Fred Loya Vocab

ALIEN INSURER

is an insurance company that is incorporated outside of the United States.

HAZARD

condition that increases the chance or severity of a loss.

AVOIDANCE

avoiding a particular activity that could turn into a loss.

LOSS

reduction in quality, quantity or value of property.

MORALE HAZARD

arises from carelessness or not taking precautions to prevent a loss.

TRANSFER

method of transferring the risk of a potential loss from one entity to another.

SPECULATIVE RISK

there is a possibility of gain or loss.

PERIL

cause of a loss

DOMESTIC INSURER

is an insurance company that is incorporated in this state (Texas)

NONMATERIAL MISREPRESENTATION

incorrect information given by insured, but when corrected does not affect coverage.

RECIPROCAL

an unincorporated insurer individual who through an attorney in fact, provide insurance among themselves.

METHODS OF HANDLING RISK

sharing, transfer, avoidance, reduction and retention.

ADHESION

contract is prepared by the insurer and accepted or rejected by the insured.

ESTOPPEL

involuntarily giving up a known right, the right is taken away from you.

EXPRESSED

authority a principal grants to an agent by means of the agent's contract. Can be written or oral

AGREEMENT (OFFER AND ACCEPTANCE)

when one party makes an offer and the other party accepts.

RETENTION

when insured assumes all or part of the risk for themselves.

INDIRECT LOSS

Is the inability to use property as a result of a direct loss.

PURE RISK

there is no possibility of gain only the possibility of a loss

STOCK INSURERS

Company owned by their shareholders, its earnings are distributed as taxable dividends.

CONDITIONAL

certain conditions should be met by both parties for the contract to be legally

MATERIAL MISREPRESENTATION

Incorrect information given by the insured, but when corrected does affect coverage.

LAW OF LARGE NUMBERS

states that the larger the group of units insured, the more accurate the predictions of loss will be.

INDEMNITY

restores insured to the same financial condition they were prior to the loss.

ELEMENTS OF A LEGAL CONTRACT

offer and acceptance, consideration, competent parties and lawful objective.

FOREIGN INSURER

is an insurance company that is incorporated in another state

IMPLIED AUTHORITY

not expressed or written into the contract, but which the agent is assumed to have in order to transact the business of insurance.

PHYSICAL HAZARD

arise from material, structural or operational features of a risk.

APPARENT AUTHORITY

is the appearance or assumption of authority based on the actions of the principal

DIRECT LOSS

the actual physical damage of insured property.

FIDUCIARY CAPACITY

Someone who undertakes a high level of trust when acting in the interests of another person.

SHARING

a chance of loss is shared among many individuals

WAIVER

voluntarily giving up a known right

PRINCIPAL

Entity that an agent represents

ADMITTED

What an insurer becomes when they receive their certificate of authority to transact business in Texas.

CONSIDERATION

is the thing of value which each party gives to the other.

RISK

uncertain possibility for a loss to occur.

ADVERSE SELECTION

The tendency for people with a greater than average exposure to loss to purchase insurance.

ALEATORY

is a contract in which unequal amounts or values are exchanged.

REDUCTION

taking action to reduce the possibility of a loss.

MORAL HAZARD

intentional losses

ELEMENTS OF AN INSURABLE RISK

Calculable, affordable, non catastrophic, homogenous, accidental and measurable.

AGENT

Person that represents the Principal.

LAWFUL (LEGAL) OBJECTIVE

must have legal purpose to be valid and must be consistent with public policy

UNILATERAL

only one party makes a legally enforceable promise.

MUTUAL INSURER

Company owned by its policyholders, its earnings are returned to them as non taxable dividends

COMPETENT PARTIES

for a contract to be valid each party must be legally able to make decisions. They must be 18 years of age, sane and sober.

FEATURES OF AN INSURANCE CONTRACT

adhesion, aleatory, unilateral and conditional

CONTROLLED BUSINESS

soliciting or procuring insurance for the agent, the agent's family, or business associates, and not for the general public.

REBATING

offering or receiving anything of value as an inducement to buy insurance.

MISREPRESENTATIONS

false oral/written statement

CERTIFICATE OF AUTHORITY

What an insurer needs to transact in the insurance business.

FRAUD

Is the intentional misrepresentation used to deceive or cheat

another party.

NON RESIDENT AGENT

an agent that resides outside of the state of Texas but wishes to transact in the insurance business in Texas.

TWISTING

making any misrepresentation to a policyholder for the purpose of inducing or tending to induce that person to lapse his insurance.

MANAGING GENERAL AGENT

A person, firm or corporation that has supervisory responsibility for the local agency.

RISK MANAGER

For compensation, examines, assesses, or evaluates risk for the reduction of risks

CPCU

Holders of this designation are exempt from the property and casualty exam.

DEFAMATION

Making any oral or written statements that are false or derogatory as to the financial condition of another insurer.

SURPLUS LINES AGENT

Agents with a Managing General Agent or Property and casualty License doing insurance business for a non admitted company.

COMMISSIONER OF INSURANCE

Individual who is appointed by the governor, every 2 years, to enforce the insurance laws

CONTINUING EDUCATION

All agents must complete this before their license renewal. It cannot be transferred from one term to another and proof of completion must be kept for four years.

DEDUCTIBLE

The specific amount or percentage of the loss the insured is required to pay.

LIMITS OF LIABILITY

The maximum amount of the insurance company will pay in the event of a loss.

SUBROGATION

The right of the insurer, who has settled their insured's loss, to recover from an at fault third party.

INSURING AGREEMENT

States the insurance company's promise to pay.

EXCLUSIONS

The section of the policy that lists the perils or property not covered.

CONDITIONS

States the duties and responsibilities of the insured and insurer.

DECLARATIONS PAGE

Contains the 5 p's. Parties, Property, Policy term, Policy limits, and Premium. It is usually the first page of the policy contract.

DISCRIMINATION

When an insurance company denies, refuses to renew, or charges more for coverage because of a person's race, color, religion or national origin.

DEFINITIONS

Where key policy terms are defined.

NAMED INSURED

The person listed on the Declarations Page to whom the policy is issued.

INSURED(S)

Additional person insured under the policy.

PROOF OF LOSS

Form that is completed by the insured after a loss that provides an official inventory of the damages. The insured has 90-91 days to submit it.