NY Property and causality

Question 1

Risk

Answer 1

Uncertainty concerning financial loss

Question 2

Actual cash value

Answer 2

Replacement cost minus depreciation

Question 3

Replacement cost

Answer 3

Amount of money it costs to replace an item at the time of loss

Question 4

Indemnity

Answer 4

Restoring the insured to the financial position prior to the loss

Question 5

Limit of liability

Answer 5

The maximum amount the insurer will pay under that policy for any 1 loss

Question 6

How much does an extension of coverage cost once co insurance is satisfied?

Answer 6

0 if co-insurance is satisfied

Question 7

Coinsurance

Answer 7

Requirement of insured to carry a minimum specified amount as percentage of replacement cost of a partial loss

Question 8

Pair and set Clause

Answer 8

Loss to one item of a pair or set that doesn’t constitute a total loss of the set

Question 9

When an insured and insurer cannot agree on the value of an item two appraisers are hired to determine the value

Answer 9

Appraisal

Question 10

Risk Management

Answer 10

Avoidance - avoid the risk 
Assumption of risk- assuming responsibility of the risk 
Transfer -pay insurance premium 
Sharing- deductible 
Reducing -preventative procedures

Question 11

Pro Rata Liability

Answer 11

Two insurers share different percentage of liability

Question 12

Equal shares

Answer 12

Two parties split the liability

Question 13

Assignment

Answer 13

Rights and coverages re assigned if approved by the insurer

Question 14

Subrogation

Answer 14

The process by which two insurance companies determine the fault and pays a claim of the insured.

Question 15

Arbitration

Answer 15

A process for insurance companies to settle difference when one company subrogates against another

Question 16

Cancellation

Answer 16

Terminating the policy for non payment or increased during the policy period

Question 17

Non renewal

Answer 17

Terminating a policy after the specified period due to increased risk, deterioration of property

Question 18

Vacancy

Answer 18

A building which is unfurnished and not used for dwelling or business

Question 19

Unoccupied

Answer 19

A building that is furnished but not used as a dwelling or business

Question 20

Right of salvage

Answer 20

Insurers have right to the property after it’s been paid

Question 21

Abandonment

Answer 21

Insurance has the right to waive “right of salvage”

Question 22

A section of an insurance policy that indicates the general rules or procedures that the insurer and insured agree to follow under the terms of the policy.

Answer 22

Conditions page

Question 23

The following are all part of the conditions page

Answer 23

Inspection
Changes to the policy
Liberalization clause
Return of the premium

Question 24

Loss ratio

Answer 24

Formula used to compare premium income to loss

Incurred losses + loss adjusting expense \ earned premium

Question 25

Endorsement

Answer 25

Anything that modifys the original contract

Ex:adding or removing coverage

Question 26

Duties after loss

Answer 26

• Protect the damaged property from further damage
• prepare an inventory
• cooperate with insurer
• notify the police
• submit signed sworn proof of loss

Question 27

Judgement rating

Answer 27

Used when credible statistics aren’t available

Ocean marine insurance

Also know as “A” rated

Question 28

Schedule rating

Answer 28

Applying a schedule of charges and credits that lead to a base rate to determine individual exposure

Used less frequently due to ISO

Question 29

Experience rating

Answer 29

Premium is determined upon the insureds loss history

Question 30

Retrospective rating

Answer 30

Self-rating system in which actual losses determine the final premium
Subject to a minimum and maximum

Question 31

Merit rating

Answer 31

Not determined on actual loss but rather records that indicate risk

Question 32

Contract of adhesion

Answer 32

Insurance contracts underwritten by insurers and offered to potential insured on a “take it or leave it” basis.
No negotiating

Question 33

Warranty

Answer 33

A statement guaranteed to be true

Question 34

Elements of a legal contract include

Answer 34

• Agreement-offer and acceptance
• Consideration
• competent parties
• legal purpose

Question 35

Aleatory contract

Answer 35

An exchange of unequal amounts or values

Question 36

Risk Retention

Answer 36

Planned assumption of risk through the use of deductibles,co payment or self pay

Question 37

What are three goals of risk retention?

Answer 37

1. Reduce expenses and improve cash flow
2. Increase control of claim settling and reserving
3. Funding losses that can’t be insured

Question 38

Express authority

Answer 38

Authority a principle intends to grant an agent through a contract

Question 39

Reinsurance

Answer 39

A method insurers use to protect against catastrophic losses

Question 40

Aggregate limit

Answer 40

The maximum LIMIT of coverage available under a liability policy for 1 year

Question 41

When are aggregate policies restored?

Answer 41

Anniversary date of the policy

Question 42

Short rate refund

Answer 42

Insurer imposes a (10%) penalty on the refund of unearned premium

Question 43

Flat cancellation

Answer 43

Policy cancelled upon its refund date (no penalty)

Question 44

Pro rata refund

Answer 44

Mid term cancellation (no penalty) calculated
365 days- days used= days to refund
Premium / 365= cost per day
Day
Days to refund x cost per day= total refund

Question 45

Strict liability

Answer 45

Applied in product liability cases.
Manufacturer sells a product that has an “implied warranty” that it is safe
Business is liable regardless of fault or negligence

Question 46

Terrorism risk insurance act

Answer 46

Nullifies any provision in P&C that excludes coverages for losses under the act of terrorism

Question 47

Hired auto and non-owned auto liability endorsement provides coverage to insured

Answer 47

For the use of hired and non- owned autos