Chap 5 Commercial insurance Flashcards Preview

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Flashcards in Chap 5 Commercial insurance Deck (55):
1

2 types of commercial insurance

1) Property Insurance (-direct loss -Indirect loss)
2) Liability Insurance ( -General liability -Professional liability -Employer liability)

2

Commercial insurance/ General Liability insurance

it is defined as the legal liability that an enterprise faces when running its day to day operations

3

Commercial insurance/ General Liability insurance/ 5 areas

1) Operations
2) Product
3) Completed Operations
4) Contingent liability
5) Contractual liability

4

Commercial insurance/ professional liability

Arise from negligent act, errors, omissions and poor performance by employees when performing their professional duties.

5

Commercial insurance/ employer liability

Covers the various risk exposure that an organization faces when it employs people to complete various tasks

6

Commercial insurance/ occurrence

Commercial insurance require that the loss or bodily harm be caused by an occurrence which includes:
1) continuous or repeated events over a period of time
2) accident
3) series of accident

7

Commercial insurance/occurrence policies

Pays for the loss that occurred during the policy period regardless of when the claim is filled

8

Commercial insurance/claim made policies

Pay for loss after a certain date but the claim are made during the policy period

9

Commercial insurance/ 3possible types of deductibles

1) aggregate deductible
2) straight or per occurrence deductible
3) franchise deductible

10

Commercial insurance/ aggregate deductible

The firm pays all the losses for the year until the deductible limit is reached

11

Commercial insurance/straight or per occurrence deductible

The firm pays the deductible for each separate loss

12

Commercial insurance/franchise deductible

It is only for ocean marine insurance. Either a dollar amount or a percentage of the loss and the entire loss is paid once the loss is greater than the deductible

13

Commercial insurance/ stop loss provision

Caps the amount the insured pays in total through out the policy period

14

Commercial insurance/ coinsurance in commercial property

An insured can elect to underinsure but will pay a higher premiums for doing so and is expected to keep the amount of coverage based on the current replacement value. If so, the insurer will pay all losses up to the limit of the policy

15

Commercial insurance/ coinsurance for commercial property: calculation of pure premiums

Expected loss paid / $coverage

16

Commercial insurance/ coinsurance for indirect loss

Covers extra expenses for additional cost incurred as a result of a direct loss. The coinsurance requirement is based on the amount of time a firm would be shut down if is incurred a loss

17

Commercial insurance/ captive insurers

Insurance companies owned by a firm or firms. The insurer insures the firm and perhaps other non related companies to capitalize on risk pooling. Can be pure captive or group captive

18

Commercial insurance/ pure captive

Insures only parents and parent's subsidiaries

19

Commercial insurance/ group captives

Insurers having many parents

20

Commercial insurance/ 3 structures of coverage

1) umbrella policy
2) blanket insurance
3) multiple-line insurance

21

Commercial insurance/ structure of the coverage / umbrella policy

Provides protection against a catastrophic lawsuit by providing broad blanket coverage to areas not covered by the underlying policy. Covers beyond the scope of the underlying policy for personal injury and property damage

22

Commercial insurance/ structure of the coverage/ blanket insurance

Provides coverage under a single limit for:
- 2 or more items
- 2 or more locations
- a combination of items and/or location

23

Commercial insurance/ structure of the coverage/ multiple-line insurance

Covers property and casualty in one contract it could provide insurance for property, general liability, business income, equipment breakdown and crime

24

Commercial property insurance

Covers damage and loss to property. Loss can be direct or indirect/ consequential

25

Commercial property insurance / 2 categories of direct loss

Loss due to perils
Loss due to dishonesty

26

Commercial property insurance / direct loss due to perils / extended coverage

Provides protection against perils not covered by the basic policy such as riot and civil commotion

27

Commercial property insurance / direct loss due to perils / specified perils

Covers a list of perils named

28

Commercial property insurance / direct loss due to perils / open perils

Provides coverage for every peril except for a list of exclusion

29

Commercial property insurance / direct loss due to perils / 9 types of possible coverage

1) building and personal property
2) boiler and machinery
3) account receivable
4) Builder risk
5) condominium association
6) credit insurance
7) crop (hail) insurance
8) glass insurance
9) marine insurance

