Ch 10

Basic parts of an Insurance Contract

1. Declarations 2. Definitions 3. Insuring Agreement 4. Exclusions 5. Conditions 6. Miscellaneous Provisions

Misc. Provisions

Ex: subrogation, cancellation, grace period

Coinsurance Clause for Property Insurance

encourages the insured to insure the property to a stated percentage of its insurable value, Refer to equation sheet

Calendar Year Deductible

for health insurance, a type of aggregate deductible that is found in individual and group medical expense policies,

Purpose of Deductibles (3)

Eliminate small, costly claims, Reduces premiums, and Reduces moral/attitudinal hazards- encourages people to be more careful and discourages dishonesty because they can't profit from insurance/must pay

Pro Rata Liability

a provision that applies when two or more policies cover the same insurable interest in the property, each insurer's share of the loss is based on the proportion that its insurance bears to the total amount of insurance on the property, prevents from profiting from a loss

Exclusions

excluded perils, losses and property, things are excluded if a peril is uninsurable, there are hazards, other contracts cover it moral hazards, or coverage isn't needed by most

Endorsements

for property and casualty insurance, written provisions that adds to, deletes from or modifies the original contract provisions, resolves conflicting terms, you can add coverage

Elimination (Waiting) Period

health insurance, a stated period of time at the beginning of a loss where no insurance benefits are paid

Coinsurance in Health Insurance

helps to reduce premiums, prevents overuse of benefits, must pay more later beyond the deductible for a loss, there is an out-of-pocket maximum, refer to equation sheet

Coordination of Benefits Provision

in group health insurance, insurance is designed to prevent overinsurance or duplicate benefits if someone is covered under more than one group plan Ex: has their own work insurance and is covered under their spouse's

Other Insureds

insured under the named insured's policy even though they are not specifically listed

Contribibution by Equal Shares

liability contracts, each insurer shares equally in the loss until the share paid by each insurer equals the lowest limit of liability under any policy, or until the amount of the loss is paid, each insurer pays equal amounts until policy limits are exhausted

Additional Insureds

people added by endorsement

Named insured

person named in the declarations page,

Primary and Excess Insurance

primary insurer pay first, then the excess pays after the policy limits under the primary policy are exhausted

Aggregate Deductible

property insurance, all losses that occur during a specific time period are accumulated to satisfy the deductible amount, the insurer pays the remaining losses once the insured meets their yearly deductible

Straight Deductible

property insurance, the insured pay a certain amount of loss before the insurer is required to pay, on a claim-to-claim basis, every time a loss occurs the insured pays X amount and the rest insurance covers

Conditions

provisions in the policy that qualify or place limitations on the insurer's promise to perform, certain duties the insured must meet to be payed for losses like a notification period

Deductibles

requires the insured to pay part of the loss, a specific amount is subtracted from the total loss payment that otherwise would be payable, not in life insurance (or other complete losses)

Riders

same as endorsements but for life and health insurance, add on to the policy to meet your needs, changes to the original policy

Declarations

statement that provides info abut the particular property or activity being insured, identifies the insurer and names the insured, location of property, amount of insurance...etc

Insuring Agreement

summarizes the major promises or the insurer, what perils are covered for loss, the perils can be names or open-perils coverage aka "all risk"

First Named Insured

the first name n the declarations page, has certain other rights and responsibilities like payments and complying with conditions