Contract Law and Underwriting c3 fib

1 The consideration of the insurance company Promise to pay claims

2 Mutual reliance on truthfulness The Doctrine of Utmost Good Faith

3 True to the best of your knowledge Representation

4 The tendency for people who have a high risk to purchase insurance Adverse Selection

5 Absolute truth/guaranteed truth Warranty

6 An untrue statement Misrepresentation

7 Ambiguity in a policy will be resolved in favor of the policyholder Contract of Adhesion

8 The process of selecting, classifying and pricings risks Underwriting

9 Only the insurance company is legally bound by their promises Unilateral Contract

10 Exchange of something of value Consideration

11 Unequal benefit Aleatory Contract

12 Hiding information on a material fact Concealment

13 The most important piece of underwriting Application

14 A policy should cover what a reasonable policyholder would expect The Doctrine of Reasonable Expectations

15 A lie that would cause the insurance company to reject a risk or alter the premium Material Misrepresentation

16 The portion of the policy that lists coverages Insuring Agreement

17 A change or modification to a policy Endorsement

18 Who has all the rights and responsibilities on a personal policy Named Insured

19 The policy ends in the middle of the policy period Cancellation

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

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

22 The US, Possessions, Territories and Canada Standard Territorial Definition

23 Predictable, catastrophic and losses covered by their own policy Exclusions

24 All clauses are found in this part of the policy Conditions

25 Two insurance policies covering the same loss on a different basis Non-Concurrency

26 The way unearned premium is returned when the insurance company cancels Pro-Rata

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

28 Giving up a known right is an example of Waiver

29 The insurer paying his portion of a claim is an example of Pro-rata

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

31 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