Complete OC2

Earned premium before written -examples

-audit premium: might be reasonably estimable during coverage period in aggregate but not assignable to individual customers until after exposure period/audit is complete -reinstatement premium: may be likely given current loss reserves but actual payment not due until paid losses breach attachment point -if wait to recognize, distortion in earning period

Tax accounting rules

-based on GAAP or statutory accounting rules or independent determination (based on tax law/regulation for jurisdiction in question)

Lack of bias (accounting criteria) -when it's useful -what reporting is like -ASOP requirement

-bias useful only if users understand bias and consistently applied (so reported results can be adjusted to reflect their own desired bias) - may need to report unbiased values AND disclosure of biased value w/ bias determined in predictable/consistent fashion - ASOP: actuary must be aware discounted reserve is inadequate unless appropriate risk margin included

Common Insurer Assets

-business assets: building/equipment/inventory -stocks/cash/cash equivalents: -bonds: fairly predictable, periodic, secure income (largest asset class for US/Canada insurers) (UNIQUE)

Regulatory accounting rules/hierarchy

-can be independent set of standards or additional specialized schedules filed in addition to GAAP financial reports - regulators have complete set of accounting rules with elements of liquidation and going-concern accounting

Loss reserve accounts (5)

-case reserve: loss reserve assigned to specific claim as an estimate of unpaid claim, established by claims adjuster/claim system -IBNR -bulk reserve: estimated deficiency in aggregate of case reserves for known claims -- can be assigned to case (since reserve for claim already reported) or IBNR (bc not reliably assignable to individual claim) -additional case reserve: additional reserve for individual claim above level established by adjuster -- common for claims under reinsurance where case reserve come from ceding company -reopened, anticipated subrogation/salvage recovery, deductible recovery, expected legal defense

ceded reinsurance accounting approaches (2)

-ceded reinsurance entries recorded in same place as/are offsets to corresponding direct or assumed reinsurance entires -purchase of reinsurance is recorded as the purchase of an asset GAAP: ceded reinsurance premium/loss are negative premium/loss for income statement, but ceded loss reserves are an asset on the balance sheet

Change in accounting principle vs change in accounting estimate

-change in accounting principle: special disclosure of change, recalculation of prior period results (eg undiscounted liability estimate to present value estimate) -- affects results only for prior periods required to be shown, may also need cumulative adjustment for oldest period -- if bc of change in accounting standard, new standard gives specific implementation guidance -change in accounting estimate: affects only latest reporting period/no recalculation (change in estimated amount of undiscounted liability)

Cost benefit effectiveness (accounting criteria)

-cost of producing accounting info should be reasonable in relation to expected benefit of the info -apply materiality thresholds in accounting frameworks

self insurer liability accounting

-current insurance accounting standards do not cover these events -may need to use generic accounting requirements applying to all businesses -- US FAS 5 Accounting for Contingencie: require amounts to be reliably estimable before they are booked, which might not happen. --if self insured liability related to employees, special accounting rules designed for employee benefits apply

deferral matching vs asset liability approachs -pros and cons of each

-deferral matching: absent change in estimates, profit emerges in a steady pattern over insurance policy term -asset liability: reliable measure of value at reporting date (book assets with intrinsic value) -possible for both approaches to have comparable income statement results and both probably have comparable equity values -'mixed attribute' framework: single accounting framework combining elements of both approaches

retrospective deposit accounting approach

-defining characteristic: deposit is function of initial deposit, past payments and current estimates of future payments (focus on all CF since inception) -interest rate: rate for which discounted value of past payments+estimated future payments = initial deposit --changes when estimated CF under contract changes

policy liabilities (insurer liability) -what it exists for and what it doesn't exist for

-established for inforce insurance policies for future events (liability exists bc contract does) -does not exist for policies that haven't been written, but might for events covered by renewal of existing policies -- level premium renewable term life insurance yes, not for possible renewal of property insurance contract (bc pricing is not guaranteed)

Understandability (accounting criteria) -who it's evaluated in terms of -3 characteristics

-eval in terms of intended users AND uses -transparent, intelligible, clearly disclosed

Commutation -defintion

-finalize remaining obligation under agreement of either party to the other --commutation clause written into original contract or negotiation --does not negate original contract, finalize through (series of) fixed payments from reinsurer to reinsured. -final payment is a paid loss representing economic value of future payments --all other balance sheet entries are removed --might be less than full undercounted loss reserve (reflect TVM) but may also include risk adjustment

asset liability approach -focus -when assets/liability booked

-focus on value of assets or liabilities exist as of balance sheet date -asset is booked if right to future stream of cash flow exists at report date -liability booked if entity committed to obligation resulting in payment of cash --does not recognize DAC or unearned premium liability (beyond what's needed for future losses/exp/prm)

extended reporting endorsements -US regulation for definite/indefinite extension

-for claims made policies (claims reported during policy term) -allow extension of claims reporting timeframe at no addl cost if event occurs/fixed cost determined at policy inception -US regulation: --definite extension: liability for extended period recorded as unearned premium reserve --indefinite extension: loss reserve

Relevance (accounting criteria) -goal -3 characteristics

-help users make decisions -info should be timely, have predictive value, provide useful feedback on previously made decisions

rule hierarchy

-in given accounting framework there are different sources of rules. Where rules conflict, predefined hierarchy is followed (higher overrule lower sources)

Comparability/consistency (accounting criteria) -2 characteristics

-info must allow for comparison between time period/among entities and must therefore be consistent

bank deposit accounting approach

-initial deposit grows with interest credited @ interest rate -declines with withdrawals -credited rate can be fixed/variable/dependent on market rates/whatever but method of calc is set in advance -defining characteristic: ending deposit for reporting period dependent only on beginning balance, credited rate, deposits/withdrawals

Accrual of Estimated IL based on level of EE

-initial for AY: established based on a priori estimate of loss exposure for period (eg expected loss ratio * EP) From previous period reserves, subtract paid losses in AY and add incurred to get total reserves. -subsequent: periodic loss reserve reviews to determine if prior year estimates should be change --timing of reviews depends on development patterns

Balance Sheet Definition (general) -what it lists -what it indicates

-lists everything an organization owns (assets) and everything it owes to others as of a specified date --thought of as uses and sources of funding (not insurance) -indicates difference between organization's assets and liabilities (called net worth) -use funds by investing assets: succeed by achieving higher return on assets than need to pay on liabilities

installment premium -how it is recorded

-not considered WP transaction under certain accounting frameworks -full policy premium recorded up front (how it's collected is billing issue) --premium receivable asset account: billed and due but not yet collected --yet to be billed/not yet due in different premium receivable account

Premium vs. Service Charge -service vs. finance charge

-payment plans allow payment of premiums to be spread over a period of time (often means amount paid exceeds paid in full amount) --addl payments can be recorded as addl premium/service charges//financing charge -Regulatory: additional payments fixed per payment date are service charges while variable charges (based on amount of payment) are finance charges

earned premium for premium adjustments -how portions in past and future earned

-portion of written premium from transactions relating to past coverage periods is earned immediately (audit or add new driver before policy starts) -portion relating to future is earned over time through unearned premium liability (mid term endorsement)

income statement accounts (7)

-premiums: EP = WP - change in unearned premium liability -claims incurred: paid out - change in claim liabilities -loss/claim adjustment expense: expenses on claims resulting from events during reporting period -underwriting expense: expense related to insurance operation -underwriting income: net income from operations -policyholder dividend -investment earnings: -- investment income -- net capital gains (realized or unrealized)

Prospective vs. retrospective reinsurance

-prospective: reinsurance to cede future losses (assumed/ceded reinsurance and commutations are this kind) -retrospective: requires recovers under contract held on present value basis or need disclosure of benefits/effects of contracts --loss portfolio transfer: applies to whole portfolio of losses over predetermined time/subject to limit --aggregate loss cover: used as protection against adverse development beyond specified point for existing portfolio of claim liabilities (used in acquisition of insurers)

Reinsurance Lag reporting correction

-reinsurance constructs may result in material lags in premium/loss reporting (esp involving reinsurance pools) -distortion if late reported losses go to correct year -correct by requiring companies to book estimates of premium/losses reported late and replace when actual values known

purposes (3) of reinsurance contract

-reinsurance contract specifies reporting requirement of ceding company to assuming company -purposes: specify necessary payment transaction under contract, provide assuming company sufficient data for reserve analysis, enable assuming company to meet own accounting/financila reporting requirements

Reliability (accounting criteria) (4 characteristics)

-representational faithfulness: info represent what it claims to represent (ex. implicit discounting) -verifiability: reported value should be able to be recreated using same info -completeness: does not omit material facts/consideration -neutrality: can be used for economic decision making without regard to how it may affect economic/political/social behavior

Asset Liability premium revenue recognition

-revenue recognized up front once insurer gains control of asset resulting from revenue -no unearned premium -deposit liability for premium received before effective -loss and expense liability for future cash outflows: when full premium recognized earlier (date of sale) -any calculation involving earned premium needs to be adapted

examples of non evenly spread insurance protection (5)

-seasonal policies (snowmobiles) -aggregate excess policies insuring losses over specified amount over the policy period (greater at end) -warranty policies (inc over age) -financial guarantee/performance bonds (more likely to not perform as age) -multi year policies! (especially in high inflation environment) -- multi year policies also tend to write premium as a series of annual policies

reasons for reinsurance report lag

-time for ceding company to get data required -need to coordinate input from multiple parties -multiple handoffs/consolidations --retrocession contracts where ceding companies report to reinsurers who report to retrocessionaires -may need to record estimated transactions when lags are material.

Purpose of accounting

-track and organize all activities that affect an organization financially -provide information useful for decision making

discounted loss reserves -what happens -balance sheet -income statement

-ultimate paid losses are recorded at nominal value but loss reserves are recorded at discount --reserve increases from amortization of discount -balance sheet: discount amount can be asset and liability reported on undercounted basis or liability established discounted -income statement --many jurisdictions record increase resulting from the discount amortization as incurred loss (looks like reserve strengthening without disclosure) --record income statement effect of increasing loss reserves from discount amortization as interest expense

Accounting info from a set of accounting rules/requirements meet the following criteria (6)

-understandability -relevance -reliability -comparability/consistency -lack of bias -cost benefit effectiveness

policyholder surplus and unpaid claim estimation

-unpaid claim and adjustment expense liabilities have to be estimated -estimate too low: surplus overstated, then once estimate adjusted upward the surplus is reduced -estimate too high: surplus understated, then goes up once estimate is brought down

Tax Accounting (user and focus)

-used by tax authorities -use specialized accounting framework to calculate the tax owed by an entity -directed/influenced by social engineering/public policy/political/verifiability concerns -in US: based on statutory accounting with modification

IASB rules on when to recognize premium (5)

-when contract signed -when premium due -when premium received -when policy effective -when policy expires

estimated premium -when it's used -what it requires

-when pricing exposure not known initially -require premium adjustment when pricing exposure level is determined -eg. reinsurance or commercial liability where premium is function of something

recognition vs measurement

-when to recognize asset/liability in report vs. how to measure asset/liability when it is recognized -different probability standards (eg record when financial effect is virtually certain but measurement at initial recognition is most likely value) -multiple recognition triggers/rules probably exist (initial recognition rule differs from remeasurement)

tax surcharge as premium -how it's shown and recorded

insurer may be used as tax collector for special purpose taxes levied on policyholder as a function of premium US: -Surcharge shown separately on premium bill sent to PH so insurer not liable for these amounts not collected. -Taxes are temporary entry on cash asset account/noninsurance liability account. > 0 until actual payments are remitted to tax authority.

ISO CGL Coverage form categories of loss -3 categories

generally used to finance potential liability losses -BI and PD liability -personal and advertising injury liability -medical payments

life provisions: nonforfeiture options

give PO methods of using cash value of policy without giving it up if policy is terminated -cash surrender value: PO surrender policy for cash, all future obligation under policy ceases (outstanding loan amount deducted from cash surrender amount) -reduced paid-up insurance: PO elect to use accumulated cash value to purchase paid-up insurance @ reduced face amount (coverage provided is same as original surrendered contract) -extended term insurance: PO choose to continue full death benefit of original policy for shorter period under term policy

HO-3 Section II Exclusions (applying to all of Section II): motor vehicle liability, watercraft liability, aircraft/hovercraft liability

(limit exposures insured under PAP) motor vehicle liability: coverage doesn't apply if vehicle: -required to be registered for use on public roads/property -involved in organized race -rented to others -used to carry persons/cargo for charge -used for any business purpose (except golf cart on golf course) watercraft: may still be covered under Section II if small/low powered or watercraft insured uses but doesn't own aircraft: all excluded except model airplanes/hobby aircraft not carrying people/cargo hovercraft (self-propelled motorized ground-effect air-cushion vehicles): no exceptions to exclusion

Relevance vs. Reliability -infrequently traded asset -difficult to estimate insurance liability

-usually a trade off -value of infrequently traded asset: different parties place materially different values on asset, or reliable value is original cost which is not relevant -difficult to estimate insurance liability: value may be estimable but reliability of estimate could be questioned. Lower Range of estimate may be reliable, but relevance of range is questionable

Part D Transportation Expense -when coverage applies --nonowned auto --nonowned rental -coverage limits -waiting periods -special case for theft

-if *covered physical damage* loss to covered auto, insurer reimburses insured for temporary transportation expenses --up to $20 a day/max $600 for each covered loss --applies to nonowned auto if insured legally responsible to auto's owner for the owner's transportation expenses --applies to nonowned rental car if car owner claims loss of income because car can't be rented while repaired and named insured is legally responsible --ONLY applies if cause of loss covered by policy -subject to waiting period (deductible of time): 48 hour waiting period for total theft under OTC, 24 hr period for loss by other perils for COLL and OTC -for theft: coverage extends until time stolen auto returned to use/insurer pays for auto

sources of insurance regulatory systems

-legislation -judicial -administrative agencies

replacement cost -commonly used for what -what insured entitled to -special situations (3)

-commonly used for building insurance/personal property -insured entitled to current cost of repairing damaged property or building new property of like kind/quality --applies even if property is several yers old or replacement cost > purchase price --can usually do replacement cost for property of comparable material/quality

HO-4 vs. HO-3 -who it's for -6 coverage differences

HO-4 is specifically for people in rented houses/apartments -HO-4 Covg C written at limit insured selects as adequate to cover personal property (HO3 it's 50% of Covg A limit) -HO4 Covg D is 30% of Covg C limit (HO3 it's 30% Covg A) -HO4 has additional coverage for building additions/alterations (limit 10% Covg C) -HO4 does not include additional coverage for furnishings provided by landlord -HO4 additional coverage for increased costs imposed by building ordinance or law limit is 10% building additions/alterations limit (HO3 is 10% Covg A) -HO4 covered for trees/shrubs/plants at limit of 10% Covg C (HO3 is 5% Covg A)

strict (absolute) liability

Liability imposed by a court or by a statute in the absence of fault when harm results from activities or conditions that are extremely dangerous, unnatural, ultrahazardous, extraordinary, abnormal, or inappropriate.

'occupying' used in which two coverages

UM and MP

bailor vs bailee

bailor is the person lending property/owner bailee is the person who borrowed/temporarily possessing personal property

ISO PAP Part E

outlines the duties required of an insured after an accident or a loss -requirements for notifying the insurer of the details of any losses that happen

BPP pollutant cleanup/removal -what it does and condition for payout

pay insured expense for cleanup/removal of pollutants from land/water @ described premises IF release/discharge/dispersal/seepage/migration/escape of pollutants is result of covered cause of loss that occurs during policy period

Interference With Copyright, Patent, or Trademark tort -who governs these rights -defenses

since copyright/patent/trademarks are property right, interference with these is a tort -legislation usually preempts common law and governs most matters concerning these rights defenses: didn't interfere or plaintiff doesn't own intellectual property in question

policy provision -definition

def: contractual term included in insurance policy specifying requirements/clarifying intended meaning

Part C other insurance

if other applicable UM insurance available, following provisions apply: - total amount paid is no more than highest limit of any of policies providing coverage (no stacking) -coverage for accident involving non-owned vehicle (including temporary substitute) is excess over any other primary insurance -if this policy and another one both provide coverage on primary or excess basis, policies contribute proportionally to insured recovery

remedies -definition -2 types of remedies -2 types of equitable remedy

if party injured/about to injured by another party's tort, can see monetary damage OR other remedies remedy: seeks to enforce a right/prevent or correct a wrong -legal: award monetary damages -equitable: used when monetary damages cannot adequately compensate an injured party --specific performance: used to compel party to act --injunction: used to compel party not to act

good samaritan issues

if person owes no duty to another person, refusal to act does not create grounds for a suit -if help and does so negligently, can incur liability good samaritan law: A statute providing that a person will not be liable for damages as a result of rendering aid to an injured person, without compensation, at the scene of an accident. -apply to gratuitous services performed at scene of emergency, exempt from ordinary negligence (not gross)

negligence and 2 important aspects o fit

negligence: broad term for unintentional tort (all other torts are intentional) important aspects are: 1. elements of negligence (that plaintiff must establish): -defendant owed legal duty of care to plaintiff -defendant breached duty of care owed to plaintiff -negligent act was proximate cause of plaintiff injury/damage -plaintiff suffered actual injury/damage 2. required proof of negligence -negligence per se -res ipsa loquitur

Part D -no benefit to bailee -other sources of recovery -appraisal process

no benefit to bailee: policy will not benefit (directly/indirectly) any bailee (person assuming custody of property of others for business purposes) -insurer can recover from business if it was negligent other sources of recovery: if loss covered by sources of recovery other than PAP, insurer pays proportion of loss according to limit of liability --homeowners, coverage by owner of nonowned auto, any other physical damage insurance appraisal: either party can demand, each party selects appraiser and the two appraisers select an umpire -> if appraisers can't agree on ACV and loss, differences submitted to umpire and 2/3 decision is binding. -insurer's policy conditions and exclusions still apply

standard forms -defnition -pros

-ISO/AAIS developed standard insurance forms for use by individual insurers + coordinated endorsements to apply necessary state variation/customize coverage -benchmarks that nonstandard forms can be evaluated by -easier to evaluate in policy analysis and widely used/consistently interpreted

Part E additional duties for UM

-notify police if hit and run involved (discourage fraud) -submit legal papers if person sues uninsured motorist

Occurrence vs. Claims-Made triggers

-occurrence: injury or damage that occurs during the policy period. -claims made: the first making of a claim against any insured during either the policy period or an extended reporting period. occurrence is more common

Management accounting (user and focus)

-organizations create addl sets of accounting frameworks on which to base their management decisions. -Based on GAAP and REGULATORY framework (not statutory) -eg: large claims can cap claims at certain level/reflect reinsurance pool among business units when looking at results for individual business units, but keep total for organization as a whole -discount liabilities to evaluate financial results of business units when not allowed in GAAP

other insurance in same policy -what it is -what determines # of coverages applied

-property/liability can have 2+ coverages under same policy, loss can be covered by 1+ of coverages offered -policy provision may limit number of coverages that apply -with multiple coverages/different valuation provisions/deductibles, insured might be able to recover more by filing under one coverage over another/stacking

types of property

-property: item with value -2 types of property: --real property (realty): tangible property of land/attached to land or structure/grows in land (buildings, driveway, underground piping, paneling, elevators) --personal property: all tangible/intangible property that's not real property (vehicles, oil in pipelines)

business income/extra expense coinsurance requirements -common % -requirements

-requirement: tased on projects net income/operating expenses for policy period -common %: 50-100 and 125 (some business can resume operations in <6 mo = 50%, some business take a year or more = 125%)

examples of advisory organizations and what they provide

-Insurance Services Office, American Association of Insurance Services --both provide data collection, actuarial services, policy form filing for multiple LOB, loss costs to members -National Council on Compensation Insurance (NCCI) --provide data collection, ratemaking, actuarial services, policy form filing for worker's comp on CW basis -Surety and Fidelity Association of America provides similar services for surety/fidelity business -National Independent Statistics Service: data collection services in Canada --General Insurance Statistical Agency (GISA), Insurance Bureau of Canada (IBC, does not develop rates on behalf of members like ISO and represent auto/home/business insurers): information sharing services

structure of insurance regulations

-Insurers' financial condition -Rate regulation -Product regulation -Market conduct -Company formation and licensing -Licensing insurance personnel -Consumer services

prejudgement interest -definition -what the purpose is -relation to limit

-Interest that may accrue on damages before a judgment has been rendered. -allow plaintiff (inured person filing suit) to get interest from time accident occurs/lawsuit filed -> time judgement handed down -added to amount to indemnify claimant as if they got payment for damage at time of accident. -subject to limit of liability

Part F - termination -state law -4 kinds

-changes mandated by state laws usually in state endorsement (supersedes policy provisions) -cancellation -renewal -automatic termination -other termination

modular policy -definition -when used

-combines set of individual components (1+ coverage/cause of loss/conditions forms) -used in commercial since loss exposures are unique/more customization needed -can be monoline or package

manuscript forms -definition -how they are developed -interpretation

-custom forms developed for one specific/small group of insureds w/ unique coverage needs -specially drafted/selected to cover unique loss exposure/customize regular coverage to meet insureds specifications --based on wording from previously developed/used forms -not general considered contracts of adhesion (difficult to interpret during policy analysis) --differences between how insurance professional/insured/courts interpret the same form may result in delay in claim adjustment

HO-3 Structure

-declaratons -agreement and definition -section I - Property -section II - liability -endorsements

leased vehicles vs owned auto

-deemed owned auto if leased under written agreement for continuous period of >= 6 months

prospective deposit accounting approach

-defining characteristic: current value of deposit set equal to PV of future payments (irrespective of initial deposit or past payments) -interest rate is market rate, locked in at inception usually -deposit value changes with amortization of interest and with change in projected future losses

deposit accounting rules

-deposit accounting application/how rules applied on contract by contract basis (even if resulting amounts are summarized) -amount received for contract is deposit liability (no revenue/expense/income effect) -deposit liability increased by additional receipts/investment income credits. Decreased by payments -deposit represents PV of future payment obligations

commercial property declarations -info it has

-description property insured -kinds/amounts of coverage provided and covered cases of loss (basic/broad/special) -list of mortgagees (if any) -The deductible amount -list of the property coverage forms and endorsements attached to the policy -applicable coinsurance percentage(s) -Any optional coverages -supplemental declarations/schedules can be added on separate pages if needed

BPP: personal property of others -what it's designed to do/who it's important for -when property is covered -if insured didn't buy this coverage

-designed to protect insured against loss of/damage to personal property of others while such property in custody of insured --important for businesses (bailees) that have customers' property in their custody -covers property only while in insured's care/custody/control and in/on building described in declarations/within 100 feet of building or structure or within 100 feet of described premises whichever is greater --applies even if insured not responsible for damage -even if insured didn't buy this coverage, BPP provides coverage extension for personal property of other's limited to 2500 @ each insured location

After DICE method -liability -property

-determine how much payable under insurance policy -property: valuation provision determines how property valued (replacement cost, depreciated actual cash value, etc). --can also be limited by coinsurance, insurance to value, policy limit, deductible -liability: valuation of covered loss is established by court/negotiated settlement

Professional Liability policies -how policies for different professions work -why insurers specialize -common exclusions

-different policies used to insure different professions (due to different liability exposures) -some professional liability insurance written only by insurers that specialize in it --so they can develop skills required to successfully underwrite profession specific risks, handle claims differing from common types --usually insurers develop forms independently instead of using standard forms -common exclusions include: contractual liability, punitive damages, insured's dishonest/criminal/malicious acts, as well as specialized exclusions

CGL Limits of Insurance -where they are shown/explained -limits

-dollar amounts shown in policy declarations, provisions under Section III Limits of Insurance explain how limits apply -each occurrence limit is most insurer pays for one occurrence regardless of # persons, # claims etc. Main Limits: 1. General Aggregate -a. Personal and Advertising Injury Limit -b. Occurrence Limit --i. Damage to Premises rented to you limit --ii. Medical Expense Limit 2. Products Completed Operations Aggregate limit -a. Each Occurrence Limit

GAAP accounting (user and focus)

-for broad range of users (investors, creditors, owners) -focus on value or performance of organization as a GOING CONERN: assumes organization will operate indefinitely (replacement values/depreciated cost). -- value of tangible asset as going concern might be replacement value but in run off it would be market value

environmental insurance -what it's for -what forms are like/how they can be modified -5 common types

-for when endorsements to existing property/liability policies are inadequate -non standardized, competing policy forms have significant coverage differences --forms can be substantially modified by endorsement --OR forms combined to provide packages of different types of environmental insurance with same policy limit 5 common types: -site specific environmental insurance liability -underground storage tank compliance -remediation stop-loss -contractors pollution liability -environmental professional E&O liability

enterprise liability

An expanded liability concept requiring each member of an industry responsible for manufacturing a harmful or defective product to share liability, when a manufacturer at fault cannot be identified. -can be held liable based on market share

PAP and Transportation Network Companies -where drivers can get insurance and why those might not be ideal

-usually drivers may buy commercial auto policy for coverage (which maybe very expensive) or have one provided by TNC --TNC provided insurer begins @ different points in transaction and coverage limited before passenger enters auto --commercial auto limits usually higher than those carried by individual under PAP -endorsements exist for PAP for TNC but not all insurers will write

fiduciary liability policies -what ERISA does -liability exposure -what insurance covers

Employee Retirement Income Security Act (ERISA) regulates employee benefits plan fiduciaries (someone whose role in employee benefits involves discretionary control/judgement in design, administration, funding, management of plan) -ERISA fiduciary/employer of fiduciary/firm key employees can be held personally liable for full amount of loss from breach in statutory duties --breach can be from negligent investment decisions (even if made by investment manager), causing financial harm to plan participants -fiduciary liability insurance: cover fiduciary of employee benefit plan against liability claims alleging breach of fiduciary duties involving discretionary judgement --also cover administrative error in same manner as employee benefits liability insurance (cover employer against liability claim alleging improper advice/E/O committed while administer employee benefit plans) added by endorsement

peak season endorsement

Endorsement that covers the fluctuating values of business personal property by providing differing amounts of insurance for certain time periods during the policy period.

commercial umbrella exclusions -2 kinds

Exclusions: umbrella policies w/ broader coverage usually have exclusions in umbrella policy that have narrower application -can also have exclusion not existing in Underlying and provide narrower coverage than underlying insurance for that exposure

Largest expenses and largest liabilities

Expenses: claim payments (losses) and loss adjustment expense Liabilities: loss reserves and LAE reserves

Part C insuring agreement -criteria for vehicles to be UM vehicle

UM vehicle = land motor vehicle/trailer of any type meeting ANY of the following criteria: -no BI liability insurance/bond applies to vehicle @ time of accident -BI liability policy/bond in force but limit is lower than min amount by financial responsibility law in principally garaged state -vehicle is hit/run vehicle whose owner/operator can't be identified that hits: --the named insured/any family --vehicle named insured/any family member is occupying --named insured's covered auto -BI policy/bond applies @ time of accident but insurance denies coverage OR becomes insolvent

prof/manage liability vs CGL: duty to defend/selection defense counsel

CGL: insurer has duty to defend insured against claims that fall within scope of policy and insurer selects/pays attorney that defend insured Professional liability: can follow CGL method OR provide defense cost reimbursement coverage that requires insurer to reimburse insured for defense expense covered by policy -insured can select counsel subject to insurer approval -insured may also have option to assume defense even if policy provides insurer has duty to defend -cost of defense usually paid within (not in addition to) limit

Misc Type Vehicle Endorsement -what it does and where details listed -passenger hazard exclusion -part D of endorsement (exclusions and limits)

clarifies PAP provisions to apply to motor home/motorcycle/ATV/dune buggy/golf cart -endorsement schedule lists each covered vehicle/applicable coverages /limits/premium -passenger hazard exclusion (optional): exclude liability for BI to any person occupying covered vehicle for lower premium -part D of endorsement: --exclude coverage for loss to clothing/luggage, business/office equipment, sales samples, articles used in exhibits. -- limit amount paid for physical damage to lowest of following values: stated amount shown in schedule/declarations, actual cash value of stolen/damaged property, amount needed to repair/replace property

commercial traditional health insurers -what benefits like -who buys this

commercial insurers: many benefits packages/premium variations tailored to specific groups/individuals -include workers of all ages w/ no employer sponsored health insurance/young unemployeds/business owners with no group coverage

trailer/camper body coverage (max limit of liability) endorsement -coverage extended for what -exclusions -physical damage payment

coverage extended to direct/accidental loss to trailer/camper body described in policy declarations/endorsement schedule -covers related facilities/equipment (cooking/dining/plumbing/refrigerating facilities) --exclude coverage for loss to clothing/luggage, business/office equipment, sales samples, articles used in exhibits, PAP exclusions for electronic equipment/radar/custom furnishing/equipment -same physical damage payment as misc. vehicles

commercial property coverage forms -definition -usually contains -common forms in commercial property (3)

definition: commercial property coverage part component that can be any of several commercial property forms containing an insuring agreement and related provisions usually contains: -insuring agreement -delineation of property covered/not covered -addl coverage and coverage extensions -provisions/definitions applying only to that coverage form commercial property coverage parts usually have >1 commercial property coverage form: -building and personal property (BPP) form: insure buildings, business personal property, personal property of others -addl forms for insuring buildings/personal property in special situations (under construction, condo association/unit owner) -loss of business income/extra expense

commercial property cause of loss forms -definition -types -where these are specified

definition: specify perils covered types: basic, broad, special -CP coverage part can have 1+ causes of loss forms and loss forms can apply to different causes of loss --dec page will indicate which form applies to each type of property @ each location (it's infrequent that different cause of loss forms are actually used in same policy)

compensable amount of liability claim -two components

depends on how claim is settled and extent of damages awarded to claimant

liability concepts applying to tort claims

injured person has to prove damage suffered and choose whom to sue/develop theory of liability to present to court Joint tortfeasors Expanded liability concepts Vicarious liability Good Samaritan issues Class actions

insurance to value definition

insurance written or amount approx the full value of the assets insured

common policy conditions: transfer of rights and duties under this policy -what insured cannot do -when coverage is automatically transferred

insured cannot transfer rights/duties under policy to any other person or organization without the insurer's written consent (new owner of property) -coverage automatically transfered if individual named insured dies to insured's legal representative or any person having proper temporary custody of insured property

life provisions: assignment clause provision -what it does -absolute vs. collateral

life insurance PH can assign policy to another person (contingent on insurer notification) -absolute: transfer all ownership rights to another party -collateral: assign policy to another as collateral for a loan (only transfers certain policy rights to creditor)

fee for service/indemnity plan coverage

patient chooses own healthcare provider/reimburses patient/provider @ certain percentage (after deductible) for services provided -used in traditional health insurance plans

Regulatory/Supervisory Accounting (user and focus)

- regulators/supervisors -deal with RUNOFF values (not going-concern), focus on realizable values for asset sale/liability settlement and may have different set of valuation assumptions -- specialized accounting frameworks (Statutory Accounting Principles)

Deferral matching income recognition -life vs p&c -what is used for this, what happens if premium received at different times

-Life recognizes when premium due -P&C recognize premium revenue as coverage is provided (earning) -uses Written Premium (premium charged for policy during reporting period, assuming it is already effective) -- portion of WP from unexpired policy risk is unearned premium (liability) set up to defer recognition of premium revenue -- 'deposit liability' if premium received before effective --'premium receivable' asset if paid after effective

claim liability vs unearned premium liability considerations (3)

-While both cover claim obligations under policies, loss reserves and unearned premium reserve cover different portions of these claim obligations with no overlap. -Deficiencies to either loss reserves or the unearned premium reserve can occur. -Any deficiencies must be reflected in the appropriate reserve figure: events that haven't happened end in unearned premium but events that have happened reflected in loss --inadequacy in loss reserve may result in reevaluation of adequacy of unearned premium --DEFICIENCY IN ONE DOES NOT NECESSARILY INDICATE DEFICIENCY IN OTHER

lack of bias vs. relability -how conservatism leads to bias

-accounting frameworks require conservatism -> may lead to delayed recognition of assets until value is reasonably certain or high reported liability value (unlikely final settlement value > reported) -conservatism varies by context (buyer vs seller)

Deposit premium -definition -used for

-aka binder premium -amount policyholder pays at beginning of period, pending determination of actual amount used for: -policies that are bound/agreed to before all contract details have been finalized -pricing exposure is not initially known -reinsurance treaty where final premium is dependent on business during effective period

financial notes and disclosures -what it does -what it can include (3)

-allow additional information beyond balance sheet etc -include description of accounting policies used to prepare statements/discussion of values that aren't reliably estimable -can include forward looking info concerning estimates of future financial earnings -subsequent events: events occurring after financial statement/valuation date but before publication -include effect of discounting unpaid loss/loss adjustment expense liability: info on discount rate, total effect of PV discount calculation as well as any risk margin

Large deductible credits reporting

-applies when insurer pays full claim/gets reimbursement -premium for large deductible policies expected to be smaller than if no deductible existed --regulatory accounting systems gross up reported premium for deductible credits with regard to premium assessment systems

liability adequacy test

-determine if unearned premium reserve is insufficient to cover corresponding losses and expenses --if it is, establish premium deficiency reserve to avoid futures earnings loss

Actual Claim Activity Incurred Losses

-initial: IL established based on actual claim activity + possible add loss reserves to allow for IBNR/deficiency/redundancy in case reserves -subsequent: changes in claim adjuster estimates and aggregate reserves run off over time -used when most claims are reported and settle relatively quickly -not possible if claims reported slowly/initial claim adjuster estimates are not sufficiently reliable

insurance expense -definition -what it includes

-liability for expenses incurred/unpaid in conjunction with the insurance policies -commission, premium tax liabilities

Written Premium

-total premium on all policies put into effect during a period -primary measure of insurer size or growth

reinstatement premium

A premium that applies to reinsurance contracts or primary policies to reinstate the original policy limit after it has been exhausted by the covered event in order to cover another possible event under the reinsurance or primary policy.

deposit accounting -conditions for required by accounting framework

CONDITIONS - no risk transfer exists -timing risk exists but transfer of amount risk is negligible (amount to be paid is fixed/minimal uncertainty but don't know when payment will be made) -reinsurance is retroactive subject to exceptions

reporting segment -GAAP vs Regulatory

GAAP: financial statements are consolidated for reporting entity (may be combined from multiple entities) -require reporting at reporting segment level: level at which operations are managed/performance measured by senior management - not all items are required to be reported at reporting segment level Regulatory: financial statements are nonconsolidated, separate for each legal entity.

liquidation vs going concern

GAAP: going concern - value of something in use to produce a product means expected income stream for going concern, but is reduced to land/building/equipment value for liquidation Regulatory: liquidation

policy holder dividend as premium

PH might be eligible for discretionary dividends paid by insurer -can be treated as negative premium or positive expense

Incurred Losses -definition -equation

The losses that have occurred during a specific period, no matter when claims resulting from the losses are paid incurred loss = paid losses + (ending loss reserves - beginning loss reserves)

deferral matching -what it is -when assets/liabilities booked -two accounts used to achieve this method

accounting approach: focus is to coordinate timing of income and expense recognition so that both occur when triggering event that is focus of the contract occurs (income statement) -insurance premium earned over policy term, expenses/losses are recognized over same period as premium -Deferred acquisition cost (DAC) assets - defer up-front expenses so not recognized on income statement during period -Unearned premium liabilities - defer recognition of revenue/premium

Premium balances

aka agent balances -premium due on policies - Comes from delay between payment by policyholder/transmittal of premiums to insurer

unpaid claims (insurer liability) -definition -5 components

aka loss reserves represent claims on policies for events that have already occurred but not yet been paid has: 1. case reserves 2. provision for future development on known claims 3. reopened claims reserve 4. provision for claims IBNR 5. provision for claims in transit (incurred/reported but not recorded) -last four are IBNR, can be IBNR or IBNER

reinsurance recoveries -definition -how two recoveries are usually recorded

amounts due from reinsurer for ceded losses under some accounting frameworks: -amounts billed/due as a result of ceded paid losses are recorded as an asset -reinsurance recoverable: amounts to be ceded/billed in the future bc of incurred but unpaid losses are contra liability

premium audit -what it is -when this happens

audit can be used to determine final exposure when it's not known initially (ie sales or payroll) -occurs during or @ end of policy term -for PREMIUM BASE: this is not retrospective premium adjustment, which is based on LOSSES in a term (not from determining exposure)

premium endorsement/cancellations

change to policy mid-term cancellations are a extreme form of endorsement

unpaid adjusting expense (insurer liability) -definition -what it includes

cost of settling/defending claims on policies for events already occurred - may include expected adjusting expense for unreported claims/cost of dispute coverage w/ insured -includes cost of defending insured

revenue recognition -deferral matching -asset liability

deferral matching: revenue recognized as service is rendered (earning in) asset liability: recognized up front, once insurer gains control of asset resulting from revenue

Insurance policy -definition -distinguishing characteristics (7)

definition: formal written contract by which an insurer provides protection if an insured suffers specified losses distinguishing characteristics: -indemnity -utmost good faith -fortuitous losses -contract of adhesion -exchange of unequal amounts -conditional -nontransferable

deferred acquisition cost

expense payments deferred for income statement purposes under deferral matching accounting approach -so that they can be recognized in the income statement at the same time as the corresponding revenue

Claim liability (loss reserves) VS. unearned premium liability -definitions and how they become deficient

loss reserves: established for events occurring during the expired portion of the policy period -may be deficient estimate of ultimate cost of incurred/unpaid losses -new info since original estimate/changing economic/legal environment unearned premium reserve: losses potentially arising from the unexpired portion of the policy -deficient with regard to expected losses over the unexpired policy term -new information regarding pricing/UW decisions or change in legal interpretation of policy language

Main/common Insurer Liabilities

main: claim liabilities (reserves) and unearned premium -policy liability -unearned premium -unpaid claims -unpaid adjusting expense -insurance expense

paid loss vs cash payment

paid loss has lags/estimates compared to cash paid (simultaneous paid loss transaction may not be recorded) -if payment made but corresponding entry hasn't, payment goes to suspense account --growth in suspense: backlog in clearing records or influx of claim activity that has yet to be recorded (bc need more detail) -booking lag also cause differences: may need to estimate paid amounts occurring between ledger closing and accounting as of. Adjustment after actual values known.

income statement (insurer) -calculation for net income from operationso -biggest source of revenue

premiums - claims and adjustment expenses - underwriting expenses = net income from operations -biggest source of revenue is investment income and insurance sales

principle of indemnity/contract of indemnity

principle: The principle that insurance policies should provide a benefit no greater than the loss suffered by an insured. contract: A contract in which the insurer agrees, in the event of a covered loss, to pay an amount directly related to the amount of the loss. insurance policy adheres to the principle, meaning it is a contract

Assumed reinsurance: differences in accounting rules for -risk transfer rules -LAE

risk transfer rules: for both GAAP and statutory risk transfer amount needs to be a certain amount in order to count as reinsurance LAE: contracts for tort liability insurance often include coverage for losses and legal defense -legal defense cost can be LAE/reported by ceding company separately from losses -assuming company can assume legal defense costs as losses --may distort loss vs LAE on combined industry basis

recoverables -types -recording practices

salvage: amount insurer can collect from sale of assets that insurer takes over ownership of as result of claim payment subrogation: insurer right to recover amount of claim payment from 3rd party responsible for injury or damage (ceded reinsurance) deductibles: insurer pays entire claim then seeks reimbursement from insured -recorded as negative paid loss but might not match actual cash transaction (billing is recorded as negative paid when bill sent not when cash gets there) --if unrecoverable, reverse original recoverable entry (reinsurance) or write off recoverable balance in different income account (deductible)

income statement (general) -what it shows

shows financial results over time period -show gains/losses from non-operating activities (purchase/sale of assets) structured to calculate organization profitability: revenue - expenses = net income

consideration

-Something of value or bargained for and exchanged by the parties to a contract.

