Gontime Flashcards
(208 cards)
0
Q
What is indemnity
A
To restore, no better-no worse
1
Q
What is insurance
A
Transfer of risk from insurer (1st party) to insured (2nd party)
2
Q
What is covered property insurance?
A
Real property and personal property (things you can touch)
3
Q
What is casualty insurance
A
Legal LIABILITY to others (3rd party) claimant for liability claim
4
Q
What is a personal line
A
Type of insurance for families. Auto, home, boat, rv
5
Q
What is a commercial line of insurance
A
For businesses; taxi or 18 wheelers, usaa bldg, customer in bldg, workers comp
6
Q
What does an agent sell
A
Sell policies
7
Q
What do actuaries set
A
They set rates
8
Q
What is a risk?
A
Uncertainty of loss
9
Q
What is a pure risk
A
Chance of loss only, son driving sports car
10
Q
What is speculative risk
A
Chance of winning or loosing, slots and lottery
11
Q
What risk does insurance only cover between pure and speculative
A
Pure risk only
12
Q
What is the Law of Large Numbers
A
Actuaries estimating claims using the law
13
Q
What is a peril
A
A cause of loss
14
Q
What are named perils
A
Lists things that ARE covered
15
Q
What is an open policy
A
Covers all except what’s specifically excluded
16
Q
What is a hazard
A
Conditions that increase the chance of peril happening
17
Q
List the different types of peril
A
Visible- dead tree in yard
Dishonest- arsonist
Morale- attitude of carelessness
18
Q
What are the two types of loss
A
Direct- physical damage to property
Indirect- loss of use
19
Q
What is an insurability interest/ financial interest
A
For an insurance policy to pay, there must be an insurance risk. Must exist at time of loss
20
Q
Give examples of insurable interests
A
Buy a new car (auto loan) or a house (mortgage) or rental car
21
Q
What is a tenant improvement
A
When you do work on a apartment you DO NOT own
22
Q
What is a proximate cause
A
The first cause in an unbroken chain of events
*typically if proximate cause is covered, all resulting damage is too
23
Q
What is CALC
A
Competent parties- 18,sane,sober
Agreement- offer and acceptance
Legal purpose- transfer of risk, must support public policy
Con$ideration- dollar value, exchange of values (premium=promise to pay)
Insured makes the offer
24
What is a representation
Believed to be true, answers to questions by insured
25
What is misrepresentations
Has no effect to be issued policy
26
What is material misrepresentation
Not true but would have caused insurer not to issue policy
27
What is concealment
Intentionally hidden
28
What happens when fraud occurs
Void the policy due to the concealment
29
What is a warranty
Written into the policy, promises insured will do, breach will void policy
30
What is a binder
Temporary contract, good for 30 days
31
Policy structure
Declarations-receipt
Insuring agreement- promises coverage
Conditions- rules (procedures) rights/responsibilities
exclusions- what's not covered
32
What do declarations do
Tailors the policy
33
What are the 6 P's
Policy #, parties involved! property description, policy term, policy limits and deductibles, premium
34
What is limit of liability
Maximum per loss
35
What is aggregate limit
Maximum per policy, found on commercial policies
36
What is a deductible
Retention or retention limit, insurer pays excess
If add to deductible you reduce premium
If increase deductible reduce frequency of claim
37
What is the premium
Consideration paid by insured is premium
| Policy cancelled before expiration, insurer may pay back $ to unearned premium
38
What is an Insuring Agreement
uSAA promise to pay covered perils if covers liability, insurers pay for defense covered here
39
What are conditions
Contains duties and rights of the parties
Other procedures in conditions
-termination of procedures
40
What are the Insured duties after a loss
-prompt notification
-cooperation with USAA
-submission of proof or loss of sworn statement w/I 91 days
Protect property from further damage & inventory of damage property
41
What are USAA subornation rights
Insurer now has right to recover amount paid for loss from at-fault party
42
What are the rights of mortgagee
Pay premium, receive claim payment, receive cancellation notice
* nothing insured does, can prevent from collecting under policy
43
What are the 2 types of terminations
Cancellations
- before end of policy
Non-renewals
-occurs at end of policy period
44
What are cancellations
Insurers may cancel subject to state regs.
| 10 day advance notice, insured receives full refund of unearned premium without penalty, called pro rate
45
When can insured cancel
At any time
- no advance notice required
- insured may not get a refund
46
What are non renewals?
