massachusetts personal lines

consumer report

provides information regarding a customer's credit, character, reputation, etc.

risk-sharing arrangement

reciprocal insurer

insurers use _____ to protect themselves from catastrophic loss

reinsurance

bankruptcy of the insured will NOT

relieve insurer of its policy obligations (insurer must provide the coverage stated in the policy)

actual cash value

replacement cost minus depreciation

Coverage F: Medical Payments to Others

residence employees are eligible for medical payments if the bodily injury arises in the course of employment

Casualty

same as LIABILITY

special damages are

tangible damages that can be specifically measured in dollar amounts

the policy defines collision as

the impact of a covered vehicle with another vehicle/object

Severability of Insurance

the insurance applies separately to each insured. this condition does not increase the insurer's liability for any one occurrence.

the abandonment provision in property insurance policies states that

the insured may not relinquish ownership of damaged property to claim a total loss, but must protect damaged property from further loss

Substitute Transportation will reimburse the insured for transportation expenses if:

the insured's auto is out of service due to collision damage and the auto is covered for collision

personal property coverage would cover

the insured's camera if stolen while the insured is on vacation

experience rating

the insured's past experience with claims helps determine the cost of insurance

in return for the insured's promise to insure the property to some certain percent of its value:

the insurer agrees to give the insured a reduced rate per hundred on the insurance and pay partial losses in full

Primary Policy

the policy that pays first in the event of a covered loss, or in a layered program of insurance, the policy that covers the first layer of loss

who does a life settlement broker represent?

the policyowner

Assignment

the transfer of legal right in an insurance policy

the insured's homeowner policy will only pay to remove the tree if

the tree is blocking the driveway

example of a producer's fiduciary duty

the trust that a client places in the producer in regard to handling premiums

fine for impersonation of a licensed producer

at least $10 but no more than $100

the commissioner must examine companies in order to determine financial condition, ability to fulfill it obligations, compliance with insurance laws and dealing with its policyholders

at least once every 5 years and whenever deemed necessary the commissioner

after the insurer receives proof of loss,

it has 60 days to pay for the loss

after the insurer receives proof of loss:

it has 60 days to pay for the loss

what is the fee for a rating organization's license?

$25

The regular National Flood Insurance Program would insure an eligible single-family dwelling for up to

$250,000 on a replacement cost basis

who violates a cease and desist order must forfeit and pay a max sum of

$10,000 for each violation

silverware

$2,500

Pure Risk (characteristics)

- due to chance -definite -measurable -predictable

coverage for medical payments under an automobile insurance policy applies to expenses following a covered incident within

2 years

how long do rating organization's licenses remain in effect

3 years

Mortgagee

A lender

Coverage under Part 6 - Medical Payments in auto policies issues in this state is similar to

Accident insurance, because it provides legal protection if the insured causes injuries to others

which of the following is the closest term to an authorized insurer?

Admitted

what document grants express authority to an agent?

Agent's contract with the principal

Exclusions on a Dwelling Policy

All Homeowner Policy Exclusions apply to All Dwelling Policies

to legally transact insurance in this state, an insurer must obtain:

Certificate of Authority

auto damage caused by contact with a bird or animal is paid under

Comprehensive

which coverage would pay for damage to a covered auto due to colliding with a deer?

Comprehensive coverage

Which property coverages would provide protection to contents damaged by fire?

Coverage C - Personal Property provides coverage for the contents of an insured dwelling

breakage of glass included in

DP-2 and DP-3 only

which liability coverage must be added by endorsement to a homeowners policy in order to apply?

Personal Injury *personal injury only applies if added by endorsement and an additional premium is paid

what would pay for the insured's sustained injuries when struck by a hit and run driver?

Medical Payments

Does the homeowners policy cover a collapse cause by foundation cracks?

NO The foundation cracks would take years to cause collapse, meaning there would have been plenty of time to fix them

The Federal Fair Credit Reporting Act

Regulates consumer reports

what type of information would be found in a policy's insuring agreement?

Renewal Dates

an apartment occupant's personal property would be insured under which homeowners form?