BPP optional coverages

-agreed value -inflation guard -replacement cost -extension of replacement cost to personal property of others

exclusive control

The control of only one person or entity; in tort law the control by the defendant alone of an instrument that caused harm.

probable cause

The grounds that would lead a reasonable person to believe that the plaintiff committed the act for which the defendant is suing

tort reform: pretrial screening panel -what it is and what happens -purpose -complaint

review certain tort cases to encourage settlement of meritorious cases/discourage frivolous claims -considered alternative dispute resolution w/ several mediators (judge, doctor, layperson, attorney) -informal and panel decision nonbonding -normally mandatory purpose: speed up resolution of cases competing objective: (some people complain this delays case progress to jury/final resolution)

BPP conditions

abandonment appraisal duties in event of loss loss payment recovered property vacancy valuation mortgageholder coinsurance

CGL Coverage A Exclusions

a. expected/intended injury: BI/PD expected/intended to insured (except in case of BI from use of reasonable force to protect persons/property) b. contractual liability: exclude liability assumed by insured under contract UNLESS liability for claim could have been imposed on insured by tort law OR if liability assumed under insured contract if BI/PD occurs after contract/agreement executed c. liquor liability: exclude coverage if liability from cause/contribute to intoxication of any person OR giving alcohol to someone underage OR violating laws governing sale/distribution of liquor (ONLY IF insured is in alcoholic average business, BYO doesn't count but are advised to purchase), not excluded under Covg A because it is insured under another policy d/e. worker's comp/employers liability: exclude coverage for obligations of insured under worker's comp and coverage for BI/PD to any employee of insured if injury from employment f. pollution: eliminate coverage for pollution liability related to premises/operations (encompass many ways pollutant can enter environment) --exceptions: BI/PD caused by heat/smoke/fumes from hostile fire or from escape of fuel/lubricant/operating fluid for normal functions of mobile equipment g. aircraft/auto/watercraft (see separate card) h. mobile equipment (separate card) i. war j. damage to property (separate card) k - n. insured product and work (damage to your product, damage to your work, damage to impaired property/property not physically injured, recall of products/work/impaired) (separate card) o. personal/advertising injury: eliminate coverage under Coverage A for BI from personal/advertising injury p. electronic data: since it is not considered tangible property q. recording/distribution of material/info in violation of law: exclude BI/PD from violation of any law addressing/prohibiting/limiting communication of material or information r. fire legal liability: exclusions c-n do not apply to damage by fire to premises while rented to you/temporarily occupied by you w/ permission of owner (separate limit of insurance)

coinsurance formula

amount payable = (limit of insurance / (value of covered property @ time of loss x coinsurance %) ) * total amount of covered loss = (did / should) * loss

HO-3 Section II Additional Coverages

amounts payable in addition to Covgs E and F (usually incidental in nature/related to claims made under E/F) -claims expenses -first aid expenses -damage to property of others -loss assessment

HO-3 Coverage C - Personal Property -what it applies to/can cover -standard limit and exception (+exception to exception) -special limit categories

apply to items insured owns/uses anywhere in the world -can cover loss of/damage to personal property of others/guest/residence employee while property on residence premises if the named insured requests coverage -standard limit: 50% coverage A limit, applies in addition of that limit (can be changed on Dec page and charging additional premium) --max(10% coverage C limit, $1000) applies to property usually located at residence/self-storage warehouse other than the one on dec page --- this 10% limit does not apply to personal property removed from residence premises bc of house repair/renovation/rebuild and is not fit to live in/store property in (applies for 30 days if insured is moving principal residences) -special limits about liability: some categories of personal property (higher than average risk of loss/types of property not contemplated in HO insurance premium) subject to sub-limits --jewelry/furs, firearms, silverware/goldware etc apply only when loss caused by theft --8 other categories apply when loss caused by covered peril (money+precious metals, securities, watercraft, trailers, portable electric equipment, media, property used for business on and away from residence premises)

HO-3 Coverage A - Dwelling -what this applies to -residence requirement

apply to: - dwelling on residence premises (1-4 family dwelling) and on structures - attached to dwelling structures (wall to wall carpet included) - materials/supplies located on/next to covered dwelling used to construct/repair premises -residence premises: Residence Premises Definition Endorsement (applies to all HO forms except HO-6) requires residency at the inception date of the policy --can remove this requirement with a different endorsement

Part F - automatic cancelation -2 scenarios

automatic termination: if insurer offers to renew but named insured does not accept (by not paying renewal premium), policy terminates @ end of policy period -can also auto-terminate if insured obtains other insurance on covered auto even if insurer is not notified

BPP optional coverages: inflation guard

automatically increase limit of insurance by % of annual increase shown on dec page -pro rata from date limit of ignorance became effective to date of loss before loss payment is computed -separate annual increase for buildings and personal property

punitive damages (tort) -purpose -when it's awarded -what amount of damages is based on

can result from bad faith punish/make example of defendant and deter defendant/others from committing similar acts only awarded in certain situations (outrageous conduct): -defendant intended to cause harm -defendant acted oppressively, maliciously, fraudulently --employers/principals liable for punitive damages if they directed/ratified acts of employees/agents w/ knowledge of malice, fraud, oppression amount of damages depends on: -nature of defendant action -size of defendant assets (richer means larger, probably) -purpose of punitive damages

replacement cost alternate settlement option

can settle claim based on ACV and have 180 days to refile claim on replacement cost basis -insured gets funds from insurer @ time of loss and rebuild, then collect full replacement cost value

ACA of 2010

benefits under new laws: -insurers can't decline insurance for pre existing medical conditions -adult children put to age 26 join/remain covered under parent healthcare plan -insurer can't rescind benefit bc insured/employer made honest mistake/omission on insurance application -no lifetime dollar limits on essential benefits -insurers must pay for certain preventative services w/o copay, coinsurance, deductibles (screenings, flu, pneumonia, well-baby, well-child) -individuals can choose primary care doctor within plan provider network, OB-GYN without referral and seek emergency care @ hospital outside network without prior approval -insurer required to spend set % of premium received on direct medical care/improvements to quality of care provided --meet annual federal reporting requirements --provide rebate to participants if % not met

life provisions: policy loan provisions

if policy accumulates cash value, it will have policy loan provision: -PH can borrow amount up to cash value of policy subject to interest -if loan not repaid @ time of insured's death, outstanding loan amount including interest deducted from death benefit amount (no repayment schedule)

CGL Named Insured and Related Parties -each type, who is the named insured and who are the insureds

can be individual, partnership, joint venture, corporation, LLC, trust etc -if individual: spouse is also insured but coverage applies only to claims arising from conduct of business owned solely by named insured (unnamed spouse business and nonbusiness activities excluded) -if partnership/joint venture: named partnership/joint venture and all partners/members and spouses are insureds but only for liability claims from conduct of business of partnership/joint venture -if LLC: named company is insured, controlling members of company are insured (w/ respect to conduct of named insured's business), managers of company are insured (w/ respect to duties as managers of named insured) -if other organization (corporation, school district, etc): all executive officers, directors, stockholders are insureds but only w/ respect to their own liability -if named trust (legal entity created for benefit of designated beneficiaries): named trust is insured, trustees are too but w/ respect to their own liability

defendant defenses against negligence claims -what these defense can do for defendant -5 defenses

can prevent recovery of damages, reduce amount of damages even when defendant found negligent -Comparative negligence -Releases and exculpatory clauses -Immunity -Statutes of limitations and repose -Tortfeasor's capacity

commercial property glass extension

cover expense of installing temporary glass plate/boarding up opening when repair/replacement of damaged glass has been delayed -also pays for cost to clear obstructions (not window displays) preventing replacement of glass

tort reform: periodic payments (structured settlements) -how plaintiff benefitted -how defendant benefits

structured settlements benefit plaintiff because interest earned by settlement annuity is not subject to income tax -as interest rates decline, tax advantage also declines also prevents plaintiff from spending entire award prematurely (funds available for long term) defendant benefits by being able to avoid selling critical assets to pay large lump sum (especially if award isn't covered by insurance) number of jurisdictions requiring periodic payment is not expected to increase quickly

life provisions: incontestable clause

designate period (2 yrs) after which insurer can't deny claim because of misrepresentation on part of PO -application is considered part of life insurance contract so any misrepresentation can serve as basis for insurer contesting claim during contestable period

environmental law -what it includes -who's involved -what lawsuits come from, how guilt is determined

environmental law: include measures to prevent environmental damage (environmental impact statements, measures to assign liability, cleanup for incidents resulting in environmental damage) -goverment agencies are often enforcers so environmental law related to administrative law -lawsuits arise from laws imposing strict liability designed to protect general public: --administrative agency determines if party liable for damages under statute/regulation --findings relate more to if defendant violated law than whether defendant actually caused damage to someone

family member definition

person related to named insured by blood/marriage/adoption and resides in named insured household -includes wards/foster children and children temporarily away from home

supplemental coverages term for: -property -liability

property: coverage extensions, additional coverages liability: supplementary payments

CGL Rating Formula -and definitions of components

rate x exposure = premium -rate: reflection of organization susceptibility to liability losses (depends on classification of insured's operations) -exposure: size of business operations to be insured, reflected in terms of premium base

purpose/unique qualities of insurance industry -what it's used to address -3 unique qualities of insurance industry -regulatory scrutiny

ratemaking used to address complaints on lack of fairness/equity/affordability of insurance 3 unique qualities of insurance industry: -insurers set rates before determining actual costs (require years to determine and some types of claims take years fo final settlement) -legislative bodies have chosen variety of rate regulatory environments under which insurers operate (insurers have a lot of flexibility to charge rates as see fit across states) -insurance industry developed information haring/doing product development mechanism that could raise anti-competition issues if used by other industries (allow cooperation as long as does not hinder competition) regulatory scrutiny varies by line of insurance and line of business/nature of insureds in line can influence degree of rate regulation (take it or leave it or if insured negotiates)

nontransferable -definition applying to insurance -exceptions

'personal contracts': insurance is contract between two parties, insured cannot transfer policy to third party w/o insurer written consent (selling a property to 3rd party) -insurers may sometimes transfer policies to other insurer (insureds notified but approval not required) --if insured unhappy: cancel or pursue claim based on notion that consideration under transferee is lower than original -exception: ocean marine hull policies terminate with change in vessel ownership but not if this happens at sea.

commercial property basic/broad form additional coverage:

(basic and broad) limited coverage for fungus/wet rot/dry rot/bacteria: -limit = 15000 in aggregate for 12 month policy period (broad) collapse: abrupt falling down of building/part o building that can then no longer be occupied for intended purpose. insurer pays for collapse if caused by the following: -covered cause of loss -hidden, unknown decay -hidden insect/vermin damage -weight of people/personal property -weight of rain collecting on roof -use of defective materials/construction if abrupt collapse happens during construction -also covers loss to property because of collapse of personal property inside building (racks) if it's because of the above reasons

HO-3 Residence employees vs. employees

-residence employees: domestic workers whose duties relate to maintaining/using household premises/performing domestic or household services -employee: employee of insured who's not a residence employee

Cost associated with premature death -what is premature -costs life insurance helps with

- premature death = death before 65 -can leave a variety of unfulfilled financial/emotional obligation -life insurance helps for the following costs to do with premature death: --lost income (decreased wage earner income lost) --final costs (funeral/medical etc) --outstanding debts (credit card debt, mortgage) --unpaid long-term obligations (to supplement retirement savings/fund college tuition, child care, home maintenance) --estate planning (estate tax, probate cost, lost charitable contribution) --unfulfilled family obligations (standard of living, grief, economic/noneconomic)

HO-3 Additional Coverages : Damage to Property of Others -what it pays -what this coverage does for insured/insurer -when it won't pay (7)

-'voluntary property coverage': pays up to 1000 for damage to property of others caused by insured regardless of fault/legal liability --insured maintains goodwill by paying for relatively minor losses, allows inter to avoid litigation expense on small property damage claims to determine insured fault -will not pay under this coverage for property damage to the extent of any amount recoverable under Section I (pay deductible amount under this coverage, the rest under Section I for covered peril) -also will not pay if: --damaged caused intentionally by insured > 13 yrs old --property owned by insured damage --property owned by/rented to tenant of insured or resident is damaged --damage from business engaged in by insured --damage is result of act/omission in connection with premises other than insured location that insured owns/rents/controls --damage arises from ownership/maintenance/use of motor vehicle/watercraft/aircraft/hovercraft (except off road vehicle not subject to motor vehicle registration/not owned by insured)

renewal types of disability insurance -noncancelable -guaranteed -conditionally renewable

--noncancelable: insurer can't cancel, and cannot change benefits provided, rates, policy features unless insured requests change --guaranteed: continues as long as premiums continue to be paid up to specified age as long as insured is gainfully employed (insurer can raise premium on renewal) --conditionally renewable: insurer has option to increase premium/change policy term at renewal and cancel contract if conditions for renewal not met

components of gen. liability coverage part

-1+general liability dec form -1+general liability coverage form -endorsements -general liability coverage part can be included in CPP or issued in monoline providing general liability covg only

terrorism/TRIA cap endorsement -what it is/when its attached to policy -what endorsement describes

-100 billion program cap on annual aggregate insured losses paid by government/all insurers for certified acts of terrorism --when PH accepts certified acts of terrorism coverage, ISO requires insurer to attach cap endorsement for specific line of business/coverage provided (does not apply to non certified acts of terrorism) endorsement describes: -certified acts of terrorism in TRIA -informs PH insurer responsibility to pay losses for certified acts of terrorism ends if program cap reached -secretary of Treasury mandates calculation of pro rata shares of insured losses below cap, which may reduce policyholder coverage

Part D insuring agreement: deductibles -3 reasons to have deductibles -which coverage has higher deductibles usually

-3 reasons for deductibles: --reduce small claims --hold down premiums --encourage insureds to be careful in protecting their cars against damage or theft -usually higher deductible on COLL than OTC

coinsurance clause -definiton -common %

-A clause that requires the insured to carry insurance equal to at least a specified percentage of the insured property's value. --insured is responsible for retaining part of loss if property is underused a specified percentage of property insurable value --most common are 80/90/100

reasonable expectations doctrine -example -warning

-A legal doctrine that provides for an ambiguous insurance policy clause to be interpreted in the way that an insured would reasonably expect. -example: renewal of policies w/ change from original policy (w/o notification) -extension of adhesion doctrine as it accounts for the fact most insureds are not practiced in policy interpretation but not all courts recognize this!

HO-3 Section II Exclusions (applying to Covg F): 4

-BI to residence employee if injury occurs off insured's location/injury does not arise out of employees work (exception is injury for residence employees working away from insured location OR on insured location whether working or not) -BI eligible for Worker's COMP -nuclear reaction -injury to home sharing occupant -injury to residents

commercial property special form: trees/shrubs/plants/lawns that are part of vegetated roof

-BPP includes these as covered property, and covers items w/o limits and restricted perils applying to other trees/shrubs and plants under BPP Outdoor property coverage extension -special form has own restrictions cause of loss for these (but covers loss from windstorm or anything not listed below): --Dampness or dryness of atmosphere or of soil supporting the vegetation; --Changes in or extremes of temperature; --Disease; --Frost or hail --Rain, snow, ice or sleet

professional/management liability vs. CGL differences

-CGL doesn't include professional liability exclusion BUT many insurers may attach professional liability exclusion for several professional classifications since they don't want to cover -differences: --claims made trigger --consent to settle --duty to defend/selection of defense counsel --deductibles

commercial property conditions

-attached to any of the commercial property coverage forms to which they are attached (including BPP) -concealment/misrepresentation/fraud -control of proeprty -insurance under 2+ coverages -legal action against us -liberalization -transfer of rights of recovery against others to us -no benefit to bailee -other insurance -policy period, coverage territory

prof/manage liability vs CGL: consent to settle -CGL -prof/manage liability --two situations

-CGL policy provides that insurer may, at its discretion, settle any claim/suit --insured has no involvement in decision and can't prevent settlement insurer wants to make -professional/liability: bc insured reputation might be at stake, insured usually has right to participate in decision to settle claim --policy may say insurer can't settle w/o insured's consent --if not given, insurer must continue to defend insured and pay judgement OR insured has to take over defense/pay any further defense expense as well as any judgement exceeding amount for which insurer would have settled ('hammer clause')

commercial property conditions: concealment/misrepresentation/fraud -what it does -concealment/misrepresentation/material definitions

-CP coverage part void if insured commits any fraudulent act related to coverage OR conceals/misrepresents any *material* fact pertaining to coverage part, covered property or insured interest in covered property --misrepresentation: active, deliberate misstatement of fact --concealment: intentional failure to disclose a material fact -coverage can be provided even if misrepresentation or concealment happens if it's not material (if knowledge of it would cause insurer to charge higher premium/decline to write coverage)

general liability coverage forms -major sections -2 versions of coverage forms

-Coverages—This section contains one or more insuring agreements and applicable exclusions, as well as supplementary payments in some forms. -Who Is an Insured—This section describes the individuals and organizations that qualify as insureds. -Limits of Insurance—This section explains how the limits of insurance apply to covered claims. -Conditions—This section contains various conditions that the insurer and insured must abide by. -Definitions—This section defines certain words and phrases used in the coverage form. coverage forms may have 2 versions for occurrence coverage trigger or claims made (claims made have additional section for extended reporting period aka coverage for claim made after end of policy occurring before end of policy)

HO-5 vs. HO-3 -3 differences

-HO-5 is the broadest, essentially it's HO-3 modified to have open peril coverage for Covg C too --doesn't exclude some exposures excluded by HO-3 --covers water damage (including flood for personal property away from location owned/rented/occupied/controlled by insured) --covers personal property damaged by rain through open window/door/roof even if building isn't damaged --special limits for jewelry/furs, firearms, silverware apply to misplaced/lost items (not just theft)

interference with relationships between others (list of torts)

-Injurious falsehood -Malicious interference with prospective economic advantage -Unfair competition -Interference with employment -Interference with copyright, patent, or trademark -Interference with right to use one's own name in business -Interference with family relationships Canadian 'business torts': -inducing breach of contract -slander of title/goods -conspiracy -passing off -intimidation

battery -definition -classification as tort condition -possible defenses

-Intentional harmful or offensive physical contact with another person without legal justification. --person does not need to be in fear of bodily harm/aware of contact --can be crime as well as tort -to be classified as tort: act must be intentional and hostile/offensive -possible defenses: --plaintiff consented to act (actual or implied) --act in self defense or defense of others (reasonable force allowed to repel attach) --act was one of physical discipline (pare-child relationship/contact with persons who have legal authority to discipline others0: successful only if force used is reasonable/use of force must be in good faith

HO-3 Conditions applying to both Section I and II

-Liberalization clause: if policy form broadened @ no addl premium, broadened cove automatically applies to all existing policies of same type -waiver/change of policy provisions: waiver of right/change of policy provision is valid only if insurer makes it in writing, oral waivers by claims reps w/ apparent authority are permitted, insurance agents with binding authority can make oral policy changes effective until written policy change endorsement made -cancellation: inured can cancel anytime by returning policy/contacting insurer in writing and insurer can cancel for certain stated reasons by delivering written notice within number of days -nonrenewal: insurer must provide at least 30 days notice, proof of mailed notice is sufficient -assignment: can't happen without insurer written consent -subrogation: insured waives all right to recovery against person provided the waiver is in writing/made before loss, or insurer can require insured assigns rights against another person to insurer to protect extent of insurer payment of loss -death: if named insured/spouse dies, insurer covers legal representation as insured to the extent that the decedent had interest in property covered in policy

HO-3 Section II applies to these motor vehicles

-Motor vehicle designed as a toy vehicle for use by children under seven years of age that is powered by one or more batteries and has not been modified after being manufactured to exceed five miles per hour on level ground. -Motor vehicle in dead storage on an insured location. -Motor vehicle used solely to service any residence -Motor vehicle designed for assisting people who are handicapped. -Motor vehicle designed for recreational use off public roads and not owned by an insured/owned only while on an insured location. -Motorized golf carts not capable of exceeding 25mph, owned by an insured, and used to play golf or used legally within a private residential association. -Trailers currently not towed by, hitched to, or carried on another motor vehicle.

premium reduction and size of property deductible -relationship -what it encourages

-NOT directly proportional to size of deductible, premium reduction on sliding scale (small losses are more frequent than large losses, premium credit increases more slowly than size of deductible) -tend to encourage use of medium size deductibles (eliminate dollar trading for small losses, reliable source of recovery for large losses)

Named vs. Open perils

-Named: insured must prove loss was caused by covered cause of loss for coverage to apply (burden of proof on insured) --insures against less causes of loss -Open: initial assumption is that the loss is covered. To deny, insurer must prove loss was caused by excluded cause of loss (burden of proof on insurer)

life provisions: reinstatement clause -what it does -what insured needs to do for this to happen -exception

-PO can reinstate life insurance policy that's lapsed for nonpayment of premium usually within specified period --may need insured to provide evidence of insurability/pay all outstanding premiums w/ interest/repay any outstanding policy loans --exception is policies that were surrendered for cash value

damage elements for claimant considered for BI claims -normal -in claimant death

-Reasonable/necessary medical expenses incurred/expected in future -Type of bodily injury -Wage loss/loss of earning capacity bc of injury -Other out-of-pocket expenses (household assistant) -Current and future pain and suffering -Extent/permanency of disability/Disfigurement -Preexisting conditions that could have contributed to the bodily injury -in case of claimant death, claim is survival action (how much recovered if claimant lived) or wrongful death (monetary loss to survivors)

underground storage tank compliance policy -what is RCRA -UST compliance policy coverage (usual required limit, defense costs, nonrenewal notice)

-Resource Conservation+Recovery Act (RCRA): requires owner/operator of underground storage tanks to demonstrate proof of ability to pay claims resulting from release of fuel/hazardous material from tanks -UST compliance policy: provides proof of financial responsibility under govt regulation that apply to owners/operators of underground storage tanks with fuel/hazardous materials --site-specific EIL policy as core coverage and worded to give full financial responsibility compliance (required limit usually 1 million per claim) --can include separate limit for defense (25% of policy limit) but USUALLY defense costs within limit of liability --60 day notice of nonrenewal and automatic extended responsibility requirements of RCRA/applicable state regulations

terrorism endorsements for commercial property/liability forms -TRIA -who developed endorsements -types

-Terrorism Risk Insurance Act (TRIA): federal government shares financial responsibility for terrorism losses with insurance industry (federal insurance) --insurers writing LOB subject to TRIA required to make coverage available for certified act of terrorism on same terms/conditions as coverages that apply to nonterrorism events -ISO and NCCI both have endorsements to comply with TRIA/states with special provisions affecting terrorism coverages Types: -disclosure endorsement -cap endorsements -certified acts exclusion endorsements -NBCR exclusion endorsement -limitations endorsements -aggregate limit endorsements -punitive damages exclusion endorsements -other acts exclusion endorsements -auto coverage endorsments -workers comp endorsements

general liability declarations -common items of information

-The insurer's and producer's names. -The named insured's name and mailing address. -The policy inception and expiration dates. -A condition stating, "In return for the payment of the premium, and subject to all the terms of this policy, we agree with you to provide the insurance as stated in the policy." -The limits of insurance. -Description of the named insured's business. -Rating and premium auditing information. -A list of endorsements attached to the policy.

consumer directed health plans (CDHPS) -3 major components -HSA vs HRA

-access to high quality care without requiring deductibles for preventative care -3 major components: --HSA or HRA (health reimbursement arrangement) --high deductible medical coverage w/ preventative care not charged against deductible --access to information tools to make informed healthcare decisions -low premium since high deductible: money set aside @ start of year to satisfy deductible in HSA or HRA --HSA is funded by enrollee themself, money can be rolled over at year's end (no taxes withheld from funds contributed) --HRA: contributed to by employer, not include in employee income for tax (distributions to employee are tax deductible and unused money can be rolled over)

life insurance riders: -accidental death -disability income -guaranteed insurability -waiver of premium

-accidental death (double indemnity): additional death benefit when death results from accidental BI/means as defined in rider (usually addl death benefit = face amount of basic policy) -disability income: added to policy to provide regular monthly income if insured becomes permanently disabled (specify level of income for determined period of time) -guaranteed insurability: guarantee access to coverage if PH becomes uninsurable due to poor health int he future (must be purchased before certain age, usually limited to form of whole life insurance) -waiver of premium: insurer agrees to waive payment of premium falling while policyowner/insured is disabled before the age of 60 or 65 (as defined in waiver of premium provision)

contractors pollution liability policy -what it addresses -similarities/differences to EIL -exclusions

-address environmental insurance needs of contractors performing environmental remediation services on contaminated sites -CPL modeled after site-specific EIL --both cover BI/PD/cleanup/defense --site specific EIL is written on designated premises basis --CPL covers contractor operations/activities @ project sites AND completed operations/contractual liability exposures AND covers loss arising from described operations of named insureds -insured operations described in the application -CPL policies w/ claims-made OR occurrence coverage trigger -Exclusions (mostly can be added by endorsement): --has most exclusions of site-specific EIL (exceptions are EIL completed operations, damage to insured site, cost of remediate job site for loss exclusions) --asbestos abatement operations --radioactive matter --claims arising out of insured's products --damage to sites owned by/leased to insured --professional liability --nuclear (low level exposure only)

public/livery conveyance exclusion endorsement -what it does -when it applies

-adds transportation network platform definition -reinforces public/livery conveyance exclusion in PAP for Parts A, B, D and explains exclusion applies to any period of time insured is logged into a platform as a driver (even w/o passenger) --UM exclusion addressed in state specific endorsement -designed to be attached to all PAPs unless ISO transportation network driver endorsement is attached

advisory organizations: concerns over anticompetitive pricing

-advisory orgs have faced regulatory scrutiny for rate setting practices --post 1980s, orgs shifted from setting rates (which included expenses) to develop loss cost per exposure

terrorism/TRIA aggregate limit endorsement -what this endorsement does and when it's offered -coverages it applies to for CGL and farm liability vs. products/completed operations -how the aggregate limit works

-aggregate limit TRIA endorsement used within certain commercial liability coverage forms --limit insurer exposure/provide limited liability coverage for certified acts for reduced premium --offered only when insured initially rejects certified acts of terrorism coverage -in combination with CGL and farm liability coverage forms, this endorsement applies to BI/PD/personal and advertising/medical payments coming from certified acts of terrorism -in combination with products/completed operations liability coverage form, limit applies to Bi/PD only -Certified acts of terrorism aggregate limit subject to policy general aggregate/products completed operations aggregate limit -other limits also continue to apply to damages from certified act of terrorism if aggregate limit hasn't been exhausted.

Part C - Insuring Agreement -what it agrees to pay -what damages are covered/what damages aren't -condition for coverage to apply

-agree to pay compensatory damages insured person is legally entitled to recover from the owner/operator of uninsured vehicle because of BI caused by accident -damages include: medical expenses, rehabilitation expense, lost wages and others. -damages DO NOT INCLUDE punitive/exemplary damages -compensate insured for damages caused by uninsured motorist w/o need to sue IF uninsured motorist is legally responsible for accident

tortfeasor capacity

-all people liable for tortious acts regardless of mental capacity (apply to minors, insane, intoxicated persons) --if a tort requires intent, defendant can establish lack of capacity to form intent as a defense --common law: minor liable for tort of older than 7

ISO Commercial Property Endorsement: flood coverage -2 sources -max limit/deductibles

-all three commercial property insurance cause of loss forms exclude flood available from 2 sources: -NFIP: federal government resource providing insurance for properties in eligible communities (administered by federal insurance administration, part of FEMA) --max NFIP limit is 500,000 for building and 500,000 for contents of building --sold through private insurers/agents and backed by govt -private insurers w/o federal participation --(most private insurers unwilling to provide flood coverage for commercial property in zones with > 100 year flooding probably risk aka zone A) --outside of high-hazard flood zones, flood coverage written by endorsement subject to substantial deductible (25,000) --may only provide excess flood coverage to NFIP limit

optional limits transportation expenses coverage endorsement -what it does -possible limits

-allows increased limits of loss of use (to cover significant temp transportation expenses) --30 per day/max 900 --40 per day/max 1200 --50 per day/max 1500

coverage for damage to your auto (max limit of liability) aka stated amount endorsement -what it does -what schedule states -max limit of liability --special case in max limit of liability

-allows owners of high-value antique cars/restored who cars to establish insurable value by inserting stated amount of insurance in policy -schedule describes each vehicle and shows stated amount of insurance applying to COLL/OTC loss -max limit of liability limited to min of: stated amount shown in schedule/declarations, ACV of stolen/damaged property, repair/replace cost (deductible still applies) --if repair/replace results in better than like quality, insurer does not include the amount of betterment in loss payment

-ambiguity definition -acceptable ambiguity -what happens in court for ambiguous/uncertain contract

-ambiguity: any policy provision that can be reasonably interpreted more than one way -acceptable ambiguity: insurance policy can be interpreted in 2+ ways and insurer is fine with either. -any ambiguity/uncertainty is construed against party who drafted agreement since they had the opportunity to express intent clearly --insurer has good faith obligation to draft a policy clearly expressing what it intends to cover

auto loan/lease coverage endorsement -what it does -what's usually paid out -not included in this endorsement

-amends part D of PAP so in event of loss, unpaid amount due on lease/loan for vehicle is covered --essentially covers pay difference between outstanding loan amount/amount and payout on unendorsed policy (ACV or repair/replace cost) -not included: overdue lease/loan payments, penalties imposed under lease for excessive use/wear and tear/high mileage, security deposits not refunded by lessor, cost for extended warranties, health/accident/disability insurance purchased with loan, balance from previous loan/leases

why it's difficult to main adequate property insurance limits (4)

-amount of insurance necessary for coinsurance requirement based on property value @ time of loss but limit selected when policy purchased -selected insurance limit usually based on informed guess of property value -insurable value @ time of loss can't be precisely measured until property actually rebuilt/property -values change over time.

contract of adhesion

-any contract in which one party must either accept the agreement as written by the other party or reject it --this is the typical insurance policy: insurer chooses exact wording of policy, may be altered by endorsements but insurer develops those too.

UM/UIM Stacking

-application of 2+ limits to a single auto accident -interpolicy: UIM policy limit of one policy added to UIM limit of other policy -intrapolicy: stacking of single policy covering more than one vehicle interpolicy/intrapolicy can be through endorsement but can also be prohibited

HO-3 Peril insured against for Covg C

-applies on named perils basis (coverage applies only if covered property damaged as result of cause of loss named in policy) named perils included: -fire/lightning -windstorm/hail (damage from rain/snow/sleet/sand/dust covered only if wind or hail damages building that causes opening through which cause of damage enters, watercraft only covered when inside fully enclosed building) -explosion -riot/civil commotion -aircraft -vehicles -smoke (except loss from agricultural smudging/industrial operation) -vandalism/malicious mischief (except home-sharing host activities) -theft (even from attempted/unsuccesful theft) -falling objects (breaks through dwelling roof/wall and damages contents) -weight of ice/snow/sleet (for property contained in building) -accidental discharge/overflow of water/steam (by plumbing/heating/air conditioning/fire-protective sprinkler system OR household appliance) -sudden/accidental cracking/burning/bulging (hot water heating system/air conditioning/automatic fire protective sprinkler/appliance for heating water) -freezing (with reasonable precaution) -sudden/accidental damage (except loss to tubes/transistors/electronic components/circuitry of appliances/computers/home entertaiment -volcanic eruption (except earthquake/tremors)

Part A out of state coverage

-applies when auto accident happens in state other than one in which covered auto principally garaged --PAP automatically provides higher required limits for accident if it's in a state with financial responsibility law/requires higher limits -compulsory insurance law requiring coverage when vehicle used in state: PAPR provides required min amount/types of coverage

commercial property conditions: no benefit to bailee

-bailee is person/business organization that has temp custody of the property of another -become legally liable to bailors for damage to property to hold, and might try to limit liability with contractual provisions stating they're not responsible for damage if damage is recoverable under insurance carried to bailor -this condition reinforces insurer's right of subrogation against bailee

provisions of a disability income policy: -benefit periods -perils insured against -waiting period -definition of disability -benefits provided -renewal/continuance

-benefit periods: time period that benefits are paid (ends when insured returns to work or reaches max benefit period) , longer max benefit periods may need higher premiums -perils insured against: provide benefits in event insured individual suffers any illness, accident, injury causing individual to lose income/possibly for certain types of permanent injuries -waiting period (elimination period): time elapses after wage earner becomes disabled before income benefits paid (7 days for short term and 30/60/90/1 yr for long term), shorter waiting periods need higher premiums -definition of disability: describes extent of disability that's required for income payments to begin, can be based on inability to perform occupational duties/amount of earned income lost or both -benefits provided: vary on type of policy (individual/group/SSDI), tie together policy features and amount of coverage/payment period/coordination of benefits with other disability income policies -renewal/continuance: specify cancelation type

contract bond categories -bid bond (obligee, if principal fails to fulfill) -performance bond (if principal defaults) -payment bond (why it's important) -maintenance bond

-bid bond: guaranteeing that a contractor bidding on a construction or supply contract will enter into the contract and will provide a performance bond if the bid is accepted. --obligee owns proposed construction project (or is general contractor) --if principal (the bidder) fails to fulfill obligation, surety pays obligee difference between amount of principal's bid and bid finally accepted + addl expenses as result of contractor default -performance bond: guaranteeing that a contractor's work will be completed according to plans and specifications. --if principal defaults, surety can: ---complete contract using existing contractor/replacement ---have obligee arrange for completion of work and reimburse for addl costs/pay damage --surety can seek reimbursement from principal -payment bond: guaranteeing that the project will be free of liens. --usually included in contractor performance bond but can be issued in separate bond --provides payment protection to private project owners (important since labor/material suppliers going uncompensated can apply mechanic lien to property and the owner won't have clear title to property until all debts settled) -maintenance bond: guaranteeing that the work will be free from defects in materials and workmanship for a specified period after the project is completed. --some performance bonds automatically include coverage w/o addl charge for a year

defamation in commercial speech -what commercial speech involves -2 most common defamatory commercial speech and when someone is liable

-can involve libel, much less protection than speech concerning public issues -commercial speech: solely in speaker's individual interest and concerns speaker's specific business activity -may involve injurious falsehoods that are not personally defamatory -comparative advertising: Product A marketers mention Product B by name --if truthful, advertisers not liable. --claims of superiority must be specific/described objective tests and be false/misleading/incomplete to be considered libelous -product disparagement/trade libel: intentionally false/misleading statements about characteristic of plaintiff's product resulting in financial damage to plaintiff --(prove publication slayed material part in loss of customers/prospective customers), eg quality of plaintiff property/conduct of business

causes of loss to property -cause of loss definition

-cause of loss adversely affects property/leaves in altered state --or may not alter property itself but affects person's ability to possess/use property (theft) --fire is the greatest risk of large/total property loss

disability loss exposures -what costs might be incurred

-chance individual becomes disabled > chance of early death and many people don't consider long-term disability effects (don't have enough savings) --costs for medical expenses, rehabilitation, education (for new job) --75% of americans insured under govt disability insurance but limitations to benefits so need for personal disability insurance

point of service plan -what plan it's like -how it works -what the POS plan handles vs member

-combine HMO and PPO (more close to HMO) -control medical costs but member must have primary care physician in network --physician is point of service and can refer member inside or outside network -POS handles paperwork/billing for in network care, member handles paperwork/bills/record keeping for out of network care

Variable universal life -cash value/min interest rate -expenses and how they change over time

-combine universal life and variable life -cash values/minimum interest rate are not guaranteed --cash value determined by investment experience of separate account that is maintained by insurer --policyholder can select separate account in which flexible premiums are invested -insurers impose significant initial expense charges/surrender charges for manager PH investment account --surrender charges decline after policy ages 10-15 years (reach 0) --may charge periodic investment management fees, expense charges, administration fees --charge for mortality cost of insurance protection (varies with insured age)

insuring foreign operations -why this is needed -specialized coverages -why multi-national enterprises are different and what they can do for insurance

-commercial insurance policies with few exception restricts coverage to US/territories and possessions and Canada -organizations that need to operate outside coverage territory need insurance for foreign exposure -each insurer in specialized market develops unique forms -specialized coverages include: --foreign property/business income insurance --foreign liability insurance --foreign supplement/excess auto insurance --foreign voluntary worker's comp and employers liability insurance (cover transportation expense to return disabled/deceased employees, coverage for endemic diseases) --foreign crime (kidnap, random insurance) --political risk insurance (protect against protection against seizure of assets/currency inconvertibility/interference with contractual performance multinational enterprises w/ worldwide product and marketing facility: -law of particular nation requires coverage for properties in nation be purchased from insurers licensed to engage in insurance business (admitted insurers providing admitted coverage) -may also want to buy local insurance to maintain good relations with local business and buy admitted coverage anyway - admitted coverage may not meet need of multinational corporation: they can buy admitted coverage and combine with difference in conditions (DIC) written to wrap around admitted coverage (to get uniform coverage for all the insured's location) --enterprise could also buy global insurance program from insurer that can provide admitted coverage worldwide (through subsidiary/insurer with reciprocal arrangements)

actual cash value -why it's common -calculation

-common bc supports principle of indemnity by restoring insured to pre-loss condition -calculation: replacement cost @ time of loss - depreciation

pre-loss policy analysis -conducted by -sources of information for insureds -limitations

-conducted by insurance professionals (preparation to answer insured's coverage questions/policy sold is appropriate for insured's loss exposures) -conducted by insured to verify policy they are purchasing adequately addresses their loss exposures -relies almost exclusively on scenario analysis to determine extent of coverage the policy provides for the losses generated by given scenario --insureds: source of info is past loss experience, insurance producer/customer rep consulted in insurance transaction --limitations to scenario analysis: number of loss scenarios is infinite, can't account for all OR loss recognized but underestimated

Other factors affecting premiums -construction -occupancy -protection -external exposure -location

-construction: frame, joisted masonry, noncombustible, masonry noncombustible, modified fire resistive, fire resistive (used in rating) -occupancy: some occupancies riskier than others and rate is higher accordingly -protection: internal (sprinklers give rate reduction) or external (local fire department, graded one (best) to ten to indicated availability of fire fighting personnel and equipment) -external exposure: properties adjacent to building can increase probability of loss to insured building/contents (charge included only if specific rate calculated for particular location but always taken into account for underwriting) -location: risk of loss caused by windstorm/theft/earthquake/other perils depends on location

self-contained policies -defintion -when appropriate -monoline vs. package policy

-contains within one document all provisions needed to make up a complete insurance policy --endorsements can be added to provide additional/optional coverage -appropriate for insuring loss exposures that are similar among many insureds -monoline policy (one LOB, eg. liability only) while package policy (2+ LOB, eg. property + liability coverage)

types of personal property: examples, whether it's covered under commercial property insurance -contents -property in transit -property in possession of others -floating property

-contents: --'personal property' is contents of building --'business personal property' is contents of commercial building -- includes personal property of others in care of insured, property often covered even if not in building -property in transit: property being shipped to others/received --coverage for property in transit may exist but often inadequate if significant transit exposures -property in possession of others: if organization places property in temp possession of others for any reason --usually only nominally covered since probability of loss @ temp location may differ greatly from normal -floating property: property that doesn't remain at fixed work site/is in transit between work sites (cameras, contractor tools) --not covered, may need special inland marine policy

Health maintenance org (HMO) -what it is -premium/out of pocket expenses -how cost controlled

-contract with healthcare providers to provide comprehensive services to its members with small co-pay for routine visits --low premium/out of pocket expenses -gatekeeper physician must usually preapprove specialist visits --control cost with this required preapproval and with oversight of diagnostic test/treatments

exclusive provider organization -relationship with insurer -vs HMO (provider and premium)

-contract with insurer to provide healthcare to plan members at much lower premium than other plans --charge insurer access fee for use of network, negotiate with healthcare providers to set fee schedules for guaranteed service levels, help to resolve issue between insurer/healthcare providers --plan members MUST use EPO network healthcare providers except for emergency -vs HMO: providers in HMO receive payments from insurer monthly, providers in EPO get payment for services they provide only -lower premium than HMO

contractual obligation (legal base of insurable interest) -two kinds

-contractual rights regarding people: contract may give one party the right to bring claim against second party without entitling first party to specific property belonging to second party (unsecured credit) --unsecured creditors have NO insurable interest in debtor property (aka no specific lien) --ex credit card debt -contractual right regarding property: contract may allow one part to bring claim against specific property held by second party --creates insurable interest in secured property = debt remaining balance --mortgage

misuse of legal process tort -malicious prosecution: definition, main element of tort, defense/acts that bar lawsuit for malicious prosecution -malicious abuse of process: definition, defense

