Insurance Schools

Joseph Jones purchased a new car stereo system from Dailey's Auto Enhancements. Daily's permanently installed the stereo system in Joseph's car in an area of the dashboard not typically used by the automobile manufacturer for such installations. One week after installation, Joseph's car was broken into and the stereo was stolen. Under Part D of the personal auto form, what would be the limit of coverage?

$1,000.

There are (BLANK) methods of managing risk

5

In 2015, West Virginia passed a new modified comparative fault standard which can bar a plaintiff in a lawsuit from recovery, if he or she is found to be more than ______ at fault in the bodily injury or property damage.

50%

If Commercial Property coverage is written on the Building and Personal Property coverage form and a loss occurs, the insured must furnish a signed statement of loss within:

60 days after the request of the insurer.

Morale hazard

A condition of been attention to or disregard for ones of life, health, property, or behavior, that increases the frequency or severity of a laugh. Example: an attitude towards insurance

Moral hazard

A condition that increases the probability that a person will intentionally cause, create, or inflate a loss

Legal Purpose

A contract is legal and enforceable only if it complies with the law of the state or country in which it is written and complies with public policy

Certification of insurance

A general summary of coverage. Is not the policy

Estoppel

A legal doctrine that prevents or stops a party from conducting it's own previous actions if those actions have been reasonably relied upon by another party

insurance

A method of handling pure risk, by spreading it over a large number of similar individuals.

Cancellation

A policy may be canceled during the underwriting. Before the policy is delivered.

Speculative risks

A situation where either profit or loss is possible. Insurance companies do not write policies on risks where a possibility of financial gain exists.

Pure risk

A situation where there is only a possibility of loss, there is never the possibility of a profit or financial gain

Occurrence

A sudden and unforeseen event resulting in financial loss; a continuous or repeated exposure to an event that results in a financial loss

Accident

A sudden and unforeseen events resulting in financial loss

Capacity to contract/competent parties

All parties must have necessary capacity or competence to enter into the contract

contract

An agreement between two or more parties that is enforceable by law.

Offer and Acceptance

An applicant completes an application for coverage (makes an offer) and the insurance company accepts it and returns a policy (acceptance)

Assignment

An insurance policy cannot be assigned to another party without the written consent of the insurance company

Fruad

An intentional act disigned to deceive and induce another party to part with something of value

In a liability situation, "proximate cause" includes what important feature?

An unbroken chain of events must lead to the bodily injury or property damage.

The doctor in a reasonable expectations

And insurance contract or policy should cover the policyholder and or his beneficiaries to the extent that the average person would expect

Appropriation clause

Answers the question of how much two or more policies covering a loss will pay to the claim

Hazard

Any condition that increases the possibility or severity of loss

Deductible

Applies to claims such as property, auto physical damage, or health insurance claims. The insured must bear their loss and it is deducted from the claims payment before that amount is remitted to the claimant

Misrepresentation

Are untrue statements made by the insured or insurer, usually at the time when an application is made

Foreign insurance companies may be examined by the West Virginia Insurance Commissioner:

At least once every 5 years..

Risk avoidance

Avoid the hazard

Which of the following best describes a sidetrack agreement which is an insured contract under the CGL?

B&O railroad builds an extension track off of their main line and runs the track right behind the loading dock of the Ford Motor Company.

A West Virginia producer who overcharges or fails to refund premiums to persons entitled to a refund is subject to:

Both a fine and/or license suspension or revocation.

The four elements of a valid contract

CLOC Capacity to contract/competent parties Legal purposes Offer and acceptance Consideration

Calvin has a Business Automobile policy covering the automobiles he uses in his business. He acquires a new trailer with a load capacity of 1,000 pounds and he plans to attach it to a van he already owns. The van is scheduled on the policy with Symbol 7 listed beside it. Based on this information, how long does Calvin have to report his new trailer to the insurance company?

Calvin is required to report newly acquired vehicles to the insurance company within 30 days..

Mid term cancellation

Cancellation occurring before the policy has expired

On Monday afternoon, Carissa's boss requested that she finish updating the company website by Tuesday morning. Carissa did not want to stay at the office late into the evening so she took her work home to complete it there. On the way home, Carissa remembers that she left an external hard drive back at the office. This hard drive contained files that she needed to complete the website updates so she turns her car around and heads back to the office to retrieve it. Two blocks away from her office, another car runs a stop light and smashes into Carissa's car, severely injuring her. Which of the following statements would be TRUE in how Carissa would be handled by her employer's workers compensation coverage?

