RI PROPERTY AND CASUALTY
Strict Liability
places absolute responsibility for damages/injuries on an individual, regardless of fault (owning a tiger and it attacking someone)
Coinsurance/Insurance To Value
policy condition that requires an insured pay part of a loss if the amount of insurance carried on the property is less than a specified percentage of the value of the property at the time of loss
Duties of the Insured After a Loss
- giving prompt notice of a claim to the insurance company or agent -protecting the property from further damage -completing a detailed proof of loss (inventory of the damage) -making the property available for inspection by the company -submitting to examination under oath -assisting the insurer as required during the claim investigation procedure
Premium Financing - Limitations on Interest
-an insurance premium finance company shall not charge/collect any interest at a rate in excess -interest on any insurance premium finance agreement is to be computed on the balance of the premiums due, after subtracting the down payment made by the insured, from the effective date of the insurance contract, for which the premiums are being advanced, including the date when the final installment provided for in the agreement is due and payable. anticipates timely repayment, in equal monthly installments for a year. -service charge $15 per insurance premium finance agreement, nonrefundable upon cancellation or prepayment, may be imposed as long as the charges do not exceed -an insured may prepay the obligation in full at any time. In that event, the insured shall receive a refund credit unless it is less than one dollar
Rhode Island Joint Reinsurance Association - Definitions
-basic property insurance is insurance against direct loss to property -program is the basic property insurance inspection and placement program -Rhode Island Joint Reinsurance Associate - organization formed by insurers to administer the program
Rhode Island Joint Reinsurance Association - Limits of Coverage
-established in rules adopted by the governing committee subject to approval by the commissioner -standard and percentage deductibles and percentage participation clauses may be imposed by the association on any commercial, or non-owner occupied residential risk. "consent rate basis" - may impose deductibles on all other risks only if there has been excessive loss frequency and the applicant has failed to take reasonable steps to correct any situation -applicant may not obtain lead liability coverage above the maximum limits established by the governing committee and approved by the commissioner
Sources of Underwriting Information
-insurance agents recommendation -policyholders insurance history -loss ratios
Rhode Island Joint Reinsurance Association - Purposes
-to make basic property Insurance available to qualified applicants who have been unable to secure such insurance in the normal market -to mandate the participation of all domestic insurers and all insurers licensed to write those classes of basic property insurance -to encourage the improvement of properties located in urban areas and to further orderly community development.
Premium Financing - Cancellation of Insurance Contract
-when an insurance premium finance agreement contains a power of attorney enabling the company to cancel an insurance contract listed in the agreement, the insurance contract shall not be cancelled by the company unless stated in the laws otherwise -ten days written notice needs to be mailed to the insured of the intention to cancel the contract unless the default is removed in ten days -after ten days insure may cancel contract by mailing a notice of cancellation on a pro rata basis
Occurrence
A loss that occurs at a specific time and place over a period of time
Definition of the Insured
person/entity that will be compensated for loss by an insurer under terms of the policy
Fair Credit Reporting Act
Federal law that allows consumers who are denied insurance because of information contained on a credit report to be notified and allowed to obtain the information used in the report from the reporting agency
Mobile Home Insurance
HO-7. can be attached to an HO-2 or HO-3. covers: -mobile home/all original equipment/accessories -additions not originally included (water pumps, cabanas) -additional living expenses
Automobile: Personal Auto/Business Auto - Who is an Insured?
Part A (liability) - named insured and members of their family while using any auto, anyone using the insured car with permission, people/organizations that share liability with the insured Part B (medical) - named insured and any family members while occupying any motor vehicle designed for use on public roads any other person while occupying the named insureds covered auto and entitled to do so Part C (uninsured) - named insured and family members, anyone occupying the named insured and family members, any person entitled to recover damages because of bodily injury by an uninsured motorist to the named insured, family members, or passengers in the covered auto
Privacy of Consumer Financial Information
Requires a licensee to provide notice to individuals about its privacy policies and practices, describes the conditions where a licensee may disclose nonpublic personal financial information about individuals to affiliated/nonaffiliated third parties, and provides methods for individuals to prevent a licensee from disclosing that information. applies to nonpublic personal financial information about individuals who are claimants/beneficiaries of products/services primarily for personal, family or household purposes from licensees.
Flood Notice Requirements
Upon issuance and each renewal of insurance policies covering standard fire insurance, insurers shall provide written notice advising the policyholder that the insurance policy may not cover damages resulting from floods, that flood insurance may be available through the Federal Emergency Management Agency (FEMA) National Flood Insurance Program, and to contact their insurer or producer for assistance.
Workers Compensation Insurance/Employers Liability Insurance - Exclusive Remedy
a compromise between the employer and the employee stating that if an employee is injured on the job, the benefits they receive from workers' comp for that injury is the only ("exclusive") compensation ("remedy") that will be given. this means that the employee can't sue the employer for additional compensation for that same injury.
Commissioner/Director - Penalties
a contract that doesn't comply with state law is valid but the companies involved pay at least $300, up to $1,000. Commissioner will report these findings to the attorney general, who will pursue legally. the commissioner can suspend/revoke a license due to public safety, unstable financial condition, or fraudulent activity. The commissioner will prepare a statement of charges and a hearing is set. company can plead their case/provide witnesses and the commissioner can build a case against them. the commissioner may decide how to serve the charges, notices, and orders. commissioner can also modify/set aside a notice. the director may also revoke/suspend a license, order violator to cease, require compliance of title 27 (insurance) and issue penalties no less than $100 and no more than $50,000.
Automobile: Personal Auto/Business Auto - Liability - Split Limits
a provision of an insurance policy that states different maximum dollar amounts the insurer will pay for different components of a claim. three separate dollar amounts apply to each accident: per person limit, per occurrence limit for all injured persons, and per occurrence limit for all property damage resulting from the accident.
