Property and Casualty Exam

Commercial Property Causes of Loss

4 causes of loss forms: Basic Broad Special Earthquake (only when used with one of the above)

Pair and Sets Clause

A personal articles floater provision that allows the insurer to pay for a loss in proportion to the actual loss when a part of a pair or set is damaged or destroyed. In no case will a loss of 1 article be considered a loss of a whole

Personal Umbrella Policy

A policy covering (BI &PD) and Personal Injury Liability in excess of the insured's underlying policy limits. This provides excess coverage over the limits of an underlying policy

Market Value

A property policy provision that changes the valuation method otherwise applicable (ACV or RV) to a valuation method that allows reimbursement to the insured, according to the price a willing buyer would pay for the property purches from a willing seller

Pro Rata

A proportional share.

Aircraft Liability Insurance

Aircraft Liability - covers claims arising from the ownership, maintenence, or use of an aircraft Airport Liability - coverage for private, municipal, or commercial airports. Hangarkeepers Liability - coverage for liability arising out of damage to non-owned aircraft in the care, custody, or control of the insured.

Aircraft Hull Insurance (two deductibles)

An in-motion deductible and a not-in-motion deductible. Aircraft is considered in motion whenever it is moving on the ground or in flight as a result of engine power

Garage Coverage Form

Auto liability/physical damage coverage, plus general liability protection for businesses that are engaged in the sale, service or storage of autos Section I - Covered Autos Section II - Liability Coverage Section III - Garagekeepers Coverage Section IV - Physical Damage Coverage Section V - Garage Conditions Sections VI - Definitions

Workers' Compensation Laws

Benefits must be paid for employee on-the-job injuries, regardless of negligence on anyone's part

Personal Watercraft Insurance

Boatowners Policy - similar to HO, covers boats that can be towed, property & liability Outboard Motorboat Policy - inland marine form, covers outboard motors and boats, direct property loss only Yacht Policy - ocean marine form, larger vessels, property & liability

Boiler and Machinery (coverage)

Boiler and Machinery Declarations Page Equipment Breakdown Protection Coverage (form) Any applicable endorsements

Named Peril

Coverage applies only to lossess caused by perils that are specifically stated in the policy. Example: Fire, lightning, wind, hail, aircraft, riot, vehicles, explosion, smoke, etc

Commercial Property Basic Loss (form)

Coverage includes: firem lightning, windstorm, hail, aircraft riot or civil commotion, vehicles, vandalism, volcanic action (above ground) explosion, smoke, sprinkler leakage, sinkhole collapse

Commercial Property Building and personal Property Coverage (form)

Covered Property: Building or structure described in declarations Business personal property personal property of others

Dwelling (other coverages available)

Debris Removal Impreovements, Alterations, and Additions Reasonable Repairs Property Removed Trees, Shrubs and other Plants Fire Department Service Charge Collapse Glass or Safety Glazing Material

Special Form Perils

Dwelling and Homeowners Policy: The dwelling and other structures are covered for all direct physical damage (open peril), except for perils specifically excluded

National Flood Insurance Program

Enables property owners to purchase federal flood insurance. Administered by Federal Emergency Management Agency (FEMA)

Liability Policies (misc types)

Excess Liability Policy Personal Umbrella Commercial Umbrella Medical Professional Insurance Errors and Omissions Fiduciary Liability Liquor Liability Employment Practices Liability Insurance

Terrorism Risk Insurance Act

Funds coverage for potentially catastrophic events due to acts of terrorism. Applies to all property insurance

Mine Subsidence

Loss caused by the collapse or movement of structures resulting from the caving in of underground mines.

