Prop 1st 3 chapts

Outdoor property - coverage extension

up to $1000 for fences and radio and television antennas or $250 for trees, shrubs, and plants damaged or destroyed by fire, lightning, explosion, riot or civil commotion, or aircraft

Property off premises - coverage extension

up to $10000 for property, excluding stock, that is temporarily at premises the insured does not own, lease, or operate. This coverage does not apply to personal property in a vehicle, or in the possession of a salesperson

Personal effects floater

used to insure personal effects carried or worn by travelers anywhere in the world, but not while the property. Coverage is usually limited to $100 for jewelry, watches and furs, and there is no coverage for vehicles, bicycles, currency or travel tickets.

Binders: a temporary agreement to cover(provide coverage) until policy is issued, expires when policy is issued

usually written, but can be oral. Insurer declines policy, binder expires on date of cancellation notice

A businessowners policy is

A businessowners policy is similar in structure to the personal lines homeowners policy except it covers a business exposure for both property and liability losses.(A self-contained prepackaged policy.)

An insured is driving her car through a residential area when she loses control and crashes into a neighbor's front porch. The neighbor, who was sitting on the porch, is injured. The insured's liability policy has a limit of $500,000. This amount applies to the total of damages for any bodily injury and property damage resulting from one accident. Which type of limit of liability does the insured have?

Combined single is a single dollar limit of liability applying to the total of damages for bodily injury and property damage combined resulting from one accident or occurrence.

Policy structure 3

Conditions - general rules or procedures hat the insurer and insured agree to Inspections: right to inspect or examine insured's location or books to determine the exact exposure for underwriting and rating purposes. Changes to the policy: insurer and must be in writing. Liberalization clause: insurer introduces an improved free coverage, the insured will get the benefit of the new coverage immediately and will no have to wait for policy renewal. Return of premium: method used to calculate the return premium when policy is cancelled prior to expiration date Endorsements - addendums to contract that are used to change the policy's original terms, conditions, or coverages must be in writing attached to the policy and signed by an executive officer of the insurer may be used t add or delete coverage, or to correct items Exclusions and policy limits - insurance policy that details the perils restrict some of the broad terms used in the insuring agreement earth movement( earthquake, mudflow, or volcanic eruptions are not covered floods, water back up. and underground water is not covered under water damage policy policy limits:

Market value - valuing based on a buyers willingness and a seller's willingness to buy or pay for property before the loss

Considers value of land and location, rather than cost to rebuild/recover

Furriers Block - Bailee

Furriers block - This coverage is written for insureds in the fur business and covers merchandise held for sale and customers' property that the insured has temporary custody for cleaning, repair, or storage

In insurance, an offer is usually made when

In insurance, the offer is usually made by the applicant in the form of the application. Acceptance takes place when an insurer's underwriter approves the application and issues a policy.(the application is submitted)

Privacy protection(gramm-Leach Bliley): insurers ma not disclose nonpublic personal information to a nonaffiliated third party except for the following

Insurance company clearly and conspicuously disclose to the cnsumer in writing that information may be disclosed to a third party consumer is given the opportunity, before that time that information is initially disclosed, to direct that information not be disclosed to the third party

policy structure 2

Insuring agreement - establishes the obligation of the insurance company to provide the insurance coverages as stated in the policy lists the parties to the contract, effective and renewal dates, the description of coverage provided, and perils Additional coverage - provides an additional amount of coverage for specific loss expense, at no additional premium

DP-2 Broad form

Is a named perils, building structures are written with an 80% coinsurance requirement

HO-8

It is intended for use when replacement cost coverage is not practical. When the market value of the structure is considerably lower than the replacement cost, such as some older homes, this form may be useful. Listed was created specifically for older homes

How many days do producers have to report administrative actions taken against them in another jurisdiction?

It is the responsibility of the producer or business entity to report to the Commissioner any administrative action taken in another jurisdiction or by another governmental agency in this state within 30 days after the final disposition of the matter.

Loss valuation: Property insurance policy is written, the insured has several option as to how a loss to the insured property will be valued at the time of loss

a factor in determining he premium charged and the amount of insurance required

Personal effects and property of others - coverage extensions

coverage is for up to $2500 for personal effects of the insured or his employees. this coverage also can be applied to personal property of others in the insureds care, custody, and control

The personal articles floater

is used to insure certain types of personal property on a scheduled basis. The types of property that may be covered are usually pre printed on the form including jewelry, furs, cameras, musical instruments, fine arts, etc.