Carissa's injuries are not compensable as she was commuting to work and coverage does not apply in that case..

Aleatory Contract

Contingent upon and uncertain or random event that provides for an unequal transfer a value between parties

executory contract

Contract that outlines the duties of both the insured and the insurance company, and states that those duties must be performed, before the contract will be fully executed

Which section of the Commercial Package Policy varies based on the lines of coverage included?

Coverage Part EXPLANATION: Each line of insurance that is eligible for the Commercial Package Policy has its own coverage part consisting of a variety of mandatory and optional forms that are used to provide the coverage desired.

Insuring Agreement

Describe the obligations assumed by the insurance company and consideration for the premium paid. It describes the covered peril, and the risks assumed, and the nature of the coverage

Conditions

Describes the rights and the duties of both the insured and the insurer in the case of loss

Breach of Warranty

Failure of the insured to comply with one or more of the policy conditions

Brianna is applying for a new job at General Hospital. Which law limits how much information Brianna's bank and mortgage lender can share with General Hospital, with regard to Brianna's finances and credit score?

Fair Credit Reporting Act

The $1,000 coverage for reasonable expenses incurred to remove property to another location to protect it from flood damage is available on flood insurance:

For 45 days from the time it was removed for each flood loss occurrence

Insurable interest

Having a lawful, sustainable, and economy interest in the life, health, property, or object being covered under the insurance contract.

Transfer of risk

He most common and most popular method of handling risk. A person transfers their risk to an insurance company in exchange for paying a regular premium.

On a Business Auto policy, Symbol #8 represents:

Hired autos.

Actuaries

Hired by insurance companies to make mathematical predictions about things like, how many of the people in any given risk pool will have their home destroyed by a tornado, be diagnosed with cancer, or die in a given year

Concealment

Holding back information; failure of the insured to rebuild known material facts

Other insurance clause

If the insured has other sources of recovery for a covered claim this clause is activated

The BAP uses Symbol 7 to cover "specifically described autos" identified in the declarations. An auto acquired during the policy period will only be covered:

If the insured insures all of their vehicles with the company or it replaces a covered auto. .

A print shop is insured under a Businessowners Policy with a separate policy covering the press. If a loss occurs that is covered under both policies, how will the Businessowners Policy respond?

In this situation, the BOP is considered "excess" coverage.. EXPLANATION: The "Other Insurance" clause in the BOP is somewhat different than in other policies. The BOP states that if other coverage is provided by a separate policy, that policy is considered primary (whether collectible or not) and that any coverage for the loss under the BOP will be considered EXCESS.

Many stationary objects, such as bridges, tunnels and power lines fall within the nationwide marine definition because they are considered to be:

Instrumentalities of transportation and communication.

Binder

Insurance binder serve as a temporary evidence that coverage is in effect until the policy is issued. Binders can be either oral or written but an oral binder must be transferred to a written binder within a certain period of time

Sharing risk

Insured (client) except responsibility for a small portion of the risk, while transferring the large portion of the risk to the insurer (company).

What is the purpose of reinsurance?

It is insurance for insurance companies, to reduce the risk of catastrophic losses.

ambiguous language

Language that is vague or creates a doubt

_____ Do not need a License and Permit Bond

Lawyers

All of the following statements regarding medical payments under the general liability policy are true, EXCEPT:

Loss of earnings as a result of injuries caused by a product of the named insured. EXPLANATION: Medical payments coverage does not apply to product liability claims causing bodily injury and the subsequent loss of earnings by the injured party.

The insured's deliberate failure to reveal material facts that would affect the insurer's decision to issue an insurance policy is called:

Material concealment.

Overinsurance can create a:

Moral hazard for the insured, because it may motivate them to intentionally cause a loss to make a profit. EXPLANATION: Overinsurance creates a moral hazard for the insured because it can provide a reason for the insured to intentionally create a loss in which he or she can profit.

Nonrenewal

Occurs at the expiration date of the policy when the insurer sent a notice prior to the expiration date of the policy advising the insured that the policy will not be renewed

Claims that are paid under a CGL policy coverage, are charged against the aggregate policy limits, and reduce the amount of insurance remaining to pay future claims under the current policy. When will the limits be reinstated?

On the effective date of the next policy renewal..

A scheduled Personal Property endorsement under a Personal Inland Marine policy is usually issued on a _____ basis?

Open peril. EXPLANATION: Coverage is provided on an open peril basis. The property is covered on a per item scheduled basis and not a blanket basis. Losses are settled on an ACV (actual cash value) or agreed amount basis.