Tenant broad form (HO-4) *the HO-4 form is for the apartment dweller. it covers what the insured owns, their contents and has no coverage for the apartment*

contrary to the basic concept of indemnity

replacement cost

first aid covers for others injured on the insured's premises

are paid in addition to the liability limit

General Compensatory Damages

are for intangible elements that cannot be specifically measured in terms of dollars

Reciprocity

occurs when the state in which the person resides accords the same privilege to residents of MA

Liberalization Clause

changes adopted by the insurer that broaden coverage automatically apply to the policy at no additional premium

a producer who fails to segregate monies from his own personal funds is guilty of

commingling

damage to car caused by wind or hail

covered with comprehensive coverage

Coverage D: Loss of Use

covers losses incurred as a result of your home being uninhabitable

portable electronics insurance

covers the repair/replacement of portable electronics if stolen, inoperable due to mechanical failure, or damaged

Misrepresentation

issuing sales material with exaggerated statements about policy benefits

comprehensive coverage would cover the financial loss due to

damage to your car caused by wind or hail

mandatory part of an insurance policy that varies with each individual policy

declarations

a person applying for a resident insurance producer license must make application to the commissioner on the uniform application and

have successfully passed the examinations for the lines of authority for which the person has applied

the policy conditions define

how parties to the contract must act following a loss

personal injury is NOT an additional

liability coverage automatically provided in a homeowners policy

The watercraft endorsement on a homeowners policy extends coverage for

liability protection for bodily injury or property damage caused by the ownership or use of watercraft (excluding when used to carry persons for a fee or when rented to others)

pro rata liability

limits the liability of the insurer to a portion of the loss no greater than the amount the insurer bears to all the insurance covering the same property

aggregate limit is the

maximum limit of coverage under a liability policy during a year

what is the major difference between a stock company and a mutual company?

ownership *mutual companies are owned by policyholders, while stock companies are owned by stock holders*

adverse selection is a concept best described as

risks with higher probability of loss seeking insurance more often than other risks

in the event of a total loss,

the coinsurance clause does not operate and the face amount of the policy is paid

watercraft damage coverage in the homeowners policy

up to $1,500

amount of loss assessment coverage included in a homeowners liability coverage section:

up to 1,000 per occurence

HO covers insurance even if

you are not liable

Fee for a rating organizations license:

$25

What is the minimum amount of coverage that should be carried on an HO-2 on a home that was purchased 4 years ago for $75,000, which today has a replacement value of $100,000?

$80,000

How much notice is required for the cancellation policy of coverage under a dwelling policy?

10

Minimum age requirement for an insurance producer in this state

18 years old

Dwelling Policies

3 forms DP 1 DP 2 DP 3

How long do rating organization's licenses remain in effect?

3 years

licensees must inform the Commissioner of a change of address within

30 days of the change

A homeowner, at the time of loss, must be insured for at least ____ % of replacement cost in order to collect the full replacement cost of a partial loss

80%

How much is covered for debris removal under the HO property additional coverages?

All reasonable costs if the debris was cause by a peril that is insured against, the reasonable cost of debris removal is paid by the insurer

Required to participate in the Insolvency Fund

Authorized Insurers are required to participate in the Fund as a condition of their certificate of authority

Under the HO-4 and HO-6 homeowners policy forms, property is insured against

BROAD form perils (provide the same level of coverage as Coverage C in the HO-2 and HO-3)

What is true regarding coverage for flood and earthquake perils?

Both flood and earthquake are excluded perils in all property policies can be purchased w an endorsement

Girl 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 liability does the insured have?

Combined Single

General Compensatory Damages

Compensate for non-monetary aspects of harm suffered, such as pain and suffering.

Vandalism and Malicious Mischief

Coverage provided in many property insurance policies that protects property against damage caused by vandals but will NOT be covered if vacant for more than 60 days immediately prior to the loss

Vicarious Liability

Legal doctrine under which a party can be held liable for the wrongful actions of another party. example: a 9 year old damages the neighbor's window.. the parents (insureds) will be held liable

Not a cover auto

a mobile home (if someone is injured exiting a friend's mobile home this is classified as a premises exposure)

Exclusions

are NOT found in the declarations section of a policy

Under the HO-4 and HO-6 homeowner policy forms, property is insured against:

broad form perils

Earthquake Damage

damage by earthquake is specifically EXCLUDED from coverage in all homeowners forms. However, coverage may be purchased by endorsement.

