P&C Ch. 2 Vocab

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P&C Ch. 2 Vocab
2013-01-25 04:51:06

P&C Ch. 2 Vocab
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  1. contract
    an agreement between two or more parties
  2. indemnify
    to make whole
  3. contract of utmost good faith
    insurance is a good faith contract because there is a mutual reliance of truthfulness of both parties
  4. doctrine of reasonable expectations
    what is expected
  5. elements of a contract
    offer and acceptance, consideration, legal purpose, and legal capacity
  6. consideration
    something of value, the companys consideration is the promise to pay
  7. insurable interest
    exists if the owner would suffer a financial consequence if the loss occured
  8. legal capacity
    requires both parties to be legally competent
  9. contract of adhesion
    legal contract that is written by the insurance company, applicant does not take part in the writing of the contract
  10. aleatory
    contract in which the dollar value exchanged by the two parties is not necessarily equal due to the uncertain timing of the even which the subject of the contract
  11. unilateral
    two parties to a contract but only one party (the insurer) makes legally enforceable promise
  12. personal contracts
    insurance contracts that are personal in nature
  13. conditional contracts
    certain events must have taken place, transpire, before they can be fully executed
  14. warranties
    absolute truth
  15. representation 
    simply the truth to the best of you knowledge and belief
  16. misrepresentation
    simply a lie
  17. concealment
    partial truth but failing to tell the whole truth
  18. fiduciary
    an individual responsible for another's  financial well being
  19. fraud
    act of deceiving someone in order to gain financially at their expense  
  20. waiver
    voluntary relinquishment of a right or privelage
  21. estoppel
    legally prevents one from exercising that right or privilege 
  22. best of your knowledge
  23. misrepresentation
    utilizing concealment, simply a lie, can invalidate a contract if it is both material
  24. insurable risk elements
    large number of similar risks, quantifiable in dollars, financially significant to the insured, an element of risk
  25. underwriting information sources
    the application itself, physical inspections, and consumer credit reports
  26. class rates
    rates that apply to all members of a larger group of similar risks (law of large numbers)
  27. manual rates
    when class rates are printed in a manual
  28. merit rates
    are customized class rates
  29. schedule rating
    would lower class rates for a building that was upgraded 
  30. experience rating
    would add or subtract from the class rates depending on actual loss experience
  31. retrospective rates
    can adjust the class rates based upon experience with the same policy year
  32. individual rates
    rates that are too uncommon to generate the large numbers necessary for a class rate
  33. judgement rates
    rates based partially and if not exclusively on the judgement of the underwriter
  34. loss ratio
    losses paid / earned premiums
  35. expense ratio
    expenses paid / written premium 
  36. combined ratio
    loss ratio + expense ratio (underwriting profit)