Insurance Flashcards
(14 cards)
Risk
Peril
Hazard
Risk
o a condition with a possibility of loss
Peril
o direct cause of loss, such as fire, collision, windstorm, theft, etc.
Hazard
o a condition that may create or increase the chance of loss arising from a given peril
Insurable Risks
- sufficiently large numbers of homogeneous exposure units to make the loss reasonably predictable
- loss must be measurable and definite
- loss must be fortuitous and accidental
- loss MUST NOT be catastrophic to insurance co
Principal of Indenmity
A principal underlying insurance contracts (other than life ins) under which the insurer seeks to reimburse the insured for approx. the amount of loss, no more or no less
4 principals supporting the principal of indemnity:
- insurable interest
- actual cash value
- other insurance (limit the ability to profit from a loss)
- subrogation
Insurable interest
must operate at the issuance of insurance policy AND at the time of loss in property and casualty insurance
**with life insurance, only needs to exist at the time of issue
Collateral Source Rule
Gives the victim the right to sue the negligent party even if her/his own insurance policy compensated for the injury
Subrogation
When an insurer pays a claim, it takes over the legal rights its insured had against a negligent third party
Underwriting Process
- Application
- Information from agent or broker
- Investigation
- Information Bureaus
- Physical exam or inspections
Personal Property Endorsement
Homeowners ins usually excludes properties that can be easily stolen, such as jewelry, stamps, coins, etc.
- usually appraised and insured for specified value
- Coverage is open peril basis
PAP Auto Policy
Coverage A: Liability - bodily injury & property damage
Coverage B: Medical Payments - pays to the insured or persons occupying the covered auto
Coverage C: Uninsured Motorist - insurer to pay the insured compensatory damages because of bodily injury from uninsured motorist
Coverage D: Collision & Other than Collision
Who is covered?
- the insured and spouse (living in the same household); 90 days to get the new coverage if any spouse moves out
- a family member who is living in the same household
- any person using your auto with your permission
Business Insurance
1) Business Owner’s Policy: for small-to-medium sized companies. Covers real property, contents and liability protection. Premium is deductible.
2) Commercial Umbrella Policy: excludes E&O, malpractice or mistake of a professional.
3) Professional liability
- Malpractice: results in bodily injury, e.g. physicians & dentists
- E&O: results in property damage, loss of money.
4) Directors and officers E&O: protects corporate officers and directors from suits alleging management
5) Worker’s compensation: reflects absolute liability; ER must pay and premiums are deductible. Owners of business are not covered.
6) Unemployment Insurance: FUTA paid by ER, also deductible
Tax treatment to Employees
Medical Reimbursement: tax-free
Worker’s compensation: tax free
Disability benefits (or Sick Leave pay): taxable
Unemployment benefits: taxable
Medicare Eligibility
- All persons age 65 or over who are entitled to SS benefits or Railroad retirement program.
- Regardless of age, disabled beneficiaries receiving benefits at least 2 years, incl. disabled workers at ANY age, disabled widow or widower (of workers) age 50 or over, beneficiaries age 18 or older who were disabled before 22. DISABLED INDIVIDUALS automatically receives part A & Part B.
Medicare Part A - Hospital Insurance
- Hospital stay: a deductible for 1st 60 days, a 2nd deductible for the next 30 days and a 3rd deductible for another 60 days. Inpatient hospital care is limited to 150 days for one stay.
- post-hospital care in a skilled nursing home - 100 days
- unlimited number of post-hospital home health services
- Hospice care for terminally ill patients
- patients pay for 1st 3 pints of blood. Additional blood are covered
Medicare Part B - Medical Insurance
- Voluntary, persons who are eligible for Part A are also eligible for B
- Participants pays partial premiums
- after deductible, Part B pays 80% of approved charges; no stop-loss applies