Workers Comp premium computation

Manual Rating - rates based upon job classification Experience Rating - rates based on employers prior loss experience Premium Discount - larger employers receive discount, as credit for expenses which do not increase proportionately Participating Plans - premum refunded, if loss experience falls w/in guidelines Retrospective Rating - initial premium is charged, then adjusted at end of policy period to reflect actual loss experience

Workers Compensation Benefits

Medical Benefits Disability Income Benefits Rehabilitation Benefits Death and Survivor Benefits (funeral expenses)

Aftermarket Parts

Non original equipment made by a manufacturer other than the auto maker

Commercial General Liability coverage forms

Occurence Form Claims-Made Form

Homeowners (property) Exclusions

Ordinance or Law (loss caused during enforsement) Earth Movement (earthquake, landslides, mine substinence, sinking) Water Damage (flood, tidal water, overflow, or back up of sewer/drains/sump) Power Failure (interuption away from premises) Neglect (failure to protect) War (civil, insurrections, rebellions, revolutions) Nuclear Hazard (reaction or radioactive contamination) Intentional Loss (burn your own house) Government Action (during confiscation or seizure)

Personal Articles Floater (examples)

Personal Jewelry Floater Personal Effects Floater (items worn by travelers) Fine Arts Floater (paintings, manuscripts, antiques) Camera Floater Musical Instrument Floater

Ocean Marine Insurance

Protect against losses to property while being chipped by ocean, or inland waterways. Unregulated in regard to forms and rates

Inland Marine Insurance

Protects against losses to preoperty that is mobile in nature (across land), primarily while property is away from the owner's premises

Aircraft Hull Insurance

Provides coverage on an open peril basis for physical loss or damage to the insured aircraft, on ground, or in flight. In flight is from the moment it moves forward for takeoff until it completes its landing run.

File and Use (rate approval)

Rates must be filed with the state insurance regulatory authority (Dept or Division of Insurance), and may be used as soon as they are filed

Commercial General Liability

Section I - Coverages Coverage A - BI and PD liability Coverage B - Personal and Advertising Injury Coverage C - Medical Expense Section II - Who is an Insured Section III - Limits of Insurance Section IV - Conditions Section V - Definitions

Business Auto Coverage Form

Section I - Covered Autos Section II - Liability Coverage Section III - Physical Damage Coverage Section IV - Business Auto Conditions Section V - Definitions

Workers Comp Self Insurance Plans (employer groups)

Some states allow employers to self-insure when able to guarantee their ability to meet their workers comp obligations Usually required a self-insurance certificate and surety bond

Mandatory Rates

Some states require that mandatory rates be used for certain lines of insurance.

Hazard

Something that increases the chance or likelihood of a loss occuring. (physical or moral or morale)

Insurable Interest (limit of liability)

Specifies that the insurer will not be responsible for an amount which is greater than the financial interest of an insured person or more that the limit of liability stated on the Declarations Page

Bonds (2 types)

Surety Bonds (performance bonds) - guarantee that specific obligations will be fulfilled Fidelity Bonds (honesty bonds) - cover employers from direct loss due to fraudulent or dishonest acts (theft) by their employees

Deductible

The amount of money which the insured party must pay before the insurance company's own coverage plan begins.

Declarations Page

The basic information about a policy: Who - names of insurer and insured What - description of insured property Where - address and legal description of insured property When - effective and expiration dates. How Much - limits of coverage, deductible, premium

Peril

The cause of a possible loss.

Automatic Agreements

The ceding company must transfer the amount of insurance in excess of the retention level immediately and automatically upon receipt of the premium

Premises

The interior of that portion of a building occupied by the insured to conduct business

Actual Cash Value (ACV)

The policy pays for the cost to repair or replace the damaged property at the time of loss, less depreciation

Replacement Cost

The policy pays the full cost to replace or repair the damaged property (not exceeding policy limits) at the time of the loss without an adjustment for depreciation

Right of Salvage

The right of the insurer to take possession of damaged property after the loss to the property has been paid. The salvage belongs to the insurer.

Condominium Commercial Unit- Owners Coverage (form)

This form is used for commercial unit-owners instead of the HO-6 (which is used for residential unit-owners)

Pollution Liability Coverage

Three options to adding pollution coverage back to a CGL policy: Pollution Liability Coverage Form Limited Pollution Liability Coverage Form - identical to above, but does not include clean up costs. Pollution Extension Endorsement - deletes pollution exclusion, but continues to exclude cleanup costs

Motor Truck Cargo Forms (U)

Truckers Form - insures public truckers for legal liability arising out of loss/damage to cargo belonging to others Shippers Form - Covers shipper's own goods Owners Form - covers business that owns the trucks in which it transports its own goods

Contribution by Equal Shares

Under this concept, when 2 or more insurers' policies cover at the same level (Primary or Excess), each insurer contributes an equal amount to the loss settlement until the loss is paid, or until each insurer has exhausted its limits of insurance, whichever comes first. Example: If there are 3 insurers participating, each would pay 33 1/3 percent of the loss; if 4 insurers participating, each would pay 25 percent of the loss; or if 5 insurers participating, each would pay 20 percent of the loss.