30

Commercial property insurance / direct loss due to perils / 3 types of building and personal property

1) real property
2) business personal property
3) personal property of others

31

Commercial property insurance / direct loss due to perils / boiler and machinery insurance

Protects against physical damage and financial loss that result from sudden and accidental breakdown of boiler machinery and equipment. It might provide inspection and repairs before the machine breaks down

32

Commercial property insurance / direct loss due to perils /builders risk

Covers buildings under construction for fire, windstorm, flood, earthquake and vandalism

33

Commercial property insurance / direct loss due to perils /Credit insurance

Protects manufacturers, wholesales, and service organizations against consumer insolvency

34

Commercial property insurance / direct loss due to perils / glass insurance

Provides coverage for plate glass windows and doors which are often excluded from building coverage

35

Commercial property insurance / direct loss due to perils / 2 types of marine insurance

1) ocean marine
2) island marine

36

Commercial property insurance / direct loss due to perils / 4 major types of ocean marine insurance

1) Cargo insurance
2) Hull insurance
3) Protection and indemnity insurance
4) Freight insurance

37

Commercial property insurance / direct loss due to perils / ocean marine insurance/ cargo insurance

Covers goods being shipped for damage and loss

38

Commercial property insurance / direct loss due to perils / ocean marine insurance/ hull insurance

Covers the ship on an all risk basis

39

Commercial property insurance / direct loss due to perils / ocean marine insurance/ protection and indemnity

Covers:
1) damage to piers, docks, and the ship's cargo
2) illness or injury to passengers and crew
3) fines and penalties

40

Commercial property insurance / direct loss due to perils / ocean marine insurance/ freight insurance

Covers loss of earnings to the ship's owner if goods are damaged or losed and can't be delivered

41

Commercial property insurance / direct loss due to perils / island marine insurance

Covers articles in transit and also bridges and tunnels

42

Commercial property insurance / direct loss due to perils / 3 major types of island marine insurance

1) Bailee
2) business floaters
3) means of transportation

43

Commercial property insurance / direct loss due to perils / island marine insurance/ bailee coverage

Covers property held by someone who has temporary procession of the property that belongs to another

44

Commercial property insurance / direct loss due to perils / island marine insurance/ business coverage

Policy that provides broad and comprehensive protection on a property that is frequently moved from one location to another

45

Commercial property insurance / direct loss due to dishonesty/ 2 types of insurance

1) crime insurance for non employee theft
2) theft by employees covered by fidelity bonds

46

Commercial property insurance / direct loss due to dishonesty / non employee theft / 5 major types of coverage

1) forgery or alteration
2) inside the premises
3) outside the premises
4) computer fraud
5) money orders and counterfeit currency

47

Commercial property insurance / indirect or consequential losses / 6 types of coverages

1) Business income
2) Spoiled food
3) Extra expenses
4) Contingent business interruption
5) leasehold interest
6) rain insurance

48

Commercial liability insurance / vicarious liability

The obligation of a principal to pay the losses of a third party caused. Y an agent such as an employee

49

Commercial liability / strict liability

Those engaging in certain undertaking such as hazardous practices like the industrial use of high explosives are held responsible for injury without inquiry into fault

50

Commercial liability/ products liability

It is increasingly held to strict liability for makers of items such as foods, cosmetics, drugs, automobile

51

Commercial liability/ general liability/ 5 specific policies not covered by the exceptions

1) personal and advertising injury
2) environmental liability
3) fire legal liability
4) liquor liability
5) property in the insured's care custody or control

52

Commercial liability/ 5 types of professional liability

1) errors and omissions
2) directors and officers
3) malpractice
4) architects and engineers
5) general partners liability

53

Commercial insurance/ Surety bonds

Bond that provides monetary compensation if the bonded party fails to perform certain acts. They guarantee the performance of the principal

54

Commercial liability/ 3 parties involved in a surety bond

Principal (party bonded )
obligee (party reimbursed for the damages )
surety ( party the agrees to answer for the debt)

55

Commercial liability / 9 types of surety bonds

1) auctioneer's bond
2) insurance agent bond
3) judaical bond
4) federal surety bond
5) fiduciary bond
6) license and permit bond
7) lost instrument bond
8) public official bond
9) contract bond