Insurer may nonrenew subject to state regulations
- 30 day notice required
- no adjustment in premium since goes to exp. date
47
When may insured renew
At any time (no rules)
| -no advance notice required
48
What is the claims dispute resolution processes
Disagreements on value of the loss (appraisal) determines
| If cannot be done, hire an umpire by both appraisers
49
What is an arbitration
Deals with disagreements on coverage issues
50
Where are the other insurance located
In the conditions section; when insured has more than one policy covering same loss
51
In other insurance, what is Pro Rata Liability
Proportionate total loss, big policy pays proportionately more
Policy limit 100,000, fire loss 40,000
Insurer A, 1/4 of limit; 25,000/100,000, 1/4 of 40,000=10,000 loss
Insurer B, 3/4 of limit; 75,00/100,000, 3/4 of 40,000= 30,000 loss
52
What is contributions by equal shares
All insurers share limit of lowest policy, split evenly.
Fire Loss= 40,000
Insurer A pays 1/2 of loss, 20,000
Insurer B pays 3/4 of loss, 20,090
53
What is primary and excess (other insurance)
Primary pays first, excess pays after primary limits are exhausted.
Policy A is primary- 40,000 loss
A pays 25,000 (until exhausted)
B pays remaining 15,000
54
What is coverage territory
Where applies, restrict to US (auto)
| Worldwide=floaters
55
What are other common conditions (Assignments)
Insured May not transfer policy to another person unless given
Written consent
56
What is liberalization
Broadens or extends coverage, no additional premium charged
57
What legal action is taken against insurer
Insured May use within 2 years and one day of loss
58
What are the exclusions in DICE
Things that aren't covered, flood, contraband, intentional acts
-have these bc they aren't insurable or better covered somewhere else
59
What are endorsements
Changes to policy
| *only authorized officer can change policy, insured can request change
60
What is Certificate of insurance
Verifies coverage, and it isn't an insurance contract
61
What are the six Loss valuations
```
Replacement
ACV
value stated
Values stated policy (liquidated determined)
Market value
Pair and set
```
62
What is a replacement cost
Today's cost, with like and quality
63
What Is actual cost value
Replacement cost-depreciation
64
What is aggregate/stated value
antiques and classic care and artwork
65
What is value policy
Destroyed by fire, insured has right to demand policy limits as value, doesn't apply to personal property
66
What is loss valuation
Negotiated amount determined by a buyer and seller
67
What is pair and set
Subtract value of what remains after the loss for value of the pair
68
What is total loss
Costs more to repair than to replace
69
What is partial loss
any loss that isn't total loss.
| * adjuster will verify if co insurance requirement is met before they pay a partial loss on building*
70
What is coinsurance
Insured to carry a minimum amount of insurance (insurance to value) 80%,
- never pay more than limit bought.
- Minimum not carried, partial losses are not paid in full (penalty applies)
71
What is vacant
Empty bldg, insured penalized after 60 days
| -May not be covered for losses such as vandalism but still covered in fire insurance
72
What is abandonment
Insured cannot abandon partially damaged property and expect to be paid for its full value
73
What is salvage value
Total losses
74
What is casualty insurance
Most common is casualty coverage is Liability
75
What is liability
Legally responsible, third party coverage
76
What is civil liability
Actions brought by injured parties, can be covered by liability insurance
77
What is a tort
A tort is a civil wrong.
78
What is An unintentional tort
Negligence
79
What is an direct liability
Insured is wrongdoer
80
What is vicarious liability
Insured is responsible for actions of wrongdoer
81
What is contractual liability
Insurer assumes another's liability under written agreement
82
What is absolute liability
Liability without fault, child drowns in pool, wild animal escapes cage, pit bull bites neighbor
83
What is strict liability
Product defect claims
84
What is negligence
Failure to do something that should be done that results in a LOSS
- reasonable prudent person rule
* would not be texting, driving, while in car and driving
85
What are the elements of negligence
Legal duty- owe obligation
Breach of duty- failure to comply
Actual loss- another suffers loss
Proximate cause- breach of duty is direct cause
86
What are the types of injuries and damages
BI- inc pain and suffering
Property damage-loss of use (fix of truck,rental vehicle)
Personal injury- persons character or reputation
87
What is the duty to defend
If claim would've been true, then it would be covered
| Applies to frivolous claims
88
What is an accident
Sudden and unexpected
| *specific time an place proven*
89
What is an occurrence
Event happens over time, Continuous or repeated exposure
| Results in injury or disease
90
What are compensatory damages
Special- monetary damages
| General- non-economic losses
91
What are punitive damages
Punish wrongdoer due to gross negligence
| * usually not covered by insurance
92
What is admitted
Authorized insurer- certificate of authorityb
93
What is non-admitted
Unauthorized insurer, not required to have CoA, only sell surplus lines
94
What is a CoA
Issued by TDI, is an insurance company license
95
What is surplus line insurance
In Texas, agent must have surplus lines to sell surplus lines insurances
96
What are the surplus lines conditions
Coverage only placed with unauthorized carrier after a diligent search of authorized or admitted insurers.
