Liberty Mutual

Exposure

A condition or situation that presents a possibility of loss

What does it mean to salvage something and then what does it mean to abandon something?

A condition that provides that the insurance company can take possession of damaged property after payment of loss. Salvage foods can reduce the cost of the claim to the insurance company. A condition states that the insured may not abandon property to the company and ask to be reimbursed for its value.

Aleatory contract

A contract that is contingent on an uncertain event (a loss) transfer of value between parties

Adhesion contract

A contract where one party has more power than the other party in drafting the contract

Fraud

A deliberate misrepresentation that causes harm; all-out effort to deceive and cheat the other

Accident

A loss that occurs at a specific time and place

Pure Risk

A risk in which there is no chance of gain only loss

Speculative Risk

A risk that may result in a loss or gain ex. Gambling or Business investment

Unilateral contract

A type of contract that is one sided

ACV

Actual Cash Value-The cost to replace an item of property at the time of loss, less an allowance for depreciation ;often used to determine the amount for loss

Self-Insurers

Alternative to purchasing insurance where a company or individual assumes the risk of paying for its losses and set aside the necessary funds to pay for such losses

Alien Company

An insurance company incorporated in a country other than the U.S. that is doing business in the United States

Limit Liability Aggregate

An insurance contract provision limiting the maximum liability of an insurer for a series of losses in a given time period

Insurable Interest

Any actual, lawful, and substantial economic interest in the safety or preservation of the subject of the insurance from loss or destruction or financial damage or impairment Ex. Mortgage that loans will suffered financially

Unfair discrimination

Applying different standards to insureds that have the same risks of loss

Implied authority

Authority given by the principal to the agent that is not formally expressed or communicated

Commercial Property

Business Stuff...ex. building

Contributory Negligence

Common law defense against that in most states that if an individual contributes to her own loss in any way, then someone else cannot be held liable for the loss

Insurance

Contract or device for transferring the risk of loss from a person, business, or organization to an insurance company that agrees, in exchange for a premium, to pay for losses through an accumulation of premiums

Third Party Contracts

Contract that pays for liabilities if you damage another persons property..Think of Insurance+You(Insurer)+The person car you hit

Property Damages

Damages to or destruction of property, including loss of use of property

Assumption of Risk

Defense against liability based on the common law principle that a person who knowingly exposes himself to danger or injury assumes the lost and cannot hold another person responsible for the loss

Bodily Injury

Defined in most policies to the injury, sickness, disease, and death resulting from any of these at any time

Endorsement

Document attached to an insurance policy that changes the policy in some way

Deductible

Dollar amount the insured must pay on each loss to which the deductible applies; the insurance company pays the remainder of each covered loss up to the policy limits.

Promulgate

Enforce the law but don't make the law...ex. Police officer Insurance commissioner....Enforce insurance laws but does not make the law

Direct Loss

Financial loss resulting directly from a loss to property( Tangible Goods)

First Name Insured

First person listed in the declaration as an insured; the first named insured may have a higher level of duties insured or rights under the policy

Producer

General term used to describe someone who sells insurance, such as an agent, broker, or solicitor

Moral Hazard

Hazard created by an individual who would be willing to create a loss situation on purpose just to collect from the insurance company

Morale Hazard

Hazard created by an individual's tendency to contribute to a loss through his own irresponsible actions or carelessness

Physical Hazard

Hazard that arises from the condition, occupancy, or use of the property itself

Dwelling

House that you rent to others....Fire Policy (Dwelling Policy) Landlord Policy

Causality/Liability

I damage somebody else stuff....I'm responsible

Personal Injury

Injury other than bodily injury arising out of such as libel, slander, false arrest, wrongful entry, violation of privacy, and malicious prosecution

Domestic Company

Insurance Company doing business in the state in which it is incorporated

Two Party Contracts

Insurance company and the insurer... design to insure damage to your stuff

Risk retention group

Insurance company formed by several organizations to cover those organizations' liability loss exposures; risk retention groups are exempt from most state laws that govern insurance companies

Stock Companies

Insurance company owed by its stock holders

Personal Lines

Insurance coverage that individual and their families

Commercial Lines

Insurance designed for businesses, institutions, or organizations

Mutual Company

Insurance owned by policy holders

Named peril

Insurance policy that insures only against perils specifically listed in the policy

Open peril

Insurance policy that protects the insured from losses caused by any peril that is not specifically excluded by the policy

Auto

It is a contract that you have with an insurance company in which you agree to pay a premium, and in the event of an accident, the company agrees to pay for your covered damages, as outlined in your specific insurance auto policy.

Comparative Negligence

Law that allows an injured party to collect from another party for a loss, even when the injured party contributed to her own loss. Damages are reduced to the extent of the injured party's negligence.

Apparent authority

Legal doctrine that states an agent has whatever authority a reasonable person would assume she has

Express authority

Legal doctrine that states that an agent has the authority either orally or in writing, by the principal

What 4 items need to be present to prove negligence?

Legal duty owed Breach of legal duty owed Proximate cause Damages

Vicarious Liability

Liability that a person or business incurs because of the actions of others, such as family members or employees; imputed liability

What is the pair or set condition and equation?

