OTL C81 (Study 5) – Study Guide and Exam Preparation Material
What are the requirements of contracts? - correct answer ✔✔Agreement; consideration;
genuine intention; capacity to contract; legality of purpose
What does it mean to indemnify? - correct answer ✔✔To place people back in the same
financial position, they were in immediately before the loss
What is the principle of indemnity? - correct answer ✔✔To provide the insured order to collect
the amount of their financial loss—no more and no less
What is a valued contract? - correct answer ✔✔In the event of a total loss, pays a
predetermined amount agreed upon by the insurer and the insured at the time the contract
was made.
What are the three principles enforced by indemnity? - correct answer ✔✔1. Salvage
2. Subrogation
3. Contribution
What is salvage? - correct answer ✔✔The insurer is entitled to possession of the property
remaining
What is subrogation? - correct answer ✔✔The legal process by which an insurer who has paid a
loss pursue any rights of recovery against a responsible third-party
What is excess insurance? - correct answer ✔✔Insurance that does not participate until all
other similar insurance on the same subject as exhausted or until the loss exceeds a previously
agreed-upon amount
What are the requirements of contracts? - correct answer ✔✔Agreement; consideration;
genuine intention; capacity to contract; legality of purpose
What does it mean to indemnify? - correct answer ✔✔To place people back in the same
financial position, they were in immediately before the loss
What is the principle of indemnity? - correct answer ✔✔To provide the insured order to collect
the amount of their financial loss—no more and no less
What is a valued contract? - correct answer ✔✔In the event of a total loss, pays a
predetermined amount agreed upon by the insurer and the insured at the time the contract
was made.
What are the three principles enforced by indemnity? - correct answer ✔✔1. Salvage
2. Subrogation
3. Contribution
What is salvage? - correct answer ✔✔The insurer is entitled to possession of the property
remaining
What is subrogation? - correct answer ✔✔The legal process by which an insurer who has paid a
loss pursue any rights of recovery against a responsible third-party
What is excess insurance? - correct answer ✔✔Insurance that does not participate until all
other similar insurance on the same subject as exhausted or until the loss exceeds a previously
agreed-upon amount
