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CFP Risk Mgmt, Insurance & Employee Benefits > Property and Casualty Insurance > Flashcards

Property and Casualty Insurance Flashcards

1
Q

Name the 12 perils covered by basic homeowners insurance

A 
Fire
Lightning
Windstorm
Hail
Riot or civil commotion
Aircraft
Vehicles
Smoke
Vandalism or malicious mischief
Explosion
Theft
Volcanic eruption
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2
Q

Name the 6 perils covered by broad coverage

A

Falling objects
The weight of ice, snow or sleet
Accidental discharge or overflow of water or a stream
Explosion, cracking, burning, or bulging of hot water heater, air con, fire sprinkler or household appliance
Freezing of the above systems
Sudden and accidental damage from an artificially generated electrical current

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3
Q

What is open-perils coverage and what are the exclusions?

A 
This coverage is so broad that it covers everything excluding:
Earthquakes
Floods
Neglect
War or nuclear hazards
Power failure
Intentional loss
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4
Q

What are the homeowners policy sections and their sub-coverages?

A

Section I: Property loss

  • Coverage A: insures the dwelling
  • Coverage B: insures other structures
  • Coverage C: insures general personal property
  • Coverage D: provide loss-of-use coverage
  • Coverage B-D are a percentage of Coverage A*

Section II: Liability loss

  • Coverage E: comprehensive liability
  • Coverage F: medical payments to others
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5
Q

What is the HO-2 policy?

A

Broad form (named perils). Provides broad coverage for dwelling and personal property

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6
Q

What is the HO-3 policy?

A

Special form (open perils). The most popular homeowner policy. Real property is covered on an open-peril basis unless specifically excluded. Covers all perils in HO-2 as well

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7
Q

What is the HO-4 policy?

A

Contents broad (tenants or renters). Covers personal liability and loss of use

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8
Q

What is the HO-5 policy?

A

Comprehensive form. Similarly to HO-3, but personal property is also on open peril basis

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9
Q

What is the HO-6 policy?

A

Unit (condominium) form. Provides coverage for condo owners personal belongings and any structural area the condo owner is responsible for

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10
Q

What is the HO-8 policy?

A

Modified form for special risks. Use for older homes that have replacement costs exceeding its market value. This policy will provide replacement costs, labor and material, necessary to get the dwelling functional

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11
Q

What is inland marine or “floater” insurance?

A

Used to cover more valuable personal property rather than less valuable items around the house. (An art collection vs a blender)

Covers articles in transit

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12
Q

What is the market value of a home?

A

The price a willing buyer and willing seller, would exchange property

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13
Q

What is the assessed value of a home?

A

The value at which the taxation authority would levy property taxes - typically 60-80% of the market value

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14
Q

What is the replacement cost value of a home?

A

The amount it would cost to rebuild the home as is. This is the amount that should be insured

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15
Q

What is the coinsurance provision?

A

A provision that requires homeowners to insure at least 80% of their home’s replacement value.

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16
Q

What is guaranteed replacement costs?

A

A provision that insures replacement above 100% to guard against natural disasters when the cost of rebuilding goes up.

17
Q

What is the inflation guard endorsement?

A

It automatically increases the dwelling coverage by an amount usually tied to an index

18
Q

What are usual exemptions to comprehensive personal liability (CPL) insurance?

A 
Professional or business liability
Aircraft
Watercraft
Automobiles
Communicable disease
Rental property
19
Q

What are the various types of liability policies?

A

HO, section II, Coverage E: comprehensive personal liability (CPL)
HO, section II, Coverage F: Medical payments to others
Personal injury liability: torts from certain injuries
Personal Liability Umbrella Policy (PLUP)

20
Q

What are the three types of personal automobile policy (PAP) coverages?

A

Legal liability
Injury to the insured and family
Damage to the vehicle

21
Q

What are the 6 parts to the personal automobile policy (PAP)?

A 
Part A: liability coverage
Part B: Medical payments coverage
Part C: Uninsured motorist coverage
Part D: Coverage for damage to your auto
Part E: Duties after an accident
Part F: General provisions
22
Q

What are insurance endorsements?

A

Additions or deletions to the policy

23
Q

What are monoline forms?

A

These are specific types of loss policies. Strung together, they can protect a businesses specific line of work

24
Q

In Package Coverage insurance, what are the four sections of the policy?

A

Common Policy Declarations: defines the insured, date of policy and the premium for applicable coverages

Common Policy Conditions: contains provisions common to most types of coverage

Common Condition form: contains provision peculiar to this type of coverage

Exclusion: what the policy won’t cover

25
Q

What are the 4 parts to the Business owner’s Policy (BOP)?

A

Part 1: Common policy conditions
Part 2: Property coverage
Part 3: Causes of Loss and Exclusions
Part 4: Liability coverage

26
Q

How does the commercial package policy (CPP) differ from the BOP?

A

It operates very similarly, but it is usually for larger businesses than the BOP and it also likely includes coverage for buildings and their contents

27
Q

What are the different types of commercial liability insurance?

A

Employer’s liability: protects the employer from employee lawsuits

Directors and officers E&O: protects key leaders from lawsuits

Employment Practices: protects employers from suits having to do with inappropriate workplace lawsuits

28
Q

What are the different types of Professional Liability Insurance?

A

Malpractice: protection against medical mistakes

Defense and settlement: pays a settlement instead of going to court

E&O: protects against financial harm

29
Q

What are the two forms of social insurance businesses must carry?

A

Worker’s comp: protects employers from their 100% liability to pay for medical bills related to an on-the-job injury

Unemployment Comp: a tax paid by the employer to fund an unemployment benefit for an out-of-work employee

30
Q

What does it mean that umbrella coverage “steps down”?

A

It steps down on top of existing liability coverage

31
Q

What types of autos are typically covered under liability?

A

Any vehicle listed
Utility trailer owned by the insured
A private auto purchased within 14-30 days

32
Q

What are the typical limits of coverage D - loss of use?

A

20% of coverage A - dwelling

33
Q

What does the basic Commercial General Liability coverage protect?

A

Non-auto, non-employee liability claims

CFP Risk Mgmt, Insurance & Employee Benefits (6 decks)

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