Contract Law and Underwriting c3 fib

Consideration

The insurance company Promise to pay claims.

Doctrine of Utmost Good Faith

Mutual reliance on truthfulness.

Representation

True to the best of your knowledge.

Adverse Selection

The tendency for people who have a high risk to purchase insurance.

Warranty

Absolute truth/guaranteed truth.

Misrepresentation

An untrue statement.

Contract of Adhesion

Ambiguity in a policy will be resolved in favor of the policyholder.

Underwriting

The process of selecting, classifying and pricing risks.

Unilateral Contract

Only the insurance company is legally bound by their promises.

Consideration

Exchange of something of value.

Aleatory Contract

Unequal benefit.

Concealment

Hiding information on a material fact.

Application

The most important piece of underwriting.

Doctrine of Reasonable Expectations

A policy should cover what a reasonable policyholder would expect.

Material Misrepresentation

A lie that would cause the insurance company to reject a risk or alter the premium.

Insuring Agreement

The portion of the policy that lists coverages.

Endorsement

A change or modification to a policy.

Named Insured

Who has all the rights and responsibilities on a personal policy.

Cancellation

The policy ends in the middle of the policy period.

Subrogation

The insurer assumes the right to sue the at-fault 3rd party.

Estoppel

Preventing someone from exercising a known right based on his or her previous actions.

Standard Territorial Definition

The US, Possessions, Territories and Canada.

Exclusions

Predictable, catastrophic and losses covered by their own policy.

Conditions

All clauses are found in this part of the policy.

Non-Concurrency

Two insurance policies covering the same loss on a different basis.

Pro-Rata

The way unearned premium is returned when the insurance company cancels.

Appraisal

The clause that outlines the procedure when the insured and the insurer disagree on the value of the property following a loss.

Waiver

Giving up a known right is an example of.

Pro-rata

The insurer paying his portion of a claim is an example of.

Unearned

Premium paid in advance before the company has the opportunity to provide coverage.

Claim Payment

Policy A covers $300,000 and Policy B covers $100,000 so how much would they each pay on a $100,000 claim? A $75,000 B $25,000.