CAIB 1-Chapter 1 Latest Update Graded A+

CAIB 1-Chapter 1 Latest Update Graded A+ RISK Chance of financial loss to which an object of insurance is exposed SPECULATIVE RISK the chance of financial loss or gain PURE RISK the chance of financial loss but no chance of financial gain INSURANCE the undertaking by one person to indemnify another person against loss or liability for loss in respect of a certain risk or peril to which the object of the insurance may be exposed...or to pay a sum of money or other thing of value upon the happening of a certain event CONTRACT an agreement between two or more persons which creates an obligation to do or not to do a particular thing CONSIDERATION an exchange or something of value between parties INSURABLE INTEREST onr has an insurable interest in the subject matter of the insurance when they will suffer financially by a loss UTMOST GOOD FAITH the law requires insurance contracts maintain a higher standard of honesty than is needed of other contracts. The duty applies to the insured, the insurer and the broker INDEMNITY application of the principle of indemnity ensures people receive the actual amount of their loss no more and no less INSURANCE BINDER a temporary agreement in which the insurer agrees to provide certain coverages pending the issuance of the policy AGENCY AGREEMENT a written agreeement or contract between the insurer and the brokerage which acknowledges their relationship VOID CONTRACT one which is unable in law to support the purpose for which it was intended. Such contracts are deemed never to have existed VOIDABLE CONTRACT a contract that may be voided at the option of the wronged party only and not the wrongdoer PERIL the cause of loss DIRECT LOSS occurs when the peril insured actualy attacks the object of insurance INDIRECT LOSS losses which arise as a consequence of a direct loss ACTUAL CASH VALUE new or replacement cost of the property at the time of the loss, less depreciation REPLACEMENT COST the cost to repair