*before can be non-admitted, you must check if they can be on admitted side
97
What is a domicile
Domestic-state
Foreign-in another state
Alien-in another county
98
What are stock insurers
Owned by shareholders
Dividends paid to stockholders if a profit is made and are taxable
Dividends are not guaranteed
99
What are mutual insurers
Policyholders.
Participating dividends are partial return of premiums and are not taxable
Dividends are not guaranteed.
100
What is self insurance
Business sets up claims savings account, to pay for property damage or risk
101
What is a govt insurance called
Residual market;
| Def and state govt provide insurance not available by other insurance companies
102
What is the FAIR program
Home insurance, People that are subject to fire, inner city crime areas.
103
Who regulates the insurance business
State regulation
104
What and who falls under federal regulation
Applies, but only to extent that such business is. to regulated by law
105
What are the sources of underwriting information
```
Credit report
Consumer investigative
Inspection report
Insurance application
MVR
Photos
```
106
What is the fair credit reporting act
To protect when adverse action resulting in review of credit
107
What do underwriters do
Use credit history and other sources of info to eval risk.
108
What are consumer rights under fair credit reporting act
Required to give written and verbal disclosure at time of app.
Consumer request copy of report (from credit bureau)
May challenge accuracy of reports contents
109
What is the terrorism risk insurance act
Fed govt reimburses insurance companies for terrorism losses covered in some (commercial insurance) policies
110
Who certifies that they can pay for losses under terriorism assurance act
Secretary of State, secretary of treasury, and attorney general
Will not pay more than $100 billion in aggregate
111
How is the terrorism risk assurance act applied
Must be injurious to life, property or infrastructure
Resulted in. U.S.
Produce $5 million in damage
112
What is Gramm Leach Bliley Act
Req financial institution to provide customer with notice if t hey share non-public info to third parties
Allows customer to opt out-instruct insurance company to not share with others
Also forced to develop uniform licensing laws
113
Who passes state regulations
State legislature passes statutes and publishes laws
114
What is the Texas insurance code
All laws on particular laws
115
What is commissioners duties
2 year term, February 1st of each odd year, no financial interest in company
116
What are the powers of commissioner
```
Issues insurance and licenses and certifications of authority,
Conducts examinations (audits)
```
117
What are powers of commissioner
Issues cease and desist, imposes penalties following hearings, approves insurance policy forms sold within state
Approves rates for regulated lines of insurance
118
When are investigations done by commissioner
Once every five years
Insurer pays for audit and receives premium tax credit
New insurers examined every years or as necessary
119
What is the guarantee association
Protects claimants and policyholders in The event of insurers insolvency
Composed of all insurers authorized to transact business within the state
120
What is guarantee assoc.
Governed by board, 5 insurers and 4 public
121
What is the assessment of guaranty association
Amounts they pay is based upon their share of market in Texas, result in fine if not payed
122
What is the financial strength ratings
Private companies (not TDI) that publish these ratings
123
Who are the private companies that publish ratings
A.M. best
Moody's
Standard and Poor's
Fitch
124
What is rate regulation
Use and file in tx
| TDI could eventually decline rate increase and order company to pay refund
125
What is agent regulations
Agents represent their companies
Eval customers needs and recommend appropriate coverages
Bind risk
126
What are the licensing requirements
18 years of age, pass exam, fingerprints, notify change of address w/I 30 days
127
Who is a resident agent
Licensed to sell in tx,
128
Who is a nonresident agent
Does not live in tx, allowed to sell in tx
129
What is a temp license
90 days, no renewal, required to have a agent sponsor, no test
130
What is an emergency license
90 days, agent has died or is disabled, renew 1 time, no test required
131
What is a insurance service rep
Salaried, no commissions, only does quotes and explains coverages,
Does not bind coverage or collect premiums, unless told to be supervising agent gives expressed authority
132
What is a limited lines agent
Sells one type of insurance,
133
Who is a risk manager
Does not permit licensee to receive commissions from sale of insurance
134
Who is a managing general agent
Appoints and supervise property and casualty agents who sells insurance, not licensed to sell, agents do actual selling.
