P&C Ch. 1 Vocab

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P&C Ch. 1 Vocab
2013-01-25 04:42:06

P&C Ch. 1 Vocab
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  1. property
    your stuff for the most part, tangible items that you can possess
  2. two party contract
    contract between you and your insurance company
  3. third party contracts
    contract between you, your insurance company, and the unknown third party...the victim...the other guy
  4. casualty or liability
    your legal responsibility for damage that you do to the other guy's body or property
  5. personal lines insurance
    P&C policies written to cover the needs of an individual or family, auto, home, boat, camper, RV
  6. commercial lines insurance
    contracts designed to provide coverage for the insurance needs of a business
  7. insurance
    a contract that allows for the transfer of your individual risk to a company, which will indemnify losses (transfer risk to someone else)
  8. insured
    you and your resident family members, the named insured or first named insured has all the rights of ownership under the policy
  9. insurance company
    the professional risk bearer, the other party to the contract, has right to cancel or nonrenew policies
  10. prorata (proportional) refund
    refund is equal to the amount of insurance that was used if insured cancels policy
  11. short rate refund
    you are assessed a small fee/penalty if you cancel mid-term
  12. risk
    chance of loss, uncertainty of loss, probability  that loss will occur
  13. pure risk
    risk that comes with owning a car (you own a car...it can be stolen, if you drive the car...you can hit someone)
  14. speculative risk
    risk that arises, or is created, with actions from the insured (gambling)
  15. loss
    financial loss, there has to be a way of putting a dollar value on the loss. insurance companies do not cover sentimental value
  16. direct loss
    if your house burns down, you have a direct loss
  17. indirect loss
    the additional money you will have to spend to live in a motel for a while your house is rebuilt after a fire
  18. mitigating risk or loss
    several options in dealing with risk, avoid, reduce, retain, transfer
  19. predetermined limit
    the amount of money that the insurance company will pay up to
  20. insurable interest
    the extent of your financial interest at the time of loss
  21. exclusions
    the causes of loss that the insurance company will not cover (catastrophic losses, predictable losses, and covered elsewhere)
  22. endorsements
    covers the gaps or holes in the insurance policies
  23. stock companies
    earns money for its stockholders 
  24. mutual companies
    earns money for the policyholders
  25. fraternal benefit societies
    operated for the benefit of their members and  have no stockholders and pay dividends to policyholders
  26. risk retention groups
    group self insurance for similar businesses and liability claims filed against any member would be paid out of this pool
  27. lloyds associations
    not truly an insurance company, it is simply a place where insurance syndicates (act like insurers) or associations meet to underwrite risks
  28. facultative reinsurance
    agreement between the insuring company and the reinsurer (one risk)
  29. reinsurance treaty
    all liability, auto, etc policies, negotiated every year
  30. government insurers
  31. state level insurers
    workers compensation
  32. domestic company
    a company charted in Michigan would be a domestic company (Accident Fund, Farmers, Frankenmeuth, Hastings)
  33. foreign company
    a company charted in another state, territitory (State Farm)
  34. alien company
    a company charted in another country (Sun Life of Canada) 
  35. admitted or authorized company
    company that is authorized to do business in that state, and if loss occurs, they have to pay
  36. non-admitted company
    if a loss occurs, you may be on your own if they dont want to pay claim, they dont have to
  37. direct writers
    employees of the company they represent
  38. exclusive agency
    contracts with one company that it wished to represent (State Farm can only write State Farm)
  39. independent agency
    can represent many different companies and write for those different companies
  40. direct response companies
    companies that solicit clients on TV and the internet and then licensed telemarketers respond to the inquiries (Gieco)
  41. law of agency
    agents represent the company and they side with the company that they represent, not the customer
  42. expressed authority
    powers specifically expressed in the agency contract
  43. implied authority
    powers may not be specified in your agency agreement but are implied by that contract
  44. apparent authority
    powers that may seem to be there but they are not really there