CPCU 552 Flashcards
(166 cards)
1
Q
Any loss that a person or organization sustains as a result of a claim or suit against that person or organization by someone seeking damages or some other remedy permitted by law.
A
Liability Loss
2
Q
The legally enforceable obligation of a person or an organization to pay a sum of money (called damages) to another person or organization
A
Legal liability
3
Q
A classification of law that applies to legal matters not governed by criminal law and that protects rights and provides remedies for breaches of duties owed to others.
A
Civil law
4
Q
The branch of the law that imposes penalties for wrongs against society.
A
Criminal law
5
Q
A wrongful act or an omission, other than a crime or a breach of contract, that invades a legally protected right.
A
Tort
6
Q
The failure to exercise the degree of care that a reasonable person in a similar situation would exercise to avoid harming others.
A
Negligence
7
Q
A tort committed by a person who foresees (or should be able to foresee) that his or her act will harm another person.
A
Intentional tort
8
Q
Liability imposed by a court or by a statue in the absence of fault when harm results from activities or conditions that are extremely dangerous, unnatural, ultrahazardous, extraordinary, abnormal, or inappropriate.
A
Strict liability (absolute liability)
9
Q
A legally enforceable agreement between two or more parties in which each party makes some promise to the other.
A
Contract
10
Q
The failure, without legal excuse, to fulfill a contractual promise.
A
Breach of contract
11
Q
A contractual provision that obligates one of the parties to assume the legal liability of another party.
A
Hold-harmless agreement (or indemnity agreement)
12
Q
Liability assumed through a hold-harmless agreement.
A
Contractual liability
13
Q
A written law passed by a legislative body at either the federal or state level.
A
Statue
14
Q
Any condition or situation that presents a possibility of loss, whether or not an actual loss occurs.
A
Loss exposure
15
Q
A conscious act or decision not to act that reduces the frequency and/or severity of losses or makes losses more predictable.
A
Risk control
16
Q
The event or circumstance that directly leads to an occurrence.
A
Root cause
17
Q
A risk control technique that reduces the frequency of a particular loss.
A
Loss prevention
18
Q
A risk control technique that reduces the severity of a particular loss.
A
Loss reduction
19
Q
A risk control technique that involves ceasing or never undertaking an activity so that the possibility of a future loss occurring from that activity is eliminated.
A
Avoidance
20
Q
A risk financing technique in which one party transfers the potential financial consequence of a particular loss exposure to another party that is not an insurer.
A
Noninsurance risk transfer
21
Q
Laws that develop out of court decisions in particular cases and establish precedents for future cases.
A
Common law (case law)
22
Q
The branch of civil law that deals with civil wrongs other than breaches of contract.
A
Tort law
23
Q
The formal laws, or statues, enacted by federal, state, or local legislative bodies.
A
Statutory law
24
Q
The event that triggers coverage under an occurrence coverage form: injury or damage that occurs during the policy period.
A
Occurrence coverage trigger
25
The event that triggers coverage under a claims-made coverage form; the first making of a claim against any insured during either the policy period or an extended reporting period.
Claims-made coverage trigger
26
Interest that may accrue on damages before a judgement has been rendered.
Prejudgment interest
27
Interest that may accrue on damages after a judgement has been entered in court and before the money is paid.
Postjudgement interest
28
Insurance coverage for losses that exceeds the limits of underlying insurance coverage or a retention amount.
Excess liability insurance
29
A liability policy that provides excess coverage above underlying policies and may also provide coverage not available in underlying policies, subject to a self-insured retention.
Umbrella liability policy
30
A claim that is characterized by an extended delay between the claim's triggered event and the reporting of the event to the insurer
Long-tail claim
31
A statue holding establishments that serve alcoholic beverages responsible for harm that results from serving patrons alcohol in violation of the statue.
Dram shop act
32
The unit in which the exposure is measured, such as gross sales or payroll.
Premium base
33
A numeric code representing the description in the rating classification table that best fits a particular organization's operations.
Class code
34
An employer's liability for its employee's operations of their autos in the employer's business.
Employers non ownership liability
35
Policy that covers two or more lines of business by combining ISO's commercial lines coverage parts.
Commercial package policy (CPP)
36
Policy that covers only one line of business.