135
Business and financial entities
One partner must be licensed before business can apply for license.
Banks must be separate and distinct from bank ops, to avoid coercion.
136
What is a license renewal
2 years
If lapses, may renew within 90 days- subject to a 50% fee
Must apply for new license if expired for one year or more
137
CE
2 ethics hours, 4 years of records, 30 hours, 50% in classroom
138
What is termination of appointment
Must be reported to TDI,provide reason for termination, LOA doesn't result in loss of license
139
Who can take away license
Commissioner
140
What are fiduciary responsibilities
Misappropriation of funds, subject to state fines
| Mixing (commingling) is prohibited
141
What is conversion
Bringing $ for one purpose then converting to a different use
142
What are the disciplinary actions
Cease and disorder
Suspend or revoke license
Levy fine- $25,000
20 days to request hearing, TDI must give 10 day advance notice of hearing
143
What penalties and fines may arise resulting from disciplinary actions
Misappropriating or converting $
| Convicted of felony= If licensed, notify commish w/I 30 days
144
What if you fail to comply with fines
Agents-$1,000 per violation, $5,000 max
| Insurers- up to $25,000
145
What is twisting
Misrepresentation
146
What is defamation
Financial condition
147
What is disparagement
Services
148
Unfair trade practices- testimonials
Genuine true, must be current opinion
149
What is boycott, coercion and intimidation
Force someone to do something
150
What is the false use of stats
Verifiably true, source must be i.d.
151
What is unfair discrimination
Race religion or country of origin is not allowed
152
What is unfair claims practices
Unless the claim is a fire loss of income claim
153
What time requirements do adjusters must me
15 days to acknowledge the claim or start the investigation
15 business days to except or deny the claim
Five business days to write the check
Requirements may be modified if arson or weather related catastrophe is involved
154
What are covered autos
Owned vehicles or private passenger auto's pick up trucks and vans
size requirement is 25,000 pounds or less only
for personal use not business
the exceptions are farm vehicles
155
Covered autos non-own vehicles
Borrowed vehicles
rented vehicles
and temporary substitute vehicles
And rentals and these are all covered under liability only
156
Trailers hitched to insured vehicles
Automatically covered for liability only
157
Persons injured and Who are covered
Resident spouse and the name insured
158
Who is a Resident family member
Blood marriage or adoption
| wards or foster children
159
Any person driving with the church permission who are they
Permissive user's with spouses permission
160
What do Part A third-party cover
Pays legal obligations
bodily injury or property damage
Pays all claims handling cost without limits
Does not cover the insureds injuries or damage
161
What do bodily injury cover
Medical expenses
lost wages
pain and suffering
162
What is property damage
Damage to another vehicle-pay for rental as well
damage to a building
damage to wall or fence
163
What is the Texas motor vehicle safety responsibility act
Requires proof of ability to satisfy a liability claim against a person as a result of an accident
Meet requirements in Texas-by auto liability insurance or bond, deposit money with the state $85,000,
self-insure for $1 million
164
What are the limits of liability for Texas, split limit
$30,000 for bodily injury per person
$60,000 for bodily injury per accident covers all people in the vehicle
$25,000 for property damage per accident
165
What is the combined single limit
$85,000 per accident
166
What is a supplementary payment-bonds
Premiums up to $250
| Loss of earnings up to $200 per day
167
Is defense a supplementary payment
Difference is not a a supplementary payment
168
What are the exclusions for liability
Does not apply to family members for use of a vehicle without permission
169
What does livery mean
Means delivery for a fee or taxi
170
What is a courier
Property for a fee
171
Is prearranged racing covered as an exclusion
No it is not covered
172
Lost cause intentionally by insured not covered
Road rage
173
What exclusions not normally covered under motorized vehicles
Motorcycles or autos with fewer than 4 wheels
174
Other insurance clause
Just borrows Mary's car and is in an accident Mary is primary Jess is excess
175
What is Out of state coverage
Insured will pay higher
Liability limits purchased by the insurer