Agree value - provision agreed by insured and insurer the amount of insurance represents a fair valuation when insurance is written and suspends any coinsurance or other contribution clauses.

item's whose value does not fluctuate much. Policy pays the agreed value as specified on the policy schedule regardless of item appreciation or depreciation

Aggregate limit: maximum limit under a liability policy during a policy year, regardless of the number of claims made of the number of accidents that occur

losses paid under coverages subject to aggregate limits reduce the amount available for future losses aggregate limits restored anniversary of the policy

Split: separately stated limits of liability for different coverages

stated on a per person, per occurrence, or per policy period basis, or can be split between bodily injury and property damage

Valuable papers and records - coverage extension

$2500 for the cost to research, replace, or restore lost information from valuable papers and records, other than electronic data

Cleaner, dryers and Laundries - This coverage form

This coverage form provides protection for insureds in the laundry or dry cleaning business loss or damage to customers' property while in their possession

Stated Value - amount of insurance scheduled not subject to any coinsurance requirements in the event of a covered loss

This is the max amount insurers will pay in the event of a loss

Nonowned detached trailers - extension coverage

$5000 coverage applies only if the loss occurs when the trailer is in the insured's custody and only if the insured is contractually obligated to pay for loss or damage. A higher limit may be shown in declarations. This coverage is considered excess over other insurance

a bill of lading

A contract for the transport of goods between the shipper and the carrier. This document specifies the carrier;'s duties and responsibilities for the property. Common carriers are required to issue a uniform bill of lading to every person(shipper) that it transports goods for.

what is Inland Marine

A list of risks eligible for inland marine insurance published by the national association of insurance commissioners is known as the nationwide definition. On equipment breakdown insurance the insurer may inspect the insured's equipment, but they are not required to. The scheduled personal property endorsement is used to insure personal property with high values such as furs, antiques, and jewelry

Which of the following is a specific service for which an insurance producer is NOT allowed to charge a fee to the applicant or policyholder?

A producer is prohibited from charging a separate fee for any service if the producer receives a commission for it from the insurance company. Insurance producers may charge fees for specific services which are beyond the scope of services pertaining to insurance policies, including risk management services, financial planning, investment counseling, and similar.

Specific insurance:

A property insurance policy that covers a specific kind or unit of property for a specific amount of insurance.

If a lender violates the law by requiring that a borrower, under a loan secured by real property, purchase an amount of insurance on that property that exceeds the replacement value of the property, what effect does this have on the loan?

A violation of the law does not affect the validity of the loan or the mortgage or deed of trust.

Terrorisms Risk Insurance Act: temporary federal program that shares the risk of loss from future terrorist attacks with the insurance industry

Act must be certified by the secretary of treasury and secretary of homeland security(since 2015), and the attorney general of the U.S. with the following characteristics. the act must be violent or dangerous to human life, property, or infrastructure. the act must have resulted in damage within the U.S to an air carrier as defined in the US code to a US flag vessel or other vessel based principally in the US and insured under US regulation or on the premises of any US mission. The act must have been committed by someone as part of an effort to coerce the US civilian. Act must produce property and casualty insurance losses in excess of specified amount

All of the following are factors in the determination of actual cash value EXCEPT

Actual cash value (ACV) is a valuation method in which the value of property is determined using the replacement cost for property of like kind and quality, minus depreciation. The original cost is not a factor.(Insurance premium paid.)

Blanket Insurance is a single property insurance policy hat provides coverage for multiple classes of property at one location, or for one or more classes of property at multiple locations.

All insured properties are written for one total amount of insurance, and no single insured item is assigned a specific amount of insurance. However, different amounts may be shown for buildings in general equipment in general, and other items

If an insurance producer allows his or her license to lapse, within how many months of the due date of the continuation fee may the producer reinstate the license without having to pass a written examination?

An individual insurance producer who allows his/her license to lapse may, within 12 months of the due date of the annual continuation fee, reinstate the same license without needing to pass a written examination.

Which of the following would NOT be considered a source of insurability information by an insurer?

An insurer may inspect, with the applicant's written permission, the following: application form, motor vehicle records, interviews with neighbors, friends and employers, inspection of property, and inspection of insurance history.

Bailee customer - coverage forms are used to covers loss to customers property without regard to the insured's legal liability for the loss. It covers both the bailee's interest and the bailor's

Bailee's Customer coverage forms are used to cover losses to customers' property in the care, custody or control of the insured. Each of these coverage forms is unfiled

Dwelling policies: created by ISO used primarily as property coverage form, used to insure dwelling only. contents only, or both.