Monoline policy
37
Coverage for damage to customers' autos left in the named insured's care while the insured is attending, servicing, repairing, parking, or storing them.
Garagekeepers coverage
38
Trucks in the medium and larger size classes that are operated beyond a 200-mile radius of the principal garaging location and that are subject to zone rating, which considers the territories in which insured vehicles operates.
Zone rated vehicles
39
The ISO coverage form designed to meet the auto, GL, and errors and omissions liability insurance needs of auto and trailer deals
Auto dealers coverage form
40
The provision on the ADCF that severely restricts coverage for customers of the insured auto dealer.
Customer Limitation
41
The endorsement that deletes the False Pretense exclusion from the ADCF and agrees to pay for loss as a result of the named insured's (1) being tricked into voluntarily parting with an auto or (2) acquiring an auto from a seller who did not have legal title.
False Pretense Coverage endorsement
42
The endorsement that modifies the ADCF to cover an auto dealer for collision damage to any covered auto while being driven or transported from the point of purchase or distribution to its destination if such points are more than fifty road miles apart
Dealers Driveaway Collision Coverage endorsement
43
Coverage that pays necessary medical expenses incurred within a specified period by a claimant (and in certain policies, by an insured) for a covered injury, regardless of whether the insured was at fault
Medical payments coverage
44
The coverage form filed by ISO that can be used to insure a person or an organization providing transportation by auto in the furtherance of a commercial enterprise.
Motor Carrier Coverage Form
45
Individuals who lease themselves and their owned trucks to motor carrier to transport property for the motor carrier.
Owner-operators
46
A contract under which two motor carriers agree to swap trailers and to indemnify each other for any damage that occurs to the other's trailer while it is in the borrowing motor carrier's possession.
Trailer interchange agreement
47
Coverage for a motor carrier's liability for damage o trailers in its possession under a written trailer interchange agreement.
Trailer interchange coverage
48
The commercial auto endorsement required by the motor carrier act of 1980, in which the insurer agrees to pay, up to specified limits, the damages that the insured becomes legally obligated to pay for the liability resulting from the negligence in the operation, maintenance, or use of any motor vehicle subject to that law.
MCS 90 endorsement
49
A statue that obligates employers, regardless of fault, to pay specified medical disability rehabilitation, and death benefits for their employees' job-related injuries and diseases.
Workers compensation statue
50
Disease thought to be caused by work or the work environment
Occupational disease
51
A disability caused by a work-related injury or disease temporarily limits the extent to which a worker can perform job duties; the worker is eventually able to return to full duties and hours.
Temporary partial disability (TPD)
52
A disability caused by a work-related injury or disease that temporarily renders an injured worker unable to perform any job duties for a period of time.
Temporarily total disability (TTD)
53
A person hired to perform services for another under the direction and control of the other party, called the employer.
Employee
54
A person (or an organization) hired to perform services without being subject to the hire's direction and control regarding work details.
Independent contractor
55
A federal statue that eliminates the right of most maritime workers (other than crew members of vessels) to sue their employers and, in return, requires such employers to provide injured or ill workers with benefits like those provided by state workers compensation statue.
United States Longshore and Harbor Workers' Compensation Act (LHWCA)
56
A federal statue that permits injured members of a vessel's crew (or survivors of a deceased cred member) to sue their employer for damages due to the employers negligence.
Jones Act (United States Merchant Marine Act of 1920)
57
A state fund that sells workers compensation insurance in competition with private insurers.
Competitive state fund
58
A facility, owned and operated by a state government, that provides workers compensation insurance and that does not permit any other insurer to sell workers compensation insurance in that state
Monopolistic state fund (exclusive state fund)
59
A mutual insurer established by a state's legislature to write workers compensation insurance for any qualified employer in the state
Employers mutual insurance company
60
Insurance that covers loss due to a single occurrence only for the amount that exceeds the policy retention.
Specific excess insurance
61
The policy used in most states to provide workers compensation and employees liability insurance
Workers Compensation and Employers Liability Insurance Policy (WC&EL policy)
62
Coverage for employers liability that private insurers provide to employers operating in a monopolistic state fund that does not include such insurance in its workers compensation policy.
