Unit 3 Part A

Question 1

property insurance policies typically cover…

Answer 1

first party losses/”my stuff” aka buildings/real property and personal belongings

Question 2

casualty/liability policies cover…

Answer 2

third party losses, aka not the insured but the other party involved

Question 3

first party
second party
third party

Answer 3

me
insurer
the other guy

Question 4

DICEE

Answer 4

Declarations
Insuring agreements
Conditions
Endorsements & additional supplementary coverages
Exclusions

Question 5

Declarations (DICEE)

Answer 5

1st page of the policy; who, what, when, where of the insured

Question 6

Insuring agreement (DICEE)

Answer 6

describes covered perils/risks

Question 7

Conditions (DICEE)

Answer 7

states policy provisions, rules of conduct, obligations etc required for coverage

Question 8

If a policy provides liability coverage, the promise to defend the insured if sued is found under the

Answer 8

insuring agreement

Question 9

Endorsements

Answer 9

add, modify, or take away coverage

Question 10

Exclusions

Answer 10

take coverage away by describing property/perils/hazards that are not covered by the policy

Question 11

definitions section of an insurance policy

Answer 11

clarifies meanings of certain terms used in the policy

Question 12

additional/supplementary coverage

Answer 12

provides payment for certain additional expenses, may have a separate limit of insurance

Question 13

named insured vs
first named insured vs
insureds by definition vs
additional insured

Answer 13

NI – person to which the policy is issued
F, NI – person listed first on declarations page if there is more than one person
NI by def – insureds not listed by name such as resident relatives
Add NI – done by endorsements

Question 14

policy period and territory

Answer 14

period – where policy begins and ends
territory – where a loss must occur

Question 15

the beginning and end dates of a policy are also known as

Answer 15

inception and expiration date

Question 16

if the insured has paid premiums in advance for the future, the insurer must return this ________ ________ if the insured cancels the policy

Answer 16

unearned premium

Question 17

prorated basis

Answer 17

if the insurer cancels the insured’s policy; the NI will receive a portion of the premium back depending on when the policy is canceled

Question 18

a surcharge/penalty for early cancellation is applied on a….

Answer 18

short-rated basis (insurer is entitled to retain a large % of unearned premium)

Question 19

flat cancellation

Answer 19

policy is canceled on the effective date

Question 20

nonrenewal

Answer 20

occurs at expiration date with a required advance notice by insurer, not required of insured

Question 21

deductible

Answer 21

amount paid out of pocket by insured; higher the deductible, lower the premium

Question 22

“other insurance” condition/other sources of recovery

Answer 22

defines how reimbursement will occur where multiple policies cover the same loss

Question 23

nonconcurrency

Answer 23

result of 2+ policies covering the same property but providing different coverage – not ideal, most commonly seen in commercial insurance policies

Question 24

if more than one policy cover the same property, ______ insurance attaches immediately upon loss; _______ coverage pays whatever is not paid by the first policy

Answer 24

primary
excess

Question 25

pro rata

Answer 25

method of preventing overpayment; each company pays part of the loss according to the % of the total amount of insurance the policy provides

Question 26

contribution of equal shares provision

Answer 26

all insurers pay equal amounts up to the limit of the policy w/ smallest limit

Question 27

provisions

Answer 27

conditions section of a property insurance policy that lists the duties and rights of the NI and insurer

Question 28

loss provisions

Answer 28

conditions that specify what the NI and insurer do if loss occurs

Question 29

duties after loss lists NI's responsibilities including (6)

Answer 29

PROMPT notice of claim PROTECT property from further damage COMPLETE detailed proof of loss (official inventory) MAKE property available to inspection SUBMIT to examination under oath COOPERATE with insurer as required during investigation

Question 30

assignment/transfer of rights or duties condition

Answer 30

a policy may not be transferred to anyone else without the written consent of the insurer; if the NI dies, the rights and duties are transferred to the NI's legal representative and remain insured up to the renewal date