Automobile: Personal Auto/Business Auto - Liability - Combined Single Limit
a single dollar limit that applies to any combination of bodily injury and property damage liability claims
RI Automibile Insurance Plan
after consultation with the insurance companies authorized to issue automobile liability and/or physical damage policies, commissioner shall approve a reasonable plan for the proportional distribution among the companies of applicants for motor vehicle liability and/or physical damage insurance who are in good faith but are unable to procure insurance through ordinary methods. The plan shall provide coverage for liability imposed by law for damages arising out of the ownership, maintenance, or use of the vehicle within the United States or Canada, up to $250,000 because of bodily injury/death of one person in any one accident and, up to $500,000 for two or more people. when any plan has been approved, all the insurance companies shall subscribe to it and participate. licensed non-resident insurance producers shall be allowed to submit applications to the plan, as long as their state allows it. any applicant for insurance, any person insured under the plan, and any insurance company affected, may appeal to the insurance commissioner from any ruling/decision of a manager/committee designated to operate the plan. any order/act of the insurance commissioner shall be subject to review on petition filed by an aggrieved party in the superior court for the counties of Providence and Bristol within ten (10) days after notice of it is given. the court shall summarily hear the petition and may make any appropriate order or decree. .
Damages - Compensatory - Special
all direct and specific expenses involved in a particular loss, such as medical expense, lost wages, funeral expenses, and the cost to repair/replace damaged property
Terrorism Risk Insurance Act
allows government and insurance industry to share losses in the event of a terrorist attack. federal "backstop" greatly limits insurers losses
Commercial General Liability - Coverage A - Bodily Injury and Property Damage Liability - Occurrence
an accident, including continues/ repeated exposure to the same general harmful conditions. have to be written on an occurrence basis. only cover losses that "occur" during the policy period and within the policy territory. there is coverage for any covered occurrence that happens during the policy period, even if the claim is made after the policy expires.
Proximate Cause
an action that, in a natural and continuous sequence, produces a loss
Workers Compensation Insurance/Employers Liability Insurance - Work Related vs. Non Work Related
an injury or illness is work-related if an event/exposure in the work environment caused/contributed to the resulting condition or significantly aggravated a pre-existing injury or illness. Work-relatedness is presumed for injuries/illnesses resulting from events/exposures occurring in the work environment, unless an exception specifically applies
Workers Compensation Insurance/Employers Liability Insurance - Standard Policy Concepts
an insurance policy that provides coverage for an employer's two key exposures arising out of injuries sustained by employees. part one: covers the employer's statutory liabilities under workers compensation laws part two: covers liability arising out of employees' work-related injuries that do not fall under the workers compensation statute
Insurable Interest
any lawful and substantial economic interest in the safety /preservation of the subject of the insurance from loss/destruction or financial damage/impairment
Licensing - Continuing Education
applies to all residents/nonresidents involved in the sale of insurance exemptions include licenses that do not require examination, limited/restricted licenses, nonresident's complying with their states education requirements, and person who is all least 55 and has been lined for 25 years or at least 60 and been licensed for at least 20 years. must complete 24 hours of approved credit including three hours of ethics, not excluding course instructors. those licensed in another state must provide these credit hours, done in their home state or RI, at the date of renewal. failing to meet the requirements leads to suspension of all insurance licenses, and will not be permitted to apply for any other insurance licenses until the commissioner is shown compliance. fee for course approval is $60
Notice of Material Change
applies to the renewal of personal lines auto insurance, homeowners insurance, and residential fire insurance Upon an offer to renew, an insurer shall provide written notice of any material changes in policy at least thirty days prior to the expiration of the policy. if an insurer fails to provide notice the coverage provided in the expiring policy shall remain in effect, without the coverage modification, until notice is provided or until the effective date of replacement coverage, whichever occurs first.
HO-A
basic form. covers home structure, property, structures on land. Replaces at current value, not the original price. covers: -fire/lightening -windstorm/hail -vandalism -vehicles/aircraft -explosions/riots -glass breakage -smoke -volcanic eruption -personal liability
DP-1
basic form. has provisions to provide coverage to the dwelling, other structures, personal property, and fair rental value. similar to HO-1.
HO-1
basic homeowner policy. covers home structure, property, structures on land. covers: -fire/lightening -windstorm/hail -vandalism -vehicles/aircraft -explosions/riots -glass breakage -smoke -volcanic eruption -personal liability
Compliance with Provisions of Fair Credit Reporting Act
before report: -tell the applicant/employee that you might use information in their consumer report for decisions related to their employment. notice must be in writing and in a stand-alone format. notice cannot be in an employment application. can include some minor additional information in the notice, like a brief description of the nature of consumer reports, but only if it does not confuse or detract from the notice. -get written permission from the applicant/employee. can be part of the document you use to notify the person that you will get a consumer report. -certify compliance to the company from which you are getting the applicant/employee's information. must certify that: notified the applicant/employee and got their permission to get a consumer report, complied with all of the FCRA requirements and will not discriminate against the applicant/employee or otherwise misuse the information before adverse action: -a notice that includes a copy of the consumer report you relied on to make your decision -a copy of A Summary of Your Rights Under the Fair Credit Reporting Act after adverse action: -the name, address, and phone number of the consumer reporting company that supplied the report -a statement that the company that supplied the report did not make the decision to take the unfavorable action and can't give specific reasons for it -a notice of the person's right to dispute the accuracy or completeness of any information the consumer reporting company furnished, and to get an additional free report from the company if the person asks for it within 60 days
Blanket vs. Specific
blanket insurance covers more than one item of property at a single location or one or more items of property at multiple locations while specific insurance is specifically listed and covered for a specific amount
Bonds - Fidelity
bonds that guarantees an employee's honest discharge of duty; written to protect an insured from dishonest acts by employees
Bonds - Surety
bonds that guarantees someone will perform faithfully whatever he or she agrees to do, or that someone will make an agreed upon payment to another party
HO-2
broad form. covers all the HO-1 does plus: -falling objects -weight of ice/snow/sleet -accidental water overflow -sudden and accidental tearing apart, cracking, burning and bulging -freezing -sudden and accidental damage by an artificially generated electrical current -mechanical breakdown (heater, AC, water heater) water damage related to foundation, water back up, slow leaks, flooding, earthquake, kitchen/laundry appliances, TV/computers NOT covered
DP-2
broad form. similar to HO-2.