Coinsurance clause purpose

encourage the insured to insure the property closer to its value

Dwelling is used

for properties not where the policyowner lives. used for tenant dwelling is used for property

unfair trade practices

if an auto repair facility/insurance company fails to discloses whether the parts installed were used, rebuilt or aftermarket crash parts

DP-1 and DP-2 policy forms

loss or damage from falling objects is covered except for damage to awnings, fences, outdoor equipment, outdoor radio and tv antennas. damage to the interior of the building is covered only if the exterior has been damaged first

Personal Injury

may be added as an endorsement

MA Financial Responsibility Law

requires that the insurance policy provides coverage limits not less than the following: $20,000 on account of injury or death to any 1 person in a single accident $40,000 on account of injury or death to 2 or more persons in a single accident $5,000 for damage to property of others arising out of a single accident

Coverage F (Medical Payments) under a homeowners policy would cover:

residence employee who is injured on the job.

What is not considered a flood?

sewage backup

the commissioner will serve a notice hearing, the time and place of which CANNOT be

sooner than 21 days after the date such notice was served

who is covered by an HO-4 policy?

tenants

location of premises, policy limits, supplemental representations, and insurer's name/address can all be found in

the Declarations

the amount an insurer will pay under Coverage D (loss of use) depends on

the amount of coverage on the dwelling

Definitions

the part of the policy that clarifies terms in the policy

The Personal Auto Policy does NOT provide coverage outside

the united states, its territories or Canada

How much will the Loss Assessment additional coverage of the insured's homeowners liability policy pay?

up to $1,000 per occurrence for the insured's share of loss assessment charged against them as owner or tenant of the residence premises during the policy period by a corporation or association of property owners

Eligibility requires that the dwelling have not more than __ residential units

4

Domestic Insurer

insurer's home office is in this state

Boatowners Policy contains

property, liability, and medical payments coverage

coverage D

provide for loss of use indirect or consequential losses

Liability limits

$20,000/$40,000/ $5,000

Auto liability policy limits explained

- first limit shown is the most the policy will pay for injuries to any one person - second limit is the most policies will pay for all injuries if more than one person is injured in a single accident - third limit is the most the policy will pay for property damage resulting for a single accident

at the time of loss, the insured's claim settlement options include:

- pay the value of the lost or damaged property - pay the cost or repair/replacement - appraisal

Risk Retention

- to reduce expenses and improve cash flow - to increase control of claim reserving and claims settlements - to fund losses that cannot be insured

Homeowners Insurance

-for your own home you live in -equivalent to property/liability coverage

Coverage B: Other Structures

-protects other, unattached, dwellings on the property. -covers landscaping as well as buildings, but not the land. -does not cover other structures used for business purposes.

personal property being moved to a new location can be covered for up to ___ days without notice to the insurer

30

moving to a new location, personal property will apply on pro rata basis to both locations for

30 days

under Coverage C of a homeowners policy, the amount of insurance provided to cover personal property of the insured is

50% of the amount provided as Coverage A

what type of compensatory damages will pay for pain and suffering and disfigurement?

General Compensatory

the homeowners policy form that covers condominium unit owners

HO-6

What does Massachusetts Automobile Insurance policy cover?

Medical Payments: paying for injuries arising out of an auto event, regardless of fault

fiduciary responsibility

Money collected with respect to an insurance transaction must be held in a position of trust by the agent or broker.

A participating insurance policy may ..

Pay dividends to the policy owner

An insurance company receives an application with some information missing and issues the policy anyway. What is this called?

Waiver *in insurance policies, a waiver is giving up one's known right or privilege*

An insurer was just caught misrepresenting the terms of a policy. What fine does he face?

a fine of up to $1,000 or imprisonment for up to 6 months

insurable interest in a property policy must be proven

at the time of loss

which type of insurer must participate in the MA joint underwriting association?

authorized property insurance companies

accessories installed on a mobile home that would be covered:

auto radio antenna

comprehensive cover would cover financial losses due to

damage to your car caused by wind or hail *comprehensive coverage includes losses caused by falling objects, fire, theft, windstorms, hail, vandalism*

a beauty parlor burns to the ground. what type of loss is this?

direct

the coverage afforded by the Use of Other Autos - Broad Form is considered to be

excess over the auto owner's coverage

HO-6 is designed specifically to cover the

exposure of a condominium

larcency

failure to pay premiums collected to the company after written demands

larcency

failure to pay the premiums collected to the company after written demand

DP-1 Basic Form

fire insurances + a few mentioned perils

most likely to have the most favorable premium rate for fire?

fire-resistive

punitive damage:

form of punishment, intended to serve as an example to others to discourage undesirable behavior