-courts discourage lawsuits alleging these torts because of public policy, which favors use of courts to resolve disputes malicious prosecution: The improper institution of legal proceedings against another. -historically for criminal case but now apply to civil proceedings (bankruptcy, incompetency declaration) -basically need a lack of probable cause for plaintiff to sue defendant defense: inability of plaintiff (former defendant) to prove any of the elements of the tort some acts bar lawsuit for malicious prosecution (here, the plaintiff is the former defendant and defendant is the former plaintiff) : -defendant action on advice of counsel: defendant disclosed all facts to impartial attorney and genuinely believe in plaintiff guilt and act on attorney advice indicates presence of probable cause -plaintiff guilt of crime: if defendant proves plaintiff guilty and plaintiff convicted. Acquittal doesn't count as evidence of lack of probably cause. -probable cause (proof of this for arrest prevents malicious prosecution action) malicious abuse of process: The use of civil or criminal procedures for a purpose for which they were not designed. -bring person into jurisdiction supposedly as witness but actually to serve process in form of complaint in connection w/ another action -defense: plaintiff inability to prove ulterior motive

first to die (joint) life insurance

-cover two individuals (death benefit payable on first death) -death benefit gives survivor funds to cover a home mortgage/debt obligations/dependent care --less costly than separate policies on each life

Part D insuring agreement: nonowned autos -when coverage applies -what kind of coverage applies to nonowned auto -what vehicles nonowned auto definition includes

-coverage applies if insured borrows/rents a car (not if nonwoned auto is made available for insured's regular use) --if nonowned auto damaged, PAP provides broadest coverage applicable to any covered auto shown in declarations (coll + comp if they have it) -nonowned autos include any auto/trailer used as temp substitute for covered auto or trailer out of normal use bc of breakdown/repair etc.

commercial property conditions: policy period, coverage territory -when coverage starts -where property is covered

-coverage begins on effective date/ends on expiration date in declarations (12:01 @ insured's mailing address shown in declarations, even if insured property might be in different time zone) -insured property covered only while in US + territories, Puerto Rico or Canada

CGL named insureds - excluded -when people/org are excluded -problems for this exclusion and why they are problems

-coverage doesn't apply to conduct of current/past partnership, joint venture, LLC not shown as named insured in the policy declaration -only apply if declared as need additional premium Problems: - for insureds forming temporary partnerships dissolved once purpose is achieved (contractors/construction firms with joint ventures terminated when construction project for which they are formed is done) --once terminated, both parties are still liable for BI/PD from joint venture even after CGL policy that joint venture was insured under is no longer in effect --if contractor subsequent CGL don't declare/name original JV, won't be covered - people who started businesses as sole proprietors/incorporated later: CGL policy issued in name of corporation won't cover sole property who is sued in their personal capacity as individual for injury from work completed when business was sole proprietorship

limited transportation network driver coverage (no passenger) endorsement -what it does -what makes it different from transportation network driver coverage

-coverage ends when driver *accepts* passenger (so before picked up) -limits loss exposure further than other endorsement, lower premium

other insurance in a similar policy -what it is -example -who this involves and how much is paid

-coverage overlaps because same party protected by two or more policies issued by different insurers --ex: two HO policies on old/new homes can both cover personal property at other locations --usually involve 1+ insurers and 1+ policy, must determine which insurer will pay/how much --based on policy other-insurance provisions

Part B - Other insurance

-covered auto: insurer pays pro rata share -nonowned vehicle/temp substitute for covered auto: medpay coverage under PAP is excess over any other collectible auto insurance paying medical/funeral --aka a passenger who is not related to insured considers insured's covered car a nonowned vehicle.

what liability coverages deductibles are and aren't included in

-included (to encourage risk control, protect against loss to specified category of property): specialty/professional liability, bailee legal liability (warehouse/auto service) -not included: CGL, personal/auto liability

towing and labor cost coverage endorsement -what it does -limits per disablement -variation on this endorsement

-covers cost of towing covered auto when it's disabled and cost of labor to repair auto @ place of disablement --single limit per disablement (for either towing or labor) but separate limit to each disablement --25, 50, 75 -for non-ISO policy, could have this coverage apply if covered auto disabled because of covered loss beyond certain distance from insured's residence --then also applies to transportation fee for insured to get home/cost to reach destination/cost of extra meals/lodging when loss results in delay

employment practices liability policies -what it covers -who insureds are

-covers excluded employment related claims from CGL policies --employment discrimination, sexual harassment, wrongful termination etc -insureds usually include corporation, D/O, employees, former D/O/employees

HO-3 Coverage F - MedPay to Others -what it covers/includes -when it's usually paid (vs. Covg E) -3 conditions in order to apply

-covers medical payments incurred by others (not insured/regular household residents) within 3 years of injury --include reasonable medical/surgical/x ray/dental/ambulance/hospital/professional nursing/funeral services/prosthetic devices --automatically included in all HO policies up to limit of 1000 for single accident -usually paid when insured feels moral obligation to another person even if insured isn't negligent/legally responsible --paying as MedPay can eliminate need to determine if insured was legally responsible for injuries 3 conditions in order to apply: -injury occurs to person who has insured's permission to be @ insured location -if injured person is away from insured location and BI arises out of condition @ insured location/on property immediately adjoining the insured location -person injured away from insured location by activity performed by insured

miscellaneous provisions

-deal with relationship between insured/insurer and to establish working procedures for implementing policy -does not have force of conditions -example: mutual insurer policy describe insured right to vote one election of board of directors

6 additional coverages in BPP

-debris removal -preservation of property -fire department service charge -pollutant cleanup/remova -increased cost of construction -electronic data

6 categories of policy provisions

-declarations (unique info on insured/list of forms on policy): outline who/what is covered and where/when coverage applies -definitions (words with special meaning in policy): may limit/expand coverage based on definitions -insuring agreements (Promise to make payment): outline circumstances under which insurer agrees to pay -conditions (qualifications on promise to make payment): outline steps insured takes to enforce policy -exclusions (limitations on promise to make payment): limit insurer payments -misc. provisions: deal with relationship between insured/insurer

depreciation in ACV -definition -what kind it is

-depreciation reflects value of use insured has already received from the property --can be based on age, physical depreciation (physical wear/tear), functional depreciation (obsolescence by fashion, tech change, function can be performed better with other methods ) -ECONOMIC DEPRECIATION (not accounting) = difference between replacement cost and current market value from physical/functional depreciation --accounting is allocation of property value in organization accounting/tax records over property useful life

insurance treatment of disability/health/long term exposures

-disability insurance: replace lost income when wager earner is disabled (can combine private/govt insurance) -health insurance: various sources to pay for routine/major medical expense --premium varies depending on benefits selected, level of care, age/health, source of plan -long term care insurance: pay costs associated with treatment of serious, long term medical conditions

insurance application

-documented request for coverage -contains info on insured/loss exposures presented to he insurer -UW use info to decide whether to provide requested insurance/price policy -keep completed application to preserve insured representations

how property deductible reduce insurer costs -why/how it does -3 ways it benefits insured

-dollar trading: eliminate involvement in low value losses that insurance is not designed for, subtract out deductible from covered loss amount (not efficient because loss adjustment expenses exceed indemnity payable to insured) -benefit insured because: 1. reduce insurer overall loss cost and LAE 2. provide insured with risk control incentive 3. reduce morale/moral hazard incentive

joint tenancy -what it is -insurable interest -payment

-each owner (called tenant) owns entire property and has right of survivorship (automatic right of one tenant to share of other tenant if that one dies) -insurable interest: each tenant has interest in property full value -payment would max out @ property value and made to first named insured in declarations

cyber risk insurance common insuring agreements -electronic data protection -cyber extortion -cyber crime -notification or remediation -business interruption -network security liability -privacy liability -electronic media liability -technology errors/omissions liability -intellectual property liability

-electronic data protection: typically provide coverage for cost to recover/restore electronic data that was altered/destroyed/deleted/damaged -cyber extortion: provide coverage for expenses related to computer network kidnap/ransom events -cyber crime: theft of money/intangible property -notification or remediation: coverage for expenses related to crisis management during/after cyber risk loss (cost to notify customers of security break, development/execution of public relations campaign) -business interruption: loss of business income/loss of contingent business income/payment extra incurred as consequence of business interruption/suspension of insured's computer system due to computer network security breach (DOS attack) -network security liability: provide coverage for liability arising from security breaches to insured's computer network (damage to customer data, loss of use of services etc) -privacy liability: provide coverage for liability from unauthorized disclosure/use of private info of others/liability from insured's failure to comply with privacy provisions contained in laws (HIPAA, GLBA, anti-identity theft legislations) --if bank employee accesses social security numbers -electronic media liability: liability from insured's electronic content (can include email communications, website content, message board/discussion forum content resulting in actual/alleged acts of defamation/disparagement/libel/slander/false advertising) --can also be errors/omissions in written/spoken word resulting in claims alleging financial loss/damage -technology errors/omissions liability: coverage for liability arising from negligent act/error/omission relating to insured's products or services provided to others (IT advice), may also apply to employee of insured's independent contractors -intellectual property liability: cover copyright/trade secret/trademark/patent infringement claim from use of insured's protected ideas/works (or infringing on protected ideas or works of another)

self insurance health plans

-employers may self-insure part/all of health insurance benefits provided to employees (employer pays part/all of employee medical expenses, would need to perform own claim processing/contract third party administrators)

deductibles reduce premium cost to the insured in 2 ways

-encourage risk control by insured -eliminate need for insurer process small losses (reduce insurer loss cost and LAE)

terrorism punitive damage exclusion endorsement -what is excluded

-endorsement for liability coverages developed for when state laws allow this exclusion --exclude coverage for punitive damages awarded against PH arising directly/indirectly out of certified acts of terrorism

terrorism other acts exclusion endorsements -what this endorsement excludes -what coverage this applies to -when endorsement applies

-endorsement to exclude acts of terrorism other than TRIA certified acts -allow insurer to exclude non certified acts of terrorism occurring outside of US (only used in commercial liability since these coverages insure some exposures outside the jurisdictional boundary of TRIA) -these non certified acts of terrorism committed outside US excluded on if 1+ of the following has happened: --total of all damages (including business interruption) to all types of property from terrorism > 25 million dollars --Fifty or more people sustain serious physical injury or death. --The act of terrorism involves the use, release, or escape of nuclear materials or results in nuclear reaction, radiation, or radioactive contamination. --The act of terrorism is carried out by means of the dispersal or application of pathogenic or poisonous biological or chemical materials. --Pathogenic or poisonous biological or chemical materials are released when one purpose of the terrorist act appears to be the release of such materials.

expanded liability concepts(4)

-enterprise liability -alternative liability -market share liability -concert of action

BPP conditions: appraisal -what it does -what it doesn't apply to

-establish method for insurer/insured to resolve disputes on insured property's value/amount of loss: either party can issue written demand for appraisal -does not apply to policy coverage disputes

terrorism/TRIA certified acts exclusion endorsements -when coverage is excluded -SFP states

-exclude coverage or certified acts of terrorism when insured declined insurer offer of TRIA coverage --attached for each LOB/coverage --non certified acts of terrorism are not excluded but coverage of such acts is subject to other exclusions/limitations in policy -some states require policy insuring *property* loss caused by fire provide coverage = coverage provided under Standard Fire Policy (SFP): fire losses from terrorist action can't be excluded so this endorsement contains exception for SFP states (though the fire losses are still limited by program cap)

HO-3 Section II Exclusions (applying to all of Section II): other (7)

-expected/intended injury (even if actual injury/damage resulting from action was unintended (exception is if BI/PD results from use of reasonable force to protect persons/property) -professional services -insured's premises not an insured location (BI/PD from any premises owned by /rented to insured or to others by insured but is not insured location) -war -communicable disease -sexual molestation/corporal punishment/physical or mental abuse -controlled substance (except if prescribed)

ISO Commercial Property Endorsement: earthquake/volcanic -where it's limited in availability -2 ISO endorsements

-expensive and limited in availability in area with high probability of earthquake damage (CA and location near New Madrid Fault) -2 ISO endorsements to add earthquake/volcanic eruption as covered perils: --earthquake and volcanic eruption endorsement: include coverage for full policy limit, contain coinsurance condition --earthquake and volcanic eruption endorsement (sub-limit form): subject to sub-limit that is lower than regular policy limit, does not contain coinsurance condition

limited mexico coverage endorsement -what it does -relation to Mexican auto liability insurance requirements

-extends PAP coverages (including physical damage!) to insured involved in accident/loss in Mexico within 25 miles of US border on trip of 10 days or less -does NOT meet Mexico auto liability insurance requirements --effective only if primary liability coverage is also purchased from licensed Mexican insurer (usually @ licensed agent --excess over Mexican insurance/any other insurance

public official immunity -who this extends to -extent of immunity for different acts

-extends to local government officials/judges, absolute immunity for acts performed in official capacity -other officials might have qualified immunity in limited situations extent of immunity depends on act: -administrative/discretionary: An act, a decision, a recommendation, or an omission made by a government official or agency within the authority of that office or agency. --usually full immunity as long as acts in scope of authority/performed with no malice/bad faith -ministerial: An act that is directed by law or other authority and that requires no individual judgment or discretion about whether or how to perform it. --liable for damages for these acts performed improperly, even if performed in good faith/without malice -no immunity for things like operation of cars, assault/battery, malicious/fraudulent acts

comprehensive insuring agreement -definition -commercial property insurance -liability

-extremely broad grant of unrestricted coverage clarified/narrowed by exclusions, definitions, other policy provisions -commercial property insurance: also called 'special form' or 'open perils' coverage --gives protection against causes of loss that are not specifically excluded (covers all named causes of loss in basic/broad form coverage and addl causes of loss that aren't excluded) -liability: do not limit coverage to particular location/operation/activity.

annuity types based on premium payments method -flexible premium annuities -single premium annuities

-flexible premium annuities: enable annuity owner to decide when to pay periodic premiums (require min payment amount if payment made during given period) -single premium annuities: purchase annuity in lump sum payment --single premium deferred annuity (premium paid well in advance) or single premium immediate annuity (premium paid shortly before payout begins, might be bought by person @ retirement to get lifetime benefits through annuity)

named non-owned coverage endorsement -who this endorsement is for and what it provides -who it applies to -relation to other applicable insurance -what happens with newly acquired vehicle

-for people who don't own an auto/occasionally drive another person's vehicle -provides liability/medpay/um/uim for driver who doesn't own auto -applies only to person named in endorsement (NOT spouse/family unless indicated on schedule) -excess over any other applicable liability insurance on nonword auto -applies on newly acquired vehicle up to 14 days (ends when named insured purchases separate insurance on vehicle)

agreed value method -when useful/which kind of policies this method applies to -relation to true value of property -total/partial loss amount payable -- vs. agreed value optional coverage

-for valued policies not contracts of indemnity --useful if difficult to calculate a precise value --only requires both parties agree to value (does not have to do with true value of property) -if total loss, insurer pays agreed values specified in policy -if partial loss, paid on whatever valuation method in contract agreed value optional coverage: suspects coinsurance clause in commercial property insurance. Nothing to do with agreed value method.

UIM Coverage -when it applies -how it can be added to policy

-for when negligent driver is insured for minimum required limit (so not considered UM) but insufficient to pay insured's damages -can use ISO UIM endorsement or state-specific UIM endorsement or state-specific endorsement providing UM and UIM replacing UM coverage of standard PAP

effects of rate regulation on UW cycle -what regulators try to do

-hard market follows a soft market --general has strong/generally undesirable effects on rate and regulators generally unable to anticipate suppress cyclical behavior -regulators might try to restrict increases @ top of cycle (hard market): this might exacerbate as this reduct competition (if insurers pull out/go bankrupt) and remaining insurers become more restrictive in policy terms (reduce eligibility provisions, increase deductibles, reduce policy limits)

how insurance professionals help property insurance buyers avoid valuation problems (3)

-hire qualified appraiser to establish current replacement cost value/set policy limits accordingly (adjust appraisal over time using indexes and reappraise regularly) -review/revise policy limits periodically to ensure adequacy -appropriate coverage options (agreed value optional coverage, inflation guard protection, peak season endorsement)

why property insurers want insurance to value -benefits -what happens if non insured to value

-in property: most losses are small, total loss is rare occurrence -if policy chooses lower limit than value, insurer has to charge higher premium than they otherwise would (or else face risk of premium not sufficient to cover expected losses) benefits: -insurer: ensure premium adequate to cover losses, simplifies UW by reducing need to determine exact values during underwriting (underinsurance determination made @ time of loss) -insured: sufficient funds available in event of loss, uncertainty associated with large retained losses reduced

HO-3 Section I Conditions: -Other Insurance + Service Agreement -Our Option -Loss Payment -Abandonment of property -no benefit to bailee

-if 2+ insurance policies cover same loss, loss is shared proportionally by all policies --HO is excess over service plan/property restoration plan/home warranty/service warranty -insurer can repair/replace damaged property with similar property (instead of paying value of loss) if it feels like it -- happens if insurer can purchase repair/replacement items at deep discount -insurer adjusts all losses with insured/insured's spouse --loss payable 60 days after insurer receives proof of loss and agreement reached y insurer/insured or court judgement/appraisal award entered -if insured abandon property after damaged/destroyed (they can turn over to insurer), insurer does not need to take responsibility for it -bailee holding property of insured is responsible for care to that property (bailee who damages insured's property can't avoid responsibility bc insured has HO coverage)

HO-3 Additional Coverages : Loss assessment -what it covers and what it pays

-if HO is billed with assessment by homeowner association/similar organization when organization sustains a loss for which their officers failed to secure a sufficient amount of insurance --provides up to 1000 for insured's share of loss assessment for BI/PD not excluded by section II or liability resulting from act of elected/unpaid director/officer/trustee

endorsements -rules of policy interpretation

-if added to policy, become part of policy -intended to modify basic policy form -standard endorsements: included with most policies written in line (basically part of basic policy form - state specific) rules of policy interpretation of endorsements: 1. endorsement takes precedence over conflicting terms in policy to which it is attached 2. handwritten endorsement supersedes a computer-printed/typewritten one

Part F - Bankruptcy of Insured

-if insured declares bankruptcy/becomes insolvent, insurer is NOT relieved of any obligations under policy --if insured sued for amount > policy limit and declares bankruptcy, insurer still has to pay part of judgement covered by insurance

commercial property conditions: other insurance

-if insured has more than one policy covering given loss, total recovery from ALL insurance should not be in excess of actual loss sustained -if other insurance provided by additional policy subject to same plan/terms/conditions, each policy pays in relation to all applicable policies. -if policy not subject to all conditions of commercial property part, the commercial property policy is excess

Part C - arbitration -when it happens/what disputes it won't happen for -selection process and if selection can't be agreed on -when the decision made is binding

-if insurer/insured cannot agree on whether insured is entitle to recover damages from UM/on amount of damages --does NOT include disputes involving coverage -selection process: both parties consent, each party selects an arbitrator, two arbitrators select a third arbitrator -- if 2 arbitrators can't agree on 3rd within 30 days, either party can request selection made by judge of court --each party pays expense it incurs, both parties share the expenses of the third arbitrator -decision agreed to 2 out of 3 arbitrators is binding as to whether insured is legally entitled to recover damages/amount of damages --binding IFF amount of damages < min limit for BI --if exceeds, either party can demand right to trial within 60 days of arbitrator decision

BPP conditions: recovered property -first thing that happens if property recovered -insured's options and insurer obligation under each

-if insurer/insured recovers property that insurer has paid a loss on, party making recovery is obliged to notify the other party --insured can take recovered property + refund loss payment, meaning insurer pays cost of recovering property and repairing it --insured can elect not to take recovered property, which one insurer can then dispose of in any way

HO-3 Section I Conditions: Mortgage Clause -3 rights of mortgagee on Declaration

-if loss occurs to property covered by Coverage A or B, loss payable jointly to mortgagee and insured --mortgagee is satisfied as long as property repaired and insured continues to make mortgage payments -mortgagee has rights independent of insured's (if insurer denies insured's loss, mortgagee retains right to collect from insurer the insurable interest in property) -insurer must mail notice of cancellation/nonrenewal of policy to mortgagee AND insured at least 10 days in advance

ISO Commercial Property Endorsement: peak season limit of insurance -why it is necessary -what it covers (same effect as...) -when it's attached and how premium works

-if organization experience wide fluctuation in personal property value (especially value of goods held for sale) --if carry high limit to cover max, overinsured for much of year (too much in premium) and if carries less than max, underinsured during peak period -covers fluctuating values of business personal property by giving different amounts of insurance for certain time frames during policy period --same effect as endorsing policy to increase coverage before peak season and endorsing again later to reduce (eliminate transactions and possibility that they might be overlooked) -attached when policy issued and pro rata premium charged for period limit is increased

(defense) immunity -definition -why this immunity has happened -classes of immunities

-immunity: defense shielding people/org from liablity -for reasons of public policy, common law has granted immunity from liability or torts to certain classes of people under certain conditions -classes: --Sovereign, or governmental, immunity --Public official immunity --Charitable immunity --Intrafamilial immunity

natural conditions (landowner liability) -in general (and alternative rule) -in case of trespasser -exception (in rural and urban areas)

-in general, landowner not liable for natural conditions on the land causing injury either on/off land --this rule may be rejected in favor of reasonableness standard (eg land has frequent landslides and owner didn't do anything to correct) -land possessor of land under no duty to correct natural conditions on land even if it creates a danger to trespasser -exception: trees! if a tree falls and causes damage on adjacent premise/highway landowner may be liable for negligence if he/she knew tree might fall and failed to take reasonable steps to remove --in rural areas, landowner has no affirmative duty to inspect trees to determine if prone to collapse/dropping branches --in urban areas, landowner with trees does have duty to use reasonable care and inspect trees

your covered auto definition -four classes

-includes four classes: any vehicle listed in declarations, a newly acquired auto (which has its own detailed definition), any trailer you own, temporary substitute auto/trailer (treated as non owned auto for physical damage, only for short term substitutes for another covered auto out of normal use due to breakdown, repair, servicing, loss, destruction)

you/your -who this includes and under what situations

-includes unnamed spouse of named insured if spouse is resident of same household --if spouse moves out but remains married, spouse included in 'you' for 90 days or when policy expires --coverage ends if spouse named on another policy

CGL other rating considerations

-increased limit factor -premium credits if insured didn't buy/UW doesn't want to provide coverages automatically in CGL form (personal/advertising, med pay, fire legal) -endorsements need premium -deductibles reduct premium

excess electronic equipment coverage endorsement -what it does -limits for what it covers

-increases 1000 limit on electronic equipment permanently installed in locations not intended for that purpose to limit shown on schedule -also covers tapes/records/disks/other media if in/upon covered/nonowned auto @ time of loss (pays lesser of ACV or repair/replace cost, limit of 200)

economic impact o insurance on individuals/businesses (9)

-indemnify parties, allowing individuals/families to recover from losses quickly and businesses to continue operations after a loss -reduces uncertainty about potential future losses -promote loss control activities: insurers recommend/require techniques for reducing losses to people/business, inspections help business comply with safety standards -helping insureds use resources efficiently: makes it unnecessary to set aside large amounts of money to pay for future losses -providing support for credit: helps facilitate loans as insurance can guarantee lender will be paid off if collateral for loan destroyed/damaged by insured event -satisfying legal requirements: insurance used/required to satisfy legal requirements -satisfying business requirements: for credit arrangements, leases that need proof of insurance -providing a source of investment funds: insurers invest premiums collected, providing businesses with capital -reducing social burdens: reduce financial burdens of accident victims by providing compensation

UM/UIM -court decision application -mandatory/optional coverage -possible limit

-individual state UM/UIM govern who is protected + under what circumstances -avoid applying court decisions related to UM to UIM cases (particularly for states where UM required UIM optional) -UIM can be mandatory or rejectable in writing --limit generally equals UM = BI. --some states say UM limit can be reduced but still above min limit

ISO 2011 Homeowners (HO) Parties eligible for coverage (3)

-individuals/families who own private home in which they reside (excl. mobile home) -people who rent/lease the premises in which the reside (apartment, house, mobile home, trailer, house trailer, condo) -individual/family who own private condo units used for residential purposes (could also apply to if insured owns but doesn't live @ condo provided there are tenants)

Canadian business torts

-inducing breach of contract: defendant, without justification, intentionally and knowingly brings about a breach of contract between the plaintiff and a third party. -slander of title/goods: A defendant knowingly and intentionally makes a spoken statement, affecting the plaintiff's property and causing plaintiff a financial loss. -conspiracy: A defendant agrees to commit an unlawful act, a lawful act by unlawful means, or a lawful act by lawful means to injure the plaintiff or the plaintiff's interests. -passing off: A defendant knowingly makes a false representation that the defendant's goods or services are actually the plaintiff's in order to induce the public to buy the defendant's goods or services in the belief that they are the plaintiff's. -intimidation: A defendant threatens to commit an unlawful act with the intent to make the plaintiff obey the defendant's wishes and thereby causes harm to the plaintiff.

why insurance is more vulnerable to abuses (misrepresentation/opportunism) than other contracts(2)

-information asymmetry: one party to contract has information important to the contract that the other party doesn't --to reduce, gather as much relevant info as possible while underwriting -costly verification: time consuming and expensive. The more difficult to verify, less likely it will be verified. may lead to adverse selection (improperly price policies)

other materials incorporated into insurance policy -what these do to policy analysis

-insurance application -insurer bylaws (for mutual/reciprocal insurers) -rating manual (reference in policy makes it a part of the policy) -premium notes (promissory notes accepted by insurer in lieu of cash premium) -inspection reports -specification sheets/operating manuals relating to safety equipment/procedures -makes policy analysis more difficult as add to volume/complexity of forms that must be evaluated. Likelihood 1+ documents contradicts/excludes/expands provision in basic form increases.

aircraft insurance -what it covers -who it's bought by -policy form/who provides this insurance -how it's similar/different to auto

-insurance covering liability due to insured's ownership, maintenance, use of aircraft; physical damage to aircraft owned or used by the insured; and other aircraft loss exposures -purchased by many insureds, classified by purpose of use categories -no standard policy, most aircraft insurance provided by pool of insurers or by UW in the London market -similar to auto (liability and physical damage) --differences: pilots must meet strict qualifications (license and medical certification from FAA), and aircraft policies cover ONLY planes specifically described in policy (except policy covering airline)

real-life exceptions to principle of indemnity (3)

-insurance policies have dollar limits/deductibles: insured is paid less than entire loss amount -insurance doesn't always indemnity insured for inconvenience/time/nonfinancial expense for loss -valued policies (insurer pays pre-established dollar amount in event of total loss)

ISO PAP -what it contains

-insure private passenger auto Sections -dec, agreement/definitions Part A—Liability Coverage Part B—Medical Payments Coverage Part C—Uninsured Motorists Coverage Part D—Damage to Your Auto Coverage Part E—Insured Duties Following an Accident or Loss Part F—General Provisions -almost all PAP include 1+ endorsements for state-specific requirements/coverage needs

exchange of unequal amounts -tangible values (insurer vs. insured) -intangible values of insurance promise -equitable distribution of risk costs

-insured consideration: premium -insurer consideration: promise to indemnify in event of covered loss --these tangible amounts are likely going to be unequal -intangible value of insurance promise: value of reduction in volatility of losses/maximum amount of risk varies by insured's level of risk aversion equitable distribution of risk costs: tangible values are not equal but equitable (premium charged is directly proportional to insured's expected losses) -tangible consideration offered by insured is equitable compared to intangible consideration offered by insurer

why deductibles are seldom used in liability policies (3)

-insured may not report seemingly minor incidents until situation escalated --but insurer will want to control liability claims from outset (even small ones), need to determine nature, extent AND who is legally responsible -deductible would not noticeably reduce premium --few liability claims involve small amounts --deductible only applies to damages paid to claimant not defense cost -insurer pays third party claimant agreed settlement in full without reduction from deductible THEN recover from insured (which might not happen)

how property deductibles encourage risk control -too small vs. too big deductible -when is most effective vs. least effective

-insured own funds are at stake: too small not enough financial effect, too large defeats purpose of transfer loss exposure to insurer -effective when deductible large enough to have noticeable financial effect on insured -not effective when used with large property exposures that aren't likely to have partial loss

HO-3 Perils insured against for Covgs A and B

-insured perils for A and B are open perils coverage included perils: -unless otherwise excluded, includes water damage but not loss to damaged system/appliance -anything not specifically excluded excluded perils: -any peril in Section I exclusions -collapse (unless it results from other causes) -freezing of plumbing/heating/air conditioning/sprinkler system/household appliance (if insured doesn't take precautions) -freeing/thawing/pressure/weight of water/ice (damage to external property) -theft (from home sharing/dwelling under construction OR OF CONSTRUCTION MATERIALS/SUPPLIES until dwelling is finished/occupied) -vandalism/malicious mischief (if loss from home sharing host activity/vacant for more than 50 consecutive days) -mold/fungus/wet rot (exception is only if hidden/from accidental leak, household appliance, storm/water/steam/sewer pipe off the residence premises excluding sump pumps and roof drains) -natural deterioration (wear/tear, marring, deterioration, mechanical breakdown, latent defect, inherent vice, smog, rust, other corrosion, dry rot) -pollutants (exception if pollutants released/escaped from perils insured under coverage C) -smoke from agricultural smudging/industrial operations (\damage from smoke from those operations) -settling of dwelling (settling/shrinking/bulging/expansion of foundations/footings/patios/pavements/builkheads/building structures) -damage from animals the insured keeps or from birds/rodents/insects

common policy conditions: cancellation -insured -insurer -state endorsement

-insured: can cancel policy at any time by mailing/delivering written notice of cancellation to insurer (only first named insured can do this) -insurer: can cancel policy by mailing/delivering written notice to first named insured --for nonpayment: send notice 10 days in advance --any other reason: send notice 30 days in advance --if cancelled policy results in return premium, insurer sends refund to first named insured condition maybe superceded by state law and endorsement modifies provision to comply (address permissible reasons for cancellation/longer advance notice period)

post loss analysis

-insurer analyzes policy to determine if it covers the loss/extent of coverage it provides -methodology: DICE (Declarations, Insuring Agreement, Conditions, Exclusions)

Part F - other termination provisions -3 scenarios

-insurer can deliver cancellation notice or mail (proof of mailing is sufficient) -insured may be entitled to premium refund for policy cancellation (refund is not a condition of cancelling) -effective of date of cancellation stated in notice is the end of policy period

extent of damages in liability claims -what damages must compensate for -what claimant can recover for in BI/PD, Property Damage

-insurer/insured/claimant try to estimate compensation for party incurring loss during settlement -US: common-law system require damage to compensate for loss incurred as of trial date (may need to be based partly on estimate of future expenses) -BI/PD: claimant has burden of proof, establish what losses proximately caused by insured (can't recover for losses from claimant lack of care after accident) -Property Damage: owner recovers cost to repair/replace (reasonable market value before damage/destruction), loss of use, profits lost from inability to use damaged property

defense/supplementary payments in liability claims and policy limits -3 kinds -two types of interaction with limit

-insurers pay defense costs/supplementary payments (cost of surety bonds required in connection with claims, court costs taxed against insured, interest on judgement) --HO, auto, business owner, CGL: defense/supplementary do not reduce policy limit. Once limit hit, duty to defend/pay supplementary payments dies. --specialty liability: insurer payments for defense/supplementary applied to reduce limits (since they can be a significant part of limits)

Is loss covered under property insurance? 2 questions

-is claimant an insured under policy -does the insured have an insurable interest in the property

jointly owned insurable interest types (4)

-joint tenancy -tenancy by the entirety -tenancy in common -tenancy in partnership

tenancy by the entirety

-joint tenancy between a husband and wife same as joint tenancy but with a different name

site-specific EIL exclusions

-known preexisting condition -deliberate noncompliance with environmental law -punitive damages -sold/leased premises (that insured sold/leased to others) -nuclear liability -acid rain (damage can be widespread/happen a considerable distance from source of emissions, possible exception if insured isn't using equipment that can cause acid rain) -war -contractual liability -damage to insured site (exclude coverage for release of contaminants not migrating beyond boundaries of insured site and on-site cleanup expenses) -products/completed operations -worker's comp and employer liability -transportation loss exposures (ownership/maintenance/operation/use/loading/unloading of auto, aircraft, watercraft, railcar) -terrorism

(liability of landowners) trespassers

-landowner owes trespasser minimal duty of care not to cause intentional harm (except where appropriate force might be necessary) --riggin shotgun to go off if door opened by trespasser can cause liability

liability of landowners/occupiers of land -how a tort lawsuit can come about -who plaintiff sues, why they can sue and nature of landowner occupier duty

-landowner/occupier of land owes certain duties to public/adjoining landowners and breach fo duties can result in tort lawsuit for damages -plaintiff usually sues party in possession of land (though ownership may also determine liability) -plaintiff can sue for harm caused by natural/artifical conditions on land --nature of landowner/occupier duty can vary depending on injured party status

insurance to value liability -why it does not apply and what liability rates are adequate for

-law generally does not limit dollar amount of damages court can award to injured party (severity of liability loss exposures theoretically limitless) -insurers use insurance rates adequate for 'layer' of coverage they are insuring (primary vs. excess liability) -insurance to value doesn't apply but important for insureds to buy appropriate limits of liability

negligent 3rd party -legal obligations of 3rd and 1st party

-law that party injured/property damaged can recover damages from 3rd party (even if 3rd party does not have liability insurance) -recovery from 3rd party/liability insurance can overlay with 1st party property insurance (usually considered subrogation) --legal obligation to pay damages DOES NOT affect contractual obligations of insurer providing 1st party coverage

non insurance agreements -examples of agreements overlapping with insurance coverage of loss (4)

-lease agreements making tenant responsible for damage to leased property also covered by insurance -credit card protection for cardholder against claim for damage to rented card/property purchased with card against theft/accidental damage -extended auto/home warranty (contractually enforceable source of recovery overlapping with auto/homeowners), appliance service agreement -credit card benefit: first-dollar w/o deductible, insurer can choose to claim benefit from credit card company -homeowners: include provision addressing service agreement (excess over any recovery from service provider)

administrative rule making function -how admin agency works with legislative body -3 types of rules promulgated by agencies (definition and level of authority for each)

-legislative bodies set broad guidelines for insurance regulation, admin agencies use rule making authority to set specific standards to implement broad guidelines --agency will have established procedures to resolve any disagreements from insurer/consumer (further disagreement can have court review decision) 3 types of rules promulgated by agencies: -legislative (substantive) rules: arise from statutory delegation of authority and have same force as law enacted by legislative body --development/passage of legislative rules require adherence to rule making procedures -interpretive rules: interpretations of statutes that provide guidance for agency staff/regulated parties --lack force/effect of law, not binding on individuals/organizations -procedural rules: primarily internal, prescribe procedures for agency operations, legislative rulemaking, adjudication proceedings.

ownership/possession of animals -domestic animals -wild animals

-liability for animals differentiates between domestic and wild animals common law: owner strictly liable for damages caused by trespass of domestic animal --exception is dogs/cats since they seldom cause serious damage (unless owner knows animal has vicious propensity to cause injury) owners of wild animals are strictly liable for all acts of/damage caused by animals -considered wild if by local custom animal is not devoted to people's use

duties to those who enter land or premise

-license: permission to use/enter another's land (can be revoked even if paid for) --express: The oral or written permission to enter onto another's land to do a certain act, but not the granting of any interest in the land itself. --implied: The permission to enter onto another's land arising out of a relationship between the party who enters the land and the owner. -licensee: A person who has permission to enter onto another's property for his or her own purposes. -invitee: Person who enters a premises for the financial benefit of the owner or occupant. --both must conform to conditions on which it enters or risk becoming a trespasser -owner/occupier of land owes specific but different duties of care to licensees and minimal duty to care to trespassers --licensees --invitees --trespassers --hotel guests and tenants

Part D Limits of Liability -limit in general -limit for electronic equipment -limit for nonowned trailer

-limit is min(ACV damaged/stolen property, amount necessary to repair/replace property) --partial loss is usually repaired --extensive loss is usually replaced -max obligation for electronic equipment that's permanently installed but not in locations used by original manufacturer of auto is 1000 -max amount for physical damage to nonowned trailer = 1500

HO-3 Section I Conditions: insurable interest/limit of liability -max payment for single loss/any insured

-limit max payment for single loss to applicable limits shown on Dec page -limit max payment for any insured to extent of insured's insurable interest in property @ time of loss

preprinted forms -who it's used for -the pro of using preprinted -how to customize -court interpretation

-most insurance policies -developed for use with many different insureds -reduces paperwork for policy --file only declaration page! -refer to insured in general terms so forms can be used in multiple policies without customization --declaration page adds specific info about insured that customizes policy (specify form number/edition dates of forms applying to policy). -interpreted as contracts of adhesion

aspects of coverage affecting premium: how rates are calculated for each in general -limit of insurance -covered cause of loss (basic/broad/special) -coinsurance % -deductible amount -optional coverage

-limit of insurance: represent exposure against which the applicable rate is multiplied to calculate the premium --Limit of insurance (LOI) rates decrease as insured value increases (since most losses are partial and don't increase proportionally with value of insured property): -covered cause of loss: --basic form: Group I rate (for fire/lightning/explosion/vandalism/sprinkler leakage) and Group II rate (for all other causes of loss covered) --broad form: addl rate added to basic form rates for additional perils of broad form --special form: same as broad but even higher additional rate -coinsurance percentage: rates calculated with assumption 80% coinsurance (rate reduced when policy requires higher coinsurance to reflect reduced likelihood loss reaches insured amount and to encourage person of higher limits) -deductible amount: rate developed with assumptions that policy subject to 500 deductible (many PH willing to have higher deductible to make risk more desirable to UW and rate is reduced accordingly) -optional coverage: adding optional coverages increases rates (can be because limit of insurance increased to cover additional property value (replacement cost) or separate rate applied to insurance)

HO-3 Section II Conditions

-limit of liability: Covg E limit is total limit for one occurrence, Covg F limit is for each person per accident -severability of insurance: each insured seeking protection is treated as if they have separate coverage under policy (can cover insured v. insured) but limit of liability is NOT increased no matter what -duties after occurrence (give written notice to insurer as soon as practical, cooperate with investigation, forward legal docs, claims assistance to insurer, submit evidence for damage to property of others, do not make voluntary payment) -duties of injured person (coverage F: give insurer written proof of claim asapossible, authorize insurer to obtain copies of medical reports/records, submit injured person to physical exam by doctor chosen by insurer) -payment of claim (coverage F: insurer payment is not an admission of liability by insured/insurer) -suit against us (insurer can't be sued until insured met all obligations under Section II, insurer can't be joined as party to any action against insured, obligation of insured has been determined by final judgement/agreement signed by insurer) -bankruptcy of insured (if insured is bankrupt, insurer still obligated to handle occurrence as normally would) -policy period -concealment/fraud -other insurance: Coverage E limits are excess over any other collectible insurance unless other insurance is specifically for excess coverage

Part B - Limit of liability -usual limit -what it represents

-limit stated in declaration, usually between 1000 and 10000 -max amount paid to EACH injured person in single accident -cannot receive duplicate payments for same elements of loss under Part A, B, C

UM/UIM limit vs damage trigger

-limit trigger: UIM endorsement applies when negligent driver has liability limits below the limits provided by the UIM coverage of the injured party -damages trigger: UIM applies when negligent driver has liability insurance limits < injured party actual damages

BPP deductibles -order deductible applied in -if BPP covers 2+ categories of property

-limits are applied to loss in excess of deductible --coinsurance condition/agreed value optional coverage reduces loss by penalty BEFORE applying deductible -std deductible is 500 -BPP typically covers 2+ categories of property (two buildings, or a building and business personal property etc) --losses are not combined in determining application of deductible but deductible is applied once per occurrence --(if combined total > deductible but each loss is not, no payout. If one loss is > deductible, insurer pays excess over deductible for that loss and then all of the rest of the losses since the deductible has been applied once )