Automobile: Business Auto - Exclusions
business auto liability: -expected intended injuries -assumed under contract agreement -for work-related injuries to employees -for damage to property owned by/in custody of the insured -damaged arising out of the movement of property -completed operations -pollution damage -assumed under a contract -war -covered autos used for racing/demolition/stunts physical damage: -sound reproducing/receiving equipment -wear and tear, freezing, mechanical/electrical breakdown, damage to tiers -war/nuclear events -covered autos used for racing/demolition/stunts, decrease in value
Cancellation and Non Renewal Provisions
cancellation notice: -10 days' notice for any reason if the policy is in effect less than 90 days (calculated from the effective date of the policy to the date on which notice of cancellation is mailed). -10 days notice for nonpayment at any time. -10 days notice for the reasons permitted after the policy has been in effect 90 days. non renewal notice: -60 days' advance notice. return premium: -based on company filing, short rate or pro rata.
Unfair Trade Practices - Unfair Discrimination
cannot cancel/refuse a owner occupied dwelling or personal property because of the area the property is located in. making/permitting any unfair discrimination between individuals/risks of the same class and of essentially the same hazards by refusing to issue, renew, canceling, or limiting the amount of insurance coverage on a property/casualty risk because of the geographic location of the risk, unless: - for a business purpose that is not a pretext for unfair discrimination -is required by law or regulation;
Commercial Package Policy (CPP)
combines coverage for multiple perils. can provide almost any type of commercial insurance a business may need. policy is easier to understand. bundling may be less expensive.
Business Owner's Policy (BOP)
commercial package policy that provides property and liability insurance to certain types of small businesses. coverage is not chosen but has prepackaged coverages that are desirable to a small business.
Limited/Temporary Licenses
commissioner can issue temporary license for up to 180 days without examination if deemed necessary in these cases: -surviving spouse/appointed representative in the case of the producer dying/becoming disabled to allow time for sale of insurance business/training of new personnel -member/employee of business upon death of producer -designee in active service -any other situation the commissioner sees best for public interest may have to have suitable licensed sponsor who assumes responsibility. commissioner can revoked license if public interest is in danger
Commissioner/Director - Notice and Hearing
commissioner may issue cease and desist orders. cannot be more than $5,000 per violation, capped at $100,000, unless it was willful, than no more than $25,000 per violation, capped at $250,000. commissioner can revoke license if it reasonably should have been known. violating a cease and desist may be charged up to $25,000, which may be recovered in civil court. If the violation of the cease and desist is willful, fine could be up to $250,000.
Commissioner/Director - Broad Powers
commissioner may make reasonable rules ad regulations as necessary
Licensing - Revocation, Suspension, and Nonrenewal
commissioner may place a probation/suspension/revocation or administrative penalty for: -providing false/misleading information in the license application -violating laws/regulations/order of commissioner -attempting/obtaining a license through fraud -withholding money received in the insurance business -intentionally misrepresenting terms of a contact/application -been convicted of a felony -dishonest practices/financial irresponsibility -license suspended/revoked in another state -forging another's name on application -cheating on exam -knowingly doing business with someone who is not licensed -not complying with child support obligation -failing to pay state income tax if insurance commissioner denies application, a written statement of reason is sent to applicant. applicant can request hearing within 30 days to determine reasonableness of the decision. unless employed with the company, no company can cancel a producer's authority, cancel/modify a contract without 180 days written notice, and let license expire without written notice 180 days prior. Producer, within 60 days, can make a written demand for three referees of the question as to whether or not the cancellation/modification/expiration will affect the renewal/continuation/replacement of any policies placed through the producer, or services needed by policyholders. the referees will order continuance/renewal of any policies expiring within twelve months of the issuance of the notice, at the agreed pay, for no more than one year. no property and casualty company can cancel a producer's authority unless given 14 months written notice, let license expire with out written notice 14 months prior, and modify a contract without 180 days written notice.
Commissioner/Director - Examination of Records
commissioner may visit any insurance company in the state and examine all vaults, books, and papers. commissioner may inquire about financial condition and company management. commissioner may annually examine statements, returns, and can demand answers based on findings. commissioner pay punish if necessary.
Automobile: Business Auto - Individual Insured and Drive Other Car
commonly used when an employee does not carry personal auto insurance because he/she is furnished a company auto. Coverage under the endorsement would come into play in the event the individual designated in the endorsement (including his or her resident spouse) is driving a nonowned auto for personal use.
Damages - Compensatory - General
compensate for such additional things as pain, suffering, and disfigurement
Builders Risk
completed value form. coverage for commercial, residential, or farm buildings under construction. coverage includes: -building/foundation/fixtures -machinery/equipment -building materials/supplies excludes: -land/land scaring -scaffolding -materials in transit -satellites/antenas -construction trailers -theft at job site coverage begins on date of construction if no basement or date construction makes it above basement floor coverage ends when the property is accepted by purchaser, 90 days since construction was completed, building is occupied, or insured abandons construction
HO-5
comprehensive form. open peril for the dwelling, other structures, and personal property. Similar to HO-3.
