Property & Casualty Flashcards
(146 cards)
1
Q
Agent
A
Producer acting as a legal representative of Insurance Co
2
Q
Broker
A
representative of insured/client
3
Q
Risk
A
chance of loss
4
Q
speculative risk
A
chance of loss one accepts in hopes of a gain
5
Q
pure risk
A
chance of loss w/o possibility of a gain
6
Q
spreading the risk
A
sharing the risk among customers
7
Q
risk avoidance
A
staying away from risky activities
8
Q
risk reduction
A
taking measures to reduce risk
9
Q
risk shifting
A
get someone else to agree to accept risk. i.e. hold harmless agreement
10
Q
risk retention (self-insuring)
A
having enough funds to cover losses
11
Q
Insurance
A
- transfers risk from insured to insurer
- contract where Insurer agrees to proctect Insured against injury, damage, or liability from a future event
- social device through which indicviduals by paying a premium fee transfer a defined & limited portion of their risk to an insurance co.
12
Q
Indemnification
A
concept that an insurance policy is to make the Insured whole after suffering a loss
13
Q
insurance covers
A
pure risk but not speculative risk
14
Q
law of large numbers
A
mathematical concept that says its easier to predict losses based on historical data if we have a large number of insureds
15
Q
insurable losses are:
A
predictable, accidental, measurable, but not catastrophic
16
Q
stock companies
A
sell shares of stock to investors
non participating companies (policy holders don’t participate in profits. owners do)
owned by stockholders
17
Q
mutual companies
A
owned by policy holders participating company (policy holders may receive dividends if there's a profit)
18
Q
reciprocal company (cooperative)
A
group of policy holders who have an agreement of indemnification managed by attorney in fact.
19
Q
fraternal benefits society
A
sell insurance to policyholders with common ethnic, religious, or charitable heritage
20
Q
National Assoc of Insurance Commissioners
A
provides unity in insurance laws throughout the country
21
Q
perils
A
cause of loss
22
Q
underwriting
A
refers to selection & classification of risk
23
Q
hazard
A
factor that increases the chance of a loss occurring
24
Q
physical hazard
A
tangible condition that make occurrence of peril more likely
25
morale hazard
carelessness or sloppiness
26
moral hazard
insured's intentional act or disregard that may cause a loss or make a loss more likely to occur
27
insurable interest
financial interest in covered property if a loss occurs
| needs to exist at time of loss not when policy is issued
28
limit of liability
max a policy will pay for any one loss
29
deductible
portion of the loss that the insured must absorb before insurance company begins to pay; doesn't uphold indemnity
30
other insurance clause
each policy will pay a portion of the loss
Property policys = pro-rata
Liability policies = share equally
31
Assignment
transfer of policy to new policy owner. must be agreed to in writing by owner (assignor), new owner (assignee) and insurance company
32
nonrenewal
termination of coverage at the end of existing policy period; no reason has to be provided
33
cancellation
termination during the policy period (10 days notice)
34
reasons for cancellation
1. nonpayment of premium
2. material misrepresentation or concealment
3. substantial increase in risk
35
Insurer cancels policy refund is
pro-rata
36
insured cancels policy refund is
short-rate
37
basic & broad provide
named peril coverage
38
comprehensive coverage
does not provide named peril coverage: aka all risk/special/open perils/extended coverage
39
exclusions
peril or item not covered
40
inherent vice
natural deterioration
41
liberalization clause
automatically updates policy
42
coinsurance clause
encourage insureds to insure to full value; requires property to be covered to specific percentage
43
contract
agreement consisting of an offer and its acceptance made by competent parties to provide something (consideration) for each other
44
insured gives insurer 2 items of consideration
1. money-premium 2. information-application
45
representation
statement made to the best of the applicants knowledge
46
warranties
statements made on an application form that the applicant guarantees to be true. insured's promise to do something
47
concealment
intentionally hiding the truth or intentionally telling only a partial truth regarding a material fact. includes acts of omission
48
misrepresentation
intentional lie
49
contract of adhesion
insured has no say in contract/policy
50
credit report
don't need insureds permission or notify insured
51
investigative report
compiled by investigator, must notify applicant
52
real property
buildings & other structures
53
Additional Coverages
1. debris removal
2. removal/preservation of property
3. fire dept service charge
54
replacement cost
pays the insured the full cost (up to limits of the policy_ of buying new, similar property to replace damaged or destroyed property
55
actual cash value - ACV
depreciate value
56
valued policy
exact amount of the benefit is in the policy
57
Appraisal Provision
1. each party selects appraiser
2. appraisers choose a neutral 3rd party - umpire
3. agree - then its done. if not umpire casts tie breaker
Can only settle disputes over money - not covered perils
58
direct loss
damage to property itself
59
indirect/consequential loss
loss of income or loss of use
60
tort
injury to another or damage to another's property
61
negligence
failure to do what a reasonable person would do under the same circumstances
62
proximate cause
initial act directly and foreseeably caused the damage
63
builders risk coverage
covers both personal & commercial property during renovation or construction
64
Business Income Policy Co-insurance
50% of estimated annual net income
65
contractor's equip floater
tools more than 100' away from business
66
installment sales floater
goods sold or held for sale i.e. on display in art gallery
67
installation floater
items away from store being installed
68
bailees customer floater
customer's prop. temporarily in insured's possession
69
exhibition floater
goods at a trade show
70
physician's & surgeons floater
medical equipment and furniture
71
jewelers block floater
jewelers entire stock of jewels
72
jewelry salespersons sample floater
traveling salesmans samples
73
Electronic Data Processing Equipment
computer systems
74
Personal Effects Floater
tourist luggage
75
personal articles floater
jewelry/furs, fine art, antiques
76
dwelling policies