Stop gap coverage
63
Endorsement that amend the WC&EL policy to cover employees who are not subject to workers compensation statue.
Voluntarily Compensation and Employers Liability Coverage Endorsement
64
Coverage that insures employees who are working outside the US and who are not subject to a workers compensation law for benefits equal to those provided under either the workers compensation statue of a specified state or a specific federal compensation act.
Foreign voluntary workers compensation coverage
65
An endorsement that amends the workers compensation and employers liability policy to cover the insured's obligations under the US Longshore and Harber Workers Compensation Act.
United States Longshore and Harbor Worker's Compensation Act Endorsement
66
Endorsement that amends the Workers Compensation and Employers Liability Insurance Policy to cover an employers liability for injury or death of crew members.
Maritime Coverage Endorsement
67
The endorsement in which a workers compensation insurer agrees not to endorse its right of subrogation against any organization listed in the endorsement's schedule.
Waiver of Our Right to Recover from Others Endorsement
68
The endorsement that extends workers compensation and employers liability coverage to an additional organization names in the endorsement
Alternate Employer Endorsement
69
A rate multiplier derived from the experience rating computation.
Experience modification
70
A rating plan that adjusts the insured's premium for the current policy period based on the insured's loss experience during the current period; paid losses or incurred losses may be used to determine loss experience.
Retrospective rating plan
71
An insurance policy with a per occurence or per accident deductible of $100,000 or more.
Large deductible plan
72
The duty to act in the best interests of another.
Fiduciary act
73
A legal rule that provides that a director will not be personally liable for a decision involving business judgement, provided the director made an informed decision and acted in good faith.
Business judgement rule
74
An act of a corporation that exceeds its chartered powers.
Ultra vires
75
Insurance that covers a corporation's directors and officers against liability for their wrongful acts covered by the policy and also covers the sums that the insured corporation is required or permitted by law to pay to the directors and officers as indemnification.
Directors and officers (D&O) liability insurance
76
A policy covering the liability of a corporation's directors while they serve as outside directors for another corporation.
Outside directors liability policy
77
Directors and officers liability insurance that covers only the individual liability of the insured director and officers.
Side A-only coverage
78
A D&O liability policy that insured only the independent director named in the policy.
Independent director liability policy
79
Insurance that covers an organization, its directors, and officers, and its employees against claims alleging damages because of wrongful employer practices such as sexual harassment, wrongful termination, and unlawful discrimination.
Employment practices and liability (EPL) insurance
80
Insurance that covers the fiduciaries of an employee benefits plan against liability claims alleging breach of their fiduciary duties involving discretionary judgement
Fiduciary liability insurance
81
A payment awarded by a court to indemnify an injured party for losses that result indirectly from a wrong such as breach of contract or a tort.
Consequential damages
82
A reasonable estimation of actual damages, agreed to by contracting parties and included in the contract, to be pair in the event of a breach or for negligence.
Liquidated damages
83
An award that indicates that, while the plaintfiff has sustained some harm, the injury is not one warranting substantial monetary relief.
Nominal damages
84
An insurance policy that covers third-party claims arising from either sudden or gradual releases of pollutants from specified locations.
Site-specific environmental impairment liability (EIL) policy
85
An insurance policy that includes both commercial general liability (CGL) coverage and environmental liability (EIL) coverage
CGL/EIL combination policy
86
An insurance policy that provides proof of financial responsibility under governmental regulations that apply to the owners and operations of underground storage tanks containing fuels or other hazardous materials.
Underground storage tank (UST) compliance policy
87
An insurance policy purchased in connection with a sale of property in order to transfer a potential pollutant cleanup liability and third party damages to an insurer.
Property transfer policy
88
An insurance policy purchased to insure remediation costs that exceed the projector or anticipated costs of performing an environmental cleanup of specific location that is being sold
Remediation stop-loss policy (cost cap policy)
89
An insurance policy that protects a lender's security interest in property having environmental loss exposures that are not severe enough to require true EIL insurance
Secured creditors policy
90
An insurance policy that covers the pollution related loss exposure of a contractor.
Contractors pollution liability (CPL) policy
91
Ocean shipping by cargo vessels (called tramps) that have no fixed schedule of sailing.