HO-6
condo form. broad form. covers belongings, personal liability, limited dwelling coverage (walls, ceilings, floors). similar coverage to HO-2
Watercraft Insurance
coverage for boats and personal watercraft. often includes towing, wreckage removal, and fuel spill indemnification. homeowner policy only provides limited coverage
Inland Marine
coverage for cargo that travels over land -imports -exports -domestic shipments -instrumentalities of transportation/communication -personal property floater risks -commercial property floater risks
Personal Article Floater
coverage for classes of personal property: -jewelry -furs -cameras -musical instruments -silverware -golf equipment -fine arts -stamps -coins generally an appraisal is required when issued. Usually reimbursed by actual cash value, cost to repair, cost to replace, amount specified in policy
Stated/Agreed Value
covered is the cost of repair or the stated value, whichever is less. agreed value guarantees a set amount of coverage at the time the policy was issued. It does not depreciate and the owners will be paid up to the stated value if there is a loss
Professional Liabilities - Employment Practices Liability
covers a businesses losses arising out of wrongful termination, discrimination, sex harassment, and other employment related practices
Commercial General Liability - Exposures
covers business liability exposures. business liability is liability that arises out of the conduct of a business. every business has a number of exposures
Automobile: Personal Auto/Business Auto - Liability
covers damages for bodily injury or property damage that an insured becomes legally responsible for because of an auto accident
Commercial General Liability - Coverage B - Personal Injury and Advertising Injury
covers liability that arises out of offenses such as slander. occurrence or claims made basis
Crime - Employee Dishonesty
covers loss to business personal property and money securities that results from dishonest acts of employees. applies whiter employee acted alone or within collaboration with others, except the insured/partners of the insured
Automobile: Personal Auto/Business Auto - Liability - Property Damage
covers the cost of damages to someone else's property after an accident the insured caused. most commonly, the insured's property damage will pay out when the insured is at fault for an accident that causes damage to someone else's car
Nonrenewal
decision made by an insurer or insured to not continue coverage for another police period after the current policy expires
Causes of Loss Forms
defines the causes of loss (perils) that are covered. basic: -fire/lightening -explosion -windstorm/hail -smoke -aircraft/vehicles -riot -vandalism -sprinkler leakage -sinkhole collapse -volcanic eruption broad: -everything covered in basic -falling objects -weight of ice/snow/sleet -water damage special form excludes: -wear and tear -rust/corrosion -smog -pollutants -setteling/cracking/shrinking/expansion -power failure -ordinance of law -earthquake/flood -neglect -war/nuclear hazard -intentional acts
Automobile: Personal Auto/Business Auto - Types of Auto - Hired
designates liability and/or physical damage coverage only
Endorsements
document attached to an insurance policy that changes the policy in some way
RI Property & Casualty Insurance Guaranty Association - Scope
does not apply to: -life, annuity, health, disability -mortgage/financial guaranty or other forms of insurance offering protection against investment risks -fidelity or surety bonds -credit insurance (insurance on accounts receivable) -insurance of warranties or service contracts -title insurance -ocean marine insurance -provided by or guaranteed by government
RI Property & Casualty Insurance Guarantee Association - Scope
does not apply to: -life, health or liability -mortgage/financial guaranty or other forms of insurance offering protection against investment risks -failure of any obligor on any debt/monetary obligation to pay when due the principal, interest, dividend or purchase price of such obligation -changes in the level of interest rates whether short-term or long-term, or in the difference between interest rates existing in various markets -changes in the rate of exchange of currency, or from the inconvertibility of one currency into another for any reason -changes in the value of specific assets/commodities, or price levels in general -fidelity or surety bonds, or any other bonding obligations -credit insurance, vendors' single interest insurance, or collateral protection insurance or any insurance protecting the interests of a creditor arising out of a creditor-debtor transaction -Insurance of warranties/service contracts including insurance that provides for the repair, replacement or service of goods/property, indemnification for repair/replacement/service for the operational/structural failure of the goods or property due to a defect in materials, workmanship or normal wear and tear, or provides reimbursement for the liability incurred -title insurance -ocean marine insurance -any transaction between a person and an insurer, which involves the transfer of investment or credit risk unaccompanied by transfer of insurance risk -any insurance provided/guaranteed by government -any transaction between a protected cell and the general account organized under the Protected Cell Companies Act
Commercial General Liability - Exposures - Products and Completed Operations
encompasses liability arising out of the insured's products/business operations conducted away from the insured's premises once those operations have been completed. examples: -a person suffering injury from spoiled food bought at a restaurant -a person suffering injury after stepping on a nail the carpet installers left behind
Salvage Value
estimated resale value at the end of a property's useful life
Direct Loss
financial loss resulting directly from a loss to property (fire burning down a business)
Proof of Loss
form completed by an insured after a loss that provides an official inventory of damages
Loss Settlement Provisions Including Consent to Settle a Loss
found in professional liability insurance policies that requires an insurer to seek an insured's approval prior to settling a claim for a specific amount. if the insured does not approve the recommended figure, the consent to settlement clause states that the insurer will not be liable for any additional monies required to settle the claim or for the defense costs that accrue from the point after the insurer makes the settlement recommendation
Moral Hazard
hazard created by an individual who is willing to create a loss on purpose to collect from the insurance (lying about health, exaggerating injuries)
Morale Hazard
hazard created by an individual's tendency to contribute to a loss through his or her own irresponsible actions or carelessness
Physical Hazard
hazard that arises from the condition, occupancy, or use of the property itself (smoking)
Farm Owners Insurance
includes commercial property and commercial liability coverage. combination of personal and commercial is necessary since many farms have both aspects coverage excludes: -pollutants -injury to farm employees -vehicles, unless specified in policy -insured's own products -aircraft spraying
Automobile: Personal Auto/Business Auto - Types of Auto - Newly Acquired Autos
if the newly acquired auto replaces the one listed in the declarations, the new auto has the broadest coverage provided for any vehicle already listed in the declarations until the end of the policy period. if the new auto does not replace one that is already insured, coverage must be requested within 14 days after acquiring the auto in order for coverage to apply from the date the vehicle was acquired
Licensing - Producer Compensation Disclosure
in order to receive compensation from the customer producer must, before the purchase of insurance: -obtain customer's documentation acknowledging the compensation -calculation of the compensation to be received producer must disclose that they will be paid commission unless a salaried employee of an insurance company does not apply to: -middleman between customer and insurer -insurance in secondary/residual markets -producer's whose sole compensation is commission/salaries from the insurer
Commercial General Liability - Who is an Insured?
