Assam ASSEB HS Class 11-12 Insurance flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Insurable interest

The legal right to insure arising from a financial relationship with the subject matter, where the insured benefits from its safety and suffers loss from its damage.

Principle of indemnity

The insured is restored to the same financial position as before the loss, neither better nor worse; it applies to property and liability insurance, not life insurance.

Utmost good faith

Both parties must disclose all material facts fully and honestly; failure by the insured makes the contract voidable and allows the insurer to repudiate a claim.

Subrogation

After paying a claim, the insurer acquires the insured's right to recover the loss from the negligent third party, limited to the amount actually paid.

Contribution

When several policies cover the same loss, each insurer pays its rateable proportion so the insured never recovers more than the actual loss.

Proximate cause

The dominant and effective cause of a loss, forming an unbroken chain of events; coverage depends on whether this cause is an insured peril.

Pure risk

A risk involving only the chance of loss or no loss, with no possibility of gain; it is the category of risk that insurance is designed to handle.

Moral hazard

A condition of dishonesty or character that increases the chance of loss, such as deliberate arson or exaggeration of a claim by the insured.

Law of large numbers

As the number of similar independent exposure units increases, actual losses converge on expected losses, making premiums more predictable and stable.

Risk retention

A risk financing technique where the individual or firm bears the loss itself, either deliberately after evaluation or passively through lack of insurance.

Free look period

A period, generally fifteen days from receipt of the policy, during which a policyholder may cancel a new life policy and receive a refund of premium less charges.

Insurance Ombudsman

A quasi-judicial authority that settles eligible policyholder complaints free of charge within its monetary jurisdiction, with an award binding on the insurer if accepted.

Solvency margin

The excess of an insurer's assets over its liabilities, required to be maintained at a prescribed level as a buffer against unexpected losses.

Endorsement

A written document attached to a policy that alters its terms, such as changing the sum insured, address or vehicle details, and forms part of the contract.

Warranty in insurance

A policy term that must be complied with exactly; breach entitles the insurer to avoid liability from the date of breach, whether or not the breach caused the loss.

Condition precedent

A policy condition that the insured must satisfy before the insurer's liability arises, such as giving prompt notice of loss and submitting proof.

Proposal form

The printed application containing questions on the risk, which the proposer signs; it forms the basis of the contract and grounds the duty of disclosure.

Reversionary bonus

A share of surplus declared annually on participating life policies, usually expressed as a percentage of the sum assured and payable at maturity or claim.

Nomination

The right of a policyholder to name a person to receive the policy money on death; the nominee collects the amount as a trustee for legal heirs.

Assignment of policy

The transfer of a life policy's rights to another person by endorsement or separate instrument, with notice to the insurer; it may be absolute or conditional.

Grace period

The extra time allowed after the due date for paying a renewal premium, commonly fifteen days for monthly mode and thirty days for other modes.

ULIP

A unit-linked insurance plan where part of the premium buys risk cover and the rest is invested in funds; the policy value moves with net asset value.

General average

A marine principle under which a voluntary sacrifice or expense incurred to save the ship and cargo from a common peril is shared proportionately by all parties.

No claim bonus

A discount on motor own damage premium earned for each claim-free year, forfeited after a claim, and protected under the retention rule.

Third-party motor liability

Compulsory cover for death, injury or property damage caused to others by the insured vehicle, required by the Motor Vehicles Act.

Cashless health facility

A claim method where a network hospital bills the insurer or TPA directly after pre-authorisation, so the insured pays only non-covered amounts.

Bancassurance

The distribution of insurance products through bank branches, typically under a corporate agency arrangement, using the bank's customer base and relationship staff.

Insurance broker

A licensed intermediary who acts for the insured, compares products across insurers, and must hold professional indemnity cover for errors and omissions.

Deductible or excess

The first amount of each loss that the insured bears before the insurer pays; it reduces premium and eliminates small claims.

Reinsurance

The transfer of part of an insurer's risk to another insurer; facultative is agreed case by case, while treaty covers a defined portfolio automatically.

Surveyor or loss assessor

A licensed professional appointed to inspect and assess general insurance losses above the prescribed threshold and report on the admissible claim amount.

Rebating

Sharing an agent's commission with a policyholder to induce a sale; it is an offence under the Insurance Act and can lead to licence cancellation.