RIBO Definitions Questions and Answers(A+ Solution guide)

INSURANCE - Answer-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 OR Sharing of the losses of a few people among the many who pay premiums SPECULATIVE RISK - Answer-A chance of loss but there is also a chance of profit, and because of the chance of profit these are uninsurable risks CONSIDERATION - Answer-A requirement of all contracts in the common law provinces. It is what one party gives or promises to give in exchange for the act or promise of the other party to the contract PERIL - Answer-An event, which may cause a loss to occur PHYSICAL HAZARD - Answer-This type of hazard deals with the nature of the actual risk RISK - Answer-The chance of a loss. Also, the subject of an insurance contract. (ie: an insured's property can be either a good risk or poor risk) PURE RISK - Answer-A chance of loss but no chance of profit RATE - Answer-The price of a unit of insurance (a unit of insurance usually has a $100 or $1000 value) for a period of one year. It is expressed in either dollars or cents or as a percentage INDEMNITY - Answer-A principle of insurance by which the insured's, up to the limit of the policy, and are fully compensated for the actual cash value of what they have lost, so that they neither gain nor lose as a result of the loss HAZARD - Answer-A condition, which may cause a peril to occur or make the loss more severe ACTUAL CASH VALUE - Answer-The current cost of replacing an article with a similar one in the same condition, taking into consideration depreciation and in some circumstance appreciationMORAL HAZARD - Answer-This type of hazard relates to the human element of the risk PREMIUM - Answer-The amount of money an insurance company charges to provide coverage for a specific item or policy CONTRACT OF INSURANCE - Answer-Is a contract whereby one party called the insurer agrees in return for a consideration called the premium to indemnify another party called the insured against loss or damage or liability arising out of the happening of a specific event or event NEGLIGENCE - Answer-Doing something a reasonable person would not do or the omission to do something a reasonable person would do PURE PREMIUM - Answer-The premium required to meet the losses that occur INTERMEDIARY - Answer-The physical link between insurers and consumers BROKER - Answer-An independent business person who acts as an intermediary by placing business with any number of insurers. This individual seeks out clients and tries to bring about the most beneficial match between each client and the insurer that will best meet the client's insurance needs AGENT - Answer-An intermediary who represents only one company or affiliated group of companies and/or the Faculty Association and solicits business for that company only, or sells life insurance GENERAL AGENT - Answer-One who has the authority to manage all of a company's business within his/her territory, to appoint other agents and to settle claims DIRECT WRITING AGENT - Answer-A salaried employee of an insurance company who sells insurance directly to the member of the public on behalf of their employer - an insurer who uses direct writers to sell their insurance products are eliminating the intermediaries. These companies are also known as Exclusive Agency Companies with the industry