HO-3 Section II Exclusions (applying to Covg E): 6

-loss assessment and contractual liability (exceptions are contracts relating to ownership/maintenance/use of insured location and liability of others assumed by named insured before accident occurs) -damage to insured's property (even if property repairs might prevent liability claim) -damage to property in insured's care (exception is PD caused by fire/smoke/explosion) -BI to persons eligible for Worker's Comp -nuclear liability -BI to insured

other insurance in dissimilar policies -what it is -examples -coordination of coverage

-loss covered by 1+ type of insurance from 2+ insurers -examples: utility trailers (HO and auto), valet parking (CGL, commercial auto), auto accident at work (auto, medical, workers comp) -may not have provisions coordinating coverage w/ other types of policies, difficult to resolve.

fortuitous loss -definition -who the loss must be fortuitous for and what happens if it's not -exceptions (2)

-loss happening accidentally/unexpectedly (reasonable uncertainty must exist about its probability -losses must be fortuitous from insured standpoint --if not: insured has info advantage, and promotes adverse selection -> change loss distribution in pool insurer insures -> premium insurer charges pool isn't fair Exceptions -a lot of fortuitous losses not covered (earthquakes) -finite risk insurance contracts covering losses that have occurred but not settled (uncertainty remains about final settlement values): liability insurance given to auto manufacturer for faulty part

group disability income insurance -available for -short term (benefit, waiting period, benefit period) -long term (benefit, waiting period, benefit period, definition of disability) --premiums paid by employer vs. association

-made available through employer/association --lower premium because economy of scale -short term (1-89 days) or long term (90 days+) --short term: weekly benefit, short waiting period (up to a week), short max benefit period -LTD: longer waiting period (3-6 months) --higher max benefit payout, replace 60% of insured's lost incomes, mostly split definition (own occupation initially then any occupation until max) --coordination of benefits provision defining how this benefits from other plans (SsDi, state) --no way to convert to individual policy --terminated when individual employment/association ends, or premium not paid -premiums paid by employer in part/in full and premiums may be deducted from payroll on before tax basis (benefits taxed as ordinary income when paid during disability) --association plan premiums paid by individual with after-tax $ so benefits not taxable

regulation structure: product regulation -what it does -why insurance contracts regulated -4 areas legislative policy regulation affects -what admin agency regulators can regulate -what courts can determine

-make sure insurance policy provisions comply with state/provincial law, are reasonable and fair, do not contain major gaps in coverage that might be misunderstood by consumers -why insurance contracts are regulated: --insurance policies are complex legal documents that are difficult to interpret/understand --insurers write insurance policies and sell them to the public on take it or leave it basis legislative policy regulation affects 4 areas: -standard: require standard policy for auto/property insurance (one contract all insurers operate in particular jurisdiction must use for specific coverage) -mandatory provisions: legislation may require certain std. policy provisions appear in certain types of insurance policies and mandated provisions meet min standards for protection -forms approval: policies must be filed/approved by admin agency to protect PH against ambiguous, misleading, deceptive practices -readability standards: insurance policies must meet criteria for reagin comprehension by most PH admin agency regulators have authority to regulate insurance policies under: - general standards (policy not be ambiguous/misleading/condition that deceptively affects risk assumed in contract) - specific directives for regulation (min amount of coverage) courts determine if: -insurance laws constitutional -whether admin rulings/regulations consistent w/ regulation -interpret ambiguous policy provisions -if policies cover certain losses, and other disputes between insurer/PH over policy coverage/provisions

managed care plans -what insurer does -benefit/cost to customer -what is covered

-manage quality of member care/control healthcare costs -insurer negotiates benefits/fees with network of healthcare providers --customer gets significant premium savings/reduced out of pocket cost but with reduced flexibility -probably covers standard array of services (hospital, physician/surgeon, lab/x-ray, outpatient/maternity) --emergency care can be provided, probably @ higher cost

BPP electronic data -what it provides/limitations -why coverage is limited

-many insurers think this exposure could be better treated by other forms of insurance -subject to limit too low to provide meaningful coverage for most business, represents most insurer will pay per policy year regardless of # occurences/locations --policy year defined by year occurrence began even if loss continues

preferred provider organization (PPO) -what it is -premium/out of pocket expenses

-member can choose any provider but preferred providers offer decreased medical service costs/lower deductibles -no primary care physician required, any physician can make specialist referrals --more expensive but blend traditional indemnity plans/HMOs --may need larger co-payments for things

Part C limits of liability -normal limit characteristics -what limit represents and why that is -duplicate payment situations where UM will not pay out

-min amount of UM coverage set by state -normally written on split limits bases (single limit can be endorsement) -limit represents most paid no matter what from one accident (even if multiple claims filed) --intent is to prevent 'stacking' of UM payments covering more than one car owned by named insured will not pay out when there may be duplicate payments for: -any loss under Parts A, B, C --can try to collect additional damage under UM as long as do not duplicate expenses insurer already paid -payment already made by person/organization legally responsible for accident -injured person entitled to payment under worker's comp/disability benefits

individual disability income insurance

-monthly benefits to disabled wage earner for selected period to reimburse income during period of total/partial disability -- usually replace 60% of lost income (can do higher) -purchased using after-tax dollars (disability benefits paid are not taxable to the insured) -advantage of individual: no membership in group is required --can purchase non cancelable policy @ young age when premiums lower and continue coverage until retirement --some might not qualify for group disability because of tenure requirements --group/social security benefits might not be adequate to cover disability income needs (though insurers may limit max amount of monthly benefits to discourage over insurance and fraudulent claims)

liability claim settlement -non trial claims (incentive, compensable amount, what insured/insurer want) -trial claims (compensable amount, payment method, claims above limit)

-most claims don't go to trial (incentive to reach out of court settlement because of uncertainty/time/expense in trial) --compensable amount determined by negotiation between insurer and claimant --insured wants insurer to mount vigorous defense/vindicate insured --insurer wants to minimize total cost (may pay claim instead of defending because of cost or loss setting dangerous precedent) -if no settlement, trial: extent of insured liability to claimant based on legal principles --compensable amount based on amount juror awards to plaintiff as damages (no need to limit to policy limit) --insurer pays amount on insured behalf (subject to policy condition/limit, excess award is responsibility of insured) --for claims > policy limit, insured can pay for legal counsel. Otherwise insurer controls defense costs/amount offered as settlement.

commercial property special form: if non-excluded cause of loss is similar to the ones in basic/broad

-most exclusions of forms, but when it doesn't have an exclusion equivalent to one contained in basic/broad it provides broader coverage: --vehicle peril: basic/broad excludes damage from vehicles owned by named insured while Special form doesn't exclude this --windstorm: basic/broad excludes damage to interior by rain etc. unless roof/walls first damaged by covered cause of loss, special form does the same but also excepts if loss results from melting of ice/sleet/snow on building (ice damming...)

commercial property special form -what it covers -advantages to insured

-most frequently selected loss form -cover direct physical loss unless loss excluded/limited (open peril) advantages to insured: -causes of loss omitted/excluded under broad form not excluded (most significantly: theft of covered property) -covers direct physical losses other than those specifically excluded (can cover losses insured didn't anticipate) -shifts burden of proof from insured to insurer (basic/broad insured proves loss caused by covered cause, special form accidental loss to covered property assumed to be covered unless insurer proves otherwise)

BPP Limits of Insurance -most insurer has to pay -how payment is reduced -how payment can be increased -specific vs blanket limit

-most insurer has to pay for loss in one occurrence is shown on dec page --total commercial property losses very rare, forms contain other limitations reducing paid out amount --coverage extensions and most additional coverages are paid IN ADDITION to limit of insurance (total payment for one loss possible to exceed limit) -specific limit: declaration shows separate limit for each covered building/personal property @ each location -blanket limit: one amount of insurance to all property covered by policy --can also have blanket limit on different locations or combinations of location/type of insurance blankets

Part B Exclusions

-motorized vehicles with < 4 wheels -public/livery conveyance (includes Uber even if no passengers, does not apply to share the expense car pools) -vehicles used as residence/premises -injury in course of employment (if worker's comp benefits are available) -other vehicles owned by/available for insured -vehicles owned by/available for family member regular use (does not apply to named insured/spouse) -vehicle occupied w/o reasonable belief of entitlement -vehicles used in business of insured (does not apply to PPA, pickup trucks /van/trailer) -bodily injury from nuclear weapons/war -nuclear radiation -racing -personal vehicle sharing program (if under written agreement)

Part C Insuring Agreement -3 classes of insured persons

-named insured and family members: covered if injured by UM vehicle while occupying a covered auto OR vehicle not owned by named insured/family member OR as a pedestrian -any other person occupying a covered auto -any person legally entitled to recover damages because of BI to a person described in the preceding two paragraphs (surviving spouse, loss of quality of life )

3 categories of insureds under CGL policy

-named insured and related parties -named insured's employees/volunteer workers -other persons and organziations

Part F - Transfer of insurer's interest in policy (and exception) - two or more auto policies

-named insured's rights/duties under policy can't be assigned to another party w/o insurer written consent --exception: if named insured dies coverage continues until end of policy period for surviving spouse (if they were living together @ time of death) and legal representative of deceased person (w/ respect to representative legal responsibility to maintain/use covered auto) -if 2+ auto policies issued to named insured by same insurer apply to same accident, max limit of liability is highest applicable limit of liability under one policy (no stacking!)

cash flow statement -why it's not important

-not as important for insurers than other businesses -have large amount of invested assets convertible into cash (even if insolvent) as receive revenue before having to meet contractual obligation -other business spend before receive, so need loans making CF statement important

utmost good faith -definiton -common violations

-obligation to act with complete honesty and disclose all relevant facts -common violations: fraud (misrepresentation of key facts of claim) and buildup (intentional inflation of otherwise legitimate claim)

Part D Insuring Agreement: OTC

-often has lower deductible than COLL (less expensive in general) -insures physical damage losses not caused by collision and not specifically included --missiles/falling objects, fire, theft, vandalism, riot --bird/animal collision is OTC --glass breakage from collision, if covered by OTC, may have both COLL and COMP deductible apply.

ISO commercial property endorsement selections (7)

-ordinance/law coverage endorsement -Spoilage Coverage Endorsement -Flood Coverage Endorsement -Earthquake and Volcanic Eruption Coverage -Endorsement -Peak Season Limit of Insurance Endorsement -Value Reporting Form

BPP increased cost of construction -why it's needed -what coverage is provided and condition -what is not included

-ordinance/law exclusion exists in case of loss forms attached to BPP: excludes increased cost to comply with ordinances/laws regulating repair/rebuild/replacement of covered building -this coverage provides insurance for this situation = min(10000, 5% amount of insurance) in addition to the policy limit --applies only if replacement cost option coverage is selected -does NOT include coverage for --loss to undamaged portion of building that ordinance/law does not permit to remain in use --cost to demolish undamaged

artificial conditions -what owner liability is from altering land -nuisance -attractive nuisance doctrine -sidewalk/street legal duties

-owner altering land in any manner can be liable for negligence or creating a nuisance (Anything interfering with another person's use or enjoyment of property) --if owner creates artificial condition on land that could cause severe injury/death has duty to warn of hazard if trespasser wouldn't discover without warning nuisances include: -Concentrating the flow of water discharges on adjoining land -Permitting artificial devices, such as downspouts, to discharge over public ways -Creating any other artificial condition that discharges water or snow on adjoining premises or roads -trespassing rules apply to children and adults --exception: attractive nuisance doctrine (A doctrine treating a child as a licensee (guest) rather than a trespasser on land containing an artificial and harmful condition that is certain to attract children) so possessor must keep premises in a suitable/safe condition and use ordinary care to protect trespassing children from harm -occupier of land abutting sidewalk/street has duty to avoid placing unguarded excavation/ditch on land that might endanger travel using premises (distance from sidewalk/street isn't crucial but could be relevant to determine owner foresight) --doesn't apply to trespassers --landowners generally not liable for defects in adjoining sidewalks/streets (some jurisdictions have duty to keep adjoining sidewalks/streets in repair because they benefit from throughfares)

liability coverage forms for coverages not adequately addressed under CGL

-owners/contractors protective liability: bought by independent contractor, issued in the name of the property owner for whom the contractor is performing operations (cover property owner against liability coming from operations being performed by a contractor OR named insured's negligent supervision of contractor operations) -railroad protective liability: protect named railroad owner against BI/PD from operations of contractor performing on/over/under/adjacent to railroad property (bought by contractor @ railroad request) -liquor: insure bar/restaurant/stores that sell/serve alcohol, cover 'liquor liability' (excluded from CGL if that is insured's business) -electronic data: cover insured's liability for loss of electronic data caused by incident defined in form -product withdrawal: cover cost of withdrawing/recall product from market -various pollution: insure BI/PD/cleanup from pollution not covered under CGL

legal bases of insurable interest (5)

-ownership interest in property -contractual obligation -exposure to legal liability -factual expectancy -representation of another party

ownership interest in property (legal base of insurable interest) -why it is legal -extent

-ownership rights are legally protected -extent of legal ownership determines extent of insurable interest -applies to both tangible and intangible property

source of life insurance - federal

-part of social security benefits --include monthly death benefits for surviving spouses/dependent children/dependent parents -accrue during individual years of employment in same manner as other Social Security benefits --max amount applies to benefits (150-180% of what would have been decedent's primary insurance amount if they were retiring)

ISO CGL Coverage A insuring agreement - insurer promises

-pay damages on behalf of insured/ -defend insured against claims/suits seeking damages covered under policy

ISO CGL medpay

-pay medical expenses under certain circumstances -does not require insured to legally liabile --must come from BI because of accident occurring on insured's premises/arising out of insured's operations (not completed) anywhere in coverage territory --lower limit than covgs A/B, point is to pay small BI claims w/o having to establish liability (reduce likelihood of lawsuit)

Part D -payment of loss

-payment of loss: insurer can pay for los sin money or replace property -for stolen auto that's returned to insured: -- insure can pay cost to return and pay for damage resulting from theft -- or, insurer can keep all/part of stolen property and pay insured agreed/appraised value + sales tax

(defense) comparative negligence: 50% rule

-permits a plaintiff to recover reduced damages (up to/including 50%) so long as the plaintiff's negligence is not greater than 50 percent of the total negligence leading to harm. -@ 51%, no recovery for plaintiff -<=50%, plaintiff gets damage reduced by x % at fault

(defense) comparative negligence: 49% rule

-permits a plaintiff to recover reduced damages so long as the plaintiff's negligence is less than the other party's negligence. --basically same as 50% but proportion of total negligence the plaintiff gets no recovery at is 50% instead of 51%.

(defense) comparative negligence: slight vs gross

-permits the plaintiff to recover only when the plaintiff's negligence is slight in comparison with the gross negligence of the other party. --court reduces plaintiff damage by amount proportion to contribution but leaves decision on assigning proportional damage with the court

HO Endorsements

-personal property replacement cost loss settlement: Covg C replacement cost coverage instead of ACV (lists ineligible personal property, insured must repair/replace items w/ replacement val > 500 before insurer pays replacement cost, insurers may require higher Coverage C limit) -scheduled personal property: gives scheduled coverage for specific items, covers more causes of loss and special limits/coverage C deductible do not apply to endorsement -inflation guard (prevent underinsurance from economic inflation, gradually/automatically increase limit for Covgs A-D by agreed on %) -earthquake: deductible is >500, 5% limit of max(covg A, Covg C limits) -assisted living care coverage: gives Covg C/E to relative on insured who lives in assisted care facility w/ special limits to some property like hearing aids/medical alert devices, exclude liability assumed by facility before occurrence/BI to staff member of facility -credit card/EFT card/Forgery/Counterfeit money increased limit (up to 10000) -home business insurance coverage (still exclude professional liability and other professions, has min requirements: ownership by insured, operation @ residence, max 3 employees) --gives Covg C for business property/accounts receivable, loss of business income, extra expense, increased Covg C limits for other property --gives product completed operations coverage up to annual aggregate = Covg E limit and all other business liability coverage -ordinance/law increased coverage -limited water backup/sump discharge/overflow coverage -supplemental loss assessment coverage -broadened residence residence premises definition endorsement: indicate dates in policy period that residency requirement is removed from definition of residence premises -home-sharing host activities amendatory endorsement: clarify HO3 doesn't provide coverage for home sharing exposures -broadened home-sharing host activities coverage endorsement: give coverage for home sharing activities -additional residence rented to others (1-4 families): for insureds who own rental property not @ insured location, extends Covg E/F to residences owned by insured and rented to others (list address and # families occupying) -personal injury coverage: include injury from false arrest, malicious prosecution, invasion of privacy/wrongful eviction, libel, publication of material violating right to privacy (exclude intentional/criminal acts, contractual liability, employment, business activities, BI to insured, civic/public duties done for pay, pollutants) -aircraft liability to remove model/hobby aircraft exception (exclude liability for BI/PD from unmanned aircraft) -personal injury for aircraft liability excluded

negligence: actual injury/damage

-plaintiff must have actual injury/damage/quantifiable harm --can be BI or financial loss

common policy conditions: changes -what it states -in practice and why that is -power of the first named insured

-policy constitutes entire contract between insurer and named insured, policy can only be changed by written endorsement issued by insurer -in practice: changes often made by verbal communication and confirmed afterwards in writing --verbal communication is binding because authorized agent of insurer viewed as having power to waive written endorsement requirement -only first named insured has authority to request policy changes, insurer authorized to make changes on request of first named insured w/o specific permission of any other insured

commercial package polity (CPP) -what it is -discount

-policy covering 2+ LOB by combining ISO commercial coverage parts --commercial property coverage can be one of the 2+ coverage prats included, or a single coverage part in a monoline policy -discount: insured might get package discount --premium first determined like each coverage part is monoline, then if both property and liability included premium may be multiplied to package/modification/factors (to reflect efficiency of issuing single package policy vs. several monoline)

HO-3 Covg E: who is the insured?

-policyholder and resident spouse (named insured, referred to as you) -residents of household who are relatives of named insured/spouse -residents of household < 21 yrs old and in the care of named insured/resident relatives -full time student who resided in household before moving out to attend school (<21 yrs old and in care of named insured/resident relatives or <24 and relative of named insured) -person/organization legally responsible for animals/watercraft covered by policy and owned by person defined in first 3 bullets -anyone employed by a person defined in first 3 bullets with respect to any motor vehicle covered by policy -other people using any vehicle covered by policy on insured location w/ consent of named insured/spouse

life provisions: beneficiary designations -types of beneficiaries -revocable vs. irrevocable

-primary beneficiary (first one to collect benefits) -may have contingent beneficiary if primary not alive -revocable: PO can make beneficiary changes w/o beneficiary consent -irrevocable: beneficiary changes must have beneficiary consent can be specific (a name) or a class (surviving children)

CGL Conditions (Section IV): other insurance -primary vs excess -when CGL is primary and insurer needs to do -when CGL is excess

-primary insurance: pay covered claim from first dollar subject to deductible -excess insurance: cover part of claim exceeding primary coverage limit up to separate limit -when CGL Primary: CGL is primary unless applicable insurance meeting any of criteria defining excess insurance. --if primary, insurer meets all obligations or shared if there's other insurance that is also primary -CGL is excess if any of the other insurance is any of these types (as excess, no obligation to provide defense unless no other insurer does): --fire, extended coverage, builders risk, installation risk or similar coverage named insured's work --fire insurance on premises rented to named insured or that named insured temp occupies with owner permission --insurance named insured purchased to cover its liability as tenant for damage to premises rented to named insured/temp occupied by named insured with owner permission --aircraft/auto/watercraft --primary insurance available to named insured covering liability for damages from premises/operations/products-completed that named insured is an additional insured for

Professional vs. Management liability -definition of each

-professional liability insurance: ccovers persons engaged in various occupations against liability resulting from their rendering or failing to render professional services. --also known as malpractice (liability with occupations involving contact w/ human body) or errors/omissions liability (accounting, insurance, law, engineering) -management liability insurance: cover organization against liability claims for damages resulting from various wrongful acts that are not covered under other commercial liability policies --can cover directors/officers liability, employment practices, fiduciary liability --less about individuals in occupations failing to perform and more about wrongful acts of organization/individuals in their roles managing operations of org

Part D insuring agreement

-promise to pay for any direct/accidental loss to covered/non-owned auto, less the deductible

Part B - Insuring agreement -the promise and types of expenses -at fault matters or no -2 classes of insureds and when they are covered

-promise to pay reasonable/necessary medical/funeral expenses for services rendered within 3 years of accident date --can be medical, surgical, x ray, dental, funeral -applies without regard to fault: benefits paid for both insured/other injured occupants of covered auto whether or not insured is legally liable -2 classes of insureds covered: --named insured + family: covered if injured while occupying motor vehicle/as pedestrians when hit by car designed for use on public roads --any other person occupying covered auto: covered if in covered auto (doesn't apply to passengers if operator does not own vehicle)

Part E General Duties

-prompt notice to insurer (how, when, where accident/loss happened, names/address of witnesses/injured persons) -cooperate with insurer: give info related to settlement/defense of claim -submit legal papers to insurer -submit to physical examination: conducted by doctor chosen by insurer (insurer pays) -agree to examination under oath -authorize release of medical records -submit proof of loss (statement of facts on claim)

representation of another party (legal base of insurable interest) -who has the insurable interest -examples

-representative obtaining insurance on property for benefit of property owner. --party obtaining does not need to have independent insurable interest in property, interest is from relationship with party it represents -examples: someone insures in own name and has insurable interest, but insurance proceeds go to the principal/main person -agents, trustees, bailees

aircraft liability coverage -what it does -limit -exclusions -potential provisions

-protect insured against 3rd party claims for BI/PD resulting from ownership/maintenance/use of insured aircraft -Combined Single Limit for all 3rd party claims, may also have sublimit on claims by passengers (usually no aggregate limit) -exclusions: --Intentional injury (except to prevent interference w/ safe operation) --Liability assumed under contract (possible exception is liability assumed under incidental contracts (use of airport)) --Bodily injury to an employee of the insured. --Obligations under workers compensation- --war, strikes, riots, labor disturbances, terrorism, sabotage, hijacking, or unlawful seizures. --Damage to property owned, leased, occupied, controlled, or under the care of the insured (possible exception coverage for passenger baggage and damage to hanger leased by insured) --employee suing employee -potential provisions can cover: --newly acquired aircraft --temp substitute aircraft --aircraft not owned/leased/regularly used by insured

life provisions: suicide clause

-protect life insurer from adverse selection if person was planning on committing suicide (refund policy premium to beneficiary if suicide occurs within first 2 years of policy)

what BPP endorsements are useful for (4)

-provide coverage enhancements that insureds might want but others don't need/can't afford -eliminate coverage for certain exposures (enabling UW to accept applications they would usually decline) -change policy provision to match specific characteristics of certain industries/insured -amend policy to comply with state insurance regulations

life insurance riders: accelerated death benefits

-provide discounted/portion of value of policy death benefit in event of certain contingencies like: --terminal illness (death in a year) --catastrophic illness (cancer) --need for long term care in nursing home/similar facility -insured receives amount (less than face value of policy more than accumulated cash value), relinquishes his/her interest and that of any beneficiaries

source of life insurance - group

-provides coverage to a number of individuals under one master contract issued to a sponsoring organization -insured members are not parties to contract/receive certificates of insurance as evidence of protection --usually employers that can be financed solely by employers (noncontributory) or require contributions

Part D Exclusions (a whole buncH)

-public/livery conveyance (exception share-the-expense car pool) -wear and tear/freezing/breakdown/road damage to tires (in order to exclude coverage for losses occurring inevitably/prevented by regular maintenance) --exception is damage resulting from total theft of covered/nonowned auto --'due and confined to': car destroyed by fire from electrical failure would be covered, exclusion applies to electrical component that filed -radioactive contamination/war (not riot) -electronic equipment (unless equipment is permanently installed in covered/nonowned auto) -media/accessories -govt destruction/confiscation (doesn't apply to interest of loss payees in the covered auto) -trailer/camper body/motor home not shown in declarations (doesn't apply to nonowned trailer/camper body or trailer acquired during policy if insurer asked to cover it within 14 days) -nonowned auto w/o reasonable belief of entitlement -radar/laser detection equipment -customizing equipment (doesn't apply to pickup (if it's the covered auto) caps, covers or bedliners) -nonowned auto used in garage busienss -racing -rental vehicles (if rental agreement includes damage waiver/state law doesn't allow rental company from recovering from insured for loss) -personal vehicle sharing program

Rating fundamentals -what rating is (and calculation) -specific rating vs. class rating

-rating: process of applying rate to particular exposure/performing calculation to determine appropriate policy premium calculation: rate / unit * amount = amount of insurance / unit amount * rate -specific rating: each building/contents inspected individually and rates reflecting exposure to los published by rating bureaus (still used for large businesses/unusual exposures) -class rating: use rates reflecting average probability of loss for business within large groups of similar risks (no need to inspect specific building)

newly acquire auto coverage -liability -physical damage

-receive liability coverage equal to broadest coverage indicated for any vehicle shown in declarations -physical damage (insureds may drop physical dam on older vehicles w reduced value but need it for new vehicles), with 2 provisions: --if insured has physical.damage, automatic coverage (smallest deductible) for 14 days but must ask to extend --w/o physical damage, automatic coverage for 4 days subject to 500 deductible

Transportation Network Driver Coverage (no passenger) endorsement -what it does -what schedule states

-replace public/livery conveyance exclusion in PAP -includes exception covering share-the-expense car pooling and operation of auto w/o passengers while driver is logged into transportation network platform -eliminate coverage gap between TNC network logon and passenger pickup --schedule names specific transportation network platform, described covered vehicle/coverages/premium --for Parts A,B,C,D

reduce moral hazard on replacement cost coverage

-replacement cost coverage technically violates principle of indemnity (insured profits off of loss to old/used property and get payment for new property) -policies usually only pay out after insured actually replaced the damaged/destroyed property or if loss is relatively low value

limited insuring agreements -definition -commercial property insurance -liability

-restrict coverage to certain causes of loss/to certain situations -exclusions/definitions/other policy provisions can clarify/narrow or broaden coverage -commercial: 'named peril' causes of loss coverage, called 'basic/broad-form' coverage --basic: protect against list of named cause of loss --broad: protect against things in basic + additional named causes of loss -liability: applies to limited number of incidents

(defense) comparative negligence: pure rule -definition -principal objection

-rule that permits a plaintiff to recover damages discounted by his or her own percentage of negligence, as long as the plaintiff is not 100 percent at fault. --if claimant x % at fault, recover 100-x% from defendant -all common law jurisdiction in Canada implements this rule -principal objection: does not base recovery on apportionment of fault but on relative amount of loss --allows party whose negligence was major factor to recover damages from a party who was less at fault

SSDI -rules to qualify (substantial gainful activity, etc) -monthly cash benefits (waiting period, the benefit amount and adjustments) -period of disability and what it's used for

-rules to qualify strict: disabled means worker are unable to engage in any substantial gainful activity because of 'medical determinable' physical/mental impairment (~any occupation) --substantial gainful activity: needs significant activities that are physical/mental/combo in work performed for profit (even if no profit realized) --must be established by objective medical evidence, expected to last at least 12 consecutive months/result in death (except blindness) -monthly cash benefits: 5 month waiting, paid to individuals yet to reach full retirement age --benefit = primary insurance amount under social security law (may have auxiliary benefit for eligible dependents, which might happen if worker himself is disqualified) --benefit can be reduced to offset worker's comp/any other disability benefits and subject to social security family maximum benefit -establishment of period of disability: --period of disability under law is continuous period during which individual disabled --used to determine other types of social security benefits for worker's family (established during disability or within 12 months after it ends if worker met disability insured status/disability lasted at least 5 consecutive months)

definitions in insurance policies -undefined words interpretation rules

-section contains definitions of certain terms in policy/form -'we', 'you', and other pronouns are defined in untitled preamble to policy (not definitions) -undefined words interpretation: --everyday words given ordinary meanings --technical words given technical meanings --words with established legal meaning given legal meaning -consideration given to local/cultural/trade-usage meanings of words

CGL rates for business classifications -how premises operations/product completed rates work

-separate rates for each business classification it is wiling to insure --classifications listed in table of ISO commercial lines manual, each has a class code as identification -separate rate for premises operations and products completed --products completed rate may not be used if little to no risk of liability for that, small cost added to premises/operations rates

types of individuals/families that benefit from life insurance

-singles w/o children: may not need much life insurance if no one depends on them, could get to support elderly parents, cover debt, estate taxes -single parent families: can use life insurance to make sure loved ones cared for property for housing/education/other expenses and use process of getting life insurance to appoint guardians -two income families with children: can allow family to maintain two-income standard of living -two income families w/o children: may need modest amounts of life insurance -'traditional': one wage earner -blended: one/both partners bring dependent children, wide range of needs (education, new children, alimony, child support, etc.) -sandwiched: financial support to both younger/older family members

prof/manage liability vs CGL: deductible

-small to midsize orgs have CGL with no dedutible -professional/management liability: usually have mandatory minimum deductible for various classes of policies

insurance regulation: maintaining insurer solvency -what solvency regulation does -why regulators monitor insurer financial conditions

-solvency regulation protect PH and general public against risk the insurer won't be able to meet financial obligations --minimize # of insolvencies and effect on PH when it happens -regulators monitor financial conditions because: --insurance provides future protection: PH pay premium in advance while protection period is in the future. If insurer becomes insolvent, it won't be able to pay future claims and protection purchased will be worthless --regulation protects the public interest: insolvency of insurer can adversely affect large # of individuals (PH, non-PH beneficiaries of insurance policy, employees, other insurers who may need to contribute funds to pay insolvent insurer obligations )

level of sophistication of insured + effect on court decisions -how sophistication is determined

-unsophisticated: insurer drafted ready-made policy, insured has little/no control over policy wording --cases usually interpreted against insurer -sophisticated: insured+representatives draft all/part of policy or insurer/insured negotiate wording --variable. May not interpret ambiguity in insured's favor -sophistication determination: size of org, size of risk management department, use of insurance broker/legal counsel, relative bargaining power of insured vs. insurer

regulation structure: company formation/licensing of insurers -state law and what a license means -licensing standards for domestic, foreign, alien insurers

-state law requires insurers and insurance related businesses to e licensed before they can cell products/services --license indicates insurer meets minimum standards of financial strength, competence, integrity AND insurer complied with insurance laws AND is authorized for certain types of insurance licenses for: -domestic insurer (licensed and does business in incorporation jurisdiction): meet conditions imposed on corporation engaged in non insurance activities as well as special conditions imposed on insurers -foreign insurer (licensed to operate in one jurisdiction, incorporated in another): licensed in additional jurisdiction, insurer must show satisfied requirements for home jurisdiction AND min capital/surplus/other requirements imposed on domestic insurers -alien insurer (domiciled in country other than one in which it seeks to conduct business): satisfy requirements imposed on domestic insurer by jurisdiction in which they want to be licensed

exclusions -definition -6 basic purposes

-state what insurer does not INTEND to cover (limit coverage and clarify coverages granted by insurer) -eliminate coverage for uninsurable loss exposure (war, criminal acts, normal wear/tear) -assist in manage moral/morale hazards (ensure individual remains responsible for some kinds of loss) -reduce likelihood of coverage duplication (multiple policies can provide complementary not duplicate coverage so no duplicate premium) -eliminate coverage not needed by typical insured (avoid all insured share costs of covering few loss exposures) -eliminate coverage requiring special treatment -assist in keeping premiums reasonable

HO-3 Section I Conditions: -suit against us -recovered property -volcanic eruption period -policy period -concealment/fraud -nuclear hazard

-suit against us: insured can't bring legal action against insurer unless insured complied with all policy provisions and started within 2 years of loss -recovered property: if insurer pays loss of property claim and property is recovered, insured can take property/return claim payment or keep claim payment/give insurer property -volcanic eruption: all volcanic eruptions within 72 hour period are considered one single eruption (one coverage limit/deductible) -policy period: coverage applies only to losses occurring during policy period -concealment/fraud: insured committing fraud is not covered (before or after loss) -nuclear hazard: define excluded nuclear hazard (radiation, contamination, explosion, smoke from nuclear reaction), though ensuing fire is covered

why do insurance policies have insurable interest requirement (3)

-supports principle of indemnity: ensure only parties suffering financial loss indemnified to extent of loss -prevents use of insurance as wagering mechanism: prevent insuring event where there's no loss and someone profits when it happens -reduces moral hazard incentive insurance may create for the insured: reduce ability to profit from insurance

surety bonds -suretyship -principal -obligee -types

-surety: party (usually insurer) to surety bond guaranteeing to obligee that principal will fulfill obligation/will perform as required by underlying contract/permit/law -suretyship: The obligation of one entity to answer for the debt, default, or miscarriage of performance of duties by another entity. --designed to comply with contractural arrangements and with various legal/statutory requirements -principal: The party to a surety bond whose obligation or performance the surety guarantees. -obligee: The party to a surety bond that receives the surety's guarantee that the principal will fulfill an obligation or perform as promised. types: -contract bonds -license/permit bonds -public official bonds -court bonds -misc bonds

Part E additional UM for Physical Damage

-take reasonable steps to protect covered/nonowned auto and equipment from further loss (insurer pays reasonable expenses trying to protect from further damage) -notify policy if auto was stolen -permit inspection/appraisal before repair/disposal (insurer may waive for small losses and allow insured to submit repair estimates)

newly acquired auto definition -2 types -2 stipulations

-two types of vehicles: private passenger auto or pickup/van that no other insurance policy covers (weight < 10000 pounds, not used for transportation of goods/materials except for install/maintain/transport furnishing and equipment or farming/ranching) -two stipulations in definition: additional auto automatically covered for 14 days (must request coverage beyond that), replacement auto covered for remainder of policy period even if insured doesn't ask

3 components of commercial property loss exposures

-types of property -cause of loss to property -financial consequences of property losses

functional valuation -when it's used (2) -amounts payable

-used for replace buildings/personal property when property of like kind/quality not practical and when ACV methods does not match insurance needs --and used for buildings covered by ISO Homeowners modified coverage form (HO-8) - pays cost to repair/replace damaged/destroyed property with property that is functional equivalent --pay office rebuild cost if office in former schoolhouse --pay for new computer with same/better functionality that's cheaper than old model --different material with same function --or actual repair cost/applicable policy limit if < cost of functionally equivalent property

Self Insured Retention -difference between SIR and deductible -SIR common in what coverages

-used in liability insurance policies -deductible: insurer defends on first-dollar basis, pay all covered loss, bill insured for amount of losses up to deductible --deductible may reduce policy limit -SIR: insurer pays only losses exceeding SIR amount, does not defend/adjust/pay claims below --full policy limit payable on top of SIR --may require strict reporting to insurer of any claims that have potential to exceed SIR amount --common in professional liability/specialty/drop-down umbrella (primary coverage subject to SIR on claims not covered by underlying primary insurance policy or umbrella policy)

physician professional liability policies -where liability usually comes from -insuring agreement -what damages can be

-usually arises from improper performance in practice of the profession resulting in injury -can also be liable for administrative error/omission connected with their medical practice (liable for improperly refusing staff privileges to another physician) -insuring agreement: cover damage from injury resulting from rendering/failure to render professional by insured or by anyone else for whose acts the insured is legally responsible (nurse), as well as liability from insured's service on formal accreditation board -damages can be BI/PD, emotional/mental injury, libel/slander/defamation, invasion of privacy generally covered unless specifically excluded

Part C exclusions

-vehicle that's owned but not insured for UM under the PAP under which coverage is being sought -owned vehicle with primary UM coverage on other policy: any family member insured by UM while occupying vehicle is NOT covered -claim settlement that prejudices insurer's right of recovery: if insured settles without insurer consent and makes it difficult for insurer to recover full payment from at-fault driver (if that was possible in the first place) -public or livery conveyance if person is in a covered auto (exception if occupying public conveyance that's not covered auto) -vehicle used without reasonable belief of being entitled (does not include family members) -no benefit to worker's comp or disability benefits insurer (worker's comp insurer cannot recover benefits paid to injured employee from the insurer of the negligent, at fault, uninsured driver) -punitive damages -personal vehicle sharing program

BPP newly acquired/constructed property -w/ building coverage -w/ business personal property -when this terminates

-w/ building coverage: --provide automatic (subject to max) coverage for new building being constructed at premises described in declarations -- for newly acquired building @ other location if purpose of newly acquired building is similar to use of building described in dec page OR newly acquired building used as warehouse -w/ business personal property coverage: automatic coverage for --BPP @ any newly acquired location other than fairs/trade shows/exhibitions --BPP @ newly constructed/acquired buildings at location described in declarations terminate automatically @ earliest of 3 days: -expiration date of policy -30 days after acquisition of new location/start of construction of new building -date insured notifies insurer of new location/new building

individual disability income policy riders

-waiver of premium: Excuses a disabled insured from making premium payment during a period of covered disability. -guaranteed insurability: Enables an insured to purchase specified additional amounts of insurance on stated policy anniversary dates, without providing proof of insurability. -cost of living adjustment: After a specified period, provides an increase in the monthly benefits already being paid during a disability -future increase option: allow option to increase monthly benefit as insured income increases (based on documented income increases) -automatic increase rider: Increases the insured's monthly benefit amount each year for a specified number of years to keep up with inflation. -residual disability: partial payment of benefits in proportion to income loss if insured suffers specified % of reduction in earned income (usually after period of disability) -social security supplement coverage: addl benefit to insured when SS disability benefits don't apply (for coverage gaps)

Part A - Other Insurance

-with other applicable liability insurance on owned vehicle, insurer pays pro rata share of loss share of damage: damages * (limit on one insurer policy / total limit of liability on all applicable policies) -other liability on nonowned vehicle (including temporary substitute): PAP coverage is excess over any other collectible insurance

terrorism worker's comp endorsement -TRIA and worker's comp -NCCI endorsement (what it does, insured loss, deductible)

-worker's comp is subject to TRIA and insurers must include coverage for certified acts of terrorism --state worker's comp statutes prohibit insurers from excluding/limiting coverage for acts of terrorism certified or not NCCI endorsements help insurers comply with TRIA disclosure requirements/inform PH about premiums related to terrorism -insured loss means any loss resulting from act of terrorism (including WAR) for worker's comp -also describes deductible under program (20% of direct premium earned during prior year)

(products liability) types of product defects in strict liability -defect manufacture/assembly: definition, what it includes, why it's easy to prove -defect in design: definition, when defendant/is liable and when it might not be, what the unreasonably dangerous requirement can be replaced, what courts also consider in these cases, common cases -failure to warn: definition, what manufacturer must consider, standard for liability

1. Defect in manufacture or assembly—The product does not correspond to the original design. -include use of poor quality materials, poor assembly work -easiest type of strict liability to prove (improper manufacture/assembly is in itself a defect, no need to prove unreasonable danger because injury proves it) 2. Defect in design—The product corresponds to the design, and the manufacturer built the product exactly as intended, but the design itself is faulty, and the injury has resulted from the design-defect. -defendant liable only if design flaw affects all products of same kind, not just the one that injured plaintiff -sellers are liable for injuries caused by product if (@ time of sale) it is not fit/safe for intended/reasonbly forseeable use and is unreasonably dangerous --(may not be liable if defect not open and obvious, making it not unreasonably dangerous and strict liability doesn't apply) --unreasonably dangerous requirement can be removed/replaced with different rule determining product defectiveness: if it does not meet consumer reasonable expectations OR lacks any element that would make it safe -many courts will also consider practicality of selling product w/ certain level of safety features vs. magnitude of risk associate w/ that level of safety features -many cases arise from defective safety devices/failure to install safety devices (liable if defects/failure made product unreasonable dangerous in normal use) --lack of guards/defective guards on machines 3. Failure to warn—The product is defective in neither design nor manufacture, but it poses some inherent danger about which the manufacturer has failed to provide adequate warning. -manufacturer can consider the following when deciding to market product w/o warning: degree of danger, knowledge of danger, foreseeability of dangerous use -standard same for negligence and strict liability: manufacturer must provide warning on all danger associated w/ product about which manufacturer knows/should know

CGL limits and sublimits -general aggregate limit formula/definition/sublimits -products completed limit (definition and when it doesn't exist)