Personal Inland Marine Insurance

Used to insure moveable personal property against direct loss

Motor Carrier Coverage Form

Variation of the Truckers Coverage Form: Trucker - engaged in the business of transporting property for hire Motor Carrier - engaged in transporting property or passengers

Worker's Compensation Selected Endorsements

Voluntary Compensation Endorsement - extends Worker's Comp coverage to employees even if the law doesnt require the employer to provide coverage. Foreign Coverage Endorsement - around the clock, continuous for those employed in foreign operations

Ocean Marine Policy

Written "full value" ad will become void if certain implied warranties are violated: Legality-legal goods Seaworthiness - seaworthy ship/competent crew No Deviation in Voyage - sail the course filed with the insurer.

Vacancy

A property that has neither occupants nor personal property is described as vacant.

Open Competition

A state relies on competition between insurers to produce fair and adequate rates

Worker's Compensation Assigned Risk Plan

Aka: Residual Market Plan or State Insurance Fund Insurers who write Workers' Comp in states voluntary market must participate Offers Workers' Comp coverage for employers who are unable to purchase Workers Comp in voluntary market

Facultative Agreements

Allow the ceding insurer and the reinsurance companies an opportunity to exchange advice about the underwriting of each case

Homeowners (additional) Property Coverages

Debris Removal (remove debris left from loss) Reasonable Repairs (protect from further loss) Trees, Shrubs and Plants (damage up to $500) Property Removed (protect property 30 days off premises of insured) CC, ETF card, Forgery, Counterfeit Money (theft, unauthorized use) Loss Assessment (from homes association) Collapse (hidden decay, weight, defective material) Glass or Safety Glazing Material (breakage) Landlord's Furnishings (contents when rented to others) Ordinance of Law (loss caused during enforcement) Grave Markers (theft or damage)

Commercial Package Policy (4 key components)

Dec Page Conditions (legal obligations of insured and insurer) Interline Endorsements (coordinate coverage between parts) One or more of Coverage Parts

Endorsement

an amendment to an individual policy that reflects any changes to the standard policy

Commercial Property Broas Loss (form)

includes basic coverages plus: Falling Objects Weight of Ice, Snow or Sleet Water damage caused by accidental discharge

Bill of Lading

required to be issued to the shipper of the goods being transported. 2 types. 1. Straight (regular) - carrier is responsible for the invoice cost of the goods 2. Released - carrier is only responsible for the value of the goods declared on the bill of lading

Unoccupancy

A property that contains personal property or contents but has no occupants is described as unoccupied.

Federal Workers' Compensation Laws

Federal Employers Liability Act - interstate railroad workers U.S. Longshorement and Harbor - those who load, unload, build, or repair ships (not crew) Jones Act - crews on ocean vessels Federal Employees Compensation Act - U.S. civilian government employees

Homeowners (liability) Endorsements (for additional premium)

-Business Pursuits - Extends liability coverage for involvement in business not owned or controlled. -Home Day Care- Extends Section II coverage. -Limited Fungi, Wet or Dry Rot, or Bacteria Coverage- covers insured's liability exposure from claims of others. -Permitted Incidental Occupancies - Necessary and incidental use of premises. -Personal Injury- Defines and adds personal injury to the policy. -Watercraft Liability -Home Business -Worker's Compensation Residence Employee

Common Carrier Cargo Liability

1. Legal Liability - A common carrier's liability is almost absolute for loss or damage to property in their custody from any cause, regardless of their negligence or lack of negligence, except from 5 sources: a. Acts of God b. Acts of a public enemy c. Exercise of a public authority d. Fault or neglect of a shipper e. Inherent vice

Inherent Vice

A condition or defect that exists within property itself that causes the property to spoil, break, become defective, or destroy itself. Insurance policies typically exclude inherent vice. Example: The quality of materials used in a painting allows the painting to fade or lose luster with time.

