Term
Is a risk Insurable?
Large numbers of similar objects include? |
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Definition
-Life Insurance
-Automobiles |
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Term
| Losses are accidental or unintentional so they must? |
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Definition
-Show some uncertainty or no risk
-Must be accidental
-Avoid moral hazard |
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Term
How to avoid a catastrophic loss?
(earthquake, flood) |
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Definition
| Avoid having all members suffer loss at the same time. |
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Term
| Solutions for catastrophic risk include. |
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Definition
-Good underwriting
-Change for big loss
-Diversify Risk
-Don't insure all homes on one street
-Reinsurance |
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Term
| What is large loss principle? |
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Definition
-Max possible loss needs to be sufficient
-Small loss best paid by savings. |
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Term
| What is Insurable Interest? |
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Definition
-Must show personal loss
-Insured must lose money or some other way for a valid contract. |
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Term
| Purpose of Insurable Interest? |
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Definition
-Reduce moral hazard
-Insured may cause loss, unless they loose financially.
-It's a measure for amt of recovery in case of a loss.
-Insured can't collect more than insured amt.
-*Supports principle of indemnity.* |
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Term
| What constitutes Insurable Interest? |
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Definition
-Property-Liability Insurance
-Ownership
-Leases
-Bailee / Bailor
-Life Insurance |
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Term
Insurable Interest
(Life Insurance circumstances) |
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Definition
-Must have financial interest in con't life
-S=subject of insured life
-O=owner of policy
-B=beneficiary (receives $$) |
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Term
| Life Insurance (SOB) Requirement |
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Definition
| Required that O and B must have an insurable interest in S. |
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Term
| When must insurable interest Exist? |
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Definition
-In property -Liability insurance
-Must have in time of loss
-Life Insurance
-At the inception of the contract only. |
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