1. General Aggregate limits: cap total amount of damages insurer pays for entire policy period (not including defense costs) =A (excluding products/completed damage) + B + C Occurrence Limit (most insurer pays for any one occurrence no matter # persons/claims and all damages under Covgs A and C): a. damage to premise rented to you: most insurer pays under coverage A for damage to 1 premises while rented to named insured --(or fire damage, while rented to or temp occupied by named insured --Basic limit = 100,000 b. medical expense limit: most insurer pays under Covg C to any one person --basic limit = 5000 Personal advertising: most insurer pays under Covg B to any one person/organization --basic limit = same as each occurrence limit, usually 2. Products completed operations aggregate limit: most paid under Covg A for BI/PD in products completed hazard -products completed hazard: (BI/PD occurring way from premises owned/rented by named insured and arising out of named insured's product/work) -doesn't always have this limit in CGL policy, in which case claims paid apply to policy general limit

commercial umbrella underlying coverages -how umbrella works with these coverages

1. Underlying coverages: insurer writing umbrella will have own requirements for types/amounts of underlying insurance insured must have -umbrella limits in full in excess for EACH of underlying coverages

Aircraft Hull Coverage -2 common coverages -exclusions -deductible

1. all risk- ground and flight: cover insured plane whether it's in flight or on ground @ time of loss 2. all risk - not in motion: cover insured lane only when on ground and not moving under own power (being towed) exclusions: -war, strikes, riots, perils -similar to auto pays.damage: wear and tear, mechanical breakdown, tire damage -(possible) aircraft whose FAA airworthiness certificate has become void/restricted smaller aircraft usually has dollar deductible (flat amount or stated percentage of plane value) -larger aircraft sometimes don't have deductible since deductibles don't eliminate many claims

public official bonds -what is it -who's required to have it

A category of Surety bonds furnished by principals who are elected or appointed to fill positions of trust, guaranteeing their faithful and honest performance in office. people required to obtain: -duties involve handling of public funds, seizure/disposition of property, arrest/detention of persons, any other duties that can result in violation of rights of others -treasurers, tax collectors, sheriffs and deputies, police officers, judges and court clerks, notaries public, insurance commissioners, and bank examiners

CGL Conditions (Section IV)

1. bankruptcy: bankruptcy of insured doesn't relieve insurer of policy obligation (still have to defend and pay judgements) 2. duties in event of occurrence/offense/claim/suit (separate card) 3. legal action against us (no one can bring insurer into suit seeking damages from insured to avoid higher damages, no one can bring suit to enforce policy coverage unless party complied with all policy conditions) 4. other insurance (separate card) 5. premium audit: CGL issued with estimated premium, final premium determined after policy expiration based on premium and that can't be determined @ inception -insurer required to keep adequate records to permit correct calculation of premium/make these available to insurer on request -also have to promptly pay additional premium from audit 6. representations: named insured agrees statements in declarations accurate an complete, based on representations made by named insured to insurer, insurer issued policy in reliance on named insured's representations 7. separation of insureds: policy applies separately to each person insured -if one insured does something exclude, coverage still applies to other insureds liable for injury -restrictions: limits of insurance apply to all persons insured, rights duties specifically assigned to first named insured are not applicable to anyone else 8. transfer of rights of recovery against others to us: when insured has rights to recover all/any part of claim paid by insurer to 3rd party, right must be transferred to insurer (insured can't impair these rights) 9. when we do not renew: insurer must give notice of nonrenewal to first named insured at least 30 days before expiration (state law takes precedence over this)

commercial property conditions: control of property (2 parts)

1. coverage under policy not affected by acts/omissions of persons other than the insured if those persons aren't acting under the direction/control of insured 2. violation of policy condition at one location will not affect coverage at any other location

commercial excess liability insurance -3 types and when a loss is covered under them

1. following form subject to same terms as underlying policy (covered only if covered by underlying) 2. self-contained policy subject to its own terms only (covered only if covered by the underlying policy AND the excess policy) 3. combination of two above types: incorporate provisions of underlying policy, modify provisions with additional conditions/exclusions in excess policy

Insurance policies should not do these (2) in order to reduce/avoid moral hazard

1. insurance should not over indemnify - insured should not profit from insured loss - reduce moral hazard/potential for over indemnification by clearly defining extent of covered loss/setting policy limits 2. insureds should not e indemnified more than once per loss - multiple sources of recovery may result in overindemnification (loss exposure = subject of one insurance policy + one portion of that policy) -duplicate recovery is sometimes okay (auto/health insurance)

ISO CGL Coverage A Insuring Agreement - Insurer duty to pay damages conditions (7)

1. insured must be legally obligated (legally liable) to pay damage: determined through court proceeding or insurer claim investigation (@ which point insurer tries to negotiate out of course settlement with 3rd party claimant) --damages a court can award include special (out of pocket costs), general (intangibles for pain/suffering), punitive (depends on state if insurer is allowed to pay for insured) 2. damages must result from BI/PD as defined in policy --BI: BI/sickness/disease sustained by person including death, include damages from care, loss of service or death, pain/suffering --PD: physical injury to tangible property including loss of use, loss of use of tangible property that's not physically injured (excludes electronic data!) 3. policy must apply to to BI/PD (exclusions 4. The bodily injury or property damage must be caused by an occurrence (accident including continuous/repeated exposure, unintended results of intended acts) 5. occurrence must take place in the coverage territory: usually US+territories, Puerto Rico and Canada --international water/airspace included if injury/damage occurs in course of travel/transportation between places included in basic coverage territory -(only if liability determined in suit filed in basic coverage territory or insurer settlement) coverage territory extends to whole world for: goods/products made/sold by named insured in basic coverage territory, activities of person whose home in coverage territory/away for short time on named insured business 6. BI/PD damage must occur during the policy period (policy applying to claim is the one in effect when claim occurred) 7. BI/PD must not be known to the named insured or designated insured/employees occurring before policy inception date --continuous/progressvie injury or Montrose provision: damage is considered continuous as long as injury continues which triggers coverage for all occurrence based policies in effect throughout course of injury

CGL Coverage B Exclusions

1. knowing violation of rights of other (if done by/@ direction of insured) 2. material published with knowledge of falsity (if done by/@ direction of insured) 3. material published prior to policy period (first publication) 4. criminal acts (when committed by/@direction of insured) 5. contractual liability (if insured assumed liability in contract/agreement) -exception: liability insured would have in absence of contract or agreement (NO EXCEPTION for liability assumed under insured contract like Covg A) 6. breach of contract (even if breach from fraudulent ad of insurer) 7. quality/performance of goods failure to conform to statement in ad 8. wrong description of prices (ad says x but price is actually y and people sue for difference) 9. infringement of copyright/patent/trademark/secret -exception: infringement in named insured's ad of copyright/trade dress/slogan 10. insureds in media and internet type business -advertising, broadcasting, publishing, telecasting, designing/determining content of websites fo others, providing internet search/access/content/service -exception: paragraphs a, b, c of CGL policy definition of personal/advertising injury AND placing frames/borders/links or ad material for named insured 11. electronic chatrooms/bulletin boards that insured hosts/owns/controls 12. unauthorized use of another's name/product 13. pollution (injury from actual/alleged/threatened discharge of pollutants) 14. pollution related: no coverage for loss/cost/expense from request to test/monitor/clean up pollutants, any claim/suit by or on behalf of government for damages because of test/monitor for/clean up pollutants 15. war 16. recording/distribution of material/info in violation of law

objectives of insurance regulation

1. maintaining insurer solvency 2. protecting insurance consumers 3. ensuring availability of coverage 4. regulating insurance rates

injunction -definition -failure to comply -what the court considers when deciding to grant this

A court-ordered equitable remedy requiring a party to act or refrain from acting. -can be granted before damage has occurred (unique) failure to comply could result in criminal/civil penalty -eg. stop infringement of property rights, stop neighbors from trespassing NOT The same thing as temporary restraining order (used when immediate court action needed to prevent harm from event currently/about to happen) court considers the following when deciding to grant injunction: -Economic impact on all parties if the injunction is or is not granted -The parties' willingness to resolve the dispute in good faith -Either party's intentional misconduct -The interest of or benefit to the general public in allowing the activity being complained of to continue

ISO Commercial Property Endorsement: Ordinance/Law coverage -3 coverages included -limit -what unendorsed forms include

3 coverages for losses resulting from the endorsement of building endorsement -Coverage A: cover value of undamaged portion of building that must be demolished (changes partial to total loss) -Coverage B: cover cost to demolish undamaged portion of building/remove its debris when demolition required by building code -Coverage C cover increased cost to repair/rebuild the property resulting from the enforcement of building/zoning/land use law Coverage B/C are provided under one blanket limit -unendorsed forms exclude all losses except a small amount of coverage for Coverage C

life provisions: grace period

31 days after premium due date -if insured dies during grace period, death benefits still paid (reduced by overdue premium amounts due to the insurer)

commercial umbrella conditions -maintenance of underlying -when worldwide coverage applies

5. Conditions: -maintenance of underlying policies: usually require insured to maintain all required underlying coverage in full force/effect during policy period --must promptly notify insurer if underlying policy changed/replaced. --If not maintained, umbrella policy applies like it was anyway (still only cover amount over limit) -usually umbrella provides worldwide coverage (may have requirement suit brought in U.S/Canada to apply)

bad faith/outrage -definition, similar to what, what it does to damages -damages possible -bad faith in insurance (what insured can allege, insurer duty to insured) -defenses

A breach of the duty of good faith and fair dealing. -similar to emotional distress but separate cause of action mostly for suits involving breach of insurance contract -if extreme conduct or defendant breach of implied duty of good faith/fair dealings, plaintiff entitled to damages above those typically awarded for breach of contract damages: usually only contractual damages (compensatory, foreseeable damages, no mental anguish/punitive) for breach of contract -plaintiff can seek to recover punitive damage by alleging bad faith resulting in additional injury insurance cases: bad faith tort based on insurer implied duty to act fairly/in good faith in discharging duties under insurance contract -insured usually alleges negligent/intentional denial of claim w/o reasonable cause --could include failure/delay in pursuing claim investigation/settlement, delay in claim payment to coerce insureds into settling for less than full amount due, retaliatory cancellation of policy, unfair increase in premium after filing of claim --If defendant has reasonable cause to delay payment, no bad faith -insurer duty to insured: must act in good faith and w/o negligence bc insured has relinquished right to settle/defend. --some courts: failure to do so makes insurer liable for full amount of loss, even if loss > limit -not all courts recognize bad faith torts, may have laws/penalties for failure to settle insurance claims properly to preempt private lawsuits like this defenses: -No intent or recklessness was involved. -No outrageous or extreme conduct occurred. -The defendant did not breach any implied duty of good faith and fair dealings. -If contract damages are involved, the defendant owed no contractual duty to the plaintiff. -In an insurance case, no valid insurance contract existed; therefore, the defendant owed the plaintiff no duty to act fairly and in good faith.

joint venture -what plaintiff must prove

A business association formed by an express or implied agreement of two or more persons (including corporations) to accomplish a particular project, such as the construction of a building. to establish, plaintiff must prove: 1. agreement by parties to associate for business activity 2. profits/losses shared by each party 3. joint control of venture by the parties 4. contribution the venture's assets by each party

(defense) contributory negligence -last clear chance -assumption of risk

A common-law principle that prevents a person who has been harmed from recovering damages if that person's own negligence contributed in any way to the harm. -applies in Canada if plaintiff doesn't wear seatbelt in auto accident rule, US mostly uses comparative negligence to alleviate harsh results of pure contributory negligence: -last clear chance: place responsibility for harm on party who had 'last clear chance' to avoid harm but failed to do so (bar plaintiff recovery of damages caused by defendant negligence if plaintiff voluntarily assumed risk of harm) -assumption of risk: used for hazardous activities

conditional contracts -as applies to insurance -exception

A contract that one or more parties must perform only under certain conditions. -insurer only has to pay for losses incurred by insured if insured fulfilled all policy conditions exception: insurer willing to waive some of conditions of insurance policy (pay claim without inspection)

broad evidence -def -examples (6)

A court ruling explicitly requiring that all relevant factors be considered in determining actual cash value. examples: -obsolescence -building present use/profitability -alternate building uses -present neighborhood characteristics -long term community plans for area (urban renewal prospects) -inflationary/deflationary trends

commercial property conditions -definition -which coverages this applies to -where this is specified

A required component of the commercial property coverage part that contains conditions applicable to all commercial property coverage forms -printed as separate form, apply to all coverage forms in commercial property coverage part unless coverage form contains condition to contrary -do not require reiteration in each coverage form

specific performance remedy -definition -when this is appropriate and when it's not

A court-ordered equitable remedy requiring a party to perform a certain act, often—but not always—as a result of breach of a contract. courts unlikely to order performance of personal services/acts relying on personal judgement of performer -(doctor to perform surgery, contractor to make building) -this is because performance under compulsion may fall below performer usual standards and court doesn't want to supervise to ensure adequate performance appropriate remedy when court can readily determine whet er party being compelled has clearly complied with court's order -eg. require release of specific confidential info

underwriting cycle

A cyclical pattern of insurance pricing in which a soft market (low rates, relaxed underwriting, and underwriting losses) is eventually followed by a hard market (high rates, restrictive underwriting, and underwriting gains) before the pattern again repeats itself.

injurious falsehood tort -definition -what relationship this tort interferes with/examples -difference from defamation -defenses

A group of torts involving disparagement that causes harm to any kind of legally protected intangible property right -similar to defamation, differs primarily that plaintiff must prove both falsity of statement AND actual damage/loss -this tort interferes with economically advantageous relationship resulting in monetary loss (damage to property right NOT reputation) --eg. allegations of improper business conduct/poor quality of goods defenses: -truth -retraction made (not complete/reduce damage) -absolute privilege (judicial, consent given) -conditional/qualiifed privilege (made w/o malice as matter of public interest)

wrongful death action -what it is -how damages vary -common law (vs now) -survival statutes (what it permits recovery of, when it won't apply)

A legal cause of action that exists for the survivor of the deceased. damages vary on relationship of deceased to claimant -lost earnings/mental anguish, or they can be punitive common law: right to sue ends on person death for injured person or tortfeasor -now there are survival statutes, so cause of action for injury can survive after injured person's death survival statute: A statute that preserves the right of a person's estate to recover damages that person sustained between the time of injury and death. -permit recovery of compensatory damages (including general) but not damages for shortening person's life -survival damages not awarded if death instantaneous --if person lives a second after injury, estate can allege sufficient pain/suffering to support suit

concurrent causation -definition -when it happens

A legal doctrine stating that if a loss can be attributed to two or more independent concurrent causes—one or more excluded by the policy and one covered—then the policy covers the loss. -arises when 2+ defendants is liable for entire harm, even though act of either wouldn't have produced the harm

collateral source rule

A legal doctrine that provides that the damages owed to a victim should not be reduced because the victim is entitled to recover money from other sources, such as an insurance policy.

vicarious liability -definition -where it can come from

A legal responsibility that occurs when one party is held liable for the actions of a subordinate or an associate because of the relationship between the two parties. this liability can arise from: -contractual relationships/partnerships -principal/agent: principal authorizes agent to act on principal behalf --vicariously liable for agent tort in course of agent engagement/within scope of their actual/apparent authority -employer/employee: while employee acting in scope of employment -parent/child: generally parent isn't liable for minor child's torts, but exceptions include: --child acting as parent's agent/employee --tort involves dangerous instrument parent should expect child to cause harm --negligent entrustment/supervision: giving someone something lender (should) know is likely to use in unreasonably risky manner, failure to exercise reasonable control/supervision --family purpose doctrine: A liability concept that holds the owner of an automobile kept for the family's use vicariously liable for damages incurred by a family member while using the automobile (no need for proof of negligence to be liable) --theft/vandalism

products liability -definition -legal principles

A manufacturer's or seller's liability for harm suffered by a buyer, user, or bystander as a result of a product that has a dangerous manufacturing defect or design defect or that is not accompanied by a warning of an inherent hidden danger. suits based 1+ of the following legal principles: -misrepresentation -breach of warranty -strict liability and negligence

inflation guard protection

A method of protecting against inflation by increasing the applicable limit for covered property by a specified percentage over the policy period.

retrospective rating

A ratemaking technique that adjusts the insured's premium for the current policy period based on the insured's loss experience during the current period; paid losses or incurred losses may be used to determine loss experience. -rating plan that increases/decreases insured's premium for policy period based on insured's own losses during same period -insured pays estimated premium at beginning of period and after end of period gets refund or bill for additional premium depending on losses during period --formula for retrospective premium adjustment (subject to min, max) specified at policy inception

individual risk premium modification ('schedule rating') -definition -how it works

A rating plan that allows underwriters to modify property premiums based upon specific risk characteristics not reflected in the class rate. -establish series of criteria by which individual entity is compared to average of class -criteria is subjective in nature, require evaluation by UW to determine impact on entity risk exposure (financial strength, breadth, depth of entity loss control program, specific management characteristics) -for each criteria, UW selects specific value from range of credits/debits to be applied to developed rate to differentiate specific entity risk characteristics from the class average

factual expectancy (legal base of insurable interest) -what should be demonstrated to be insured

A situation in which a party experiences an economic advantage if an insured event does not occur or, conversely, economic harm if the event does occur. -focus on insured financial position, need only demonstrate financial harm resulting from event to be insured

insuring agreement -definition -what it can describe

A statement in an insurance policy that the insurer will, under described circumstances, make a loss payment or provide a service. -insuring agreement for each coverage (package policies have multiple) -can describe statements introducing policy coverage/coverage extension/addl coverage etc. -very broad terms, full scope of coverage not determined without examine the rest of policy

contract bonds -what it is -role of principal/obligee (and who they are) -2 purposes

A surety bond guaranteeing the fulfillment of obligations under construction contracts or other types of contracts (mechanical equipment rental, school children transport, garbage removal etc) -individual/org (principal) is contractually obligated to perform work/service for another individual org (obligee) --obligee frequently government entities (because contract bonds required by law a lot) but can be private entities 2 purposes: -surety willingness to furnish bond is evidence that principal is qualified to fulfill terms of contract (in surety's opinion) -surety guarantees that even if principal defaults obligations of contract will be performed or surety indemnifies the obligee

intentional torts -definition -intent and motive -types

A tort committed by a person who foresees (or should be able to foresee) that his or her act will harm another person. - require tortfeasor intent to harm/act to cause harm intent and motive have no relationship but motive can influence damages -self defense might lower damages, malice could mean higher damages types: -Battery -Assault -False imprisonment and false arrest -Intentional infliction of emotional distress -Defamation (libel and slander) -Invasion of the right of privacy

Malicious Interference With Prospective Economic Advantage tort

A tort involving intentional interference with another's business, or with another's expected economic advantage (commercial dealings) -expanded to cases involving interference w/ expected gift/legacy under will and economic advantage other than arising out of business defense: defendant was making lawful effort w/o malice (wrongful act w/o justification/excuse) to promote own welfare and not injure plaintiff

prior approval -definition, what is required to file -rate review process -pros/cons

A type of insurance rate regulation in which rates and supporting rules must be filed with and approved by the insurance regulator before they can be used. -some states require insurers to submit filings @ particular times, some allow submissions at any time -insurers must give actuarial justification for proposed rate changes -deemer: A law stating that if an insurance regulator does not approve of an insurer's filing within a specified time, the filing is deemed approved. Rate review (can take 6-9 months for everything): -actuaries collect, validate, analyze data then meet with company management to determine proposed rate (can differ significantly rom indication), then file pros: -keep rates reasonable/affordable -require insurers to justify their requests for ate increases with supporting historical data -tend to promote solvency since regulators review supporting data (rates will be adequate) cons: -encourage more volatile in insurance cycles since considerable time required to approve are changes hampers insurer ability to adapt quickly to change sin marketplaces -discourages innovation as heavily regulated price requirement might cause any new product to be priced too high/low to allow profit -may only be able to change rates once or twice a year consumers favor prior approval, insurers/economists favor other methods

file and use -definition -pros

A type of insurance rate regulation in which the insurer must file rates and supporting rules with the insurance regulator within a specific number of days prior to their use, and if not disapproved by the regulator during that review period, the rates can then be used immediately without specific approval. -avoid delay associated with prior approval but allow regulators to review rates before they are implemented -insurer often not required to support every request with complete actuarial analysis

use and file -definiton -what happens if regulator as an issue

A type of insurance rate regulation in which the rates and supporting rules must be filed with the insurance regulator within a specified period after they are put into use. insurer can use any rate it chooses provided it files rate with rate with regulators within 30-60 days after implementation -insurer can implement new rates @ same time as file with regulator -if regulator has a problem with rates, contact insurer after rates in effect --market forces (competitive pricing) usually prevent insurance premiums from increasing too rapidly

Tort -definition -where it results from -jurisdiction

A wrongful act or an omission, other than a crime or a breach of contract, that invades a legally protected right. -result from tortfeasor's breach of duty causing injury or loss -courts must consider laws from multiple jurisdiction to decide which laws to apply before considering facts of case --jurisdiction: particular court's power or authority to decide lawsuit of certain type/in a territory

ultra hazardous activity -definition/criteria -why strict liability applies

An activity that is inherently dangerous; if harm results, the performer may be held strictly liable. -why strict liability applies: defendant has created an unusual risk in community and if activity causes injury/damage, another person/animal's action/force of nature is immaterial to defendant liability ultra hazardous activities: -It has a high degree of risk of serious harm. -It cannot be performed without the high degree of risk. -It does not normally occur in the area in which it is conducted.

market share liability

An expanded liability concept that applies when a product that has harmed a consumer cannot be traced to a single manufacturer; all manufacturers responsible for a substantial share of the market are named in the lawsuit and are liable for their proportional share of the judgment.

concert of action -what plaintiff must prove

An expanded liability concept that applies when all defendants acted together or cooperatively. plaintiff must prove EITHER: -defendants consciously parallel each other (as result of agreement or implied understanding) -defendants acted independently but effect of acts was to encourage/assist others' wrongful conduct plaintiff doesn't have to sue all potential defendants

conspiracy -what plaintiff must prove

An expanded liability concept that applies when two or more parties worked together to commit an unlawful act. plaintiff must establish responsibility of defendants by proving all defendants agreed to commit wrongful act/carry out legal act by illegal means leading to plaintiff harm

alternative liability -what defendant has to prove

An expanded liability concept that shifts the burden of proof to each of several defendants in a tort case when there is uncertainty regarding which defendant's action was the proximate cause of the harm. -defendants have burden of proof of causation (prove that they didn't cause the harm or someone else did) -plaintiff can sue 1+ defendants but not necessarily all of them

Declaration Page -definition -includes

An insurance policy information page or pages providing specific details about the insured and the subject of the insurance. -policy number -policy period -name of insurer/insurance agent/insured/addl interests -address of insured/covered property -#/edition date of forms/endorsements -dollar amounts of limits/deductibles -rating info and policy premium endorsements can have information similar to those in declarations

intentional/negligent infliction of emotional distress -definition -possible defense -common law and how it's changed

An intentional act causing mental anguish that results in physical injury. -defense: act was not intentional, no actual physical injury/manifestation (if pure emotional doesn't count) negligent infliction: An unintentional act causing mental anguish that results in physical injury. -defense: act was not negligent common law: prove physical injury results from emotional distress (no recovery for emotional distress alone) -now: rule no longer prevalent --some courts: physical injury can be any condition or illness capable of objective determination --some courts: no physical injury requirement/permit pure emotional injury since that can be as severe as physical harm

fraud -definition -proof of fraud -defenses

An intentional misrepresentation resulting in harm to a person or an organization. -aka deceit, misrepresentation proof of fraud requires 6 elements: -A false representation has been made. -The misrepresentation is material and concerns a past or an existing fact. -The misrepresentation was knowingly made (made with the knowledge of its falsity, in reckless disregard of the truth or without knowledge or concern as to whether it was true or false) -The misrepresentation was made with intent to influence or deceive. -The party to which the misrepresentation was made places reasonable reliance on its truth (reliance requires proof/must be justified, if party would have acted regardless of representation NO FRAUD OCCURRED) -complaining party must suffer detriment/actual damage defenses: -The statement was not false. -The statement did not relate to a material fact. -The defendant did not know the statement was false. -The defendant did not intend to deceive. -The plaintiff did not rely on the statement. -The plaintiff suffered no harm or loss because of relying on the statement.

insurable interest -def -life vs property insurance

An interest in the subject of an insurance policy that is not unduly remote and that would cause the interested party to suffer financial loss if an insured event occurred. -exists even if not mentioned in policy provisions -life: beneficiary must have insurable interest in life of insured when policy purchased but not necessarily at time of death -property: insurable interest must be present @ time of loss

interference w/ employment tort

An unjustified intentional act that interferes with another's valid or expected business relationship. -may overlap w/ other torts (defamation if info false) -eg. negative info about person applying for job defense includes defendant allegation they didn't do any of the following: -Interfere with or prevent employment -Induce a breach of contract -Harm the plaintiff -Act in furtherance of an unlawful object -Use unlawful means to procure discharge -Blacklist (inappropriately recommend rejection of a potential candidate for employment)

policy conditions -definition -examples

Any provision that qualifies an otherwise enforceable promise made in the policy. -insurer promised to pay to/on behalf of/defend in policy insuring agreement but enforceable only if insured event occurs/insured fulfilled contractual duties as specified in policy conditions examples: pay premium, report losses promptly, documentation for losses, cooperate with insurer in legal proceedings.

commercial property basic/broad form: exclusions

Apply to losses caused directly/indirectly by any of these perils even if another covered cause contributed to loss 1. Ordinance or Law: eliminate coverage for consequential losses resulting from enforcement of building ordinance/law 2. Earth Movement: excludes earthquakes, landslides, mine subsidence and everything except sinkhole collapse (ensuing losses from fire/explosion are covered!) 3. Government Action: exclude seizure/destruction of property by governmental action (exception is destruction of property to stop spread of covered fire) 4. Nuclear Hazard (exception is loss by fire from nuclear whatever) 5. Utility Services: exclude loss caused by power failure/other utility service if failure originates away from described premises (overhead power line way from premises), or if only failure involves equipment supplying utility service to described premises from source way from described premises (overhead power line on premises) -exception is loss from covered peril resulting from power failure 6. War and Military Action (except terrorism) 7. Water: exclude flood/surface water/tide/wave/overflow of water/mudslide, backing up of sewer/drain/sump, underground water seeping through anywhere -exception is damage by fire/explosion/sprinkler leakage caused by above. 8. Fungus, Wet Rot, Dry Rot, and Bacteria: exception is if it's from fire/lightning (subject to anti-concurrent causation), each cause of loss form has additional coverage for this which has most amount of insurance Other (not subject to anti concurrent causation wording) -electrical/magnetic/electromagnetic energy damaging electrical devices (except for resulting fire damage) -rupture/burst of water pipes unless caused by covered cause of loss (except sprinkler leakage, exclusion only in basic form) -leakage of water/steam -explosion of steam boiler/pipe/turbine/engine owned/leased/operated by insured -mechanical breakdown -neglect

common policy conditions

Attached to every CPP/monoline policy, applying to all coverage parts in policy unless stated otherwise -cancellation -changes -examination of books/records -inspections/surveys -premiums -transfer of rights and duties under this policy

Premium revenue equation -CY, ult PY, PY

CY: WP during period + beginning UP liability - ending UP liability Ultimate PY: WP to date, with possible adjustment for expected amounts in future PY revenue: WP to date - unearned premium for the PY

source of insurance regulation: legislation (Canada) -what federal law oversees -what provincial law oversees -solving legal insurance problems

Canadian constitution empowers federal Parliament/provincial legislatures to enact legislation -federal statutory law dictate insurer corporate matters (organization, licensing) --Insurance Companies Act vests minister of finance w/ responsibility of managing superintendent of financial institutions who supervises insurers -provinces enact laws pertaining to form/content of most insurance contracts --classes include fire/auto/life etc all with different rules --legislation varies widely from province to province solving legal insurance problems involves ascertaining applicable legislation, and applicable part of legislation: -first determine class of insurance (which can be defined by peril or subject matter depending on province)

HO-3 Property Coverages (4 + additional)

Coverage A - Dwelling: apply to dwelling 'residence premises' on dec page, and structures attached to dwelling Coverage B - Other Structures: apply to non attached structures on residence premises other than dwelling building Coverage C - Personal Property: apply to contents of insured premises/personal property owned/used by insured anywhere in the world Coverage D - Loss of Use: apply to insured's exposure to financial loss (apart from property damage) if premises damaged so badly it's unfit for use Additional - stuff that's not covered in other coverages (example is Trees/Shrubs Plants, debris removal)

HO-3 Liability Coverages

Coverage E- personal liability: 3rd party coverage for those injured/property damaged by insured Coverage F - medical payments to others: covers necessary medical expenses incurred by others within 3 years of injury

(professional liability) duties of care and loyalty

D&O must exercise same degree of care a reasonable D&O would ordinarily exercise -does not require them to guarantee profitability of enterprise/have special business skills decisions made within range of reasonable business judgement satisfies this duty of care and is a defense -may not be liable for loss even if decision not reasonable UNLESS it resulted from lack of good faith in business judgment director duties: -minimum: attend director meetings (can't defend against liability by asserting ignorance arising from not having attended meetings) -should ask questions, seek out information, not rely on management unsupported statements -absolute right to inspect corporate books/records (can rely on reports presented by employees if director believes them reasonably reliable)

DICE

Declarations: examine dec page to determine if info provided by insured precludes coverage Insuring Agreement: determine if loss is covered (contains policy provisions regarding covered property/events/causes of loss/territories) Conditions: determine insured/insurer compliance --determine fulfillment of conditions (payment), if coverage is denied on condition breach, coverage triggers/restrictions, claim disputes, post-loss duties, rights and duties, subrogation/salvage --homeowners: concealment of material fact Exclusions: make sure these don't preclude coverage of loss

ISO HO policy forms (6) -what form provides and who it's for

HO-2 broad form: named peril coverage for dwelling/other structure/personal property (for owner/occupants) HO-3 special form: open perils coverage on dwellings (for owner/occupants who want broader coverage) HO-4 contents broad form: coverage for tenant personal property (for tenants/occupants of any structure) HO-5 comprehensive: open perils coverage on dwellings, other structures, personal property (owner/occupants who want broadest coverage) HO-6 unit owners: named peril coverage of personal property with limited dwelling coverage (owners of condos/coop apartment share owners, no occupancy requirement) HO-8 modified coverage: limited, named peril coverage for dwelling/structure/personal property on functional replacement cost (for owner/occupants whose dwellings may not meet UW stds for other policy forms)

HO-2 vs. HO-3 -premium -limits/property covered -type of coverage -HO-2 named perils + 2 differences

HO-2 has slightly lower premium than HO-3 -cover the same property for same limits (but for fewer causes of loss) -HO-2 is NAMED PERILS for Covg A,B,C while HO-2 is OPEN PERILS -HO-2 named perils similar to Covg C of HO-3 (with slight differences): --vehicles peril in both, HO-2 excludes loss to fence/driveway/walk caused by vehicle owned/operated by resident of premise --accidental discharge/overflow of water/steam, HO-2 excludes if building vacant > 60 days --there's definitely more but not mentioned in section

HO-6 vs. HO-3 -what HO-6 is for -residence premises -coverage differences

HO-6 is for unit owners in condo or cooperative corporation -HO6 w/ mandatory residence premises definition endorsement: define residence premises as unit the insured resides on inception date of policy (HO3 is the dwelling) -HO6 Covg A Dwelling description includes: alterations/appliances/fixtures/improvements that are part of building in insured unit, items of real property pertaining exclusively to insured unit, property that is the unit owner's responsibility under property owner agreement, structures owned solely by insured at residence location --Covg A: basic limit of 5000, named perils --Covg B: eliminated --Covg C: limit the insured selects, named perils --Covg D: 50% of Covg C (HO3 is 30% Covg A) --Loss assessment is the same --trees/shrubs/plants solely owned by named insured on grounds at unit are 10% of Covg C limit (HO3 vs 5% Covg A) --no addl coverage for landlord furnishings --coverage for debris removal does not cover cost to remove trees damaging covered structure/driveway/ramp

HO-8 vs. HO-3 -what HO-8 is for and why HO-3 wouldn't work for it -HO-8 conditions -what's not included/limits

HO-8 for when replacement cost of owner-occupied dwelling >> market value (may have obsolete construction/features) -HO might be unwilling to pay high premium for house they purchased for less, and could receive more money by collecting insurance payout than by selling (moral hazard) -HO8 Conditions: if insured makes repairs after loss, insurer does no pay more than cost of common construction materials/methods that are functionally equivalent/less costly than obsolete/antique/custom construction --only 10 named perils, limits/eliminates other coverages in HO3 --addl coverages for collapse, landlord furnishing, ordinance and law, grave markets not included and theft peril is 1000 for everything --other limits: smoke from fireplace is excluded, glass/safety glazing limit 100, debris removal has no addl insurance available if policy limit exhausted, windstorm is only peril covered for trees/shrubs/plants up to 250 (occurrence limit is the same), no coverage for personal property owned by guest/residence employee while property is in any residence occupied by an insured, theft peril provides off premises coverage limited to property in banks/trust companies/self-storage

prof/manage liability vs CGL: claims made trigger -how a claims made trigger works vs occurrence -retroactive date -extended reported period

ISO claims made CGL rarely used and most are covered under occurrence CGL professional/management liability is claims-made trigger, as claims are sometimes not settled for a while after policy -policy in effect when claim first made against insured is the policy that covers claim (occurrence trigger would cover claim made years after policy expired if injury occurred during policy period) key features: -retroactive date: date on/after the insured event must occur in order to be covered (w/o this date, policy covers any claim first made during policy period no mater when it happened) -extended reporting period (tail): additional period following expiration of claims-made period during which expired policy will still cover claims first made for injury/damage between retroactive date and before policy expiration --some policies include this automatically applied for no additional premium, this basic ERP lasts 30-60 days --supplemental ERP for premium usually goes 1-3 years

Part A exclusions (14)

Insuring agreement describes broad coverage narrowed by exclusions -intentional injury -property owned/transported -property rented to/used by/in care of insured (still covers damage to rented residence/private garage) -BI to employee of insured (still covers injury to domestic employee injured in course of employment if no worker's comp) -public/livery conveyance (exception is share the expense carpool) -garage business use (exclude loss that should be under commercial auto) -other business use (except if using own auto) -vehicle used w/o reasonable belief of being entitled -anyone covered by nuclear energy liability policy -vehicles < 4 wheels/off road veh (except nonowned golf cart or vehicle used in medical emergency) -other vehicle owned by insured/available for insured's regular use (try to get insured to accurate disclose number of vehicles owned/used) -vehicle owned by/available for family member regular use (does not apply to named insured) -racing -personal vehicle sharing

commercial umbrella insuring agreement -2 kinds of promises/agreements

Insuring agreement: one comprehensive insuring agreement instead of specific ones -usually promise to pay amount in excess of underlying limit hat insured becomes legally obligated to pay as damages for BI/PD/Personal injury/Ad Injury from an occurrence to which policy applies -OR 2 insuring agreements: A is excess applying over underlying policies, B is occurrences for which coverage available under umbrella not underlying

medicare advantage plans managed care options

Medicare Part C, may offer managed care options: -HMO -provider sponsored org -PPO -medical saving account (MSA): HSA with high deductible cat health plan -private fee for service plan: beneficiaries have more choice to obtain service from any medicare approved provider accepting plan payment -special needs plans (enroll 1+ types of individuals with special needs as defined by law)

disability/health facts

National Safety Council -disabling injury every second and fatal injury every 4 minutes -10% disabling accidents/illness are work related Census -18% americans disabled SSA -as of 2007, 3/10 are disabled before retirement -avrage monthly benefit from SS disability insurance is 1004 a month -39% of SSDI benefits approved -70% workers have no long term disability insurance

part C insuring agreement -vehicles not considered UM vehicles

Non UM vehicles: if insured is injured by one of these UM does not apply -owned by/available for regular use of you/any family member -owned/operated by self-insurer under any applicable motor vehicle law (except if it is becoming insolvent) -owned by government unit/agency -operated on rails/crawler treads -designed mainly for off road use used off road -located for use as residence/premises

terrorism/TRIA disclosure endorsement

On insurer offer to purchase insurance/renew policy, TRIA requires insurers to inform policyholders about costs/limitations of terrorism coverage with 3 disclosures: -portion of policy premium attributed to certified acts of terrorism (and coverages the premium applies to) -federal share of compensation for certified acts of terrorism under the program (if insurer deductible met, federal share is 85% of losses attributed to acts up to program cap) -amount of program cap (100 billion, if cap exceeded amount of coverage for certified losses may be reducd @ discretion of secretary of the treasury) -ISO wrote endorsements applicable to ISO LOB to which TRIA applies, NCCI does disclosure endorsements for worker's COMP

agreed value optional coverage

Optional coverage that suspends the Coinsurance condition if the insured carries the amount of insurance agreed to by the insurer and insured.

national/local economic impact of insurance industry (8)

P&C insurance affects economies of U.S.+ Canada by: -generating substantial revenue -employing thousands of people -mitigate uncertainty -increasing sales of goods/services -providing insured w/ indemnification and defense costs -providing sources of investment funds/taxes -making credit available -lower repair/replacement costs

actuarial ratemaking principles -4 principles -what can be done about differences in interpretation between insurer/regulator (and predictive modeling situation)

Principle 1: A rate is an estimate of the expected value of future costs. Principle 2: A rate provides for all costs associated with the transfer of risk. Principle 3: A rate provides for the costs associated with an individual risk transfer. Principle 4: A rate is reasonable and is not excessive, inadequate, or unfairly discriminatory if it is an actuarially sound estimate of the expected value of all future costs associated with an individual risk transfer. -principles usually reflected in laws prohibiting inadequate/excessive/unfairly discriminatory rates --differences in interpretation of principles addressed in questions posed to insurer during rate-filing review process OR may need hearing presenting expert witnesses are necessary to sort out opposing actuarial opinion --predictive modeling: complex and insurer desire to keep models confidential, insurers may have difficulty demonstrating to regulators that proposed rates/rating plans comply with law

Approaches to earning premium (2)

Pro rata: Unearned premium is a means of deferring revenue so that revenue is earned as coverage is provided - assume insurance protection is evenly spread over the policy term (GAAP) Non Pro Rata: Unearned Premium is a reflection of refund liability in the event of policy cancellation - used for non evenly spread insurance protection -more complicated, may allow pro rata method in accounting if effect is not material

One set of accounting rules (GAAP=Regulatory=tax accounting) - advantage and disadvantage

Pro: reduced cost/confusion in creation of information Con: needs of all users are not the same, compromises must be made that are suboptimal to one or more sets of users.

terrorism auto coverage endorsements -what it does

TRIA doesn't apply to auto insurance at all from whatever coverage -this endorsement covers/excludes acs of terrorism with respect to auto liability exposures, regardless of whether coverage for terrorism provided/excluded for exposures other than auto

terrorism/NBCR exclusion endorsement -what is NBCR -how ISO handles these

TRIA doesn't mandate coverage for terrorists attack from nuclear, biological, chemical, radiological materials (NBCR) acts of terrorism when coverage isn't provided in base policy -ISO has endorsements for excluding losses caused directly or indirectly by NBCR acts -offered only when insured initially rejects certified acts of terrorism coverage

conversion tort -definition and what it applies to -who can sue -defense

The unlawful exercise of control over another person's personal property to the detriment of the owner. -applies only to chattel (Tangible, movable personal property) NOT land party must be deprived of possession of chattel by wrongful taking/disposal/detention or severe damage/destruction -anyone with a right to possession (including finder/bailee) can sue for conversion defense: -A plaintiff's failure to establish the right to possession of the property -A plaintiff's refusal to demand return, followed by the defendant's consequent refusal to deliver -bailee: property was not in possession because it was lost/destroyed w/o bailee fault

punitive damage trends -how trend has changed over time

US courts began awarding punitive damages in cases not involving intentional injury caused by defendant -developments in products liability/mass tort litigation imposed punitive damages for repeated instances of liability due to single product/decision to reverse this trend, jurisdictions: -place caps on noneconomic damages -require a more stringent burden of proof to support imposition of punitive damages -created defense for injuries resulting from specific types of products (pharmaceutical)

trespass tort -definition (what it applies to, condition for plaintiff) -real property vs personal property trespass -defenses