individual - named insured/named insured'd spouse. only restriction is in connection with sole proprietorships partnership/joint venture - named insured, named insured's members and their spouses, named insured's partners and their spouses. restriction is on members, partners, and their spouses are insureds only in connection with conducting the business LLC - named insured, members, managers. restriction is on members are insureds only in connection with conducting the business. managers are insured only in connection with their duties as managers other organization - named insured, executive officers/directors, stockholders. restrictions on executive officers and directors are insureds only in connection with conducting the business. stockholders are insureds only in connection with liability as stockholders trust - named insured trustees. trustees are insureds only in connection with their duties as trustees
Hurricane Deductibles
insurers are required to provide clear and prominent notice of all hurricane deductibles, included in policy issuance/renewal. notice shall clearly and fully disclose all details pertaining to all hurricane deductibles. must provide two examples of hurricane deductibles. -windstorm deductibles may not be included in residential property insurance policies. -max hurricane deductible that can be offered/ included in a residential property insurance policy is a deductible of five percent of the insured value of the dwelling -insurers may not offer optional hurricane deductibles in excess of five percent -insurers may offer a flat dollar hurricane deductible in place of or in addition to a percentage deductible 9not exceeding five percent) -all deductibles must provide for a premium credit that is statistically supported -trigger of a hurricane deductible must be clearly stated and must be applicable only to losses due to a hurricane during the period within the issuance of a hurricane warning for the applicable part of the state by the National Weather Service and concluding 24 hours after the termination of the last hurricane warning for any part of the state -if an insured incurs a loss from more than one hurricane in a calendar year, the insurer may only apply the hurricane deductible provided in the policy once for all hurricane occurrences in that calendar year
Rhode Island Joint Reinsurance Association - Cancellation
insurers must give 30 days notice prior to cancellation/non-renewal except: -owner/occupant maliciously burning down property -material misrepresentation -non-payment of premium -at least sixty five percent of the rental units in the building are unoccupied -loss/damage exists and the insured has stated/such time has elapsed as clearly indicates that the damage will not be repaired -following a loss, permanent repairs following satisfactory adjustment of loss have not commenced within sixty days -property has been abandoned/there has been removal of undamaged salvageable items from the building without explanation -utilities shut off and the insured has failed to pay his account for such services within 120 days, or real estate taxes have not been paid for a two years after the taxes have become delinquent -
Damages - Punitive
intended to punish the defendant and make an example out of him/her to discourage others from behaving the same way
Automobile: Personal Auto/Business Auto - Types of Auto - Temporary Substitute
is considered a non owned auto instead of a covered auto under physical damage coverage only
Definitions - Binders/Certificates of Insurance
it is required that property and casualty insurance binders obligate coverage until a policy is issued or cancelled and insurers must provide coverage of the terms of the binder until the insurer issues the police or cancels the binder. if this is violated the director may revoke/suspend a license, issue a penalty no less than $100 and no more than $50,000, order the violator to cease actions, and require compliance of title 27.
Subrogation
legal right held by insurance to pursue a third party that caused a loss to the insured
Commercial General Liability - Exposures - Premises and Operations
liability arising out of the business location/activities. liability for bodily injury, property damage, and personal/advertising injury (slander, written defamation, copyright infringement, invasion of privacy, false arrest, malicious prosecution) examples: -a customer slips and falls on a wet floor, injuring themselves - a company says bad things about their competitors products
Vicarious Liability
liability that a person or business occurs because of the actions of others, such as family members or employees
Licensing - Termination of License
licenses remain in effect unless revoked/suspended an all fees/education requirements are provided by the renewal date. an insurer will notify the commissioner at least 30 days after the termination of a producer. insure will provide additional information as requested. any documents the commissioner receives are confidential by law and privileged.
Indirect Loss
loss that is a result/consequence of a direct loss (business losing profit until it can rebuild its burn down store)
Unfair Trade Practices - Defamation
making/publishing/circulating literature that is false/maliciously critical to the financial condition of an insurer, and is calculated to injure any person engaged in the business of insurance
Limits of Liability
max amount an insurance company will pay for a particular loss, or for losses sustained during a period of time
Rhode Island Joint Reinsurance Association - Inspections and Reports
may apply through the association directly or through a producer by submitting a completed application for property inspection. association will accept or reject the application based on the inspection and will cover the construction, maintenance, materials and occupancy characteristics. the owner will make the property available for inspection, with no cost to them.
Unfair Trade Practices - Misrepresentation
misrepresentation of: -policies to be issued -dividends/share to be received or previously paid from a policy -the financial condition of the insurer -nature of policies/policy classes -intentional misquote's of premium rates -loans against policies -any policy as being share/stock
Commercial General Liability - Coverage - Limits per Occurrence
most that will be paid for the sum of damages under coverages A and C because of all bodily injury, property damage, and medical payments arising out of any one occurrence
Motor Vehicle Reparations Act
motorists shall be financially able to respond in damages for their negligent acts, so that innocent victims of motor vehicle accidents may be recompensed for the injury and financial loss inflicted upon them. "accident" or "motor vehicle accident" means any accident involving a motor vehicle that results in bodily injury to, or death of, any person, or damage to the property of any person in excess $500 "financial security deposit" means for each motor vehicle the deposit with the assistant director $75,000 in cash/securities, such as may legally be purchased by savings banks or trust funds, of a market value of seventy-five thousand dollars ($75,000
Obligations of the Insurance Company
must act in the interest of insurance buyers, meet regulatory requirements, behave ethically, and disclose certain things to policyholders
Licensing - Surplus Lines Broker
must have a valid property and casualty producers license. held to all producer's provisions. must submit an application for license. residents must file a $25,000 bond with the general treasurer. bond must be continuously in effect while licensed, if bond is cancelled license will be suspended. Annual fee is $50. nonresident must submit an application to the insurance commissioner. nonresidents must comply with bond statutes in his/her state. fees: residents/nonresidents - $100
Unfair Trade Practices - Rebating
no rebates on premiums, stocks, bonds, or other securities. no advantage on dividends Licensee is prohibited from giving a gift which requires the purchase of an insurance policy. gifts can be offered in exchange for quotes only if: -purchase/renewal of policy is not necessary -value of the gift is minimal enough that it would not sway the choice over another policy -gift is offered to general public
Extra Expense Coverage
no reimbursement for loss income, but is for extra expenses incurred to stay in operation. (public utilities, newspapers)
Licensing - Requirements for a Producer
not authorized to sell, solicite, or negotiate without a license. in order to receive license, must be 18, not committed acts that is ground for denial, paid fees, and pass a written examination. initial licensing fee is $50, annual renewal fee is $50, annual contracted producer report is $30. not required to be licensed if person is an employee that does not receive commission/fees, assistants/clerical/administrative not directly related to the sale, and accountants/lawyers/ public adjusters. the department has a right to order a person to cease unlicensed activities, putting a person through hearing to know why the department shouldn't issue a cease and desist. any person guilty of this misdemeanor is fined no more than $1,000 or may be imprisoned no more than one year, determined by the attorney general. resident insurance producers are required to carry/maintain errors and omission insurance coverage. may face suspension/revocation without it. does not apply to producers directly employed by an insurance company foreign insurance companies must file an application with NAIC UCAA fees: residents - $120 nonresidents - $130
Earthquake Insurance
not covered in dwelling and homeowner policies. can be added as an endorsement or a separate policy. generally covers damage to structure or contents. all shocks within a 72 hour period count as the same earthquake.