Loss settlement condition found in property insurance contracts that states that when part of a set is damaged or destroyed, the insured will not reimburse for the value of the entire set; various methods are used to determine the amount of reimbursement.

Indirect Loss

Loss that is the result or consequence of direct loss; also called a consequential loss

Name Insured

Name on the policy

NAIC

National Association of insurance commission Organization made up all of individual state insurance commissioners whose purpose is to promote uniformity in regulation by drafted model laws and regulations

What does it mean to have a single limit?

One policy limit that applies to both BI and PD losses; may also be called a combined single limit

Binder

Oral or written statement that provides immediate insurance protection for a specific period...not guarantee... designed to provide temporary coverage until a policy is issued or denied

Fiduciary

Person who stands in a special relationship of trust to another person Financial Adviser-you trust they will take care of your money

Homeowners

Personal multiline policy for homeowners that includes both property and liability coverage; there are different forms that provide varying degrees of property coverage; liability coverage is the same in all forms......Home THAT YOU LIVE IN

What does it mean to have a split limit?

Policy limit that provides separate limits for BI and PD.. different bucket of money for each injury

Conditions

Portion of an insurance policy that describes the rights and duties of the insured and insurance company under the policy

Property

Possession owes ...Its your stuff

Indemnify/Indemnification

Principle of insurance that provides that when a loss occurs, the insured should be restored to the approximate( replacing property or giving valued for damage

Law of Large numbers

Principle that states the more examples used to develop any statistic, the more reliable the statistic will be

Insurance Consultant

Refers to a person who offers advice about insurance but doesn't sell it

Declarations

Section of an insurance contract that shows who is insured, what property or risk is covered, when and where the coverage is effective, and how much coverage applies

Definitions

Section of an insurance policy that clarifies the meaning of certain terms used in the policy.

Exclusion

Section of the policy that lists property, perils, persons, or situations that are not covered under the policy

Hazard

Something that increases the chance of loss

Cancellation/Non-renewal

Termination of an insurance policy

Market Value

The amount property could be sold for at the time of loss. May be used to determine the amount of reimbursement for a loss

Peril

The cause of loss

Risk

The chance or uncertainty of loss

Policy period

The date and time specified in the declarations for when coverage begins and ends

Subrogation

Transfer to the insurance company of the insured's right to collect damages from another party

Misrepresentation

Written or verbal misstatement of a material fact involved in the contract on which the insurer relies AGENTS

Foreign Company

an insurance company doing business in a state other than the one in which it is incorporated

Authorized(Admitted)

authorized to do business in the state

Commercial Liability

business that has losses from their stuff

Liberalization

condition found in property insurance contracts that provides that if the insurer broadens coverage under a policy form or endorsement without requiring an additional premium then all existing similar policies or endorsements will be construed to contain the broadened coverage

Assignment

condition in insurance policies specifies that the policy cannot be transformed to another unless the company consents to the transfer in writing Ex.Only the insurance company has the right to transfer the policy not the insurer.

Liability Exclusions

damage to property owned by the insured damage to property in the insured's care, custody, or control bodily injury to an insured losses covered under workers' compensation laws losses covered under nuclear energy liability policies injuries or damages caused intentionally by the insured

Functional Replacement Cost

damages property is repaired or replaced with less expensive , but functionally equivalent, materials. This method is frequently for losses to antique, ornate, or custom construction.

Additional Insured

extra person or company who is listed on the policy

Inherent Vice

has an ability to break down...things that will eventually break down...ex. Car engine....because it will be known that it will breakdown( WE DON'T INSURE AGAINST WEAR AND TEAR)

Loss

injury or damages

Reinsurance

insurance for insurance companies

Pro Rata

insurance policy is paid in full but half way through it you decide to cancel hallway through then insurance company will pay you back all of the policy

Temporary License

license only good for a period of time....Good for 180 days...issued by the insurance commissioner

Limited Lines License

line of insurance other than a major line. Offer insurance on a specific type...Travelers Insurance...

Non Resident Producer

live and sell insurance in another state

Resident Producer

live and sell insurance in your own state

Limit Liability

maximum amount of money the insurance company will pay for the loss

Unauthorized NonAdmitted

not authorized to business in the state

Supplementary Payment

provides extra coverage over and above the insured's limit of liability; commonly included are defense costs, first aid expenses, bond premiums, and post-judgment interest

Policy Territories: Canada, Guam, Puerto Rico

provisions state that a loss will not be covered unless it occurs within the policy territory while the policy includes the United States, Puerto Rico, and Canada...Mexico is not covered

Limit of Liability Occurrence

the maximum amount the insurer will pay for all claims resulting from a single occurrence, no matter how many people are injured, how much property is damaged, or how many different claimants may make claims.

Concealment

the withholding of a material fact involved in the contract on which the insurer relies Ex. Not telling the insurance company you have three tickets to get insurance policy You intentionally leaving out unnecessary information to get insurance

Absolute/Strict Liability

type of liability imposed by law on those participating in certain activities that are considered especially hazardous; a person involved in such operations may be held liable for the damages of an another even though the individual was not neglient

Vacant Conditions/ Unoccupied

when you leave the home and you are not return at all/ you leave a home an will come back to the home

Certificate of insurance

written form that verifies a policy has been written; provides a summary of the coverage provided under the policy