Unauthorized entry to another person's real property or forcible interference with another person's personal property. -for real OR personal property -plaintiff must be IN POSSESSION of property (if not, no right to sue) --tenant in possession can sue only for injury to his/her interest -real property: presume at least nominal damages since unauthorized entry onto someone else's land has happened (liable even if entry accidental and entry isn't even required) -personal property: someone kills your dog/forcible interference defenses: -plaintiff didn't own/possess property -plaintiff consented to defendant entry -defendant didn't enter onto/take control of the property

UCAJTFA -what it provides -release

Uniform Contribution Among Joint Tortfeasors Act provide that if 2+ persons are jointly/severally liable in tort for same injury/damage/wrongful death, they have right of contribution among them even though plaintiff has not recovered judgement against all/any of them -tortfeasors who paid more than pro rata share of joint liability entitled to reimbursement from other tortfeasors up to amount of excess over pro rata share -(relative degree of fault not considered) plaintiff can release 1+ defendants w/o releasing others if good faith release indicating intent only to release part not all of liability and if the payment is full compensation

unfair competition tort -definition -common law (what causes injury) -defense

Use of wrongful or fraudulent practices by a business to gain an unfair advantage over competitors. -one party deceives public into buying its product in mistaken belief it is another party's product -applies to literary/artistic properties common law: prohibit people/org from pretending goods are someone else's by using similar trademark/label/wrapper and competitor could sue if deprived of value of goodwill in business -no injury unless 2 parties competing directly w/ same product service -legally one party can't make/label goods in any manner leading public to believe goods are product of another manufacturer in another field (doesn't matter if not in direct competition) defense - assertion defendant didn't do 1+ of these acts: -Compete -Compete directly -Harm the plaintiff -Mislead the public -Deceive anyone

annuity types based on date benefits begin -deferred: when benefits payable, pros, if annuitant dies -immediate: when benefits payable, pros, cons

accumulation period: period between purchase of annuity and annuitant's age at which benefits begin -deferred annuity benefits not payable until specified time future (@ certain age or after time period) --pro: more effective for retirement (premium payments during accumulation. period which has tax deferred interest for periodic payout later in life) --if annuitant dies before any payouts, beneficiaries pay income taxes on earnings (not inheritance) -immediate annuity benefits begin soon after annuity owner purchases annuity --pro: individual gets payments and invest for future earnings/payouts, pays less ordinary income tax on early payouts --con: accumulation period is shorter for early payouts so do not earn as much tax deferred interest as earnings from deferred annuities, for policies after 1/10/85 or withdrawn before age 59.5, 10% early withdrawal penalty

other aircraft coverages

additional liability: -medpay: coverage pays regardless of insured's legal liability reasonable medical/funeral expenses incurred by occupant of insured aircraft -passenger voluntary settlement ('admitted liability'): usually for industrial aid aircraft, provides scheduled benefits if passenger suffers death, dismemberment or loss of sight --insured must as insurer to pay and claimant must release insured from liability for all BI caused bon accident -nonowned aircraft liability coverage: designed for firms that have employees who use airplanes in firm business (sales rep) --similar to nonowned auto liability coverage and available on stand-alone basis for forms with no other aircraft exposure -first two make prompt payment to passenger to avoid costly liability claim

administrative agencies/law -admin agency (definition, what they do, relation to judiciary/legislators, primary functions) -admin law(definition, main purposes)

admin agency: An official governmental body that is empowered with the authority to implement and administer particular legislative acts. -handle day to day regulation of insurance: agencies should have insurance expertise to set standards for/examine insurance rates -decisions implemented have force of law (courts have ultimate power to review decisions) -legislators delegate duties to fill in details of legislation by allowing agencies to make rules/regulation/solve disputes -primary function: rule making, adjudication admin law: The statutory laws that grant power to administrative agencies to act and the body of law that is created by administrative agencies themselves. -main purposes: ensure actions taken by agency authorized by federal/state/provincial legislatures AND ensure laws administered fairly/reasonably

administrative adjudicatory function

agencies make decisions requiring insurers/producers to cease engaging in illegal behavior, make restitution, pay fines, forfeit licenses. parties can appeal: -1. administrative appeal occurs within agency, governed by agency procedures (higher body in agency determines correctness of original decision) -2. if case goes through all levels of agency adjudication/appeals, party exhausts all administrative remedies and can seek judicial review in court --court will examine agency method for reaching decision, and can review based on due process --federal court review action of federal agencies, state law review state agency actions

BPP Addl Covgs/Covgs Ext Special Limits -how limits can be increased (+exceptions)

all BPP additional coverages/coverage extensions (except Preservation of property) have special dollar limits) -most of the time these limits are insufficient -limits can be increased by getting higher limit in declaration, add endorsement or buy another type of policy --Pollutant Cleanup/Removal or Electronic Data usually can't have a higher limit under BPP

life provisions: misstatement of age/sex -what this allows insurer to do and what they might do

allow insurer to adjust death benefit on life insurance policy to reflect true age/sex of insured if misstatement occurred -may adjust face value of policy or amount of premiums owed -mistatement usually due to clerical error in completion of application/preparation of life insurance contract

nonstandard forms -definition -preprinted vs. manuscript

also called proprietary/company-specific -common for high volume lines of insurance -may also use manuscript forms to provide nonstandard policy wordings -contain provisions varying from standard form and contain coverage enhancements not found elsewhere -preprinted nonstandard forms easier than manuscript forms to evaluate in policy analysis

commercial property special form additional coverages/coverage extensions

also in broad form: -collapse -fungus unique: -property in transit -glass extension -water/damage

HO-3 Coverage D - Loss of Use

applies to insured's exposure to financial loss apart from property damage if residence damaged so badly it's not fit to live in -applies only if damage is result of loss covered under Section I -limit is 30% of Coverage A in addition to Coverage A limit -3 coverage groups under Coverage D: --additional living expense: pays for any necessary increase in living expenses required to maintain household normal standard of living --fair rental value: if part of residence rented to others, insurer reimburses insured the lost rental value (less expenses that don't continue) until repairs are made --loss of use due to civil authority: even if insured's property is undamaged, insured's property may not be accessed because of damage to neighboring property (covered for max of 2 weeks)

structured settlements/judgements -what it is/how it works -advantages for plaintiff -advantage for insurer -factors considered in determining amount/term

alternative to lump-sum settlement for plaintiff -used when insurer involved in payment of substantial claim on behalf of defendant gives plaintiff some payment immediately but defers much of payment not future (periodic payments over time) -insurer will arrange this by purchasing annuity from life insurance company and name plaintiff as beneficiary advantage to plaintiff: interest on annuities tax free, where if they invest lump-sum they pay tax on investments -can help ensure steady of flow and stop plaintiffs from blowing it prematurely -also addresses: --Ongoing medical treatments --Income to replace wages that can no longer be earned --Ongoing household help --Occupational therapy and rehabilitation --Educational needs for children --Medical equipment replacement --Payment of legal fees on a lump-sum or an extended basis --Trusts, endowments, or annuities to take care of dependents or contingencies that may arise advantage to insurer: additional tax-free income may make settlement more attractive to plaintiff -can resolve impasse since plaintiff gets more money overall factors considered in determining amount/terms of structured settlement: -Plaintiff's life expectancy -Future medical expenses -Reasonable monthly living expenses, including mortgages, taxes, maintenance, food, clothing, and similar items -Costs of dependents' needs -Legal fees -Special contingencies

BPP optional coverages: agreed value -where it's shown -what the insured gets out of it -what the insured probably needs to submit and UW have to be careful -what happens when limit of insurance < agreed value, and when limit of insurance >= agreed value -when coverage ends and renewal

amount entered under agreed value heading in dec page for each category of property to which option applies -insured removes uncertainty as to whether amount of insurance carried complies with coinsurance condition as both insured/insurer agreed in advance amount in declarations is adequate -UW must be careful since insured is tempted to underinsure (esp cause losses usually partial), insured will probably submit signed statement of value if limit of insurance > agreed value, pay loss in full up to limit if limit of insurance < than agreed value, loss payment reduced proportionally: loss payment = (limit / agreed value) * loss - deductible coverage goes until agreed value expiration date shown on declarations or policy expiration (whichever first) and needs renewal, or else coinsurance conditions reinstated

insurance to value in Homeowners/Businessowners

amount payable NEVER less than ACV of property subject to policy limits -3 possible amount payable --replacement cost (reward for those insured to at least 80% of replacement cost value) --actual cash value (penalty) --between replacement cost/ACV (did/should * loss on replacement basis)

HO-3 Coverage B - Other Structures -what it applies to -limit -3 exclusions

applies to: -structures on residence premises not attached to dwelling and separated from it by 'clear space' --still counts as separate if linked fence/utility line collective limit for all 'other structures' = 10% of coverage A limit 3 exclusions: -structure rented to anyone who is not resident of dwelling (unless it is rented as private garage) -structure from which any business is conducted -structure used to store business property (exception is if business property is solely owned by insured/tenant of dwelling and business property doesn't include gaseous/liquid fuel other than in vehicle)

(products liability) defenses -which ones are incomplete, what defendant or plaintiff must prove

apply for both negligence, strict liability 1. state of the art: defendant claims product was safe according to state of the art @ time product was made -state of art: highest level of pertinent product 'scientific knowability'(technological feasibility of producing safer product based on existing science)/development/technical knowledge existing @ time of manufacturer -if no indication of danger/no technique to obtain knowledge of such, manufacturer has no reason to prevent manufacture of product -INCOMPLETE DEFENSE: must introduce evidence to justify placing product in market 2. compliance w/ statutes and regulations: defendant complied w/ these -INCOMPLETE DEFENSE: not conclusive against negligence/product defect --plaintiff could introduce evidence showing reasonable manufacturer could have taken more precaution 3. compliance w/ product specifications: manufacturers make products to conform to specifications established by buyers/others -negligence: manufacturer won't be liable for product built to someone's specification UNLESS defect is sufficiently obvious to alert manufacturer to potential for harm (plaintiff could sue specification preparer instead) 4. open/obvious danger: no duty to warn/take precaution for common/open/obvious propensity of product -knives, guns, gasoline etc. 5. plaintiff knowledge: person using product has knowledge equal to manufacturer knowledge (no duty to warn) 6. comparative negligence vs. assumption of risk -if state allows comparative negligence defense in strict liability suits, assumption of risk defense no longer applies -if not, active negligence (voluntary use of defective product with knowledge of danger from defect)/assumption of risk defense can apply to strict liability suit --passive negligence (A plaintiff's failure to discover a product defect or to guard against a possible defect.) does not bar recovery --defendant must prove plaintiff knew of defect/danger 7. misuse of product: similar to active negligence, this is product misuse/abnormal use -plaintiff must prove product used in appropriate/foreseeable manner to establish defect 8. alteration of product defense: manufacturers not liable for modifications made after sold

BPP Coverage extensions: when it applies, what each does/does not covers -newly acquired/constructed property -personal effects/property of other -valuable papers and records (other than electronic): what it covers -property off premises -outdoor property -non-owned detached trailer -business personal property temporarily in portable storage units

apply if at least 80% coinsurance or value reporting period symbol shown in declarations -payable in addition to overall limits shown in declaration (subject to special limits) -newly acquired/constructed property -personal effects/property of others: limited coverage for personal effects owned by individual insured/partner/member/officer/manager/employee of insured while on premises described in declarations --also covers property of others in care/custody/control of insured --not covered for loss/theft -valuable papers and records (other than electronic): covered for cost of blank records + labor to transcribe/copy duplicate information --accounts receivable, mailing lists, legal docs, medical records, specifications, drawings -property off premises: coverage for covered property while away from described premises --includes property temporarily @ location insured doesn't own/lease/operate, property in storage @ location leased after inception of current policy, property @ fair, trade show, exhibition --does not include property in/on vehicle or in custody of salesperson except @ fair/trade show -outdoor property: cover loss to outdoor fences, radio/TV antenna, trees/shrubs/plants --has own list of covered causes of loss: only loss by fire/lightning/explosion/riot/civil commotion/aircraft -non-owned detached trailer: extends 'your business personal property' to leased trailer if it's used in insured's business and in insured's care/custody/control and insured must have contractual responsibility to pay for loss/damage to trailer --does not apply if trailer attached to motor vehicle/conveyance and during hitching/unhitching operations -business personal property temporarily in portable storage units: temp insurance for BPP while stood in portable storage unit (trailer or actual unit) --must be located within 100 feet of building/structure described in declarations or 100 feet of described premises (whichever greater) --ends 90 days after property placed in unit or if unit in use at premises for > 90 days --limit 10000 regardless of # of units

commercial property basic/broad form: covered causes of loss

both are named perils: broad form covers all perils in basic +3 (most insureds choose broad even though it is slightly more expensive) -fire -lightning -explosion -windstorm/hail (doesn't include damage to interior unless building damaged by wind first, also doesn't include hail damage to vegetated roof) -smoke (sudden and accidental, not from industrial or smudging) -aircraft/vehicles (aircraft physical contact only, vehicle physical contact or contact from object thrown by vehicle) -riot/civil commotion -vandalism (except from entry/exit of burglars) -sprinkler leakage -sinkhole (not cost of filling sinkhole) -volcanoes (all eruptions in 168 hour period are one occurrence so one deductible/limit, not earthquake from eruption) -broad form only: --falling objects (only if roof/wall first damaged by falling object) --weight of ice/snow/sleet (not to vegetated roof or property in open) --water damage (from water/steam leakage from breaking apart/cracking of plumbing/heating/aircon/other system in covered building), also covers cost to tear out/replace building to repair leaky system. Will not cover cost to repair defect causing loss or repair gradual damage of 2 weeks or more

(product liability) breach of warranty -what a breach of warranty lawsuit can involve -implied warranty -implied warranty of merchantability -UCC definition and what it does, who it applies to

breach of warranty lawsuit can involve either express or implied warranty -implied warranty: An obligation that the courts impose on a seller to warrant certain facts about a product even though not expressly stated by the seller. -implied warranty of merchantability: An implied warranty that a product is fit for the ordinary purpose for which it is used. Uniform Commercial Code: A model code that has been adopted in whole or in part by each state and whose purpose is to provide a consistent legal basis for business transactions throughout the United States and its territories. -UCC applies implied warranty of merchantability to merchant-seller's sales of goods: merchant-seller warrants that goods meet stand of trade, fit for ordinary purposes for which goods are used, conform to representations made on container/label -applies to suppliers or those who supply products for value --consideration: Something of value or bargained for and exchanged by the parties to a contract.

commercial umbrella liability insurance

broader coverage than ordinary excess (historically, now they are not much broader), umbrella usually provides excess coverage over several primary policies 3 functions: -provide additional limit above each occurrence limit of insured's primary policy -takes place of primary insurance when primary aggregate limit are reduced/exhausted -may cover some claims not covered by primary policies Provisions unique to Umbrella -drop down coverage -required underlying coverages -aggregate limits -insuring agreement -exclusions -conditions

Building (BPP definition) -what the definitions include -fixtures

buildings/structures listed/described in declarations, including -Completed additions to covered buildings -Fixtures (including outdoor fixtures) -Permanently installed machinery and equipment -Personal property owned by the insured and used to maintain or service the building or its premises (eg. fire extinguishing equipment; outdoor furniture; floor coverings; equipment for refrigeration, ventilation, cooking, dishwashing, or laundering) -if not already insured, includes addition/alteration/repair in progress including materials/equipment/supplies used within 100 feet of described premises fixtures: attached to building/land in a way they can't e easily removed (plumbing, electrical, light poles etc) -things like fences/signs usually excluded

Part F - cancellation -insured -insurer (2 different scenarios)

cancellation: -named insured can cancel anytime during policy period by returning policy to insurer/giving advance notice -insurer can cancel if: --if non-renewal/continuation policy in force < 60 days: mail cancellation notice (needs 10 days notice to insured for nonpayment of premium, 20 days for any other reason) --if renewal/continuation or in force > 60 days: cancel IF premium hasn't been paid, driver license has been suspended/revoked during policy period, policy obtained by material misrepresentation

source of insurance: judicial review -common law: definition, stare decisis, solving new legal problem process -civil law: definition

common law (most of Canada, US): A legal system in which the body of law is derived more from court decisions (precedents) as opposed to statutes or constitutions. -'stare decisis': lower courts follow higher courts and courts follow earlier court decisions when same issues arise again in lawsuits --give degree of certainty on law which citizens can rely on (can depart from precedent but must give good reason) -solving new problem involves synthesis: combine ruling from several legal authorities into new rule of law applied to new legal problem --compare facts of prior cases to current case to determine similarities/differences (look at similar cases in own state, then similar case in other states, then analyze general contractual principles/somewhat similar cases, then summon all applicable law) civil law (2/3 of world, Louisiana, Quebec): A basic legal system that relies on scholarly interpretations of codes and constitutions rather than court interpretations of prior court decisions, as in common-law systems. -codes amended frequently to update law

Interference With Family Relationships tort - other family -common law actions historically and what they are now -wrongful life and pregnancy

common law: -parents could sue 3rd persons for injury to children based on loss of services --now: not necessary to show loss of services, so kidnapping/seducing/negligently injuring gives right to sue regardless of economic deprivation -children had no right to sue parents for injuries/failure to provide support --now: they can allege force used was unreasonable/in bad faith -children had no right to sue 3rd party who injured parents --now: child can now recover for injuries 3rd persons cause to parents wrongful life actions: A lawsuit by or on behalf of a child with birth defects, alleging that, but for the doctor-defendant's negligent advice, the parents would not have conceived the child or would have terminated the pregnancy so as to avoid the pain and suffering resulting from the child's defects. wrongful pregnancy: A lawsuit by a parent for damages resulting from a pregnancy following a failed sterilization/if child has disabilities after misdiagnosis or failure to detect -recovery limited to special damages aka the expenses of taking care of a disabled child (not pain/suffering or other general damages) --may require limit recovery to period before child reaches majority

(liability of landowners) hotel guests and tenants -common law rules and how they've changed -reasonable precautions

common law: 1. landlord/hotel operator has no duty to protect tenants from intruders -many courts now impose duties on landlords/hotel operators/public entities to take reasonable precaution to secure premises against foreseeable risks of harm by intruders 2. hotel operators/inkeepers must furnish lodgings to anyone who could pay (as long as not objectionable for valid reason like intoxication): refusal means person could sue innkeeper -anti-discrimination laws enacted to apply these standards to other public places (theaters) 3. property owner/landlord leasing property to another is not liable for injuries resulting from disrepair/other dangerous conditions, whether condition resulted in injury to tenant or 3rd person -now evolved so landlord more responsible for dangerous conditions (liable if injury results from negligently made repairs/concealed danger owner knows about but tenant doesn't or can't easily discover) 'reasonable' precautions depend on: -prevailing practices in type of occupancy -extent of crime in the area -kinds of security that are reasonable to provide under the circumstances --can apply to motels, parking garages, college campuses, unlighted parking lot

charitable immunity

common law: charitable orgs had immunity from suit in tort -largely been abolished and cases treated under general rules of negligence (especially for vicarious liability)

intrafamilial immunity -what common law says -2 categories of immunities

common law: one family member can't sue another in tort -this is because: belief suits would disrupt family peace/harmony, deplete family financial resources, lead to collusion/fraud immunities: -interspousal: A defense to negligence that grants immunity to one spouse from the other spouse's lawsuit for torts committed before, during, and after the marriage. --mostly abolished -other family relationship: --parent child: A defense to negligence that grants immunity to parents from their children's lawsuits for torts (also mostly abolished, may still be immune if child is emancipated or child is injured in parent's business activity) --some insurers insert interfamilial exclusion but courts vary on if exclusion is void since it violates public policy

tenancy in partnership -what it is -insurable interest -payment

concurrent ownership by partnership (and individual partners) of personal property used by the partnership -partnership and all partners have right of survivorship -insurable interest in property used by partnership, combined interests can be many x property value -payment to first named insured (partnership entity or one of the partners)

tenancy in common -what it is -insurable interest -payment

concurrent ownership of property (equal or unequal shares) by 2+ owners -do not have survivorship rights -insurable interest: limited to owner share of property -payment made to first named insured who distributes share of money to tenants in common

CGL Conditions - methods of sharing

contribution by equal shares (used if all applicable policies permit it, more advantageous to insurer with higher limits): -each insurer pays equal amount until claim fully paid or until one insurer exhaust limit, in which case other insurer pay remainder of claim up to limit contribution by limits (more advantageous to insurer with lower limits): each insurer pays proportion of claim insurer limit bears to total of all applicable insurance (subject to limit)

advisory organizations -why these organizations exist -primary rational for collecting historical data -statistical plans (what insurers use them for, why regulators define requirements)

cost data from members is collected and then shared for pricing purposes -McCarran Ferguson Act excepts insurers from pride coordination of Sherman Anti-Trust act, info sharing like this is unique to P&C insurance primary rationale for collecting historical/suggest pricing values: -single insurer might not have sufficient data to reliably project costs associated with insurance -> lead to inaccurate/inadequate rates which could threaten insurer solvency -combining insurer data allows for enough credible info for dependable estimate of future losses statistical plans: A formal set of directions for recording and reporting insurance premiums, exposures, losses, and sometimes loss expenses to a statistical agent. -insurers follow these to submit data to bureau/advisory org (requirements may vary by LOB, state) -regulations may define statistical plan requirements (since plans frequently used to justify changes to existing classification systems)

application of law in tort cases -kinds of laws that can be applied -local vs. transitory cause of action (definitions, examples) and what this determines -forum jurisdiction, what it determines and what happens if it's not where the wrong occurred -alternative to forum jurisdiction

court has choice of laws from various jurisdictions to apply to tort case: -common law (case law): Laws that develop out of court decisions in particular cases and establish precedents for future cases. -legislatively enacted law (federal or state) local vs. transitory cause of action determines plaintiff's standing to sue for tort in 1+ jurisdiction: -local: can be brought only where subject matter of controversy is located --eg. real property -transitory: arises from offense that could happen anywhere --driver accident determination of law to apply depends on forum jurisdiction (the place party sues): -if forum jurisdiction isn't where wrong occurred, court decides either to: --apply law of forum jurisdiction (lex fori), usually governs procedure (eg application of evidentiary rules, measure of damages in Canada) --apply law of jurisdiction where wrong occurred (lex loci), usually governs *substantive* matters relating to lawsuit (eg party rights, validity of defense, measure of damages in US) alternative to forum jurisdiction is significant contacts rule: -specify substantive law of state/province having more significant contacts to parties may apply even if the tort occurred elsewhere --ensures law of jurisdiction w/ greater interest in protecting citizens has law applied --w/ equal interest, court chooses rule of law with higher authority

market value and ACV -definition of market value -difficulty -most accurate for -what's eliminated in market value of real property

courts often rule ACV = market value (price something could be sold on open market by unrelated buyer/seller) -difficult to establish if few recent transactions involving comparable property (unique stuff) -may be most accurate for older historic buildings w/ obsolete materials/methods/antiques/collectibles (since property may be irreplaceable so replacement cost is impossible to determine) -land value is eliminated in establishing insurable value (since insurance doesn't usual cover land)

BPP debris removal -what it does -what coverage includes -what coverages DOES NOT include

cover cost of removing debris of covered property resulting from covered cause of loss during policy period -includes: --cost to cleanup pollution at insured's premises caused by insured peril (fire causes toxic chemicals on floor of insured building) --(maybe) cost to remove debris of property that is not covered property (neighbor's house blown onto premises) -does NOT include: --costs for cleanup/removal of pollutants from land or water --cleanup of off premises pollution even if covered loss

commercial property water damage/other liquids/powder or molten material damage extension -what it covers -does not pay for -does pay for

cover cost to tear out/replace any part of building necessary to repair appliance/system from which water or another liquid has escaped -does not pay for repair of defect the resulted in leakage -does pay for repairs to fire extinguishing equipment if damage results in discharge of substance from automatic fire protection system/is directly caused by freezing

ISO Commercial Property Endorsement: spoilage -what it covers -other aspects

cover damage to perishable stock resulting from: -power outage -on premise breakdown, -contamination of insured refrigerating, cooling, humidity control power outage should be caused by condition beyond insured's control, not subject to coinsurance, cannot be provided under blanket limit

ISO Commercial Property Endorsement: value reporting form -what it covers/is paid out and why this is good -penalties for failure and what they are -the process of this endorsement -when insurers refuse to add endorsement

cover fluctuating value of business personal property by providing insurance for insured's max expected values and require insured to periodically report property values to insurer (frequency of reporting indicated by symbol in declarations) --as long as reporting is accurate/on time, insurer pays full amount of any loss that occurs (subject to limit) even if values are greater than reported @ time of loss penalties for failure apply if: -no report is made (loss payment reduced to 75% of otherwise collectible loss) -1+ reports past due after initial (loss payment limited to last reported value) -reports are inaccurate (loss reduce by proportion value reported fears to correct value process: insured pays advance premium @ policy inception, advance premium based on 75% of limit -final premium determined after policy anniversary based on reported value (not obligated to pay more than limit even if reported values higher) --(this way insured has adequate limit to cover max personal property value/pay premium on reported) may not be issued for smaller insured since premium might not be large enough to warrant added expense of processing reports/final premium calculation

ISO CGL personal/advertising injury -what it covers -definition of personal/advertising injury -listed offenses

cover insured's liability for personal/advertising injury -defined as any kind of injury (loss of reputation, humiliation, economic loss, consequential BI from several listed offenses) --listed offenses: false arrest, wrongful eviction, libel, slander, infringing on copyright in insured's ad -can be omitted if insured doesn't want to be

HO-3 Section II Exclusions (applying to all of Section II): motor vehicles/other motorized craft

coverage doesn't apply if: -ownership/maintenance/occupancy/operation/use/loading/unloading of motor vehicle by anyone unless it's in a specific exception to exclusion -negligent entrustment by insured -insured failure to supervise/negligently supervise a person -insured vicarious liability for actions of child/minor

CGL Coverage C Exclusions

coverage excludes BI to the following persons: -Any insured (other than a volunteer worker of the named insured) -Anyone hired to do work for an insured or for a tenant of an insured -A person injured on that part of the named insured's premises that the person normally occupies -A person entitled to workers compensation benefits for the injury -A person injured while taking part in any physical exercises, games, sports, or athletic contests also does not apply to BI included in products completed operations hazard/BI excluded under coverage A

remediation stop-loss policies -what it covers -when it's used and why -what insurer agrees to pay -definition of claim/scope of work -possible exclusions

covers (first party) remediation costs exceeding projected/anticipated costs of performing an environmental cleanup of specific location being sold -used when property is known to be contaminated but cost of remediation is uncertain --high variance in cost of cleanup so buyers/sellers find it difficult to establish sale price: this policy closes gap between estimates by insuring remediation costs exceeding projected/anticipated cleanup insurer agrees to pay expenses (in excess of deductible) that insured incurs in completing approved remedial action work plan @ specified location -claim is written notice to insured that remediation cost > cost in scope -scope of work defined through endorsement (different in each policy) -few exclusions since written on first-party coverage basis (but might exclude willful noncompliance, war, contractual liability, BI) -third party coverage can be added by EIL coverage form to transaction

Site-specific environmental impairment liability (EIL) policy -what it covers -who it's sold to -coverage enhancements -insuring agreement promise -policy definition of BI/PD -policy definition of loss -typical limits

covers 3rd party claims from sudden/gradual release of pollutants from specified locations -sold to factories, waste disposal, golf courses, farms, municipalities, warehouses, oil refineries -coverage enhancements: can purchase protections against costs of on-site cleanup/claims arising from releases from 3rd party disposal/claims from preexisting pollution at insured sites -insuring agreement: obligate insurer to pay for behalf of insured a BI/PD/cleanup cost/loss+defense expenses subject to deductible --losses must be from pollution conditions existing beyond boundaries of sites listed in dec page -policy definition of BI/PD means for coverage to apply: --BI/PD must result from pollutants emanating from an insured site --AND physical injury/actual exposure to pollutants is required is required in some policy forms to trigger coverage for BI claims -policy definition of loss (usually claims made basis): --include cost to defend claims within scope of policy --cleanup costs (expenses insured incurs in removal/remediation of soil, surface water, groundwater, contamination in response to covered pollution liability loss) --loss from pollution conditions (follow definition o pollutants in ISO pollution exclusions) -limits: usually per-loss (with defense costs included in limit) AND subject to aggregate limit

BPP: your business personal property -when the property is covered -what kind of property is covered

covers personal property owned by insured/used in in insured's business (applies only when property located in/on described building, in the open (or vehicle) within 100 feet of building/structure or within 100 feet of described premises (whichever distance greater) Includes: -furniture and fixture, machinery and equipment, stock, all other personal property owned by insured/used in insured's business except excluded --stock: merchandise held in storage/for sale, raw materials, finished goods including supplies used in packing or shipping -labor/materials/services furnished by insured on personal property of others -interest in improvements/betterments (even if technically real property) -leased personal property for which named insured has contractual responsibility to procure coverage

commercial property theft related exclusions/limitations

covers theft of property that is NOT specifically excluded excludes: -dishonest/criminal acts of the insured/or partners/members/officers/managers/directors/employees of insured (except acts of destruction by employees) -voluntary surrounding of property as result of fraudulent scheme/trickery (thief tricking salesperson into allowing merchandise removal) -loss of property transferred outside of described premises on basis of unauthorized instructions -loss by theft of construction materials not attached to buildings (unless materials held for sale by named insured) -loss of property that's missing w/o explanation or evidenced by inventory shortage -special limits on theft loss on property that's attractive to thieves (furs, jewelry, precious metal, tickets) theft exclusion endorsement available if underwriter feels risk is unacceptable/insured wants to reduce policy premium

current assumption whole life

current assumption whole life (interest sensitive life insurance): traditional whole life and universal life policy -premium/cash value is periodically recalculated by insurer based on new actuarial assumptions -guarantee min interest rates/max mortality/expense charges -good for when interest rates rising -> higher investment earnings for insurer -> reduced premium/increased cash value for PH

insurance agent/broker E&O liability policies -liability from customer -liability from insurer -insuring agreement

customer liability usually from: -failure to properly advise a customer regarding insurance need -failure to obtain insurance for customer in timely manner after agreeing to do so -failure to renew policy @ expiration w/o giving prior notice -failure to properly advise customer regarding appropriate limits insurer liability comes from: -if agent binds coverage insurer didn't authorize them to bind and claims made under that coverGE -can also be sued for failure to cancel policy as instructed if loss occurs insuring agreement: pay on behalf of insured damages that insured becomes legally obligated to pay because of claims made against insured for wrongful acts arising out of performance of professional services for others

cyber risk insurance -definition of cyber risk -what kind of coverage policies offer -customization of policies -common insuring agreements

cyber risk - property, net income and liability loss exposures posed to organizations conducting their operations electronically/digitally policies can cover: -1st party only coverage (property/theft, difficult to assess and not as widely available) -3rd party only coverage (liability) -combo customization: -supplement basic product with insuring agreements appropriate -full coverage customization using insuring agreemens -standard package of insuring agreements/modular policies including particular range of coverage options common insuring agreements: -electronic data protection -cyber extortion -cyber crime -notification or remediation -business interruption -network security liability -privacy liability -electronic media liability -technology errors/omissions liability -intellectual property liability

life provisions: settlement options

death benefits under life insurance can be paid to beneficiary as: -single lump sum -interest option: life insurer retain death benefit and pays interest to beneficiary at periodic intervals (generally temporary until other settlement option chosen) -fixed period option: death benefits paid over specified period of time (periodic payment is function of amount of benefit, rate of interest paid on balance of death benefit held by insurer, frequency of benefit payments, period selected by beneficiary) -fixed amount option: death benefit, including interest, paid in fixed amounts @ predetermined intervals (usually monthly, interest included may extend time period in which payments made) -life income: beneficiary receives death benefit over life --may include no refund option (pays benefits only until death of beneficiary) --or may allow payments after primary beneficiary death to be made to contingent beneficiary --amount based actuarial tables using age/sex

defamation -definition -slander: definition -libel: definition, news media status -defenses

defamation: A false written or oral statement that harms another's reputation and concerns complaining party personally -slander: defamation expressed by speech --usually heard only once and chance large audience will hear is remote -> law requires substantial proof of injury to plaintiff's reputation and oral publication (communication) to 3rd person must occur -libel: defamation expressed in writing --wider circulation/more permanent than slander so higher potential for damage to person's reputation --publication must occur to 3rd person --news media: US holds public officials/figures suing news media for libel have to prove statement is false and that defendant made it knowing it was false or w/ reckless disregard (high degree of certainty of probable falsity)/malice defenses for slander/libel: -The statement was the truth. -The defendant made or printed a retraction (not complete defense but can reduce damage) -(absolute privilege) The statement was made in judicial or legislative proceedings, executive officers' communications, or spousal communications, or in situations when consent was given by the injured party. -(conditional/qualified privilege) The statement was made without malice as a matter of public interest, in petitions concerning appointments, in common interest communications, as fair comment on matters of public concern, or by credit-reporting agencies.

negligence: breach of duty -what defendant fails to do -reasonable person test (characteristics, circumstances affecting test, degree of care) -professional negligence standard, legal standard -when high degree of care is necessary

defendant must fail to conform to standard of care required in situation -to establish, courts ask if defendant conduct would be conduct of reasonable person under the circumstances reasonable person test: A standard for the degree of care exercised in a situation that is measured by what a reasonably cautious person would or would not do under similar circumstances. -external and objective (defendant individual judgement NOT considered), based only on how jury perceives reasonable person would have acted -circumstances change this test (disability, mental) -degree of care also varies according to possibility of harm involved (greater possibility of harm = greater caution) professional negligence: -standard applied is skill/knowledge of reasonably competent members of that profession applied with reasonable care --professionals not liable for errors in judgement provided they used reasonable care in reaching/judgement -legal standard applied is standard of professionals in own, local community (general community in same geographic area) high degree of care needed for: -common carriers (companies furnishing transportation to any member of public seeking offered services) must exercise utmost caution characteristic of very careful person (highest possible care) -people who handle/store dangerou materials must exercise care commensurate with risk associated with materials' dangerous character

assault -definition in noncriminal law

defined in noncriminal law does not involve physical contact -person at whom action is directed must anticipate/expect contact and fear harm (pointing a knife, swinging first close to person)

(defense) comparative negligence: -definition -variations

definition: A common-law principle that requires both parties to a loss to share the financial burden of the bodily injury or property damage according to their respective degrees of fault. 4 variations on rule (depending on state, comparison applies to combined fault of those against whom recovery is sought): -The pure comparative negligence rule -The 50 percent rule -The 49 percent rule -The slight versus gross rule

Part D Insuring Agreement: Collision - definition - relationship with fault - if 2+ vehicles on same policy

definition: upset/impact of covered/non-owned auto with another vehicle or object --colliding with car/tree, overturning, hit by parked car door -paid regardless of fault -- if caused by another driver, can collect from own insurer and insurer gets payment from driver insurer -with 2+ autos with collision under same policy, highest deductible applies

Part A supplementary payments (5)

does NOT reduce limit of liability Pay on behalf of insured. -cost of bail bonds (up to 250 for bail bond premiums required) due to covered BI/PD -premium on appeal bonds/bonds to release attachments: guarantee if appeal lost insured pays original judgement and appeal cost/guarantee the insured pays any judgement to please attachment on insured property -interest accruing after judgement: interest on judgement after rendered before payment. -loss of earnings because of trial attendance (up to 200 a day) -other reasonable expenses incurred @ insurer request (eg transportation)

CGL Supplementary Payments -what the supplementary payments are -relation to limits -relation to indemnitee

describe specific items insurer pays in addition to damages payable under Coverages A+B -paid in addition to limits of insurance applying coverage, but obligation to pay these ends when limit is exhausted from paying damages for judgements/settlements supplementary payments: -expenses incurred by insurer (fees for attorneys, witness fees, cost of police reports etc) --exclude attorney fee/expenses taxed against insured -up to $250 for cost (premium only) of bail bonds because of accident/traffic law violations from covered vehicle (mobile equipment) -cost of bonds (premium only) to release property of insured's held by plaintiff to ensure payment of judgement rendered against insured -reasonable expense incurred by insured @ insurer request (including loss of earnings up to 250 a day) -court cost/other costs (not actual damages) assessed against insured in suit -interest on judgement awarded against insured (pre or post judgement interest) -indemnitee: person/org insured has agreed to hold harmless/indemnify under insured contract --insurer also pays indemnitiee's defense cost in addition to policy limits if indemnitee/insured are both named as parties in the same suit (only occurs if insured has assumed obligation to defend imdemnitee under insured contract/no conflict exists between interest of insured and indemnitee) -indemnitee must also cooperate w/ insurer/ do same things as any other insured

experience rating -definition -based on what -common in what line

determine price of insurance product by which insurers generally set initial rates based on average of all policyholders' loss experience -pro experience rating: A rating plan that adjusts the premium for the current policy period to recognize the loss experience of the insured organization during past policy periods. -based on individual insured's recent historical loss experience (can increase/reduce premium for future period depending on insured's own loss experience in recent past) -common in commercial not personal lines

director/officer liability policies -director and officer definition -where liability exposure comes from -insuring agreements for this kind of policy

directors selected by owners to make strategic decisions regarding the org, officers drawn from organization top management liability exposure comes from: -securities fraud with judgement against corporation/directors/officers -individuals can be sued for breach of corporate duties corporations usually agree to indemnify their directors/officers for costs resulting from suits against them using D&O liability insurance: -coverage A: cover director/officer for personal liability as director/officer resulting from wrongful act (breach o duty, neglect, error, misstatement, misleading statement, omission etc) -coverage B ('company reimbursement'): cover sum insured corporation is required/permitted by law to pay to directors/officers as indemnification for suits alleging wrongful acts by D/O -coverage C (sometimes): entity coverage for claims made directly against corporation for wrongful acts (requires D/O to share limit of insurance w/ corporation)

CGL Coverage A Exclusion: aircraft, auto/watercraft -what it eliminates -auto definition -exceptions

eliminate coverage BI/PD arising from ownership/maintenance/use of aircraft/auto/watercraft auto definition: land motor vehicle/trailer/semitrailer designed for travel on public roads including any attached machinery/equipment OR any other land vehicle subject to financial responsibility law where licensed/principally garaged --does not include mobile equipment exceptions: -watercraft while ashore @ insured's premises -watercraft named insured does not own, < 26 ft and not being used to carry persons/property for a fee -parking an auto on/next to insured's premises if auto not owned/rented/loaned to any insured -liability assumed under an insured contract for ownership/maintenance/use of aircraft or watercraft (auto excluded) -operation of certain types of equipment attached to auto -parking an auto on the named insured's premises (valet, doesn't include any personal property in insured care/custody/control)

CGL Coverage A exclusion: damage to property -6 parts of exclusion -exception

eliminate coverage for damage to: 1.Property owned, rented, or occupied by the named insured 2.Premises the named insured has sold, given away, or abandoned if the damage arises out of any part of such premises -doesn't apply to premises named insured worked on if they need occupied/rented/held for rental by insured (builder constructing a building for sale/becomes liable for damage after building sold) 3.Property loaned to the named insured 4.Personal property in the care, custody, or control of an insured 5.That particular part of any real property on which work is being done by the named insured or any contractor or subcontractor working for the named insured if the damage arises from the work -doesn't apply to personal property and excludes only 'that particular part' of real property insured worked on 6.That particular part of any property that must be restored, repaired, or replaced because the named insured's work was incorrectly performed on it -insurer does not pay cost of redoing insured's faulty work but will pay for damage to property other than part that must be redone exception: limited coverage for property damage (other than damage by fire) to premises including contents RENTED to named insured for <=7 days (subject to damage to premises rented to you limit shown in dec page) -commercial property can cover 1, 3, 4, marine inland can also cover 1,3,4 for property of other people

regulation structure: rate regulation

ensure rates are: -adequate: help maintain insurer solvency (must be high enough to pay all claims/expenses related to coverage) -excessive: insurers can't earn excessive/unreasonable profit (don't want affordability problems) -unfairly discriminatory (implying ability to differentiate among risks): insurer discrimination must be fair/consistent and result in similar rates for insureds with loss exposures that are similar --regulators can restrict criteria insurers use to rate if criteria deemed to be against public interest dangers of underpricing: -won't earn sufficient premium to pay future loss, could lead to insolvency so PH and 3rd party claimants suffer -may drive down price levels in market as whole and can lead to insurers not writing policies/leave markets -> insurance shortage and coverage not attainable @ affordable rates to evaluate whether rate meets standards that it's not adequate/excessive/unfairly discriminatory: -Loss experience for a type of insurance -Possibility of catastrophe losses -Margin for underwriting profit and contingencies -Marketing expenses for a type of insurance -Number of insurers selling a coverage in a rating territory -Competing insurers' relative market shares -Degree of rate variation among competing insurers