Windstorm Insurance
not typically covered in homeowner policies. special type of casualty/property insurance that protects policyholders from windstorms(hurricanes, cyclones)
HO-8
older home form. basic coverage for dwelling/personal property.extended peril coverage. similar to HO-1
Automobile: Personal Auto/Business Auto - Types of Auto - Owned
only those autos the insured owns (and for liability coverage any trailers the insured doesn't own while attached to power units the insured owns). this includes those autos the insured acquires ownership of after the policy begins. can be used for liability, physical damage (except towing and labor) and medical payments.
Binder
oral/written statement that provides immediate insurance protection for a specified period. designed to provide temporary coverage until a policy is issued or denied. max period of 30 days
Commercial General Liability - Coverage - Supplemental Payments
paid in addition to the amounts paid for liability claims under Coverages A and B and don't reduce the limits of insurance available for these coverages ex: -all expenses incurred by insurance company -up to $250 for the cost of bail bonds -cost of bonds to release attachments -reasonable expenses incurred by insured to assist in investigation/defense of a claim -all costs taxed against the insured in a suit -prejudgment/post judgement interest -defense cost for an indemnity
Automobile: Personal Auto/Business Auto - Liability - Bodily Injury
part of the insurance policy that pays for the costs associated with injuries to the other person or people involved. This coverage also provides a legal defense in the event that you are sued for damages.
Supplementary Payments
payment that provides extra coverage over and above the insured's limit of liability. commonly included: defense costs, first aid expenses, bond premiums, and post judgement interest
Commercial General Liability - Coverage A - Bodily Injury and Property Damage Liability - Claims Made
pays for bodily injury and property damage losses for which a claim was first made against the insured during the policy period ex: a painter using lead based pain in the 70's, gets diagnosed for lead exposure in the 90's, can go after the manufacturer.
Automobile: Personal Auto/Business Auto - Physical Damage
pays for direct and accidental loss to the named insured's covered auto or any non owned auto against loss caused by collision and other than collision
Crime - Forgery and Alteration
pays for loss from forgery/alteration of checks, drafts, promissory notes or similar instruments made/drawn by/or in the name of th insured or the insured's agent
Workers Compensation Insurance/Employers Liability Insurance - SPC - Compensation
pays for medical expenses and replacement wages when employees are injured at work
Commercial General Liability - Coverage C - Medical Payments
pays for medical expenses incurred for bodily injury caused by an accident on premises the insured owns/rents. expenses must be incurred and reported to the insurer within one year
Automobile: Personal Auto/Business Auto - Underinsured Motorist
pays the difference between the insured's actual damages for bodily injury and the amount of liability insurance carried by the driver who was at fault, up to the limits
Commercial General Liability - Coverage A - Bodily Injury and Property Damage Liability
pays those sums the insured becomes legally obligated to pay as damages because of bodily injury or property damage. must be caused by an occurrence to be covered
Conditions
portion of an insurance policy that describes the rights and duties of the insured and the insurance company under the policy
Fiduciary Responsibilities
portion of premiums/money a producer collects for a policyholder to be paid to an insurance comapny or collected from an insurance company to be paid to claimants should be held by the producer in a fiduciary capacity and should not be used for personal use or withheld illegally. a producer who does this is guilty of theft and shall be punished by law
Premium Financing - Definitions
premium financing is the lending of funds to a person/company to cover the cost of an insurance premium. premium finance loans are often provided by third party finance entity but insurance companies/brokerages occasionally provide premium financing services. to finance a premium, the individual or company requesting insurance must sign a premium finance agreement with the premium finance company. the premium finance company then pays the insurance premium and bills the individual/company, usually in monthly installments, for the cost of the loan.
Deposit Premium/Audit
premium paid at the beginning of the policy period that is based on an estimate of what the final premium will be. this premium is adjusted based on reports submitted by the insured to the insurer
Indemnity
principal of insurance that provides that when a loss occurs, the insured should be restored to the approximate financial condition that he she occupied before the loss, no better no worse
Arbitration
procedure in which an insurance company and the insured or a vendor agree to settle a claim dispute by accepting a decision made by a third party.
Loss Valuation
process of establishing a monetary value to property loss
Appraisal
professional assessment of a property's value. used to determine the value an item or determine the extent of damage. insurance has the right to hire an independent appraiser to asses cost of damage
Professional Liabilities - Errors and Omissions
professional liability coverage that protects the insured against liability for committing an error or omission in the performance of professional duties
National Flood Insurance Program
program run by the federal government that makes flood insurance eligible to communities at subsidized rates for both buildings and personal property
Business Income Coverage
protection against loss of income/profits from which a business has suffered property loss/damage from covered peril. Included net income that would have been earned and cost of continuing normal operations (payroll). from date of loss to to date repaired.
Commercial Property Floaters
protection of business property that is not at a fixed location (construction business)
RI Property & Casualty Insurance Guaranty Association - Purpose
provides a mechanism for the payment of covered claims under certain insurance policies to avoid excessive delay in payment and to minimize financial loss to claimants/policyholders because of the inability to pay debts of an insurer, and to provide an association to assess the cost of such protection among insurers.