Watercraft

A craft principally designed to be propelled on or in water by wind, engine power, or electric motor.

Intervening Cause

A distrupted chain of events, thus freeing the defendant from liability Example: Provoking a dog, causing it to bite or defend

Direct Response Marketing

A marketing system that offers insurance contacts directly to the public through direct mail, newspaper, magazines, radio, TV, internet, vending machines, etc.

Functional Replacement Cost

A property policy provision that changes the valuation method otherwise applicable (actual cash value or replacement cost) to valuation that allows replacement with less costly property that is functionally equivalent. Example: the replacement of damaged property with identical property is impossible die to some technological or environmental change.

Bailee

An individual or organization who has taken into its care, custody, and/or control the property of another for servicing, repair, or storage

Assumed Name

An insurance agent doing business under any name other than the agent's legal name

Transit Coverage Forms (U)

Annual Transit - used to protect all property/shipments being shipped or received from other shippers during the year via any common carrier Trip Transit - used for irregular shipments, wish to insure a single shipment

Certified Act of Terrorism

Any act, certified jointly as terrorism by the Secretary of Treasury, State and Attorney General which is at least one of the following: -Violent/dangerous to human life/property/infrastructure. -Damaging within the U.S. or on U.S. air carrier/vessel/mission. -Committed by persons on behalf of any foreign person/interest to coerce/influence the U.S. civilian/government policy.

Boiler and Machinery Insurance

Any machine subject to accidental breakdown that could destroy or damage a large part of the machine is eligible for coverage, in addition to steam boilers

Homeowners (additional) Liability Coverages

Claim Expenses - supplementary payments - reasonable expenses at insurer's request First Aid Expenses - first aid for others, not the insured Damage to Property of Others - replacement costs up to limits Loss Assessment - a homeowners association charge against insured.

Workers' Compensation types of laws

Compulsory - employers required to provide Workers' Comp benefits to employees or demonstrate the ability to provide Elective - employers have choice to accept or reject workers comp laws Monopolistic-workers comp insurance only available through state fund Competitive - workers comp insurance abailable through private insurance

Motor Carrier Act of 1980

Department of Transportaion (DOT) requires: -Motor carrier must carry an insurance policy of certain minimum limits, or -Post a surety bond representing certain financial stability criteria when transporting passengers or cargo.

Homeowners (property) Endorsements (for additional premium)

Earthquake Home Day Care (children) Personal Property Replacement Cost (increase coverage for full recovery) Scheduled Personal Property (for scheduled property with a specific amount of coverage) Limited Fungi, Wet or Dry Rot, Bacteria Coverage (testing and removal) Permitted Incidental Occupancies (additional coverage when residence used for business)

Truckers Coverage Form

For those firms or persons that are in the business of transporting goods or commodities for another Section I- Covered Autos Section II - Liability Cov Section III- Trailer Interchange Coverage - covers trailer that ind does not own but has in his possession along with a written Trailer Interchange Agreement Section IV - Physical Damage Coverage Section V- Truckers Conditions Section VI- Definitions

Commercial Crime Coverage Forms

Form A - Employee Theft Form B - Forgery or Alteration Form C - Theft, Disappearance and Destruction Form D - Robbery and Safe Burglary - other than Money/Securities Form E - Premises Burglary Form F - Computer Theft and Fund Transfer Fraud Form G - Extortion Form H - Premises Theft/Outside - other than Money/Securities Form I - Lessee's Safe Deposit Box Form J - Securities Deposited with Others Form K&L - Guest's Property Form M&N - Safe Depository Form O&P - Public Employee Dishonesty Form Q - Robbery and Safe Burglary Money/Securities Form R - Money Order and Counterfeit Paper Currency

Homeowners Policies

HO Forms: 2,3,5,8 are for owner-occupant of a dwelling that is used principally for private residential purposes HO Forms: 4(tenant) and 6(condominium unit-owner) are written to insure the personal property and liability of occupants, but do not cover the structure