Tramp Shipping
92
A shipper that charters a vessel for a particular voyage
Voyage charterer
93
A shipper that charters a vessel for a specified time period.
Time charterer
94
The contract of carriage used for tramp shipping.
Charter party
95
The compensation a carrier receives for transporting cargo
Freight
96
The revenue a passenger vessel earns.
Passage money
97
Partial loss that must, according to maritime law, be shared by all parties to a voyage (cargo owners and vessel owner).
General average
98
Partial loss that is borne by only one party to a voyage (such as a cargo owner)
Particular average
99
A professional who specializes in handling general average adjustments
Average adjuster
100
Insurance that covers shipowners against various liability claims due to operating the insured vessel
Protection and indemnity (P&I) insurance
101
Insurance that covers physical damage to vessels, including their machinery and fuel but not their cargo,
Hull Insurance
102
A charter that agrees to be responsible for actually operating and insuring the vessels
Bareboat charterer
103
The service rendered by those who rescue a ship or cargo from peril and restore it to its rightful owners.
Salvage
104
The temporary possession by one party (the bailee) of personal property owners by another party (the bailor) for a specific purpose, such as cleaning or repair.
Bailment
105
Several insurers, not otherwise related, that join together to insure loss exposure that individual insurers are unwilling to insure.
Pool
106
An association of investors, grouped in syndicates, who are represented by underwriters to write insurance and reinsurance.
Lloyd's (Lloyd's of London)
107
Categories of airplane use that are used in aviation insurance classification and rating.
Purpose-of-use categories
108
A type of aircraft hull insurance that provides 'all-risks' coverage whether or not the aircraft is in flight at the time of loss.
'All risks' - ground and flight
109
A type of aircraft hull insurance that provides 'all-risks- coverage only while the aircraft is on the ground and not moving under its own power from any resulting momentum
'All risks' - not in motion
110
A schedule, attached to an aircraft policy, that limits the insured's recovery for each specified part of the aircraft to a stipulated percentage of the aircraft's total insured value.
Component parts schedule
111
The coverage, available under aircraft insurance policies, that provides scheduled benefits if a passenger suffers death, dismemberment, or loss of sight.
Passenger voluntary settlement coverage (admitted liability coverage)
112
Insurance that applies below an excess or umbrella liability policy.
Underlying insurance
113
A policy that covers liability claims in excess of the limits of an underlying policy or a stated retention amount.
Excess liability policy
114
An excess liability policy that is subject to its own provision only and does not depend on provisions of the underlying policies for determining the scope of its coverage
Self-contained excess liability policy
115
An excess liability policy that requires the insured to retain a specified amount of loss from the first dollar during a specified period of time, usually one year; the insurer then pays all loss for that period that exceeds the retention, up to the policy limit.
Aggregate, or stop loss, excess liability insurance policy
116
Coverage provided by many umbrella liability policies for (1) claims not covered at all by the underlying policies and (2) claims that are not covered by an underlying policy only because the underling policy's aggregate limits have been depleted.
Drop-down coverage
117
An amount that is deducted from claims that are payable under an umbrella liability policy and that are not covered at all by any primary policy
Self-insured retention (SIR)
118
An umbrella liability policy condition that obligates the insured to maintain all required underlying coverages in full force and effect during the policy period.
Maintenance of underlying insurance condition
119
The layers of coverage in an organizations's insurance program that are most often called on to pay claims.
Working layers
120
A level of excess insurance coverage between a primary layer and an umbrella policy
Buffer layer
121
Property that has a physical form.
Tangible property
122
Property that has no physical form
Intangible property
123
Biological identification of an individual using anatomy or physiology
Biometrics
124
An attempt to overwhelm a computer system or network with excessive communications in order to deny user access.
Denial-of-service attack
125
A risk financing technique by which losses are retained by generating funds within the organization to pay for the loss.
Retention
126
Malicious software, such as a virus, that is transmitted from one computer to another to exploit system vulnerabilities in the targeted computer.
Malware
127
The value of an organization has attained beyond the value of its tangible assets because of its favorable reputation
Goodwill
128
An insurer not authorized by the state insurance department to do business within the state.