residential structures w/ no more than 4 apts & 5 boarders
77
HO-1
Basic building & basic personal property
78
HO-2
Broad form on buildings & personal property
79
HO-3
Special coverage on buildings & Broad coverage on personal property
80
HO-4
renters insurance
81
HO-5 (comprehensive)
special form on buildings & special on personal property
82
HO-6
condominium Broad on structures & personal property
83
HO-8
older home policy basic for buildings & personal property
84
personal articles floaters
personal property insurance that exceeds existing limits
85
mobile home must be this size to be covered
at least 400 sq feet
86
Business Owners Policy (BOP)
covers property & liability for small businesses
87
does the bop have a co-insurance clause
no
88
Peak Season Inventory Variable
BOP automatically adds 25% to protect against seasonal variations
89
Commercial General Liability -CGL
standard liability policy for most large companies
90
Premises Liability
occurs at insureds place of business
| slip and fall/customer gets injured
91
operations liability
off-site occurrences of negligence
92
completed operations liability
liability on job sits away from the business after the job is done
93
products liability
injuries from a product - pays for the injury but not a recall or cost of repair for the product
94
strict liability
business that sells defective product even though they are not negligent
95
independent contractors liability
coverage for any damage caused by the Insured's independent contractors
96
contractual liability
contracts that require the Insured to hold harmless another party to the contract
5 types - LEASE
97
fire legal liability
allows some coverage if insured is liable for damage to property under insureds care, custody, or control
98
personal injury liability
psychological damage
| libel/slander, defamation of character, false arrest, malicious prosecution, violation of civil rights/privacy
99
advertising injury liability
protects a business from infringement on name, logo, trademark, slogan
100
when does products liability begin & premises end?
when the product leaves the business premises
101
vicarious liability
liability for the acts of others
102
which section of the CGL pays regardless of fault
Med Pay
103
In a CGL both med pay & supplementary do what to a limit of liability
add to
104
wrongful acts
acts which cause harm but which may not necessarily involve negligence
105
occurrence basis
policy in effect in the year of occurrence will pay the claim
106
claims-made basis
policy in effect at the time the claim is filed will pay
107
Which basis are E&O policies almost always written on
claims made
108
Mini tail erp
previous acts are covered when claim is filed during 1st 60 days after policy ends
109
midi tail erp
5 years to file a detailed claim if the approximate nature of the issue is reported within 60 days of the policy's end
110
maxi tail erp
extends the reporting period forever
111
retroactive date
date before which today's policy will refuse to pay for claims
112
E&O policy will pay a claim if
1. wrongful act occurred after the retroactive date
| 2. claim is filed before the end of ERP
113
EPL covers
discrimination & sexual harassment but not workers comp claims
114
does workers comp regard fault
no - it's a no fault program
115
can a worker waive worker's comp coverage
no
116
second injury fund
state will pay any additional claim expense if Insured hires a worker with a previous worker's comp claim.
encourages hiring workers who were previously injured
117
workers comp coverage
no limit - determined by state law
118
employers liability
covers employer if a 3rd party sues
119
other states coverages
covers employees working in another state
120
temporary substitute
auto used when insured auto is out of normal use b/c of breakdown, repair, servicing, loss or destruction
121
does split limits or single limits provide better coverage
single limits
122
PAP med pay covers
the insured. Not the other guy
123
uninsured motorist covers
1. a collision with a person who has less insurance than the state's min required liability coverage
2. only covers bodily injury. not phys dam
3. hit and run drivers
124
underinsured motorist
have legally required minimum liability coverage but not enough to pay the damages they caused
125
another name for employee theft coverage
fidelity bond
| covers theft of money
126
Inside the premises - theft of money and securities
covers all money theft except by employee
127
robbery of a custodian covers
theft from any employee while having care & custody of property inside the premises; not a watchman or janitor
128
mysterious disappearance
unexplained absence of covered property without evidence of a theft
129
inside the premises robbery or burglary of other property does not cover
employee theft or anyone's theft of money
130
a surety bond is
a contract btwn the surety co, the principal and the obligee
131
service fee
premium paid for a surety bond
132
if the obligee causes the principals default then what happens
both the surety and principal are discharged from their obligations
133
penal sum
maximum amount the surety is required to pay if the principal defaults
134
indemnity agreement - surety bond
if the surety comp has to pay the obligee the principal has to reimburse the surety co
135
what is the key underwriting factor for surety companies when bonding a person
moral character
136
completion bond
required by a lender financing a major construction project to insure funds will be used for the construction
137
big bond
guarantees bidder will accept the job bid if selected & will post a performance bond
138
performance bond
guarantees contractor will perform job according to the specifications
139
fiduciary bonds
guarantees a representative will act faithfully & dutifully
140
executors bond
person dies w/ a will (testate) - executor posts bond to protect the estate
141
administrators bond
person dies w/o a will (intestate) - court appoints an administrator. may post bond to protect the estate
142
fidelity bond
guarantees a person will not steal from an employer
143
blanket position bond
fidelity bond covering a specific category of employees
144
Garage Keepers Coverage
insurance for business who is temporary keeper of cars belonging to others
145
truckers coverage form
physical damage & liability for businesses that routinely put other people's property in their vehicles
146
motor carrier coverage form
business that haul people not property