HO-3 Section I Conditions: loss settlement -what it does -deductibles -Coverage C limit -Building limit -non-small losses treatment -if building rebuilt in new location

establish process for determining amount to be paid for property loss deductibles on Dec page subtracted from total of all losses payable under Section I caused by single event (except fire department service charge/credit cards) Coverage C and awnings/carpetings/appliances/antennas/outdoor equipment/structures not buildings: min(ACV @ time of loss, repair/replace cost) Buildings: -if limit of insurance >= 80% replacement cost: insurer pays for replacement cost of damage up to limit -if limit of insurance < 80% replacement cost: insurer pays max(ACV damage, limit * loss replacement cost / (.8*home replacement cost)) non-small losses: If loss > 2500, insurer does not pay more than ACV until repairs completed (then 180 days to notify insurer of intent to make repairs/make settlement on replacement cost basis) no requirement to rebuild building on same location but insurer only pays the amount it would have if it was, subject to limit

long term care loss exposures

even w/ health insurance families can suffer financial difficulty bc of costs of long term care for serious medical conditions -may need skilled nursing care/long term in term care

(liability of landowners) duty to licensees -examples -duties of landowners to licensees

examples: social guest, volunteer helper, firefighters/police when entering property to perform duties licensees take property in condition in which it exists -landowner owes affirmative duty to licensee to refrain from willfully/wantonly injuring person/acting in a way that would increase that persons peril -duty to warn of hidden defects occupier of land (tenant) not liable for acts of another person on premises

HO-3 Section II Exclusions (applying to all of Section II): business/renting and exceptions

exclude coverage for BI/PD from business activities from residence premises/another insured location business is excluded (full-time/part time/occasional trade/home sharing host activity or any activity engaged in for money/other compensation) with below exceptions for occasional/part time: -activities insured <2000 during year preceding the policy period -volunteer activities -home daycare services not involving compensation/possibly involving a exchange of services -home daycare services rendered to relative renting is excluded except for: -rental of insured location on occasional basis if location is used only as residence -rental of part of an insured location as residence as long as occupying family takes no more than 2 roomers/boarders in single family unit -rental of part of insured location if it used only as office/school/studio/private garage

Limits to HO-3 Covg C Theft Coverage

exclude: -theft committed by insured -theft from building under construction/of construction materials -theft from part of insured premises rented to someone other than insured -theft of personal property from another residence the insured owns/rents/occupies unless insured temporarily living there -theft of property of insured who is student residing away from home (Unless they've been there 90 days before loss) -theft of watercraft awey from residence premisses -theft of trailers/semi-trailers/campers -theft arising from home-sharing host activities

CGL Coverage A Exclusion: insured's products and work

excludes coverage for failures of insured's products/work other than BI/PD that's not insured's own product or work -damage to your product: no coverage for damage to insured's product that results from a defect in any part of the product (defective product manufactured by insured collapses, then damage to defective product itself isn't covered) -damage to your work: no coverage for claim for PD to insured's COMPLETED work --exception is if damaged work or work from which damage came was performed for insured by subcontractor -damage to impaired property/property not physically injured: no coverage for claims to property damage to impaired property/property not physically injured if damage is from defect in insured's product or work or failure of insured/employee to complete contract in accordance with terms --impaired property: tangible property unreal to insured that can't be used bc it includes insured's defective product/defective work or because insured failed to fulfill contract -recall of products/work/impaired property: eliminate coverage for loss resulting from loss of use, withdrawal, recall, inspection, repair, replacement, adjustment, removal, disposal of insured's product/work/impaired property

premium deficiency reserve -calculation/what's included and what's not -location on balance sheet -level of aggregation consideration

expected loss and expense underlying unearned premium - unearned premium reserve reported in financial statements -- positive result: insufficient reserve. 0 or negative, no liability established. CAN INCLUDE: time value of money/provisions for adverse deviation, marginal expenses directly related to the runoff of contract DO NOT INCLUDE: conditions not existing at balance sheet date, fixed/general expenses -- GAAP balance sheet: first established as contra-asset reducing DAC, liability established only for remainder after DAC is 0 --aggregation: the more detailed the level that the reserve is calculated, more likely for positive reserve (and higher the reserve will be)

extended non-owned coverage (vehicles furnished/available for regular use) endorsement -what it does -who it applies to -relation to other applicable insurance

extends liability coverage to vehicles furnished/made available for regular use of named insured/family members -applies only to individuals named in endorsement schedule (and family if checked on endorsement) -coverage is excess over any applicable insurance on nonowned vehicle -separate premium for liability and MedPay coverage

BPP preservation of property -what it does -what is covered -limitations

extends policy to cover protect covered property while it is being moved/for up to 30 days at new location -broader than normal coverage: protect against 'any direct physical loss/damage' NOT limited to covered cause of loss/locations in coverage form -still subject to limits of insurance stated in declarations (no protection if limit exhausted)

fair value vs. historical cost

fair value: price received to sell asset/paid to transfer liability in orderly transaction between market participants at the measurement date. - represents market value given sufficiently robust and efficient market -mark to model: fair value est based on model not observed market value historical cost: price at which asset or liability was originally obtained -may need amortization or depreciation of value -reliably determinable but less relevant

false imprisonment and false arrest -definitions -police officers (felonies, misdemeanors) -citizens (felonies, misdemeanors)

false imprisonment: The restraint or confinement of a person without consent or legal authority. -unlawful nonphysical restraint (blocking door out of room) false arrest: The seizure or forcible restraint of a person without legal authority. -unlawful physical restraint/threat of physical restraint possible defenses: -whether acts occurred in connection with w/ crime, nature of crime, capacity of individual involved police officers: -for felonies, have almost complete immunity from these charges while making arrest under warrant issued by competent judicial authority -for arrest w/o warrant for felony committed in presence, felony committed outside presence if reasonable ground to believe those arrested committed felony -> policy officer still not liable even if no felony committed/arrested person didn't commit -misdemeanor: --can make arrest w/ or w/o warrant for forcible breaches of peace (riots) /peace disturbing activities (public drunkenness) (arguments/impudence don't count) -- warrantless arrest justifiable only when misdemeanor committed in presence of the officer making arrest citizen's arrests: -w/o warrant to prevent commission of felony in presence can usually successfully defend against these charges IF felony committed out of presence and they have reasonable grounds to suspect the arrest person committed a felony -can be liable of felony was not actually committed or no reasonable -no misdemeanor arrests detained by store personnel for shoplifting: laws permit detention for reasonable time to investigate (~ 1 hr)

HO-3 factors considered in rating -formula -what each factor/adjustment is based on

final HO Premium = base premium factors + base premium adjustments + final adjustments base premium: based on location, public protection class, construction factors, coverage amount, policy form selected base premium adjustments: based on variation sin risk management requirements/loss exposures of individuals/families (from endorsements, deductible changes, unusual construction types) final adjustments: claim history, insurance score, package policy credits etc.

retrospective premium adjustment

final premium based on losses incurred under the contract -result in initial premium, followed by series of adjustment premium entries (subject to min/max) -adjustments can continue even after policy term expires

5 basic assertions of accounting

financial info is: -complete -valued correctly -exists -belongs to th company -properly classified, described and disclosed

BPP fire department service charge -why it's a thing -what is paid out

fire departments in some localities might charge for service in controlling/extinguishing fire -pays out charges up to limit @ each location if required by local ordinance/assumed by contract before loss occurs

common policy conditions: premium (who's responsible for paying)

first named insured is responsible for paying policy premiums (refunds go to first named insured too)

GAAP rule hierarchy

first: organization in charge of securities regulation for jurisdiction in question (defer rule setting to specified accounting standard setter but has authority to add requirements/rules and veto) -- US: SEC second: specified accounting standard setter for jurisdiction (EU: Int. Financial Reporting Standards from IASB, US: Fin Acc Std Board) -- these are the top for non publicly traded companies third: industry specific guidance (Statements of Positions) else: interpretations/emerging issues (produce guidance faster than official accounting standards)

annuity types based on party bearing investment risk -fixed dollar: value over time, rate of return -equity indexed: value over time -variable: what owner/insurer does, payout -combination: what it is

fixed dollar: insurer invest annuity premiums in securities like bonds/real estate/mortgages in exchanged for fixed rate of return -value doesn't fluctuate w/ market performance (interest earnings might) -more conservative investment so lower rate of return, insurer bears investment risk equity indexed: fixed dollar linked to stock market index -guaranteed min principal payment amount/interest rate -value of return increases w/ market based on index values and premium/interest payment does not drop below guaranteed no matter what -can exceed guaranteed value @ maturity variable annuity: owner invests annuity premium in diversified sub accounts w/ various objectives to optimize returns according to investment time horizon -insurer hires experts to manage sub accounts (separate from insurer general assets, protected from insurer creditors if insurer is insolvent) -when payout period begins: current value of investment fund converted into units (paid periodically, value varies by performance of sub accounts) combination plan: combined fixed dollar/variable annuities -insurer might make investment decisions in interest of annuity owner, annuity owner bears investment risk

flex rating -definition, what it allows/is expected to lead to government mandated rates

flex rating: A type of insurance rate regulation that requires insurers to obtain prior regulatory approval only if new rates exceed a certain percentage above or below previously filed rates. -allow quick response to changing market conditions/loss experience but prohibit large swings in short period of time (5-10% is usually allowed) --can restrict insurers from drastically reducing rates to increase market share, expected to lead to smoother insurance pricing cycles government mandated: if insurers do not use mandated rates, they cannot do business -US: flood and windstorm

anti concurrent causation wording

for basic/broad form exclusions: -losses caused directly or indirectly by any of these perils are NOT covered even if another covered cause contributed to loss unless exclusion specifically states otherwise -to prevent the concurrent causation doctrine: loss covered when caused by 2+ independent perils if only one of perils is covered even if other peril/perils are clearly excluded

rate filings -definition of formal rate proposal/how it is filed -limited insurer experience -requirements for rate filings

formal rate proposal insurers submit to regulators -contain underling data supporting proposal -approaches dictated by regulatory requirements (range from simple memo to actuarial justification of proposed rates w/ supporting exhibits) if insurer has limited experience, may rely on other insurer experience to develop rates (competitive condition instead of actuarial analysis to justify rate increase) requirements for rate filings vary by jurisdiction, LOB and usually include: -One or more years of loss data for the affected territories in the state or province and, if those data are not sufficient to be statistically credible, regional or countrywide data -Incurred or paid losses for each experience year developed to their ultimate value (actual or projected value when all claims for that year have been settled) -Projected ultimate losses adjusted for inflationary forces (trend) expected during the next policy year -Historic accounting of costs and expectations for future changes in the insurer's expenses for issuing and administering the policy and paying claims -Regulator-specific transmittal forms, special certifications, or compliance checklists -may require officer of filing insurer to certify insurer complied with all laws relating to rate filing

Part F - Fraud, legal action against insurer, policy period and territory

fraud: no coverage exists for any insured making fraudulent statements/fradulent conduct in connection with accident/loss which a claim is made legal action against insurer: no legal action can be brought against insurer until insured fully complies with all policy terms -in Part A, can't happen unless insurer agrees in writing that the insured has obligation to pay damages/amount of insurer obligation has been determined by judgement after trial policy period and territory: PAP applies only to accidents/loses occurring during policy period on Dec page, within the policy territory -territory includes Canada but not Mexico

unearned premiums (insurer liability) -definition -name under asset-liability approach

from deferral of premium revenue under deferral matching approach, the portion of policy premium for unexpired portion of policy aka unearned premium liability reserve - policy reserve under asset-liability approach

ISO PAP agreement/definitions

general agreement stating that the insurer is providing the coverage subject to payment of premium and to the terms of the policy -simple to understand -definitions @ beginning of policy

ISO PAP Part F

general provisions/conditions applying to entire policy -how changes to the policy can be made -provision for cancellation/termination -description of policy period/territory

blue cross/shield -regulation -basic medical expense coverage -major medical insurance -who blue cross/shield pays

historically not for profit administered by for profit organizations -regulated by state law separate from commercial insurers -basic medical expense coverage: routine healthcare (hospital/surgical/physican/ambulance/mental health etc) -major medical insurance: broader coverage/catastrophic coverage (hospital room/board, x rays, diagnostic, prescriptions, etc) usually with deductible -blue cross contract w/ hospitals and pay directly (rather than pay insureds/subscribers) and blue shield pays physicians directly

terrorism/TRIA limitation endorsement -when this endorsement is offered -how this endorsement works and how it is applied

if PH initially declines certified acts of terrorism coverage, insurer offers more limited terrorism coverage amounts in return for reduced premium -writes coverage or sublimate lower the limit applicable to other exposures --could apply to subsequent certified act of terrorism occurring in annual policy period if limits are not exhausted by prior act of terrorism --sublimits determined by schedule of sublimits applying to each coverage form/part/policy endorsement is attached to

joint tortfeasors -joint liability (how one becomes active contributor, when joint liability happens) -common law: damages and release (and what they are like now) -alternative treatments of joint liability (and when it still applies)

if act of negligence involves more than one person, all persons participating in act of committing a tort are jointly AND severally (individually) liable -participates by being active contributor if: (in person or by agent/employee) they acted, ratified/permitted act or advised the act -occurs if 2+ person owes common duty to 3rd party and by common neglect causes injury, or separate negligent acts of 2+ persons come together to produce one indivisible injury -some relationships create joint tort: employers liable for employee torts and vice versa, partnerships are jointly liable for torts of all other partners common law: -joint tortfeasors have joint/several liability for full amount of damages; plaintiff can proceed against al tortfeasors jointly or against any # of them (each tortfeasor responsible for whole tort regardless of degree of participation) --now: rule mostly abolished due to increased litigation against 'deep pocket' defendants who had little role in injury but had to pay entire damage -release of one joint tortfeasor releases all joint tortfeasors, even if release specifically prohibits release of everyone else --now: not really... if plaintiff settles w/ one joint tortfeasor, pro rata credit goes to other joint tortfeasor if intent of agreement was to release only 1 tortfeasor and not to operate as full release several jurisdictions now abolish concept of joint liability (several liability only), OR apply joint liability only when plaintiff fault < respective defendant's OR if defendant is @ certain % at fault -still used in product liability, taxic tort, auto liability

when liability imposed even when defendant has acted reasonably/ordinarily would not be at fault

if activity exposes others/their property to risk of substantial damage, person conducting activity may still be held liable if harm results even if not negligent -strict liability -liability from statute when liable party is performing ultra hazardous activity -owning/possessing animal -allows escape of toxic substance

BPP conditions: vacancy -non covered causes of loss -definition of vacancy for general lessee vs. tenant

if building loss occurs has been vacant for >60 consecutive days before loss, insurer does not pay if loss caused by: -vandalism -sprinkler leakage (unless protected against freezing) -breakage of building glass -water damage -theft/attempted theft -any other covered perils causing loss will have loss payment reduced by 15% definition of vacancy: -for general lessee (entity leasing entire building and subleasing portions of building to others): 'building' is the entire building and considered vacant unless >=31% of total square footage is rented out and used to donut customary operations --building under construction/renovation is non vacant -tenant: 'building' is the unit rented and is vacant when it doesn't contain enough business personal property to conduct customary operations -general lessee and tenants can be penalized separately

CGL Conditions (Section IV): duties in event of occurrence, offense, claim, suit -what if insured doesn't follow this -what should be done when first aware of occurrence -what should be done when claim/suit brought -voluntary payments

if insured does not perform these, insurer may be relieved of duty to defend and pay claims: -when named insured becomes aware of occurrence/offense that may result in claim, oral/written notice must be given to insurer and include to the extent possible: --how/when/where occurrence took place --names/addresses of injured persons/witness --nature/location of damage/injury from occurrence -when claim/suit brought against insured, named insured must: --immediately record details of claim/suit and date received --notify insurer in writing as soon as practicable --forward insurer copies of legal papers in connection with claim/suit --authorize insurer to obtain legal records/other docs --cooperate with insurer in investigation/settlement of claim or in insurer defense against suit --assist insurer in any action against third party that may be liable to insured because of injuries/damage for which claim is made insured can't make voluntary payment, assume any obligation or incur any expense without insurer consent -only exception is expenses for first aid @ time of occurrence

BPP conditions: duties in the event of a loss

if insured fails to perform any of the following, insurer might not have to pay: -notify policy if loss appears to be from violation of law (vandalism/arson/theft) -give insurer prompt (as soon as feasible) notice of loss (including description of property damaged) -provide info on how/when/where loss happened -take all reasonable steps to protect property from further loss -at insurer request, give insurer inventories of damaged/undamaged property and permit insurer to inspect property/records -examination under oath for any matter related t loss -cooperate with insurer in adjustment of loss -send signed, sworn proof of loss (statement of facts) to insurer within sixty days of insurer request for one

BPP optional coverages: extension of replacement cost to personal property of others -what it does -how amount of loss is calculated

if insured lease equipment and agreement makes insured responsible for replacement cost of these items in event they are damaged -insured can extend replacement cost option to personal property of others -amount of loss calculated according to written agreement between insured/owner of property, but can't exceed replacement cost of property or applicable limit of insurance

HO-3 Section I Conditions: Appraisal

if insured/insurer can't agree on amount of loss: -insurer/insured each choose appraiser to prepare estimate of value of loss (each party pays for own appraiser) -if estimates differ, two appraisers submit differences to umpire and agreement by 2/3 will set amount of loss

insurance regulation: ensure availability of coverage and regulating insurance rates

insurance is critical requirement and regulation helps makes sure it's available/affordable rate regulation helps achieve the other 3 purposes of insurance (maintain solvency, protect consumers, ensure availability) -regulation ensures rates are adequate, not excessive, not unfairly discriminatory

BPP conditions: mortgageholder -loss payment if MH exists -when act of insured doesn't impair rights of MH -options insurer has if making payment to MH -when the insurer has to notify MH of policy cancellation

if mortgage holder shown on declarations, insurer obligated to include mortgage holder in payment for loss to mortgaged property -usually loss payment check/draft made payable jointly to insured/all mortgage holders so they can figure out division of payment -usually loss payment used to repair/rebuild mortgaged property and mortgage continues in force as before act of insured DOES NOT impair rights of mortgage holder if mortgage holder pays premium due insured didn't pay, submits proof of loss and notified insurer of any change in ownership/occupancy/increase in risk that they are aware of -insurer may need to make payment to MH even if coverage denied: --insurer can take over rights of MH to extent of such payment and collect payment from insured --pay off outstanding balance of mortgage and take over rights of MH -insurer must notify mortgage 10 days before cancel policy due to nonpayment (30 days for any other reason) --if no notification, policy remains in force for MH even if no protection for insured

Loss Cycle (2)

incurred losses have two parts: 1. initial estimate of incurred losses for most recent exposure period (most recent AY) -- estimated with actual claim activity or accrual of estimated incurred losses 2. changes in estimate of incurred losses for prior periods

Interference With Family Relationships tort - spouses -common law and how it's changed -spouse rights against 3rd persons

individuals have rights as members of family common law: neither spouse could sue a 3rd party for personal injury against other spouse, most rights were for husband's benefit only -this isn't true anymore for most places -spouses can now sue for assault/battery/false imprisonment -rights favoring husbands have been eliminated/apply equally to wives spouses rights against 3rd persons now: -alienation of affection: interference w/ husband/wife relationship (persuade other spouse to leave marriage) -personal physical injury to one spouse -loss of consortium (services, companionship, comfort): other spouse can sue 3rd party and amount of damages based on spouses' existing relationship

tort reform: collateral source rule reform -collateral source rule -how it has changed -pros/cons

injured people commonly have health insurance covering medical bills/disability insurance covering wage loss -this doesn't relieve defendants of responsibility to pay these expenses collateral source rule: bar introduction of evidence that plaintiff has other source of recovery (defendant remains responsible for all damages even those covered by insurance) -many states now allow evidence of these other sources of income/allow offset to reduce award by amount plaintiff gets from other sources -reduces amount of damages a defendant owes/potential liability opponents: defendant shouldn't benefit from plaintiff diligence in obtaining insurance paying some of the damages

cost of insurance for replacement cost vs acv

insured selects policy limit to fully insure replacement cost property value -replacement cost > depreciated ACV (usually), so insurance is more costly since higher limits required (even if cost per unit for replacement and ACV is the same)

HO-3 Section I Conditions: Loss Payable Clause

insurer agrees to include named loss payee (eg. furniture leasing company) when claim is paid involving that personal property -los payee would be named in policy declarations, and claim draft would be payable to both the named insured/loss payee -loss payee is also entitled to notification if policy canceled/nonrenewed

BPP conditions: loss payment -4 options -least used option and why -max insurer will pay -when insurer notifies insured

insurer has 4 options to pay: -pay amount of loss/damage -pay cost of repair/replace damaged property (not including increased cost from ordinance/law) -take over all/any part of property and pay agreed/appraised value -repair/rebuild/replace damaged property w/ other property of like kind/quality --(last one is rarely exercised as this may cause insurer to become guarantor of repaired/replaced property, meaning if it is unsatisfactory insurer might be required to make it satisfactory even if cost of that goes over the limit) max insurer will ever pay is insured's financial interest in covered property insurer will notify insured of intent to either pay claim/deny payment within 30 days of satisfactory proof of loss (payment due 30 days after amount of loss established)

common policy conditions: examination of books and records -what it does -why it's included -what the insurer has the right to do

insurer has right to examine/audit insured's books/records related to policy at any time during policy period and up to 3 years after policy termination -included bc many commercial insurance policies issued with estimated premiums and final premium is determined after policy expires (based on final figures that insured reports of some variable premium base) --insurer may accept insured's report w/o verification but has the right to verify by making on-site inspection of books/records

CGL Coverage A insuring agreement: insurer duty to defend -definition of suit -when insurer must defend insured

insurer has right/duty to defend inured against suit seeking damages for BI/PD to which insurance applies -'suit' includes arbitration/alternative dispute resolution proceedings/lawsuits duty to defend broader than duty to pay damages: -insurer MUST defend insured whenever claimant alleges something of insured that could conceivably fall in policy coverage even if allegations are proven false -as long as ONE allegation is conceivably covered obligation exists

common policy conditions: inspections and surveys -what the insurer has the right to do (and who can do this, why it's important) -disclaimer clauses and why they are a thing

insurer has right/not the obligation to inspect insured's premises and operations @ any reasonable time during the policy period - inspections can be made by insurer own personnel/by another org acting on insurer behalf (determine insurability of insured's property/operations, setting adequate rates, making risk control recommendations) -insurer may inform insured of results/recommendations but doesn't HAVE to disclaimer clauses: insurer doesn't make safety inspections, guarantee conditions are safe/healthful or guarantee insured is in compliance with safety/health regulations -included to protect insurer against suits made by persons who allege their injuries wouldn't have occured but for insurer failure to detect hazardous condition/violation of law

life provisions: dividend options types (5)

insurer may pay dividends based on favorable loss/expense/investment results (not guaranteed) types: -cash option: div paid in cash @ policy anniversary date -accumulated option: div remain w/ insurer and accumulate interest (div + interest can be withdrawn @ any time or paid in addition to death benefit) -premium reduction option: div amount can be applied to pay for future premiums due -paid up additions: div can be used to buy increments of paid-up whole life insurance, increasing death benefit paid under policy -one year term insurance: div can be used to purchase term life insurance for one year (term life amount added to death benefit under policy in insured dies in that time)

building and personal property coverage form (BPP) -what insurer pays for -categories of covered property

insurer pays for direct physical loss of/damage to Covered Property @ described caused by/resulting from any Covered Case of Loss 3 categories of property (coverage can be provided on any combination of these categories, limits for each category on declarations): -building -your business personal property -personal property of others

CGL Coverage C - Med Pay Insuring Agreement -where accident must occur -other conditions

insurer promises to pay medical expenses (including funeral) for BI caused by accident occurring: - on premises owned/rented by insured including ways (roads, streets, paths, passages) adjacent to such premises - accidents occurring away from insured's premises/adjacent ways IFF accident results from named insured's operations other conditions: -accident in CGL coverage territory/policy period -medical expense incurred and reported to insurer within 1 year after date of accident -injured person must agree to be examined by physician designated by insurer

how insurers comply with varying regulations -what info insurers need -who compiles this info and what else they do -what states/provinces will publish changes

insurers need: - continuing access to insurance regulations in each jurisdiction (current statues, admin rules, regulator official directives/bulletins, formal/informal letter rulings - access to regulations of other governmental agencies (taxing authorities) -- these are compiled by librarians/staff members who keep current on regulations/regulatory practices (may specialize by jurisdiction, LOB, functional area @ larger insurers) --legal department may also monitor legal environment (working with govt affairs department) --staff members can become familiar with key regulators/policymakers as well as regulatory philosophies (that can help when preparing when preparing rate filing) insurer must monitor legal changes so it is not inadvertently out of compliance -states/provinces will publish nonemergency rules before effective dates so insurers have time to revise procedures and be in compliance -will also issue advisory notices informing insurers of imminent changes in law -occasionally issue emergency rules resulting in sudden changes

Insurer Balance Sheets -principle liability -differences from standard form

insurers principle liability is obligation from insurance contracts -third party (liability): amounts owed by insurer on behalf of policyholders -first party (physical damage): amounts owed by insurer to policyholders differences -net worth = surplus as regards policyholders (all net worth available to satisfy claims before owner compensation) = policyholder surplus (company w/o shareholders or mutuals) -different accounts constitute insurer primary assets/liabilities

HO-3 Additional Coverages -what it applies to

insures against various types of losses that are not otherwise covered under Section 1 of policy -debris removal: remove debris of covered property damaged by insured peril/ash, dust particles from volcanic eruption and cost from removing fallen trees (500/1000) -reasonable repair -trees/shrubs/plants: max 5% dwelling limit, $500 for one item -fire department service charges: max $500 if responding unit from beyond property regular fire protection district -property removed from premises endangered by insured perils (covered for direct loss by ANY cause for 30 days) -credit card/etf card/access device/forgery/counterfeit money: up to 500 for legal obligation from unauthorized use/theft of credit card , include defense cost -loss assessment: up to 1000 for assessments charged by corporation/association of property owners for loss to collectively owned property caused by insured peril -collapse: covers abrupt collapse of building from insured peril, hidden decay, insect/vermin damage, weight (no coverage if visible signs of deterioration before collapse) -glass/safety glazing material: direct physical loss covered but not resulting damage bc glass is broken (rain damage) and no coverage if vacant > 60 days -landlord's furnishings: up to 2500 of policy limit to cover damage caused by insured peril other than theft to appliances/carpeting/other household furnishings -ordinance or law: up to 10% coverage A limit to cover increased cost incurred due to enforcement regulating construction/demolition/remodeling/renovation/repair (no coverage relating to pollutants) -grave markers: up to 5000 for damage by insured peril

HO-3 Agreement/Definitions

insuring agreement: establish basis for contract, insurer agrees to provide coverage, insured agrees to pay the premium/comply w/ policy conditions definitions: clarify what is/isn't covered policy

environmental professional E&O liability policy -insuring agreement similar to -who buys this -exclusions

insuring agreement: similar to coverage grants of traditional engineers professional liability w/o pollution exclusions -purchased by environmental engineers, testing labs, environmental consultants who may be liable from professional error/act/omission claims made basis! exclusions (differ by insurer): -insured vs insured: no coverage for one insured suing another for damages out of professional error/act/omission -contractual liability -nuclear risk -warranties/guarantees -fiduciary liability

aggravated damages -intent -what it will cover

intended to compensate plaintiff for certain types of injuries caused by egregious conduct of defendant -if defendant has a pattern of committing torts like this, conduct may be determined to be even more egregious will cover conduct that could also be subject of punitive damages but role remains compensatory -take into account of intangible injuries/suffering

classifications of torts -intentional vs. unintentional -physical vs. nonphysical

intentional vs. unintentional: -intentional: tort committed by a person who foresees (or should be able to foresee) that his or her act will harm another person. --eg. defamation, invasion of privacy, trespass, interference w/ contractual rights, fraudulent misrepresentation -unintentional (negligence): failure to exercise the degree of care that a reasonable person in a similar situation would exercise to avoid harming others. --result in legal wrong, but did not intend to cause harm physical vs. nonphysical: -physical: involve physical act on person/person's property --eg. battery (causing harm to another by touching), assault (threat of physical harm, criminal definition includes tort definition + act of using intentional physical force on someone w/o their consent), false imprisonment, false arrest -nonphysical: invade a legal right --eg. defamation, malicious prosecution, fraud

invasion of privacy -definition -canada -types -defenses

invasion of privacy: An encroachment on another person's right to be left alone/be protected from unauthorized publicity in essentially private matters Canada: no tort for invasion of privacy but evolving/have protected privacy in cases involving other torts/enacted privacy legislation types: -intrusion on solitude/seclusion: invasion of something personal/secluded/private pertaining to plaintiff, not confined to physical invasion (includes surveillance) -physical invasion: searching a bag, unauthorized blood sample, photograph of embarrassing/compromising position -torts involving use/disclosure of info: --public disclosure of private facts (ie gossip, right to see depends on plaintiff public prominence) --publicity placing plaintiff in false light (statement taken out of context/based on info that's not true and presented in a way that plaintiff has good cause to be offended) --unauthorized release of confidential info --appropriation of plaintiff name/likeness (based on defendant's commercial benefit using someone else's name/likeness) defenses: -The plaintiff previously published the information. -The plaintiff consented to publication. -The plaintiff is a public figure, or the information is public knowledge. -The information was part of a news event. -The publication would not offend an individual of ordinary sensibility. -Matters were disclosed in judicial proceedings. -The information is of public interest, such as the public's right to know.

HO-3 Section I Conditions: Loss to pair/set

items in pairs/sets are more valuable together than they are individually if one out of the pair is damaged/lost, insurer will either (less deductible for either): -pay cost to exactly replace missing item -pay difference between ACV of items as pair and ACV of remaining single item

sovereign/government immunity -definition -Canada -US -Municipal corporations

judicial doctrines that prevent one from filing suit against the government -In Canada, legislation passed allowing government to sue in Tort and Contract -In US: Federal Tort Claims Act (FTCA) provides limited waiver of governmental immunity for claims against federal government --is the only means for suing for damages/collecting them from fed. govt in any cause in which the govt (if it were a private person) would be liable -Municipal corporations: unusual status (should have same immunity as state/province as a political subdivision, but also perform many functions performed by private enterprise) --usually governmental immunity only applies when functioning in government capacity --if performing proprietary functions (functions that could be performed by private entity), still subject to suit just like any other private entity (though immunity for some of these can be conferred by statute)

tort reform -purposes -reforms list

laws/legislative proposals intended to rein in personal injury litigation, seek to serve at least one of these purposes: -Decrease the number of circumstances under which a plaintiff may file a lawsuit -Make it harder for a tort plaintiff to have a case heard by a jury -Decrease the amount of damages a plaintiff will receive reforms include: -revise statutes of limitations and repose -requiring pretrial screening panels -setting caps on damages -mandating collateral-source rules -addressing issues such as joint and several liability and periodic payments.

commercial property conditions: legal action against us (2 conditions), liberalizations (when it applies)

legal action: 2 conditions insured must meet to bring legal action against insurer to enforce policy 1. insured must have complied with all conditions of policy (in both coverage part and Common policy and loss conditions) 2. action must be brought within 2 years after the date on which the direct physical loss occured liberalization: if insurer adopts revision that broadens (not restrict!) coverage under commercial property coverage part (and no addl premium charge), broader coverage extended automatically to policies already in effect (applies only if amendment adopted during policy term or within 45 days before effective date of policy)

negligence: legal duty -what are legal duties and how they are established -what legal duties are created by -legal duty in negligence lawsuit -moral obligation to act vs. legal duty

legal duties: An obligation imposed by law for the preservation of the legally protected rights of others. -to establish, courts ask if plaintiff's interests are entitled to legal protection against defendant conduct. legal duties created by: -statutes: laws -contracts: failure to perform contract/performing improperly can violate legal duty -common law (most legal duties) -for negligence lawsuit to be successful, defendant must owe duty to plaintiff: --BUT duty does not need to be owed to specific person (sufficient if defendant could foresee harm would occur to someone bc of negligent act/omission) --duty extends to all persons/property in zone of hazard moral obligation to act <> legal duty BUT person voluntarily undertaking moral obligation has legal duty to exercise reasonable care in carrying it out

life provisions: excluded risks

life insurance policies may specify types of losses not covered involving hazardous occupations/recreational activities of insured (eg. active military service, while in aircraft other than commercial airliner, sports car enthusiast who likes to race)

tort reform: caps on damages -what it does -purpose -pros/cons in medical malpractice

limit jury ability to award noneconomic damages (general damages) purpose: allow fair compensation to victims while simultaneously preventing excessive/emotionally driven jury awards common in medical malpractice but controversial: pro: -lower premium for med malpractice insurance - indirectly encouraging affordable healthcare - eliminating need for doctors to abandon practices/practice defensive medicine con: -high med malpractice rates from UW cycle, lack of competition, mismanagement of insurers reserve and insurer investment income -can result in severely injured plaintiffs receiving less than complete compensation

BPP: property not covered -reasons to exclude property from coverage -how some of these items can be insured -property otherwise insured

list classes of property/kinds of property losses that don't count as covered property reasons to exclude property from coverage: -some kinds of property are illegal to insure (smuggled goods being held for sale) -some property may be less susceptible to loss by most of perils insured against (building foundations, retaining walls, underground pipes etc) and are left out to reduce insurance needed to satisfy coinsurance -some property can be insured advantageously under other forms (money, security, auto under other policy) even if excluded, endorsements can maybe make insurance available for these items (except for illegal items) -exceptions exist to provide coverage under certain circumstances for some types of property (animals in pet shop, vehicles) property otherwise insured is covered under BPP in excess of other

HO-3 Section I Conditions: Your duties after loss -what it does -the duties (8)

list insured's duties after property loss, if insured fails to fulfill these insurer can deny coverage -give prompt notice -notify police -notify credit card/EFT card/access device company -protect property from further damage -cooperate with insurer -prepare inventory -verify loss -sign sworn proof of loss

litigation funding trends -contingent fee approach (how it works, why it's controversial)

litigation is expensive: plaintiffs must pay attorney fees, and plaintiffs who lose may also have to pay defendant attorney fees to reduce barrier: attorney may develop contingent fee approach (plaintiff/attorney agree attorney is paid % of money awarded to plaintiff) -if plaintiff gets nothing attorney does not get paid -risk of lawsuit goes to attorney --controversial if used in case that plaintiff has high probability of winning/cases with high damage (especially if attorney gets high % for little work) --might require sliding scale % for contingent fees (decrease as amount awarded increases)

(product liability) misrepresentation -when this happens -express warranty -what recovery is based on

manufacturers making representation to public through ad, brochure, labels, instructions: -extend beyond sales promotion if providing safety information on which consumers rely express warranty: An explicit statement about a product by the seller that the buyer or other user may rely on and that provides a remedy in the event the product does not perform as claimed. recovery from suit may be based on misrepresentation/ad statement about quality/safety of product constituting an express warranty

health related loss exposures -why people don't have health insurance -why private insurance > group insurance cost -why group insurance might not be sufficient -why having health insurance leads to better outcomes

many americans don't have health insurance -high cost, lack of availability so many lower income, single age earner families/elderly people don't purchase -cost of private health insurance (and many people don't know this exists) >> group health insurance --no economies of scale, might have costs related to -even with group insurance, many individuals/associates select fewer benefits/higher copay to save money on premium (or offer benefit only for lesser quality medication/older treatment methods) -people w/o insurance: may avoid treatment until health deteriorates enough that more costly treatment needed, disabled individuals might lose job and any healthcare/disability provided by employer --w/ Health insurance: get recommended examinations, more likely to seek appropriate care (decrease overall cost/increase chance of healthy outcome)

CGL Coverage A exclusion: mobile equipment -definition of mobile equipment -what's excluded

mobile equipment definition: - exclude any land vehicle if subject to motor vehicle law where licensed/principally garaged (it's considered an auto) - include: vehicle used primarily off road (bulldozers, cranes), used solely on/next to premise owned/rented by named insured, travel on crawler treads, maintained to provide mobility to various kinds of construction equipment, vehicles not meeting first 4 criteria but are not self propelled and maintained to give mobility to permanently attached equipment (pump, generator) or used to raise/lower workers , vehicles not meeting first 4 criteria but are maintained for purposes other than transportation of persons/cargo excludes coverage for: - transportation of mobile equipment by auto owned/operated/rented/borrowed by an insured - use of mobile equipment in prearranged racing, speed or demolition contest/stunting --liability from ownership/maintenance/use of mobile equipment is covered except for above

CGL named insured's employees/volunteer workers

named insured's employees/volunteer workers are insureds for liability claims arising from their duties as such -employee/volunteer (except executive officer or LLC manager) is NOT insured when the following occur --BI/Personal/Advertising injury to named insured, named insured's partners/members or to coemployee/volunteer worker in course of his/her duties as such --BI/Personal/Advertising injury from employee/volunteer worker's providing or failing to provide professional healthcare services (a nurse employed by named insured) --property damage to property owned/occupied/used/rented to OR in care/custody/control of named insured, named insured's employees, volunteer workers or partners/members

open competitions (no file law) -what it is, what determines rates, what regulator can do -pros/cons

no regulatory approval required for proposed rates -market forces (supply/demand) determine rates and availability (though sometimes insurers might still be required to furnish rate schedules/supporting statistical data to regulatory officials) -regulator retains authority to monitor competition/disapprove rates pros: -less expensive than other types of rate setting (regulator limited resources can be devoted to higher priority areas) -keeps rates reasonable equitable (market forces determine prices, so excessive rates curtailed/most people can be insured @ market prices) -overcome limitation of prior approval laws (allow insurers to adjust rates quickly, fewer political pressures and less resource spent just on filing) -prior approval might result in inadequate rates (leading to insurers reducing NBUS or withdrawal) -prior approval could reduce insurer incentive to control claim costs (if regulators approve rates higher the needed) -prior approval can result in undesirable subsidies between insureds (restriction, decrease for highest premium consumers offset in increases for others) cons: -insurer may set premiums too low to cover expected losses in order to have lower price than competitors (increases cash in short run, may lead to insolvency) -insurance policy prices might be too high for some groups that should be insured for public policy/equitable reasons

other sources of recovery for loss covered by insured's policy (5)

non insurance agreements negligent 3rd party other insurance in same policy other insurance in similar policy other insurance in dissimilar policies -identify sources before applying insurance policy provisions managing multiple recovery

insurer decisions on where to operate -3 researched points on NCR vs CR -what insurers consider in expand/restrict writing in jurisdiction

noncompetitive rating (NCR) = prior approval competitive rating (CR) = approaches allowing insurers to file rates and use immediately -researchers divided on if NCR/CR jurisdiction have lower loss ratios for any line of insurance -little evidence for excess rates in absence of NCR -stronger evidence NCR narrows range of prices (for personal lines coverage) --NCR can delay rate relief (insurer reluctant to file decreases) in deciding whether to expand/restrict writing in specific jurisdiction, insurers consider: -competition -risk appetite -capacity -ability to service PH -type of rate regulation (reluctant to enter markets w/ length review process, may even withdraw because of burdensome regulation) --most likely to avoid states w/ little business and stringent regulation threat of federal intervention in insurance frequently modifies actions of state regulators (soft market rates might be inadequate, hard market actions may lead to further availability issues)