Workers Compensation Insurance/Employers Liability Insurance - Employers Liability
provides coverage to the insured for sums the insured becomes legally obligated to pay under common law because of a work-related injury/occupational disease. for situations that are now covered by workers compensation, such as exempt employments, illegal employments, and non-compensable injuries
Automobile: Business Auto - Garage Coverage Form
provides liability coverage, garage keepers coverage, physical damage coverage. covers both auto and business liability arising out of the ownership, maintenance, or use of covered autos, and garage operations
Automobile: Personal Auto/Business Auto - Medical Payments
provides protection for the named insured, family members, and passengers in the named insured's auto for injuries received in an accident, regardless of who was at fault. not liability coverage for injuries sustained by passengers in another auto involved in an accident with the insured
Notice of Claim
provision in a liability policy requiring the insured to promptly notify the insurer in the event that a claim is made against the insured
Pure vs. Speculative Risk
pure risk is the opportunity for loss with no gain, while speculative risk is where the possibility of gain and loss both exist. Insurance can only be used to manage pure risk
Insurance Coverage for Lead Poisoning
purpose is to establish a uniform policy regarding lead poisoning coverage in pre-1978 residential rental property liability insurance and to set forth requirements to assure the availability of insurance coverage for losses/damages caused by lead poisoning. applies to liability coverage written by licensed carriers on all pre-1978 residential rental properties no insurance company shall exclude coverage for losses/damages due to lead poisoning to rental property owners
Insurance Privacy Act
purpose: governs the treatment of nonpublic personal financial information about individuals by all insurance licensees -requires a licensee to provide notice to individuals about its privacy policies and practices -describes the conditions under which a licensee may disclose nonpublic personal financial information about individuals to affiliates and nonaffiliated third parties -provides methods for individuals to prevent a licensee from disclosing that information scope: applies to nonpublic personal financial information about individuals who claimants/beneficiaries of products/services primarily for personal, family or household purposes from licensees. cannot be used to limit the RI Workers Comp Act compliance: a licensee who resides in the state that is in compliance with this regulation in a state that has not enacted laws/regulations that meet the requirements of Title V of the Gramm-Leach-Bliley Act may be deemed to be in compliance with Title V of the Gramm-Leach- Bliley Act in the other state
Definitions - Domestic, Foreign, and Alien Companies
records must stay within the state. after a public hearing, director may allow insurance company, upon application, to have its office and original records outside of the state as long as it is not inconsistent with public interest. director will determine inconsistencies through employees currently/anticipated to be located in the state, that no detriment/prejudice will occur to current/future policyholders, will not interfere will policy holders making claims (may require a toll free number, claims office located in the state), and that finical records shown can meet the obligations of its policyholders. an insurance company cannot do business in the state until it complies with state law and all companies, whether incorporated in the state or not, must comply with state law.
Damages - Compensatory
reimburse the injured party only for losses that were actually sustained
Privacy Protection (Gramm Leach Billy)
repealed a part of the Glass-Steagall act allowing commercial and investment banks, security firms, and insurance companies to consolidate
Duties of the Insured
responsibilities of the policyholder: -disclose material information -avoid concealment/misrepresentation -report loss/damage to the authorities -provide notice of claim to insurer -prepare inventory of damaged property -provide proof of loss
Mortgagee Rights
rights guaranteed to a mortgagee under a property contract issued by a mortgager by virtue of the mortgagee's financial interest in the property
Insuring Agreement
section of an insurance policy that describes what is covered and the perils the policy insures against
Exclusions
section of an insurance policy that lists property, perils, persons, or situations that are not covered under the policy
Declarations
section of insurance contract that shows who is insured, what is covered, when/where the coverage is effective, and how much coverage applies
Hazard
something that increases the chance of loss
HO-3
special form. open peril coverage. covers all perils except: -earth movement -ordinance/law -water damage -power failure -neglect -war/nuclear hazard -intentional loss -government hazard -collapse -theft to dwelling while under construction -vandalism -mold/fungus/wet rot -smog/rust/corrosion -smoke from agriculture/industrial -discharge of pollutants -setteling/shrinking/bulging/expanding -birds/vermin/rodents/insects -homeowner's animals floods/earthquakes NOT included
DP-3
special form. open peril policy. similar to HO-3.
Warranty
specific agreements between the insured and the insurer that specific agreements will be met
Elements of a Contract
standard contains that must be agreed upon/satisfied by both parties general contract: -offer and acceptance -consideration -legal capacity -legal purpose special contract: -indemnity -insurable inters -utmost good faith -subrogation -assignment and nomination -warranties -proximate cause -return of premium
Representations
statements the the applicant believes to be true in the insured's application
Definitions - Stock and Mutual Companies
stock shareholders purchase stock in the company. the shared ownership gives them a voice in electing the board of directors. a stock company generates income through selling shares and operating income. a mutual company is owned by its policyholders, share ownership in the company, and can vote in board of director elections. mutual companies generate income through retained net earnings.
Crime - Burglary
taking of property from inside the premises by a personal unlawfully entering or leaving the premises. must me evidence of forceable entry or exit
HO-4
tenant's form. Covers belongings/personal liability. Covered from sillier perils as HO-2.
Professional Liabilities - Medical Malpractice
term used to describe professional liability insurance issued to medical professionals or institutions
Cancellation
termination of an insurance policy by the insured or the insurance company during the policy period
Policy Application
the agent and applicant fill out an application which is forwarded to the insurance company. the application is the insured's offer, which is required to form a legal contract. Agent must ask every question on the application to paint a clear picture of risk
Market Value
the amount a property could be sold for at the time of loss. may be used to determine the amount of reimbursement for some losses
Deductible
the amount that must be paid by the policyholder before insurance will pay out any expenses
Peril
the cause of loss
Replacement Cost
the cost to replace a damaged or destroyed item of property without deduction of depreciation. may be used in reimbursement for some losses
Actual Cash Value (ACV)
the cost to replace an item of property at the time of loss, less depreciation. may be used to determine the amount of reimbursement for a loss
Negligence
the lack of reasonable care that is required to protect others from the unreasonable chance of harm
Law of Large Numbers
the larger number of similar exposure units, the more predictable and accurate the estimate of expected losses. necessary to accumulate a large number of similar risks with a predictable loss ratio to create the premium base from which losses can be paid
Risk
the likelihood that an insured event will occur
Commercial General Liability - Coverage - Limits
the most that will be paid, regardless of the number of insureds, claims made, suits brought, or persons bringing suit
Compulsory Insurance - Applicability
the provisions of this chapter requiring the deposit of proof of financial responsibility for the future shall apply with respect to persons who have been convicted/forfeited bail for certain offenses under motor vehicle laws, or who have failed to pay judgments upon causes of action arising out of ownership, maintenance, or use of vehicles of a type subject to registration under the laws of this state.