Basic, broad, and special form coverage endorsements amend the coverage to tailor i to specific needs of the applicant liability is not included, but can be added commonly used for rental dwellings

Which of the following other coverages is NOT included in the basic form dwelling policy?

Breakage of glass is included in the DP-2 and DP-3 only.

Newly acquired or constructed property - Coverage extensions

Coverage is for 30 days for newly acquired buildings and personal property that are similar in use to the property insured. This extension will pay up to $250000 for newly acquired buildings and up to $100000 for business personal property

Which of the following is covered under the Camera and Musical Instruments Dealers floater?

Covered property includes customer's property left for repair, cleaning or service.(A customer's camera left at a camera shop for repair)

Policy structure 1

Declaration -basic underwriting info, insured name, supplemental representations, address, amount of coverage and premiums and a description of insure locations Definitions

Direct Loss: Direct physical damage to buildings and/or personal property

Direct loss also includes other damage where the insured peril was the proximate cause of loss

Property covered under dwelling coverage A

Dwelling on the described premises listed in the declarations page and all attached structures, any materials or supplies located on or next to the described premise used to construct, alter, or repair the dwelling or other structures on the premise, Building equipment and outdoor equipment located o the premise and used to service the location unless insured elsewhere(does not include land on which the dwelling described in the declarations is located

An insured has four separate but identical policies written by different insurers to cover her $100,000 building. Each policy is written for $100,000, and each has the pro rata liability other insurance clause. In the event of a total loss to the building, what would each insurer pay?

Each policy will pay its pro rata share of the loss, but not more than the amount of loss in total.(Each policy will pay $25,000 of the loss.)

The regulation of the insurance industry primarily rests with

Each state is responsible for the conduct of insurance within that state.

All of the following are other coverages under the dwelling policy EXCEPT

Earth movement is not included in the other coverages of the dwelling policy.

Coinsurance and Insurance to value - coinsurance clause states that in consideration of a reduced rate, the insured agrees to maintain a certain minimum amount of insurance on the insured property.

Encourages he insured to insure the property closer to its full value. In case of a partials loss. the insurer will pay the partial loss in full if the insured has maintained the required percentage of insurance with relation to the value of the property.

Structure policy 4

Endorsements - addendums to contract that are used to change the policy's original terms, conditions, or coverages must be in writing attached to the policy and signed by an executive officer of the insurer may be used t add or delete coverage, or to correct items Exclusions and policy limits - insurance policy that details the perils restrict some of the broad terms used in the insuring agreement earth movement( earthquake, mudflow, or volcanic eruptions are not covered floods, water back up. and underground water is not covered under water damage policy policy limits:

HO-6( owners form is designed for the owner occupant of a condominium

Expands coverage to include parts of the building, such as alterations and appliances that the insured is required to insure bc of the condominium association agreement. policy, contents coverage is named peril, does not cover common area buildings

Which of the following would NOT be considered a flood?

Flood is defined by the National Flood Insurance Program. It does not include sewer backup.

Replacement cost - cost to replace damaged property w good quality and similarity at todays property.

Following a loss it may provide the insured with a settlement in excess of he property's actual cash value.

Indirect Loss(consequential loss): losses considered a result of direct loss

For commercial risks, the primary type of indirect or consequential loss is the loss of profits

The homeowners policy form that covers condominium unit owners is

HO-6 is designed specifically to cover the exposure of a condominium unit owner.

Coinsurance and Insurance to value - coinsurance clause states that in consideration of a reduced rate, the insured agrees to maintain a certain minimum amount of insurance on the insured property.

If the amount of insurance maintained is less than the coinsurance clause requirement, the insurer will only pay the percent of the loss that the insurance bears in relation to the amount of insurance that should have been carried. In the event of a total loss, the coinsurance clause doesn't not operate, and he face amount of the policy is paid

An insurer wishes to cancel a Commercial General Liability Policy. This policy has been in effect for more than 60 days and the cancellation is due to a reason other than nonpayment of premium. How many days before the effective date of cancellation must the insurer send notice of cancellation to the insured?

If the commercial policy has been in effect for more than 60 days, and if the reason of the cancellation is other than nonpayment of premium, the insurer is required to give to the insured notice of their intention to cancel the policy at least 45 days in advance of the cancellation date.