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

the MA automobile insurance policy does not automatically provide coverage for

non-owned trailers

temporary insurance producer license without requiring an examination for a period

not to exceed 180 days

any person who violates a cease order of the Commissioner after it has become final must:

pay a fine to the state not to exceed ten thousand dollars for each violation which may be recovered in a civil actions

pretext interviewing

pretending to be a reporter to determine the final underwriting process

Who is afforded coverage under the Use of Other Autos - Broad Form endorsement?

this endorsement provides coverage for the insured, spouse and residents of the household, provided they are named in the schedule in the endorsement and premium is paid for each

HO-4 covers

those who rent their dwelling

Discrimination

two individuals in the same risk/age class yet they are charged different rates for their insurance policies due to an insignificant factor

scheduled personal property endorsement

values beyond the limitations of the homeowners policy *covered on a valued basis*

Speculative Risk

when a person has both the chance of winning or losing

Mobile Home Endorsement

when an auto that is shown on the declarations page is a mobile home, coverage extends to include certain permanently installed equipment and accessories

Personal Injury Protection Coverage

will only pay $2,000 in benefits if the insured has medical coverage that will pay some of the medical expenses. If the insured has more expenses after $2,000 PIP and the insurance has paid the limit will be returned to $8,000

if a producer has administrative action taken against his license, he must report such action

within 30 days of the final disposition on such action

a camera the insured has with him on vacation

would be covered by the broad theft endorsement on a dwelling policy

HO forms place a $______ limit for business personal property that applies ON premises only

$2,500 limit. *a limit of $500 applies to loss of business personal property while away from the premises*

Endorsement M-0099-S

- is a mandatory endorsement - adds $500 minimum collision deductible - causes the limits of insurance to comply with the minimum limits of any state in which the vehicle is being operated

Risks that contain farming exposure

are not eligible for homeowners insurance

Permitted incidental occupancies endorsement

covers liability exposures arising from an incidental business conducted within a building on the residence premises

comprehensive automobile insurance

covers property and liability everything other than you crashing into someone

auto policy - casualty

if you crash into someone damage to OTHERS not covering your car

retention

in casualty (liability) insurance, it is the portion of a claim not paid by insurance (property insurance calls this a deductible)

foreign insurer

insurer with an office out of state

Automatic Increase in Insurance Endorsement

is used to provide at the annual renewal date of the policy, an automatic increase in the Coverage A and B limits of insurance to help offset inflation

WYO Program (Write Your Own)

made up of private insurers that write and service National Flood Insurance policies on a no risk-bearing basis through a special arrangement with the Federal Insurance Administration.

Specific Coverage

one location is insured for a specific amount of insurance on the structure and contents

Uninsured motorist coverage applies

only when the other party is legally liable but has no insurance

absolute liability example

owning wild animals *any conduct that is inherently dangerous, such as using explosives or keeping wild animals, imposes ABSOLUTE liability*

the Insuring Agreement lists:

parties to the contract, effective and renewal dates, the description of coverage provided and perils (among other things)

Any person who violates a cease and desist order of the Commissioner after it has become final must:

pay a fine to the state not to exceed $10,000 for each violation, which may be recovered in a civil action.

Reciprocity of Licensure

permits nonresident licensure for all nonresidents of the state whose home is in good standing, licensed as resident, submitted the proper request

Section 1 of a boat owners policy covers:

physical damage

An accurate comparison between private and government insurers

private insurers may be authorized to transact insurance by state insurance departments

Who would participate in a Write Your Own (WYO) flood insurance program?

private insurers that wish to write and service National Flood Insurance policies on a no risk-bearing basis

errors and omissions coverage is provided ONLY in a

professional liability policy

Declarations section

provides information as to who is insured, where they are located, when the policy provides coverage, how much coverage and the amount of deductible applied to a loss

Farm Property is

specifically excluded under the liability section of a HO policy

Which perils are covered by the HO-2 and HO-3?

sudden and accidental rupture of a heating system

Apparent authority

the appearance or the assumption of authority based on the actions, words or deeds of the principal or because of circumstances the principal created

Express Authority

the authority granted to an agent through the agent's contract - written into the contract between the insurer and the agent

What is the maximum amount that can be charged to the insured for the fire department services?

the homeowners policy will pay up to $500 of the fire department service charge

Declarations

the part of a property policy that shows the amount of insurance, premium and policy term