceptance (agreement) consideration
Competent Parties a person who is a minor, insane, or under the influence of
alcohol or drugs is considered incompetent.
Offer and Acceptance ontract involves two parties: one who makes an offer and
one who accepts it. An offer is a promise that requires an act
or another promise in exchange. Acceptance occurs when
the other party agrees to the offer or does what was
proposed in the offer.
Principle of Indemnity when a loss occurs, an individual should be restored to the
approximate financial condition he was in before the loss, no
more and no less
aleatory contingent on an uncertain event (a loss) that provides
for unequal transfer of value between the parties
Adhesion one party has greater power over the other party in drafting the
contract
policy includes coverages that an average person would
doctrine of reasonable
reasonably expect it to include, regardless of what the
expectations
policy actually provides.
Guide Questions with Definitive Solutions.
Terms in this set (202)
Risk The chance or uncertainty of loss.
Exposure A condition or situation that presents a possibility of loss.
Avoid Risk control risk
Ways to manage risk
retain a risk transfer a risk
control risk techniques that limit loss severity come under the heading of
risk reduction
retain a risk if any loss occurs, they will pay for it themselves can be
intentional or unintentional
Transfer a risk Insurance
hold harmless agreement
hold harmless agreement a contractual arrangement where one party assumes the
liability of a situation and relieves the other party of
responsibility.
Purpose of Insurance to transfer risk
a contract or device for transferring risk from a person,
business, or organization to an insurance company that
insurance
agrees, in exchange for a premium, to pay for losses through
an accumulation of premiums
,Elements of Insurability Pure Risk
Insurable Interest
Definite
Unexpected
Financial Hardship
Calculable
Affordable
Losses are Predictable
Adequate Spread of Risk
Speculative risks risks in which there exists both the possibility of gain and the
possibility of loss
pure risks involve only the possibility of loss
insurable interest before you can benefit from insurance, you must have a
chance of financial loss or a financial interest in the
property
Definite Risk of loss must be defined as to time and loss and be
difficult to counterfeit or falsify
Unexpected If results are expected then it doesn't qualify as a risk.
Financial Hardship Risk must be large enough for financial hardship for the
individual involved.
Calculable Must be able to be assigned a financial value.
Affordable The cost of the insurance must be affordable to the consumer
and be able to cover an unexpected loss.
Losses are Predictable There must be a large number of persons with similar
potential loss available for the losses to become
predictable.
Adequate spread of risk Must not happen to a large number of the insured at the
same time. Not insuring every person that would be
effected by the same risk.
Peril the cause of loss
Hazard anything that increases the chance of loss
, physical hazard a hazard that arises from the condition, occupancy, or use of
the property itself
morale hazard an individual, through carelessness or by irresponsible actions,
can increase the possibility for a loss
moral hazard a person might create a loss situation on purpose just to
collect from the insurance company
contract legal agreement between two competent parties that promises
a certain performance in exchange for a certain consideration
Elements of a Valid Competent parties
Contract Legal purpose
Offer and acceptance (agreement) consideration
Competent Parties a person who is a minor, insane, or under the influence of
alcohol or drugs is considered incompetent.
Offer and Acceptance ontract involves two parties: one who makes an offer and
one who accepts it. An offer is a promise that requires an act
or another promise in exchange. Acceptance occurs when
the other party agrees to the offer or does what was
proposed in the offer.
Principle of Indemnity when a loss occurs, an individual should be restored to the
approximate financial condition he was in before the loss, no
more and no less
aleatory contingent on an uncertain event (a loss) that provides
for unequal transfer of value between the parties
Adhesion one party has greater power over the other party in drafting the
contract
policy includes coverages that an average person would
doctrine of reasonable
reasonably expect it to include, regardless of what the
expectations
policy actually provides.