Which of the following best describes the unfair trade practice of defamation?

Making oral or written statements directly or indirectly which are derogatory or maliciously critical of another insurer would be an example of the unfair trade practice of defamation.(Making derogatory oral statements about another insurer's financial condition)

Limits of liability: insurer's liability for payment as stated in an insurance policy.

Max amount of money the insurance company will pay for a particular loss, or for loss during a period of time

Coverage E - Additional Living Expenses

Only available if broad or special form dwelling coverage is written, it pays for the increase in normal living expenses the insured incurs while the described premises are unfit for normal use

Coverage B - Other Structures: Coverages

Other structures on the described location that are separated from the dwelling by a clear space, or connected only by a fence, utility line, or similar connection

Coverage B - Other Structures:Coverages2

Other structures rented to anyone, other than a tenant of the dwelling, but only when used as a private garage. Structures used in commercial, farming, or manufacturing when storing property owned solely by the insured or a tenant of the dwelling. Gaseous liquid fuel must be stored in a tank that is part of a vehicle or craft stored in the structure

Dwelling policies include all conditions

Policy period, insurable interest and limit of insurance, concealment or fraud, duties after a loss, loss settlement, pair or sets, appraisal, other insurance, subrogation, suit against the insurer, insurers option to repair or replace, loss payment, abandonment, mortgage holders, no benefit to bailee, cancellation and nonrenewable, liberalization, assignment, death, nuclear hazard, recovered property, volcanic eruption and loss payable clause

An insurance producer is prohibited from charging separate fees for any of the following services EXCEPT

Producers are prohibited from charging separate fees in addition to those contemplated in the rate filing. Insurance producers may charge fees for specific services which are beyond the scope of services pertaining to insurance policies, including risk management services, financial planning, investment counseling, and similar.

All of the following are considered parts of the policy structure EXCEPT

Provisions is a broad term used to refer to the sections or clauses of an insurance policy that communicate the policy's benefits, conditions, etc. The essential parts of the policy are declarations, insuring clause, conditions and exclusions.

Replacement cost is defined as

Replacement cost policies do not consider depreciation if the proper amount of insurance is maintained. Policies that provide replacement cost coverage require that the amount of insurance written be 80% or more of the replacement cost of the property at the time of loss.(Full replacement of property at its current cost, new and without reduction for depreciation.)

heft coverage under an HO-8 is restricted to

Since HO-8 policies are for older homes, they insure dwellings at actual cash value, not replacement cost because the cost of rebuilding with the materials and details of the original home would make replacement cost coverage prohibitively expensive. Theft is the actual cash value of what was stolen, with limits for certain classes of property.

An insured owns several buildings, each at a different location and insured on a separate policy. What type of coverage does the insured have?

Specific insurance provides a specific amount of coverage for each property. A blanket insurance policy provides coverage for more than one property with a single limit of coverage.

If the actual values exceed the limit of insurance, the businessowners policy (BOP) contains a seasonal increase provision that automatically increases the limit of insurance for business personal property by

The BOP contains a seasonal increase provision that automatically increases the limit of insurance for business personal property by 25% if the actual values exceed the limit of insurance.

Which of the following would be covered under the Film Coverage Form?

The all-risk coverage form excludes the following additional causes of loss: deterioration, atmospheric dampness or changes in temperature; exposure of negative film to light; use of developing chemicals; developing, cutting, or printing of film or other laboratory work; electrical or magnetic injury, disturbance or erasure.( none are covered)

Coverage A - Dwelling

The dwelling must be used principally for dwelling or residential purposes. The description of coverage is broken into two parts, property covered and property not covered

What is the maximum amount an insurer will pay under the equipment dealers pollution cleanup and removal extension of an inland marine policy?

The maximum the insurer will pay under this extension is $10,000 for all expenses incurred during a 12-month period.

The purpose of insurance regulations is to

The purpose of insurance regulations is to protect the insurance buying public.