Under the Farm insurance liability coverage, which of the following would be covered?

Products Liability for the insured's farm produce sold

Under which policy provision will an insurer pay for damage to a neighbor's window caused by an insured under a homeowner policy?

Property damage.

Material Misrepresentation

Relevant; information that may cause and then sure to decline an application

Which of the following statements about risk is the most accurate?

Risk can be retained, shared, transferred, avoided, or reduced

An insured in West Virginia is involved in a collision in his covered vehicle. He submits a claim to his insurer. How many days does the insurer have to exercise its right to inspect the vehicle prior to repair?

Seven working days from the date of receipt of notice of loss

warranty

Statements made by an applicant for insurance that are guaranteed to be true

representation

Statements made on an application for insurance that are true to the applicants best knowledge and belief

Peril

The actual cause of loss. Examples: fire wind storm or hell

What is "express" authority under the law of agency?

The authority given to the agent by the company in a written contract or orally.

Contract of adhesion

The contract is drafted by one party with stronger bargaining power (the insurance company) and acceptance by another party with weaker bargaining power (the insured)

Second party

The insurance company

First party

The insured

Consideration

The insured gives the application and premium to the agent or insurance company in return for their promise to pay in the future. When we refer to a consideration when discussing insurance, we mean the premium

Waiver

The intentional relinquishment of a known right or intentional conduct consistent with claiming a known right

Physical hazard

The material, structural, environmental, or operational features of an insured risk that may be create or increase the opportunity of injury or damage.

Third-party

The party that has been damaged by the first party

Arbitration

The process of bringing the contract dispute before a disinterested third-party for resolution

Underwriting

The process of selecting certain types of risks that has historically produced in profit and rejecting those risks that have historically produced loss

Adverse Selection

The tendency of the insureds with a greater than average chance of loss to purchase insurance. With adverse selection, the insurer is confronted with the possibility of experiencing a loss due to the risk factors that were factored in when the policy was sold

With p&c insurance polices, insurable must be presented at...

The time of loss.

Which of the following perils is covered for earth movement under the DP-2 Dwelling form?

There are no perils covered for earth movement under the Dwelling forms.

Arbitration clause

This clause requires the parties to an insurance contract to resolve coverage disputes through arbitration as opposed to mediation or litigation

Liberalization clause

This clause states that if any policies or endorsement form is currently in use, or broadened by legislation or rulings from ratings authorities then all existing similar policies will provide the broad and coverage to all existing policy holders without additional premium

Coinsurance clause

This clause within an insurance policy states that the insurance company and the insured person will share in the expenses. This encourages the insured to ensure their property for the most or all the value. Should I sure at least 80% of the value

Law of Large Numbers

This law shows us that we can predict, fairly accurately, what will happen to a large group of similar individuals in a given time.

Declaration Page

This page contains the name and address of the insured or policy owner, the policy term or period, the limits of liability, the amount of the policy premium, and any deductibles that may apply. The who, what, where, and premium information

Principle of indemnity

This principle assumes that an insured, who has suffered, loss should only be resorted to the approximate financial condition that existed prior to the loss,no better and no worse

The doctrine of utmost good faith

To form an insurance contract each party to the contract must substantially rely on the honesty and integrity of the other party

Endorsement

Used to add, delete, or change any of the policy parts. Considered to be a written amendment or addition to a policy

Exclusions

What the insurance contract will not cover

Sliding

When an agent or producer fails to fully disclose all the details of, and obtain an informed consent to, The purchase of all the products and services that are included in the insurance contract. Failing to disclose all of the charges associated with the insurance premium can result in higher cost to the insured and higher commission for the agent

Churning

When an agent or producer uses misrepresentation to convince an insured to replace a policy that exists with the agent or producers carrier with the more expensive policy with the same carrier

Twisting

When an agent or producer years of misrepresentation to convince and insured to replace an existing policy purchased for one insurance carrier with a new policy from a different carrier

Risk pools

When large groups of similar individuals are combined

Expressed waiver

When the insurer or its representatives purposely gives up on a known right under the contract.

The Terrorism Risk Insurance Program Reauthorization Act of 2015 excludes all acts of terrorism if the act is committed as part of the course of a war declared by Congress with the exception of one line of insurance. Which of the following is the only line of insurance that would still be covered in case of a war?

Workers compensation

A non-admitted insurance company that insures property in West Virginia must:

Write coverage through an excess lines broker.

Implied waiver

a person's actions that cause another to believe that a right has been relinquished