Nonadmitted insurer
129
A policy that bundles the property and casualty coverages commonly needed by business with international loss exposure
International package policies
130
An insurance arrangement that provides comprehensive coverage for organizations operating internationally by linking one or more master policies written in the organization's home country to local policies in countries in which the organization does business.
Controlled master program
131
The losses that have occurred during a specific period, no matter when claims resulting from the losses are pair.
Incurred losses
132
Costs incurred by an insurer for operations, taxes, fees, and other acquisition of new policies
Underwriting expenses
133
An estimate of the amount of money the insurer expects to pay in the future for losses that have already occurred and been reported, but are not yet settled.
Loss reserve
134
The portion of written premiums that corresponds to the coverage that has already been provided.
Earned premiums
135
Under statutory accounting principles (SAP), an insurer;s total admitted assets minus its total liabilities.
Policyholder surplus
136
Interest, dividends, and net capital gains received by an insurer from the insurer's financial assets, minus its investment expenses
Investment income
137
The portion of an organization's profits that is paid shareholders.
Divdends
138
An insurer liability representing the amount of premiums received form policyholders that are not yet earned.
Unearned premium reserve
139
The expense that an insurer incurs to investigate, defend, and settle claims according to the terms specified in the insurance policy
Loss adjustment expense (LAE)
140
The expense an insurer incurs to investigate, defend, and settle claims that are associated with a specific claim.
Allocated loss adjustment expense (ALAE)
141
Loss adjustment expense that cannot be readily associated with a specific claim.
Unallocated loss adjustment expense (ULAE)
142
A ratio that measures losses and loss adjustment expenses against earned premiums that reflects the percentage of premium being consumed by losses.
Loss ratio
143
An insurer's incurred underwriting expenses for a given period divided by its written premiums for the same period.
Expense ratio
144
A profitability ratio that indicates whether an insurer has made an underwriting loss or gain
Combined ratio
145
The linking of the employee's goals with organizational goals to ensure that employees understand their role in attaining organizational goals.
Goal alignment
146
An internal document that sets out an organization's long term corporate goals, objectives, and strategic initiatives and that used by the organization to align its budget structure with its organizations priorities, missions, and objectives
Strategic plan
147
Large-scale action plans for interacting with the business environment in order to achieve long-term goals.
Strategy
148
The specific actions required by the organization to implement its strategy.
Tactics
149
The actions required by organizational units or departments for completing a tactic.
Activities
150
Limited assignments with target completion dates
Tasks
151
A group of policies with a common characteristic, such as territory or type of coverage, or all policies written by a particular insurer or agency.
Book of business
152
A claims that is characterized by an extended delay between the claims triggering event and the reporting of the event to the insurer.
Long-tail claim
153
A problem with a product line that incurs more losses over a specific period of time than were contemplated when the rates were set
Frequency problem
154
A problem with a product line that incurs losses over a specific period of time that are larger than those contemplated when the rates were set.
Severity problem
155
The process of extracting hidden patterns from data that is used in a wide range of applications for research and fraud detection
Data mining
156
An insurance marketing system under which producers (agents, or brokers), who are independent contractors, sell insurance, usually as representatives of several unrelated insurers
Independent agency and brokerage marketing system
157
An insurance marketing system under which agents contract to sell insurance exclusively for one insurer (or for an associated group of insurers)
Exclusive agency marketing system
158
An insurance marketing system that uses sales agents (or sales representatives) who are direct employees of the insurer
Direct writing marketing system
159
An insurance distribution channel that markets directly to the customer through such distribution channels as mail, telephone, or the internet
Direct response distribution channel
160
A type of group marketing that targets carious groups based on profession, association, interests, hobbies, and attitudes
Affinity marekting
161
In general, the tendency for people with the greatest probability of loss to be the ones most likely to purchase insurance.
Adverse selection
162
The number of losses that occur within a specified period
Loss frequency
163
The amount of loss, typically measured in dollars, for a loss that has occurred
.Loss severity
164
A review of underwriting files to ensure that individual underwriters are adhering to underwriting guidelines
Underwriting audit
165
Expenses that remain the same, in the short term, regardless of the amount of business an insurer writes.
Fixed costs
166
Expenses that change relative to premium volume increases or decreases
Variable costs
