North Carolina Property and Casualty
Exam Terms
Contracts must exhibit: - ✔️✔️Competent parties
Legal Purpose
Offer and Acceptance
Consideration
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 or no less
Aleatory - ✔️✔️A contract contingent on an uncertain event (A loss) that provides for
unequal transfer of value between two paries
Contract - ✔️✔️A legal agreement between two competent parties that promises a
certain performance in exchange for a certain consideration
Adhesion (Contracts) - ✔️✔️One party has greater power over the other party in
drafting the contract
Unilateral (Contracts) - ✔️✔️One Sided; Only the insurance company is legally bound
to perform its part of the agreement
Contract of utmost good faith (Contracts) - ✔️✔️The truthfulness and integrity of the
applicant when providing information that leads to issuing a policy.
Conditional (Contracts) - ✔️✔️A number of conditions that both the insured and the
insurer most follow by in order to keep the contract valid
Five parts of an insurance contract - ✔️✔️Declarations
Insuring Agreements
Conditions
Exclusions
Definitions
Declarations (Contain) - ✔️✔️Name of Insured
Address
Amount of Coverage
Description of Property
, Perils covered
Insuring Agreements (Contain) - ✔️✔️Losses for which the insured will be indemnified
What is covered
What perils covered
Conditions (Contain) - ✔️✔️Responsibilities and obligations for both the insurance
company and the insured
Exclusions (Contain) - ✔️✔️Losses for which the insured is not covered
Definitions - ✔️✔️Meaning of certain terms used in the policy
Stock Company (Types of Insurance Companies) - ✔️✔️Sells stock to raise money to
operate the business, profits are returned to stock holders, not the insureds
Mutual Company (Types of Insurance Companies) - ✔️✔️Insureds are also owners of
the company, profits are returned as dividends or discounts off future payments
Reciprocal Company (Types of Insurance Companies) - ✔️✔️A unincorporated group
forms together and agrees to share the insurance responsibly with all other members.
Each insurers each other and share the losses with each other
Attorney-at-fact - ✔️✔️Manager of a reciprocal company who is empowered to handle
all the business of said company
Lloyd's Association - ✔️✔️Voluntary association of individuals, or groups of individuals,
who agree to share in insurance contracts. Each individual, or "syndicate" is individually
responsible for the amounts of insurance they write
Fraternal benefit society - ✔️✔️Incorporated society or order, without capital stocks,
that is operated on the lodge system and conducted solely for the benefit of its
members and their beneficiaries and not for profit. Only available to their members
Risk Retention Groups - ✔️✔️A self-insurance or group captive insurance company set
up to protect manufacturers against product liability exposures and to purchase liability
insurance.
Self-Insurance - ✔️✔️When a company takes part of all of the risk of loss without the
benefit of insurance coverage to fall back on if a loss occurs
Residual market insurance - ✔️✔️When the government steps in and provides
insurance that is not ordinarily available from private insurers. It provides
War Risk Insurance
Exam Terms
Contracts must exhibit: - ✔️✔️Competent parties
Legal Purpose
Offer and Acceptance
Consideration
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 or no less
Aleatory - ✔️✔️A contract contingent on an uncertain event (A loss) that provides for
unequal transfer of value between two paries
Contract - ✔️✔️A legal agreement between two competent parties that promises a
certain performance in exchange for a certain consideration
Adhesion (Contracts) - ✔️✔️One party has greater power over the other party in
drafting the contract
Unilateral (Contracts) - ✔️✔️One Sided; Only the insurance company is legally bound
to perform its part of the agreement
Contract of utmost good faith (Contracts) - ✔️✔️The truthfulness and integrity of the
applicant when providing information that leads to issuing a policy.
Conditional (Contracts) - ✔️✔️A number of conditions that both the insured and the
insurer most follow by in order to keep the contract valid
Five parts of an insurance contract - ✔️✔️Declarations
Insuring Agreements
Conditions
Exclusions
Definitions
Declarations (Contain) - ✔️✔️Name of Insured
Address
Amount of Coverage
Description of Property
, Perils covered
Insuring Agreements (Contain) - ✔️✔️Losses for which the insured will be indemnified
What is covered
What perils covered
Conditions (Contain) - ✔️✔️Responsibilities and obligations for both the insurance
company and the insured
Exclusions (Contain) - ✔️✔️Losses for which the insured is not covered
Definitions - ✔️✔️Meaning of certain terms used in the policy
Stock Company (Types of Insurance Companies) - ✔️✔️Sells stock to raise money to
operate the business, profits are returned to stock holders, not the insureds
Mutual Company (Types of Insurance Companies) - ✔️✔️Insureds are also owners of
the company, profits are returned as dividends or discounts off future payments
Reciprocal Company (Types of Insurance Companies) - ✔️✔️A unincorporated group
forms together and agrees to share the insurance responsibly with all other members.
Each insurers each other and share the losses with each other
Attorney-at-fact - ✔️✔️Manager of a reciprocal company who is empowered to handle
all the business of said company
Lloyd's Association - ✔️✔️Voluntary association of individuals, or groups of individuals,
who agree to share in insurance contracts. Each individual, or "syndicate" is individually
responsible for the amounts of insurance they write
Fraternal benefit society - ✔️✔️Incorporated society or order, without capital stocks,
that is operated on the lodge system and conducted solely for the benefit of its
members and their beneficiaries and not for profit. Only available to their members
Risk Retention Groups - ✔️✔️A self-insurance or group captive insurance company set
up to protect manufacturers against product liability exposures and to purchase liability
insurance.
Self-Insurance - ✔️✔️When a company takes part of all of the risk of loss without the
benefit of insurance coverage to fall back on if a loss occurs
Residual market insurance - ✔️✔️When the government steps in and provides
insurance that is not ordinarily available from private insurers. It provides
War Risk Insurance