Homeowners Coverage Forms

HO-2 (broad form) HO-3 (special form) HO-4 (contents broad form; renters or tenants form) HO-5 (comprehensive form) HO-6 (condominium unit-owners form) HO-8 (modified form for older homes)

Ocean Marine Policy Coverages

Hull Insurance (ship itself) Cargo Insurange (goods being shipped) Freight Insurance (freight charges and import duties) General Average (loss is apportioned or shared among all) Particular Average (loss affects only a particular interest) Collision/Running Down Clause (collision with another vessel) Inchmaree Clause (burst boiler, broken propeller, crew navigation errors)

Commercial Property Building and Personal Property Coverage Form (extensions of coverage)

If coinsurance threshold of 80% or more is met: Newly Acquired or Constructed Property Personal Effects and Property of Others Valuable Papers and Records Property Off Premises Outdoor Property Non-Owned Detached Trailers

Commercial Property Building and Personal Property Coverage Form (additional coverages)

Included with no additional premium: Debris Removal Preservation of Property Fire Department Service Charge Pollutant Clean Up and Removal Increased Cost of Construction Electronic Data

Prior Approval

Insurers cannot use rates until approved by the DOI, or until a specific time has passed after the filinf without being disapproved

Boiler and Machinery Equipment Breakdown Protection Coverage (Form)

Property Damage Expediting Expenses Business Income and Extra Expense Spoilage Damage Utility Interruption Newly Aquired Premises Ordinance or Law Errors and Omissions Brands and Labels Contingent Business Income and Extra Expense

Abandonment of Property

Specifies that the insured may not abandon or relinquish ownership of damaged property to the insurer for disposal or repair

Conditions

Specifies the general rules(obligations) that the insured and insurer have agreed to follow throughout the policy period, such as the insured's responsibilities in the event of a loss

Apportionment (pro rata liability/other insurance)

Specifies the process to be followed when more than one policy covers the same loss.

Terrorism Risk Insurance Act Exclusions

TRIA covers all commercial lines of property & casualty insurance except: Federal and private crop and livestock Private mortgage Financial Guaranty Medical Malpractice Federal Flood Reinsurance

Workers' Compensation Disability Income Benefits

Temporary Total - expected to recover and return to work, but unable to work while recovering Permanent Total - unable to do any work for the res of life Temporary Partial - able to do some work, but is unable to earn usual wage until full recovery. Permanent Partial - able to do some work, but will never fully recover Scheduled Injuries - listing of benefits that apply for each specific permanent partial injury (loss of eye, hand etc)

Garagekeepers Coverage

The insured may elect one of the following: Legal Liability Basis - coverage applied only if the garage is legally liable Direct Excess Basis - coverage applies regardless of liability, but only if customer has no physical damage coverage of their own Direct Primary Basis - coverage applies regardless of liability, and regardless if customer has any physical damage coverage of their own

Law of Large Numbers

The larger the number of exposures considered, the more closely the losses reported will equal the underlying probability of loss. Only applies to homogeneous groups

Claims-Made Form

This form provides for the defense and payment of claims, for which the insured is legally liable. Same coverage as an Occurrence Form, but is of particular significance to risks that have the potential to generate claims years after an occurrence that caused injury or damage.

Nationwide Marine Definition

Wet insurance and Dry insurance are terms that the Nationwide Marine Definition uses in specifying risks that may be written under marine insurance. The National Association of Insurance Commissioners adopted the Nationwide Marine Definition that defines 6 broad classes of property that may be insured under marine contract The classes are: 1. Imports 2. Exports 3. Domestic Shipments 4. Instrumentalities of Transportation or Communication (i.e. bridges, tunnels, antenna towers) 5. Personal Property Floater Risks (as discussed in Chapters 3 and 9) 6. Commercial Property Floater Risks

Endorsements

Written amendments attached to the policy to broaden or restrict coverage, or to further define certain policy provisions.

Commercial Ocean Marine Liability Insurance

aka. Protection and Indemnity Covers legal libaility imposed on the insured for damages arising out of the operation of the insured vessel