Ho-3 special form policy

Theft of personal property of a resident employee is covered. damage caused by freezing while the dwelling is vacant, unoccupied, or being constructed unless the insured takes reasonable care to maintain heat in the premises or to shut off and drain the water supply, theft in or to a dwelling or structure under construction, vandalism and malicious mischief if the dwelling has been vacant for a certain period of time(more than 60 consecutive days in most states), gradual, preventable, or expected losses such as wear and tear, latent defect contamination, bulging, or expansion of foundations, pavement, walls or floors, faulty, inadequate, or defective planning, zoning, surveying, design, losses caused by weather conditions to the extent that they contribute to causes found in the general exclusions, acts, decisions, or failure to act

What is the basic dwelling form(DP-00-01)

This a named or specified peril policy. Does not provide additional living expense under coverage D, only fair rental value is provided

Dwelling policy is used for residential purposes in the following situations

Up to 5 roomers or boarders Up to 4 residential units Properties in the course of construction. Owner occupied, tenant occupied for both. Mobile homes on the basic form only, if hey contain no more than on apartment, and are located at a permanent location listed in the policy. Seasonal dwellings unoccupied for 3 or more months during a 12 month period not designed as farm property

How long is a waiting period upon purchase of flood coverage through NFIP?

Upon purchase of a flood policy, a 30-day waiting period is in place beginning from the time of application and premium payment.

Actual cash value: recognizes the reduction of value of property as it ages and becomes subject to wear and tear and obsolescence.

Usually, actual cash value is calculated as follow: current replacement cost - depreciation= actual cash value

HO-3 all risk on dwelling, but named peril on its

all risk on dwelling, but named peril on its contents.

Coverage D - Fair rent value

applies if property under Coverage A,B, or C becomes damaged or destroyed. by a peril covered in the policy

HO-4(written for tenants who reside in rented dwellings, apartment, or mobile home

are property policies issued to tenants to cover contents extend coverage to losses caused by a covered peril to improvements, alterations and additions made to the described location at the tenants expense

Salvage value - estimated value assets will come upon its sale at he end of its useful life.

can be sold as a whole or in part most policies have right to salvage condition, insurance company to take possession of the property after payment of a loss. selling the salvaged goods can reduce the cost of the claim

Privacy protection(gramm-Leach Bliley) 2

consumer is given an explanation of how the consumer can exercise a nondisclosure option this act requires 2 disclosures. when the customer relationship is established before disclosing protected information customer must receive an annual privacy disclosure and have the right to opt out or choose not to have their private info shared with other parties

HO-5

covers both dwelling and other structures on an open peril basis. Covers personal property on an open peril basis with the exception of landlord furnishings in an apartment that is rented. Landlord furnishing is limited to $2500 limit and provided on a named peril basis

Coverage B - Other Structures

covers other separate structures at the same location, such as detached garages and other outbuildings. The policy makes allowance for other structures used for a business within defined parameter

Broad form coverage

expands the causes of loss insured under the basic form with extended coverage perils and vandalism or malicious mischief purchased

HO-2(provides protection for losses from named perils. There are some noticeable limitations that should be pointed out to a client.

is named peril on both the dwelling and contents. (broad form)Exclusions are inside of a building for damage by rain, snow, sleet, sand or dust unless wind or hail damage first creates the opening, loss by a falling object unless the falling object first damages the roof or an outside wall, fences, driveways, and walks for damage from a vehicle owned or operated by a resident, damage from water or steam if dwelling is vacant for a period of more than 60 days

Mortgagee clause: protect the interests of the mortgaged property

mortgagee clause attached to a fire policy or other damage policy, the loss reimbursement will be paid to the mortgagee as interest appears rights of recovery will not be defeated by any negligence of the insured mortgagees given the right to bring suit in their own name to recover damages

Sources of underwriting information: underwriting process is to determine the insurability of the applicant

must be agreed to by the insured in writing before the insurer can use them Application form motor vehicle records interviews with neighbors, friends, and employers inspection of property inspection of insurance history

What is commercial package policy(CPP)?

permits either the insured or insurer to cancel the policy. Are subject to premium audit for 3 yrs after policy expiration, business income insurance is a type of time element coverage

Section 2 liability

provides additional coverage for damage to the the property of others up to $1,000 per occurrence

Ordinance of law

provides an insured additional amount of insurance for costs associated w changes in building ordinance and codes after a covered loss. The broad and special form policies allow up to 10% of coverage A if the premises is owned by the insured

Other insurance: how the policy will respond if there is other valid insurance written on the same risk - Pro rata

provides for the sharing loss with other insurance that may be written on the same risk in the same proportion as their limits of insurance bear to the total of coverage of all policies covering the risk whether collectible or not

Underwriting

risk selection, the process of reviewing applications for insurance to determine eligibility for coverage

DP-3 policy provides what?

same coverage as DP-w for personal property coverage, should coverage for contents be declared. Trees, shrubs, plants and lawns