Vacancy and Unoccupancy
vacant is the absence of both people and property from the premises. unocupancy is the absence of people from a premises property coverage often restricted in long terms of vacancy and unocupancy
RI Property & Casualty Insurance Guarantee Association - Purpose
to provide a mechanism for the payment of covered claims under certain insurance policies to avoid excessive delay in payment and to minimize financial loss to claimants/policyholders because of the insolvency of an insurer, and to provide an association to assess the cost of such protection among insurers.
Commercial General Liability - Coverage - Limits - Annual Aggregate
total amount an insurer will pay in a given single year
Professional Liabilities - Directors and Officers
type of errors and omission policy written for directors and officers of corporations who might be sued as individuals by stockholders
Professional Liabilities - Cyber Liability and Data Breach
type of insurance designed to cover consumers of technology services/products. policies are intended to cover liability/property losses that may result when a business engages in electronic activities, such as selling on the Internet or collecting data within its internal electronic network. also covers a business' liability for a data breach in which the firm's customers' personal information, such as social security or credit card numbers, is exposed/stolen by a hacker or other criminal. policies cover a variety of expenses associated with data breaches, including: notification costs, credit monitoring, costs to defend claims by state regulators, fines and penalties, and loss resulting from identity theft.
Liability
type of insurance that protects an insured from financial loss arising out of liability claims by transferring the burden of financial loss from the insured to the insurance company
Absolute Liability
type of liability imposed by law on those participating in certain activities that are considered especially hazardous. may be held liable for the damages of another, even though the individual was not negligent (owners of pools and firearms)
Commercial General Liability - Coverage A - Bodily Injury and Property Damage Liability - Retro Active Date
under the claims made form, a date stipulated in the declarations as the first date on which an event may occur and be covered by the policy if a claim is filed either use the same date as the policy-effective date, use an earlier date, or don't use it at all agent must insure there is no coverage gap
Crime - Mysterious Disappearance
unexplained disappearance of insured property from a known location
Unfair Trade Practices - Unfair Claims Settlement Practices
unfair claims practice: -misrepresenting relevant facts relating to a coverage issue -failure to act with reasonable promptness with claims arising under a policy -failure to adopt reasonable standards for the investigation/settlement of claims -not attempting a fair settlement of claims in which liability is clear -refusing to pay claims without reasonable investigation -failing to accept/reject claim in reasonable time after completing investigation -settling claims for less than a reasonable person would believe they were entitled too -making claims payment without indicating the coverage under which the payment is being made -unreasonably delaying investigation/payment of claims -failing to probably provide a reason for denial -failing to provide forms necessary within ten days -misleading a claimant on the statue of limitations -failing to reopens to a claim within 30 days, unless agreed on a longer period -engaging in intimidation, coercion, or threats -refusing to honor a "direct to pay" -modifying an published manual relating to auto body repairs without agreement -failing to use a manual/system in the appraisal of vehicle -refusing to compensate auto body shop for charges recognized programs for paint/refinishing -Failure to have an appraisal performed by a licensed appraiser where the vehicle has sustained damage at least $2,500 -Failure to perform a supplemental appraisal inspection of a vehicle within four business days after a request is received from an auto body repair shop -Designating a vehicle a total loss if the cost to rebuild/reconstruct the vehicle to its pre-accident condition is less than seventy-five percent (75%) of the "fair-market value" right before its damage
Crime - Theft
unlawful taking of money, securities, or other property. unlike burglary and robbery, theft also includes taking property by stealth
Crime - Robbery
unlawful taking of property from within a locked safe or vault by a personal unlawfully entering the safe/vault as evidence by marks of forcible entry to the exterior. also includes taking the entire safe/vault
Automobile: Business Auto - Types of Auto - Transportation/Rental Reimbursement Expense
up to $20 a day with a max of $600 for transportation expenses incurred by the insured because of physical damage losses to the insured's covered auto and loss of use expenses for which the insured becomes legally responsible for because a non owned vehicle
Automobile: Personal Auto/Business Auto - Types of Auto - Non owned
used only for autos used in the insured's business that are not leased, hired, renewed, or borrowed
Building and Personal Property Coverage Form
used to cover buildings, the insured's business personal property, and personal property of others on the business premises. starts on the date of construction includes: -completed additions -indoor/outdoor fixtures -machinery/equipment -outdoor furniture/floor coverings/appliances -raw materials/goods excludes: -money/accounts/food stamps/securities/notes -animals -autos for sale -bridges/roadways/walks/patios -machinery below basement/ground level -plants/trees/shrubs -bulkheads/pilings/piers/docks -underground pipes/drains
Workers Compensation Insurance/Employers Liability Insurance - Other States Insurance
used to provide coverage for states that are not listed in the information page for part one coverage but in which the insurance company is also licensed to offer workers compensation coverage
Other Insurance Provision
when the insured's primary and other primary insurance applies to the same loss, the loss will be divided between the policies by contribution by equal shares or contribution by limits
Umbrella/Excess Liability
when two or more policies/coverages apply to the same loss, the one that applies only after the lists of the primary coverage have been exhausted
Automobile: Personal Auto/Business Auto - Uninsured Motorist
will pay for certain losses the insured suffers at the hands of another driver that would have been covered by that driver's insurance, but was not because that driver was uninsured
Concealment
withholding of material fact involved in the contract on which the insurer relies
Workers Compensation Insurance/Employers Liability Insurance - Premium Determination
workers' comp insurance premiums are calculated according to how employees are classified and the rate assigned to each employee classification. payroll (per $100) X classification rate X experience modifier = premium
Certificate of Insurance
written form that verifies a policy has been written. provides a summary of the coverage provided under the policy