Limits required by the state in which the insured is traveling
176
What is The first parties medical payments
The insured occupying an auto or as a pedestrian is covered
| The insurers guess passengers with permission is covered
177
Up to what amount is the medical payments coverage
Paid regardless of fault up to three years
178
Are medical expenses covered
Medical and funeral expenses are covered, $500 per person is minimum limit
179
What is PIP
Insured occupying as a pedestrian, first party
| Pays regardless of fault up to three years
180
What does PIP pay
Medical funeral expenses,
80% of lost wages or essential services
A person cannot collect both
181
What are the PIP limits
$2500 per person minimum
| May be rejected in writing
182
What is uninsured and Underinsured motorist coverage
First party coverage
Property damage up to $250 deductible applies
Person has no insurance you must pay the deductible
183
Who is an uninsured motorist
The hit-and-run
Or physical contact with other vehicle must occur
Runs you off the road it doesn't hit you is not a hit-and-run
184
What is in Under insured motorist
Excess coverage over at fault drivers insurance
185
What are the available limits
Minimum split limits 30/60/25
$85,000 combined single limit
Maximum cannot exceed limit purchased for liability
186
Must Um/uim be included
Must be included in all liability policies issued in Texas, unless insured rejects the coverage in writing
187
What are the physical damage coverages?
Damage to ensured vehicles, non-owned vehicles (rental cars)
188
What physical damage coverage is covered in collision
Collision with another vehicle or object
| upset of the vehicle; which is an overturned vehicle
189
What is comprehensive coverages
```
Earthquake and flood (auto)
glass breakage (missile)
contact with the bird
```
190
What are some physical damages exclusions
Sound video equipment permanently installed, $1500 if permanently installed
Personal property in the car
customized equipment
191
What are the most common exclusions
```
Wear and tear
mechanical or electrical breakdown
road damage to tires
war (nuke)
freezing
```
192
What are some free coverages
Limited to $20 per day up to $600 maximum per loss
| If a theft loss there is a 48 hour waiting period
193
What is a loss settlement
Settled in actual cash value, you must depreciate the claim if in a wreck
194
What are the exceptions to newly acquired vehicles
Liability will extend until the end of the policy. And replaced for 14 days
195
What Are the duties of an insured following a loss
Notify the police of a hit-and-run and notify the police promptly after vehicle is stolen
196
What are the general provisions for territory
United States and its territories and possessions
Canada, Puerto Rico and Guam
no coverage in Mexico
197
What are the provisions for cancellation
Insurer gives you 60 days for a new policy to get to know you
and may cancel with 10 day notice
198
What if cancellation is more than 60 days
Insurer can cancel with a 10 day notice for nonpayment of premiums, drivers license suspended or revoked, fraudulent claim, vehicle registration is suspended or revoked.
199
What is a dwelling policy eligibility
Tenant usually occupied, no farms
| mobile homes by endorsement and the wheels must come off
200
What is a monoline policy
It's a type of insurance, property only, no liability unless endorsed, no theft coverage unless endorsed
201
What is dwelling policy coverage A
Additions attached to it, screen doors and windows, outdoor equipment, materials and supplies used for repairs or construction
202
What is dwelling policy coverage B
Other apart structures-limit is 10%, detached buildings, fences, detached garage, utility shed
203
What is dwelling policy coverage C
Personal property-the contents of the insured, insureds custody (houseguests), students property at a dormitory
204
What is dwelling policy coverage C
Personal property not covered-business equipment stored on premises, pets, motor vehicles, accounts, bills, currency, property of renters
205
What is dwelling policy coverage D
Fair rental value, loss of rental income caused by a covered peril
206
What is dwelling policy coverage E
Additional living expenses, motel bills, restaurant bills, laundry costs, due to loss of the use of the dwelling caused by a covered peril
207
What are other coverages for dwelling policies-free
Debris removal clean up after covered loss, property removal (30 days)
fire department service charge $500
Trees, shrubs, and other plants
Up to $500 per plant
Perils such as fire and vandalism are covered
