Unit 3

Question 0

Casualty

Answer 0

Third-party (injuries to others) catchall for miscellaneous types of insurance not properly classified elsewhere

Question 1

Property

Answer 1

First party the stuff you as an insured own any tangible item that can be insured.

Question 2

Insurance

Answer 2

Is the second party

Question 3

Underwriting

Answer 3

Classifies the applicant based on underwriting guidelines underwriting matches the risk present with premium to be charged job is to protect insurer from losses

Question 4

Loss ratios

Answer 4

Percentage of claims paid versus total premium collected
does not include company expenses and overhead
If it sure has bad loss ratio it will type underwriting rules

Question 5

Rates

Answer 5

Set by insured to cover claims and company expenses Department of Insurance controls filing of rates.

Question 6

Means of determining rates

5

Answer 6

Judgment 
manual 
merit 
experience 
retrospective

Question 7

Judgment

Answer 7

Underwriting determines the rate using their knowledge

Question 8

Manual

Answer 8

Underwriting refers to rates published by the insurer

Question 9

Merit

Answer 9

Underwriting starts with manual rating, this is modified based on unique characteristics of the risk

Question 10

Experience

Answer 10

Modifies a manual rated premium based upon the insurance on lost experience

Question 11

Retrospective

Answer 11

Subject to minimum and maximum premiums where the final premium is determined at the end of the policy. It is based on the insureds prior loss experience initial paid premium is considered a down payment

Question 12

Lost cost rating

Answer 12

Factor used in insurance rates to determine the amount the company needs to cover expected losses

Question 13

Difference between rate and premium

Answer 13

The rate is the cost per unit while the premium is the number of units multiplied by the rate

Rate levels figure in that a company is trying to make a profit this equates to the cost of claims plus the cost of the administrative expenses

Question 14

Insurance service office ISO

Answer 14

A rating Bureau that develops and files rates and policies forms with various states for his clients

Question 15

Negligence

Answer 15

Failure to act as a reasonable person negligence is a civil injury or wrong against another person also known as a tort in negligent suits the plaintiff (injured party) must prove that the other party (defendant) violated a legal duty

Question 16

Standard of care

Answer 16

Person did not do what a reasonable person should expect

Question 17

Proximate cause of loss

Answer 17

There must be a direct chain of events caused by the negligence of the defendant to prove that they are at fault

Question 18

Legal duty

Answer 18

Defendant violated a legal duty to protect the injured party

Question 19

Negligence defenses

Answer 19

Intervening cause
assumption of risk
contributory negligence
comparative negligence

Question 20

Intervening cause

Answer 20

Something breaking the chain of events from the proximate cause or not allowing the defendant the ability to provide standard of care or legal duty

Question 21

Assumption of risk

Answer 21

A reasonable person should know that they are engaging in a dangerous activity

Question 22

Contributory negligence

Answer 22

If you are partly at fault in an accident then you cannot recover anything from the other party

Question 23

Comparative negligence

Answer 23

If you’re partly at fault a degree of fault is assigned to both parties if you’re only 10% at fault then you get 90% return on damages
varies by state on how this works

Question 24

Statute of limitations

Answer 24

Timeframe allowed by law where legal action can be taken

Question 25

Damages

Answer 25

Loss caused by negligent acts

Question 26

Special damages

Answer 26

Medical expenses and lost wages

Question 27

General damages

Answer 27

Covers pain suffering and disfigurement

Question 28

Punitive damages

Answer 28

Award when loss cause by gross negligence, absolute, disregard for safety

Question 29

Absolute or strict liability

Answer 29

Something so dangerous that liability is absolute

negligence does not need to be proven absolute is typically for individuals strict is typically for business

Question 30

Vicarious liability

Answer 30

When one party is responsible for the negligent act of another party