Part F - nonrenewal -3 scenarios

nonrenewal: insured needs 20 days notice before end of end of policy period -policy period < 6 mo: insurer can non renew every 6 months, beginning 6mo after policy original effective date -6 mo < policy period < 1 yr: insurer can non renew @ end of policy period -policy period > 1 yr: insurer can nonrenew each anniversary of original effective date

nuisance tort -how it's decided -private nuisance definition -public nuisance definition (who can recover for damages and remedies) -defense

nuisance decided by considering discomfort act would inflict on normal person under normal conditions -private nuisance: An unreasonable and unlawful interference with another's use or enjoyment of his or her real property. --eg. noise, dust falling on adjoining property, blasting etc -public nuisance: An act, occupation, or structure that affects the public at large or a substantial segment of the public, interfering with public enjoyment or rights regarding property. --only people with personal damage (particular to individual plaintiff) can recover damages for injury resulting from public nuisance --remedies for public nuisance include civil tort suit for damages, criminal charges, court order demanding curtailment of nuisance -nuisance per se: act/occupation/structure that is nuisance at all times and under any conditions regardless of location/surroundings intentional vs unintentional nuisance: -intentional (absolute) -nonintentional: conduct is negligent, reckless, ultrahazardous defense: act complained of was reasonable/legal use of property by defendant

misc bonds

often supports private relationships/unique business needs: -lost securities bonds: guarantee entity issuing replacement for lost securities indemnified for any financial loss resulting from duplication of securities -hazardous waste removal bonds: guarantee govt owners and operators of waste facilities comply w/ laws for closure/post closure care of facility -credit enhancement financial guaranty bonds: governmental entities that investors will be paid promised interest and principal will be returned at maturity of debt instruments

HO-3 insuring agreement 'occurrence' definition

one accident = occurrence (even if injury/damage to 1+ person/1+ property) -can be sudden event, gradual series of incidents, continuous condition as long as fortuitous

advisory organizations: other services

other services: -actuarial analyses of data (LDF, trend) to provide members with insight into future losses (develop loss costs, not final rates) --loss costs are not adjusted to include loadings for insurer's expenses/profit/contingencies -establish rate rules, develop class systems/relativities, product policy forms -supply wide array of statistical/actuarial UW/claims info -conduct research studies on critical topics on behalf industry -forecast/respond to issues arising in industry -anticipate opportunities to identify/shape/influence change in support of member business needs -fraud identification tools/technical services -provide info about specific locations

annuity -the owner -the insurer's promise -definitions of beneficiary, benefit, payout period, payout amount

owner of annuity (individual or entity) pays specified premium to insurer in exchange for promise insurer will make payments @ specified interval to return the principal + interest (guaranteed to continue for life) -beneficiary: receives death benefit if annuity owner (annuitant) dies (usually not a lot remaining, called mortality risk of life annuities) -payout period: period benefits are paid -payout amount (cash value) = premium (principal) and interest earned over life of annuity -benefit: periodic payment, includes portion of principal and interest, may include survivor benefits

professional liability insurance -parties in normal liability insurance -why malpractice is unique --consent to settle clause and what insurer will do if they think case should be settled

parties in liability insurance: insured (first party), insurer (second party), claimant (third party) -claimant makes claim against insured and insurer provides insured w/ legal defense/claim settlement malpractice claims unique dynamic: insured's professional reputation may be at stake, payment of claim can affect reputation adversely -most professional liability policies include consent-to-settle clause (insured has to agree) --if insurer thinks case should be settled, claim rep will provide insured with realistic appraisal of evidence/of insured's chances of winning at trial

exposure to legal liability (legal base of insurable interest) -why insurable interest -extent

party may have legal responsibility for property owned by others. -insurable interest bc responsible party can suffer financial loss FROM POTENTIAL LEGAL LIABILITY if owner's property is damaged --contractor in building under construction, hotel in guest property, tenant in building -extent is property full value including owner use value

universal life insurance -what kind of protection -cost -2 distinct characteristics of universal life insurance -cash value/premium payments -who it's useful for -risks

permanent product combining life insurance protection w/ investment/savings aspect insured makes premium payments exceeding amount needed to cover mortality risk (cost of insurance), accumulates cash values from amount of premiums paid in excess of cost of insurance protection/expenses -policyholder gets annual disclosure showing premiums paid, amount of insurance (death benefit), expenses, interest earned/credited on cash value -2 interest rates: cash value of policy earns the max of the guaranteed min rate and current market interest rate premium payments flexible as long as cash value in policy covers cost of insurance/expense -can increase/decrease/miss premium payment -policyholder can pay higher premiums in order to grow cash value (growth in cash value is tax-deferred) cash value can be used to increase death benefit, borrowed against, withdraw from, add insured to policy suitable for insureds who want to combine life insurance with an investment (tax-deferred accumulation and flexibility with premium payments) risks: insureds can be less than fully committed to premium payment discipline, policies can lapse if premium not paid/cash value insufficient, cash value may grow more slowly than hoped and need large premium payments to maintain coverage (due to low interest rates)

whole life insurance -what kind of protection -cost and how it changes over time -cash value and what the insured can do with it -who it's useful for

permanent, coverage for life time: hybrid combo of life insurance and investment vehicle -premium for whole life > term life since it is a savings vehicle that develops cash value over time (as insureds pay higher annual premium than projected mortality cost for insureds at that age) cash value available to insured during life of policy as loan/cash payment on surrender of policy -may prompt insured w/ limited disposable income to underinsure -good for financial obligations continuing for a lifetime/can use to reduce estate shrinkage by taxes suitable for someone who wants permanent protection/needs discipline of paying insurance premiums to enforce savings

class action lawsuit -what this is/when it is allowed -mass tort litigation -4 features court must consider to certify as class action -other things court will consider

permit one person (or group) to file suit on behalf of all harmed members of groups -allow when individual cases present common questions/amount of damages in each claim is relatively small and may not warrant individual suits -for torts, might be for dissimilar tort victim members of a group (mass tort litigation) mass tort litigation: involves claims related to tobacco, birth control, devices, insurance -numerous plaintiffs present identical liability questions as class action, each party submits separate proof of damages court must consider 4 features to certify suit as class action: -numerosity: must impractical to bring all plaintiffs separately to court -commonality: ascertainable class w/ well defined common interest in questions of law/fact affecting parties -typicality: representative parties claims/defenses must be typical of all class members -adequacy of representation: named parties must fairly/adequately protect interests of unnamed class members court will also consider extent to which: - individual class members would have interests in controlling the prosecution of claims in separate suit - extent/nature of any litigation already started - desirability of concentrating litigation in one forum - difficulties of managing class proceedings

Interference With Right to Use One's Own Name in Business tort -what the right is -who it applies to -original user protection

person has right to use own name in business even if similar business conducted under same/similar name -apply to individual AND corporation (but corporation can be rejected if name too similar to already registered name) -original user of personal name protected and require other users give notice that no connection with original

tort reform: joint/several liability reforms -process -pro to keep approach

plaintiff can pursue collection of award against any of defendants -> once liability clear, defendants determine among themselves their relative proportions of liability/payment -plaintif can select 1+ defendants @ fault and receive full payment of amount awarded (then defendants take action against other defendants for contribution based on share of liability) pros: abolish/limit rule would under comopensate plaintiffs injured by more than one defendant (if a defendant lacks financial capability to pay share of award) -a ton of jurisdictions have limited this

(products liability) damages

plaintiff can recover damages for BI in product liability -jurisdictions can permit recovery to property for fires/explosions from product defects -some jurisdictions allow plaintiff to recover consequential damages (indemnify indirect losses) for commercial loss of product use for business purposes/loss of profits

regulation structure: unfair trade practices in market conduct -list -what it prevents

practices violating unfair trade practices laws: -fraud -misrepresentation -twisting (misrepresentation convincing customer to cancel 1 policy, purchase another policy detrimental to customer) -unfair discrimination -rebating: give producer commission/financial advantage to individual as inducement to purchase policy these practices prohibit unethical/illegal claim practices (misrepresent facts/provisions, fail to make good faith effort to pay claims when liability is clear, attempt to settle claims for < amount reasonable people believe they should receive, failing to approve/deny coverage of claims within reasonable periods)

required proof of negligence -burden on plaintiff and defendant -if facts are undisputed vs. disputed -negligence per se (definition, what it usually involves) -res ipsa loquitur (definition, 2 factors, what it usually involves)

plaintiff has burden to prove all the elements of negligence and defendant has burden of proving any defense -defendant presumed at outset to lawsuit to have used due care until plaintiff proves otherwise -if facts undisputed/point to one presumption, court must decide whether as matter of law negligence occurred -if facts are disputed/uncertain or undisputed/multiple reasonable conclusions, court makes findings of fact (supported by evidence) and may also have to make findings of law (applicability of rule of law to facts of case) to determine negligence negligence per se: An act that is considered inherently negligent because of a violation of a law or an ordinance. -usually involves failure to comply with statutory standard since proof defendant violated statute is sufficient to establish liability res ipsa loquitur: permits inference of negligence if acton or event causing injury was under defendant's exclusive control AND accident ordinarily wouldn't have happened if defendant exercised appropriate care -in absence of proof of contrary, the accident probably would have arisen from lack of due care -2 factors: --probability that under given circumstances the defendant was negligent --defendant's duty to rebut the inference of negligence as party who had exclusive control/superior knowledge of causative circumstances -frequently applied in lawsuits against common carriers, bricks falling off buildings, poisonous drugs sold as medicine, instruments left in surgical patients

D&O liablity: -what plaintiff must prove -when corporation/D&O is liable for tort

plaintiff must prove directors/officers performed their duties improperly, with resulting damage to the organization corporations directors/officers/corporation itself/employees: can be liable under tort, contract, criminal -under tort: corporation liable as a principal/employer under doctrine of respondeat superior for all torts committed by agents/employees within scope of agency or employment --D&O not liable for employee/agent tort unless they authorized/participated in the tort corporation may purchase/maintain D&O liability insurance for officer, director, agent, employee against potentially liability from exercise of corporate powers -entity coverage for corporation itself -increasing lawsuits trend, insurers have reduced coverage limits/increased premiums -prospective board members often demand this insurance

plaintiff, defendant, cause of action, standing to sue definitions

plaintiff:The person or entity who files a lawsuit and is named as a party. defendant: The party in a lawsuit against whom a complaint is filed. cause of action: facts that form basis for valid lawsuit standing to sue: A party's right to sue, as one who has suffered or will suffer a legal wrong or an adverse effect from an action.

mitigation of damages -duty of plaintiff -if they fail duty -when it applies -defendant burden

plaintiffs have duty to mitigate/contain their own damages -if fail to make these reasonable efforts, may be barred from recovering related damages -applies to plaintiff's conduct after accident occurred (possibly before if plaintiff failed to take obvious safety precautions) defendant has burden of proving damages were preventable/avoidable

Part F - Changes in policy -how terms of policy can be changed -changes that may result in premium change (4) -liberalization clause definition and when it does/doesn't apply

policy contains al agreements between named insured/insurer -terms of policy can't be changed/waived except by endorsement issued by insurer -changes during policy term that can result in premium change include: --number/type/use of insured vehicles, operators using insured vehicles, place of principal garaging of insured vehicles, coverage provided/deductibles/limits of liability -liberalization clause: automatically provides broadened coverage under some conditions --if insurer makes change to PAP broadening coverage w/o addl premium, change applies to insured existing policy on date the revision is effective in insured's state --does not apply to change including broadening + restriction of coverage or those implemented in general program revision by new edition of policy/amendatory endorsement

HO-3 Section I Conditions: deductible -how/when policy deductible applied -min deductible

policy deductible applies on PER-LOSS basis, only highest deductible applies when 2 or more apply to loss -applies only to Section I Losses -minimum deductible is 500

financial consequences of property losses -types of consequences

possible adverse financial consequences: -reduction in value of property can be measured: --no remaining worth if property must be replaced --cost of repair/restoration if property can be repaired/restored -lost income: due to property not being able to be used until it's repaired/restored/replaced -extra expenses: may incur if temporary substitute acquired or temporary maintenance of damaged property in usable condition

CGL premium base

premium base for a business indicated in ISO classification table, examples: -mercantile: gross sales -contracting business: payroll -building/premise risks: area, gross sales, or number of units -special events : number of admissions rules determine what is/isn't included in exposures used to rate, actual premium calculated @ end of policy period

regulation structure: insurer financial condition -what regulators need to balance -4 methods to review financial conditions -risk based capital: what it does, how it's calculated

primary objective of insurance regulation is to maintain insurer solvency -regulators closely monitor insurer financial condition but must balance acceptable cost of risk for society as a whole --requiring insurer to hold more capital increases cost and affects consumer price 4 methods to review financial conditions: -measure compliance w/ established financial requirements: insurers must meet financial requirements (min capital, surplus levels, investment of loss reserves) -review periodic financial statements: detailed info on premium, expense, investment, loss, reserves, surplus etc -administer regulatory info systems: identify insurers with potential solvency problems (diagnostic test applied to financial data to allow early detection) -conduct on state field examinations to review financial records (administrative law require insurers be examined at specified intervals) regulators use risk based capital to asses if insurer actual capital is accurate -determines min amount of capital insurer needs to support overall business operations based on size/risk profile -factors applied to certain assets, premiums, reserves to calc risk based capital: higher risk means higher factor applied --this calculation compared to insurer actual capital

principle based vs rules based accounting standards

principles: rely on interpretation and judgement by financial statement preparers for implementation - flexible with regard to new/changing products/less maintenance -more difficult to audit and hard to be consistent/reliable across entities -can be used to manipulate financial results rules: limit flexibility/use of judgement in implementation -easier to audit/more consistent/comparable -not flexible, need continual maintenance -subject to manipulation: adhere to literal wording while violate intent

regulation structure: licensing insurance personnel -producer licensing (how to get, agent vs. broker) -adjuster licensing (why it's necessary, what a license guarantees, public adjusters)

producers (agents/brokers) must be licensed in each jurisdiction in which they do business, comply with laws/regulations governing their activities -to get license: producer must pass written examination -brokers may have separate license that require different exam, or higher standards (may not be able to take until licensed agent for a specified time period) some jurisdictions also license adjusters representing insureds: -deemed necessary bc of complex/technical nature of insurance policies and to protect claimants from unfair/unethical/dishonest claim practices --assurance adjusters aware of prohibited claim practices, has min technical skill, treat PH fairly -public adjusters representing insureds for fee usually must be license (ensure technical competence, protect public)

(products liability) protected parties in strict liability -how standing to sue is determined

protection generally apples to: -ultimate user/consumer (can include ultimate buyer) -nonusers (bystanders) to determine who has legal standing to sue, most courts use traditional foreseeability test (for strict liability and negligence) -anyone who could foreseeably have been injured by product has standing -this is so individual consumers are protected and loss allocated to party best able to bear the loss

HO-3 Coverage E - Personal Liability -when coverage is provide -what insurer pays and what for -defense costs and when the obligation to defend ends

provide coverage if claim made/suit brought against insured because of *BI/PD* arising from covered *occurrence* DURING policy period applies worldwide, insurer pays up to limit of liability for damages for which insured is legally liable (Usually from negligence) -defense cost coverage is provided even if suit is groundless/false/fradulent -insurer obligation to defend ends when liability limit for occurrence exhausted by payment of settlement/judgement (even if policy limit exhausted by cost of claim)

(products liability) strict liability and negligence -when case is based on strict liability vs negligence -definition of product -what plaintiff must prove for strict liability, negligence

products liability cases can be based on strict liability/negligence/both -if harm results from only service/process: suit based on negligence -if harm results from product or combo of product/service or process: suit based on either strict liability or negligence products are products including ad materials, labels, computer software, instruction manuals, aircraft instrument landing charts what plaintiff must prove: -general negligence: prove manufacturer failed to use reasonable care in designing/manufacturing product causing injury (focuses on reasonableness of manufacturer conduct) -strict liability: focus on product itself and how it breaches absolute duty of safety (manufacturer conduct is irrelevant). --manufacturer can be guilty even if they used utmost care in making product --Must prove 5 elements --1. The seller was in the business of selling products. --2. The product had a defect that made it unreasonably dangerous (to an extent beyond that which would be contemplated by the ordinary user who has common knowledge about the product, Not all courts require this element.) --3. The product was dangerously defective when it left the manufacturer's or seller's custody or control. --4. The defect was the proximate cause of the plaintiff's injury. --5. The product was expected to and did reach the consumer without substantial change in condition.

professional liability (tort) -what it comes from -why liability might not be clear -win rate

professional malpractice: failure to practice profession properly -liability may not be clear cut, might not be able to be proved w/o expert witness testimony w/o professional who isn't the defendant, who explains to court how defendant failed to meet standard of care -professional liability have higher than average pro-defendant verdict favoring professional) --medical malpractice is especially hard to win for plaintiff

BPP conditions: abandonment -what it does

prohibit insured from abandoning damaged property to insurer for repair/disposal -making arrangements for repair/disposal of covered property is insured's responsibility unless insurer chooses to exercise its option under the loss payment condition

Coverage B Insuring Agreement -promise -definition of personal/advertising injury -coverage territory -occurrence coverage trigger

promises: insurer pays amounts insured is legally obligated to pay as damages AND defend insured against suit seeking damages (applies to OFFENSE from named insured's business) claims are for personal/advertising injury meaning injury (mental injury/anguish, shock, humiliation, loss of reputation etc) + consequential bodily injury from: -false arrest/detention/imprisonment -malicious prosecution -wrongful eviction from/wrongful entry into/invasion of right of private occupancy of room/dwelling/premises that person occupies, committed by/on behalf of owner/landlord/lessor -oral or written publication of material slander/libel a person/organization or disparage person/org goos, products, services -oral or written publication of material violating person right to privacy -use of another advertising idea in your ad -infringing on another's copyright/trade dress (overall appearance/image of product) or slogan in ad offense must be in CGL coverage territory (includes worldwide for personal/advertising injury offenses through internet) -occurrence: coverage trigger is covered offense committed during policy period (damage covered even if claim made after policy expires)

commercial property property in transit extension -what it does -named perils

property in transit extensions: up 5000 of additional protection for loss to insured's property in transit (must be in/on vehicle owned/leased/operated by insured and can't be in custody of insured's sales personnel AND loss must occur in coverage territory) -named perils: fire/lightning/explosion/windstorm/hail/riot/civil commotion/vandalism/upset and overturn of vehicle/collision of vehicle with another vehicle or object -theft also covered if entire bale/case/package stolen by forced entry into securely locked body/compartment of vehicle (need marks of forced entry) low coverage limit, restricted covered perils (may need different inland/ocean marine policy)

modular vs. self contained policies (6)

pros of modular: -carefully designed/coordinated: minimized possibility of gaps/overlaps when several monoline policies are used -consistent terminology/definitions/policy language make coverage interpretation easier for insured -fewer forms needed for wide range of needs -UW is simplified as basic info applies to all LOB -adverse selection problems reduced if same insurer provides several lines of insurance for one insured -package discount when several coverages included

regulation structure: market conduct -how it protects insureds -market conduct regulation process -market conduct exam: what it can be directed at and what it includes -what regulators can restrict for UW

protect consumer by asses how well insurance market is in compliance with state regulations 1. begin with market analysis (collection/analysis of data) -focus on issues like large changes in market share, consumer complaint, policy termination, noncompliant rates/forms 2. if potential violation discovered: insurance regulator selects market conduct response (could be office based info gather, correspondence with entity, voluntary compliance program, desk audit, market conduct examination) market conduct exam: -can be directed @ agent-licensing issues, complaints, types of products sold by insurer/agents, producer sales activities, proper rating, claim handling, market related aspects of insurer's operations -include visit by regulator to office of entity being examined/review of sample files so examiner can see first hand how entity operates to prevent improper UW practices, regulators restrict insurer ability to accept/decline applications, establish allowable classification, limit ways insurers can divide consumer into rating classifications, restrict timing of cancellations/nonrenewals

commercial umbrella drop down coverage -2 types, and how they work

provided by many umbrella policies for: 1. claims not covered by underlying policies bc underlying policy's aggregate limits have been depleted (also in ordinary excess policy) -once primary policy limit exhausted, further claims are paid/defended by umbrella policy subject to limit as if it were primary 2. claims for which the underlying policies do not provide any coverage, regardless of aggregate limits (subject to umbrella policy coverage) -if this is the case, usually drop down coverage is subject to self-insured retention (umbrella pays amount above this)

HO-3 Declarations (8)

provides info on -PH -PH residence -coverage limits -premium -section I deductible -effective date of policy -forms/endorsements apply to policy -mortgage holder

insurance to value provisions -definition -dual purpose

provisions encouraging insureds to purchase amount of insurance equal to/close to value of covered property -dual purpose: reward people who insured to value and punish those who didn't

negligence: proximate cause -what is proximate cause -what a person committing wrongful act is and isn't responsible for -4 rules to determine proximate cause -if harm from independent/intervening act

proximate cause: A cause that, in a natural and continuous sequence unbroken by any new and independent cause, produces an event and without which the event would not have happened. -wrongful act must be the proximate (direct) cause of harm (possibly causing ALL or substantial part of injury on its own) to determine tort liability, courts attempt to place burden of loss on person responsible, but also recognize limit of liability should exist when act was so remote as not to be chargeable to the actor: -someone who commits wrongful act is responsible for ordinary consequences that can foreseeably flow from an act but is not liable for results that couldn't have been reasonably foreseen/independent intervening cause breaks chain of causation rules for determining proximate cause: -but for rule: determine whether defendant act was proximate cause of plaintiff's harm based on determination that plaintiff's harm couldn't have occurred but for the defendant's act -substantial factor rule: determine which of the acts are significant factors in causing harm --if two parties' acts coincide to cause loss but 'but for' rule doesn't get a satisfactory result -proof of defendant responsibility: prove by preponderance of the evidence that defendant caused the harm (will fail if it's at least probable a 3rd person could have caused the act) -foreseeability: determine if plaintiff harm is the natural/probably consequence of the defendant's wrongful act and when an ordinarily reasonable person would have foreseen the harm --defendant need not have foreseen the particular result that followed defendant not liable if harm caused by independent, intervening act (must be independent of original act/not readily foreseeable as one arising from original act) -(if then, the intervening agency becomes the proximate cause)

classification systems in ratemaking -what is the purpose of class systems (purpose, what it helps insurer do) -theory vs. practice -considerations in development/regulation

purpose is to group insureds in way facilitating fair/equitable insurance rates help insurer differentiate between risks, avoid adverse selection, avoid subsidization of one class by another -matching rate to expected loss gives group members incentive to invest in loss control/safety since reduced expected losses lead to lower insurance rates theoretically: classifications should be detailed so that each member of specific class has same expected loss (ineffective/inefficient bc insurers can't predict losses with this degree of accuracy, system would be costly) in practice: balance actuarial/economic gains against incremental cost of collecting/processing rating information (why smaller insurers rely on classification plans of larger insurers) considerations in development/regulation: -differential in rates of different classes should reflect verifiable loss experience (may not always be available) -may reject because impose socially undesirable outcome (rates for specific class may be unaffordable) -look at social equity implied by class differentials between insureds in different socioeconomic groupings -market might not be able to bear rate, rate might be unfairly discriminatory, rating classification may be socially unacceptable by regulator/public at large

ISO PAP dec page (11)

purpose: personalize policy, specific info on insured and subject of the insurance -name of insurer -named insured (party responsible for premium payment, cancellation, notices from insurer): name and address -name/address of producer -policy period: starts 12:01 am std time @ address of policyholder on the effective date, ends 12:01 am std time on expiration date -description of autos: year, make, model VIN -schedule of coverages: coverage/limits applying to each listed auto/deductibles/premium -endorsements -lienholder: organization holding title to vehicle until loan is paid -garage location -rating information: rating class, applicable credit/discount -signature of authorized legal representative of insurer and countersignature date (date policy signed by legal rep)

tort damages -purpose -what damages plaintiff is entitled to -2 types

purpose: recompense injured party (not to punish tortfeasor) damages are usually monetary, amount based on facts of cases -entitle to damages that injury proximately caused (whether or not defendant could reasonably have foreseen damage) -contract damages: limited to damages parties could reasonably forsee (doesn't apply to tort) 2 types: compensatory damages and punitive damages

proposed rates -what level should rates be set at -how rates developed -actuarial memo: what it might state and what that means insurer has to do

rates should be set just high enough to cover expected losses/expenses + allowance for profit and contingencies -can be developed based on historical claims/exposure experience, industry experience, combination of insurer/industry experience, competitive market information -actuarial memo in rate filing may state insurer not taking actuarial rate indication because of competitive/market conditions (propose to charge less than fully projected cost for that class of PH and will need to recover difference between premiums from indication/rate change from other sources) --other sources: investment income, reduced profit, increase rates for other lines

(professional liability) standards of performance -what is defensible -what recent actions against professionals based on -how standard of care for professionals determined -'specialist' standard of care -inexperienced standard of care

reasonable errors in judgement by professional are defensible recent actions against professionals are based on contracts between professionals/parties who sue them for malpractice (claimants) -contracts control terms between the professional/claimant and might set high standard of performance carrying with it a high standard of care standard of care for professionals is shown by reasonable professionals practicing in similar circumstances -'locality rule' holds professionals to the standard of care of professionals in given geographical area professionals known to public as specialists are held to higher standard of care based on their specialized knowledge inexperienced professionals held to same standard of care as experienced practitioners

tort reform: statutes of limitations/repose -what it's meant to encourage and why -competing objective

reduce time period within which plaintiff can sue -shorten statute of limitation/repose meant to encourage plaintiffs to sue while evidence is still available -more time passes after tort means harder it may become to identify/locate witnesses and for witnesses to rememberers incident -phyiscal evidence also tends to disappear competing objective: statutes give plaintiffs sufficient time the tort/act in response to it

definition of disability: -any occupation -own occupation -modified own occupation -split definition -amount of earned income lost

refers to inability to perform job duties -any occupation: totally disabled, unable to perform duties of any occupation (won't pay out if insured can perform duties of another occupation/get education for new one) -own occupation: insured unable to return to duties of specific occupation (receive 100% of benefit if they can earn income from another occupation) --needs higher premium -modified own occupation: full benefits paid if insured unable to perform duties of his/her specific occupation but if insured can earn income from another occupation, benefits payments reduced in proportion to income earnings -split definition: any/own combined --can be any occupation for first 6 months, own occupation if disability extends for more than 6 months -earned income lost: specific percentage los results in payment of benefits

regulation structure: consumer servies

regulators established toll free hotlines, web sites, special consumer service units to respond to complaints regarding insurers -respond to insurer complaints/inquiries and some regulators provide educational seminars/consumer brochures on variety of topics

insurance regulation: protecting insurance consumers (6)

regulators: -ensure insurance readily available (especially necessary coverages): insurer rights to nonrenew/cancel restricted -strive to protect consumers against fraud/unethical market behavior: try to stop selling of unnecessary insurance/unwarranted limits/misrepresentation of nature of protection -set coverage standards/specify policy language for certain insurance coverages (make it easier for consumers to analyze/understand) and can reject policy provisions that don't comply w/ state law -make sure insurers follow fair claim handling practices: protect consumers from actions of insurer personnel, refusing to pay legit claims, unfairly reducing claim payments, unnecessary delay in valid claim payment -maintain solvency of insurers: ensure they have funds available to pay claims -provide info on insurance matters to consumers so they can make better decisions

(defense) releases and exculpatory clauses: -release (definition, when it can be a defense, when it is voided) -exculpatory clause (definition, when it can be a defense, when it is voided, how parties make it legally acceptable, when courts generally uphold these clauses)

release: A legally binding contract between the parties to a dispute that embodies their agreement, obligates each to fulfill the agreement, and releases both parties from further obligation to one another that relates to the dispute. -if agreed to by both parties, can be defense to tort lawsuit if court recognizes release as valid release in settlement of claim -voided by mutual mistake (misunderstanding by all parties to release) relating to past/present fact (not opinion on future condition based on present fact) exculpatory clause: A contractual provision purporting to excuse a party from liability resulting from negligence or an otherwise wrongful act. -can excuse/limit liability for negligent contract performance (including gross negligence) but void if exclude willful/wanton misconduct -courts generally viewed these unfavorably, to make more legally acceptable, parties may set these up as liquidated damages provisions --(A reasonable estimation of actual damages, agreed to by contracting parties and included in the contract, to be paid in the event of a breach or for negligence) --if liquidated damages too low (considered nominal), court will probably find the clause to be exculpatory and not uphold -court will uphold exculpatory clause if: --exculpatory clause is not adverse to a public interest/not against public policy --If the party excused from liability is not under a duty to perform (eg public utility or common carrier) --If the contract does not arise from the parties' unequal bargaining power/not otherwise unconscionable

BPP optional coverages:replacement cost -what it does and what insurer has to pay -when payment is made and the process for insured to get it -coinsurance condition/what is valued @ replacement -what condition does not apply to

replace phrase ACV with replacement cost in valuation condition -insurer obligated to pay cost to replace damage/destroyed property with NEW property of like kind/quality (w/o deduction for depreciation/obsolescence) -payment not made until property repaired/replaced and only if it was done in reasonable time (based on ACV if it takes too long) --insured can make claim on ACV basis and the difference between ACV/replacement made after completion of repair/reconstruction (if insurer notified within 180 days after occurrence) -coinsurance condition still applies but amount of insurance required based on replacement cost not ACV -- tenant improvements/betterments also valued @ replacement cost if tenant repairs/replaces @ own cost when reasonably possible after loss -condition does not apply to property of others (another coverage), contents of residence, manuscripts, works of art, antiques, rare articles --stock not included (unless stated in declaration): merchandise, raw materials, goods in process and finished goods

court bonds -what they are for -fiduciary bonds, what they guarantee and principals

required by court in connection with lawsuit, in connection with disputes of ownership of personal property -ex. appeal bond to guarantee judgement paid if appeal unsuccessful, bond to guarantee turn property over/pay damages over personal property dispute include fiduciary bonds: guarantee performance of persons appointed by court to administer property/interests of others -principals include court-appointed guardians of minors or others, executors or administrators of estates, and receivers or trustees in bankruptcy proceedings.

BPP conditions: coinsurance -what it does -loss payment while underinsured calculations

requires insured to car insurance equal to at least specified % (shown in declarations) of covered property ACV (or replacement cost if that optional coverage is in effect) -loss payment reduced if amount of insurance doesn't meet the %: (did/should)*loss - deductible, subject to policy limit --should = property ACV (or replacement cost) immediately before loss occurred * coinsurance percentage

restitutio in integrum -what it means -if principle applied, what damages plaintiff should get

restore to original position (if tort hadn't happened); one of the fundamental siding principles courts use when deciding how much to award in damages for NEGLIGENCE if principle applied, means that: -plaintiff is clearly entitled to special damages (past/future medical bills, property repair, lost wages) -general damages may also be paid to compensate for decrease in standard of living and for pain/suffering

BPP conditions: valuation -what it does -valuation for different kinds of property

rules for establish value of insured property, usually valued @ ACV (can be changed to replacement cost using optional coverage) -property other than specifically listed: ACV -building damage < 2500: replacement except awning, floor cover, appliance, outdoor equipment/furniture -stock sold/not delivered: selling price less discounts/unincurred costs -glass: replacement cost for safety glazing if required by law -valuable papers/records excluding electronic data: cost of blank media+cost of transcription/copying (2500 coverage extension to replace/restore los info -improvements and betterments --replaced by other than insured: not covered --repalced by insured: ACV --not replaced: % cost on remaining life of lease -electronic data (only under additional cover with 2500 annual aggregate limit) --replaced: cost to replace/restore that's been destroyed or corrupted by covered loss --not replaced: cost to replace media w/ identical blank media

ISO CGL BI and PD liability -premises/operations (what it is, what coverage is based on and includes/excludes) -products/completed operations (what it is, how liability is determined)

separate insurance rates: -premises and operations hazard: possibility organization is held liability because of BI/PD caused by accident on organization premises or from org ongoing operations on/off premises --usually based on negligence of organization --coverage includes contractual liability coverage from CGL form --excluded: BI/PD from aircraft/auto/watercraft and liability for injury/illness of org employees -products and completed operations hazards: possibility org held liable bc of BI/PD caused by accident arising out of products manufactured/sold/distributed by organization + occurring after products no longer on org premises/in org physical possession OR by accident from org completed work (defective parts) --liability can be based on variety of recovery theories: negligence, strict liability in tort, misrepresentation, fraud, breach of warranty (etc)

variable life -difference to whole life -what affects cash values/premiums -who it's suitable for -pro/con

similar to whole life policy (cash value over time, permanent insurance protection) but allows PH to choose amount investment amounts offered by insurer/move cash values among these accounts -investment performance of accounts affect amount of policy cash values/death benefit -offers level premiums -suitable for persons who want benefit of using competitive investment strategies/some protection against inflation over life of insurance program --disadvantage: policy needs to be held for several years to take full advantage of flexible investment --advantage: PH can move policy cash value amount among investments without incurring current income tax liability for capital gains

Snowmobile endorsement -what is a snowmobile -liability exclusions/modifications -passenger hazard exclusion/physical damage payment

snowmobile: land motor vehicle designed for use off public roads on snow/ice (does not include vehicle propelled by propellers/fans) -liability exclusions and modifications: --coverage doesn't apply if snowmobile used in business, racing (even if not prearranged/organized), for any person/organization other than named insured, if renting/leasing -passenger hazard exclusion exists, provisions for physical damage payment same as misc. type vehicle endorsement

CGL other persons and organizations 3 kinds, extent of insurance and exceptions

some people/orgs are insureds under certain circumstances: -real estate manager for named insured is insured (only applies while person/org is serving as real estate manager for named insured) -legal reps: if named insured dies, person/org with temporary custody of named insured's property is insured (for liability from maintenance/use of named insured property) until legal rep appointed, who is insured only w/ respect to duties as legal rep -newly acquired orgs: if acquire/form new org during policy period, new org qualifies as a named insured and is covered for 90 days after formation/end of policy period (doesn't extend to partnership/joint venture/LLC not named in policy) --coverage A doesn't apply to BI/PD before organization acquired/formed and B doesn't apply to personal/advertising injury from offense committed before organization was acquired/formed

compensatory damages (tort) -special damages and what it can include -general damages and what it can include

special damages (particular damages/out of pocket losses): A form of compensatory damages that awards a sum of money for specific, identifiable expenses associated with the injured person's loss, such as medical expenses or lost wages. -can include amount expended to restore lost property -BI: include hospital/doctor bills/related expense -loss of wages/earnings general damages (direct/necessary damages): A monetary award to compensate a victim for losses, such as pain and suffering, that does not involve specific, measurable expenses. -presumes when special damages proven -can include pain and suffering, disfigurement, loss of limb/sight/hearing, emotional distress, noneconomic intangible loss -injured person entitled to have future effect of permanent injuries considered in eval damages -have grown so large that legislatures may place dollar limit on some types

(liability of landowners) invitees -public vs business -duty land occupier owes

special type of licensee -public: A person invited to enter onto premises as a member of the general public for a purpose for which the land is open to the public. --public meetings, visitors to national parks, amusement parks on free passes -business: An individual who has express or implied permission to be on the premises of another for the purpose of doing business. --converted from licensee through business benefit (shoppers, guests, theater patrons) land occupier owes duty to exercise reasonable care to keep premises reasonably safe/warn of concealed dangerous conditions -need not warn of dangers of which invitee is aware

HO-3 Covg C Property Not Covered

specifically excludes all coverages for some categories: -articles separately described/specifically insured in this/other insurance -animals/birds/fish -motor vehicles/parts/electronic equipment -aircraft/hovercraft -property of home sharing occupant -property of any other person occupying residence of home-sharing host activities -property of roomers/boarders unrelated to insured -property in apartment rented to others -property held for rental/rented to others off residence premises -business data (either on paper or electronically!) -credit cards/electronic transfer cards -water/steam (water in swimming pool) -property primarily used for home-sharing host activities

commercial property special form unique exclusions

specifically excludes difficult to insure perils (insurer still pays if one of these excluded causes of losses results in a specified cause of loss insured under Broad form) -Wear and tear -Rust, corrosion, decay, deterioration, or hidden or latent defect -Smog -Settling, cracking, shrinking, or expansion -Infestations and waste products of insects, birds, rodents, or other animals -Mechanical breakdown -Dampness or dryness of atmosphere, changes or extremes in temperatures, or marring or scratching (applicable to personal property only) -weather conditions contributing to other excluded causes of loss (flood waters from high winds) -acts/decisions including failure to act/decide of any person/group/organization/government (authorities don't take flood control measures) -fault/inadequate planning/zoning/surveying/siting/design/specifications/workmanship/repair/construction/renovation/remodeling/grading/compaction/materials/maintenance -loss or damage to products: exclude coverage for damage to merchandise from production errors (exception is loss from covered cause of loss because of production error) -release/discharge/dispersal of pollutants (exception is release of pollutants from any specified cause of loss and glass damaged by chemicals applied to glass)

commercial property special form: losses covered only if caused by specified cause of loss

specified meaning cause of loss insured under Broad form -Valuable papers and records -Animals, and then only in the event of their death -Fragile articles if broken, such as glassware, statuary, marble, chinaware, and porcelain (but not including building glass and containers of property held for sale) -Builders' machinery and equipment owned or held by the insured unless on or within 100 feet of the described premises

HO-3 Additional Coverages : Claims Expenses -what it covers (4)

specifies the expenses insurer will pay when handling a claim in addition to judgement/settlement (subject to Covg E liability limit) -expenses we incur (eg insured legal representation) -premium on bonds (bonds required in defense of suit NOT exceeding policy Covg E limit) -reasonable expenses (for insured's assistance, LOE up to 250 a day) -postjudgement interest

HO-3 Additional Coverages : First Aid Expenses

specify insurer will reimburse insured for expenses insured has incurred when rendering first aid to others as a result of BI covered under policy (not to injured insured)

split vs single limit

split: Separate coverage limits that allow one limit for bodily injury to *each* person; a second, usually higher, limit for bodily injury to *all* persons in each accident; and a third limit for all property damage per accident single: One coverage limit that applies to all damages arising from bodily injury or property damage or both, resulting from a single accident.

Part A Liability - Insuring Agreement -damages (kinds) -defense -4 classes of insured persons/organizations

state insurer duty to pay: -damages/defense costs --agree to pay damage for BI/PD that insured is legally responsible for because of auto accident --damages: compensatory/punitive or exemplary damages/prejudgement interest --defense: agree to defend insured/obligated to pay legal costs IN ADDITION TO limit (this duty ends when limit of liability exhausted) -defines persons and organizations insured, 4 classes: --named insured/family members --any person using named insured covered auto --any person legally responsible for acts of covered person while using covered auto (employer of person in car related work accident) --any person/organization legally responsible for named insured use of any auto/trailer (if person/org doesn't own auto/trailer) ---ex person working for company A injures pedestrian in car loaned by company B (person and A covered, B not)

Part A - Financial responsibility

state law may require insured to demonstrate proof of financial responsibility after accident -PAP can be used for this to show responsibility to extent required

source of insurance regulation: legislation (US) -states -federal (Mccaran Ferguson, when federal law applies, Gramm leach Bliley Act)

states regulate corporate/insurance matters for most part federal intervention: -McCarran Ferguson Act: allows each state to regulate business of insurance conducted within its borders -Since above, federal law governs insurance only under prescribed circumstances: --when federal law affects insurer's activity falling outside business of insurance --when state has no law regulating an aspect of business of insurance covered by a federal law -Gramm Leach Bliley Financial Services Modernization act: protect several areas of state insurance regulation from federal control --also gives federal regulators/courts ability to preempt state insurance laws interfering with legit insurance activities of banks/bank holding companies (expand insurance powers of banks/bank hold companies but prohibit national banks from actually underwriting insurance) --prohibit state actions from preventing bank relating firms from selling insurance on same basis as insurance producers

statues of limitations and repose -statute of limitation (definition, examples of time periods) -statute of repose (definition, examples of time periods) -how statutory time periods vary, when it starts (and exception) -the right to sue for different torts -Canada

statute of limitations: A statute that requires a plaintiff to file a lawsuit within a specific time period after the cause of action has accrued, which is often when the injury occurred or was discovered. -medical malpractice: 1-3 yrs -real/personal property damage: up to 10 years -breach of warranty; 4-6 yr (but still can recover under breach of warranty suit) statute of repose: A statute that requires a plaintiff to file a lawsuit within a specific time period after a wrongful act by a defendant, such as improper construction of a building, regardless of when the injury occurred or was discovered. -can bar lawsuit even before cause of action has happened -medical malpractice: 3-10 yrs -architects/engineers: 4-15 years after building completion statutory time periods vary by jurisdiction and kind of tort -statute starts @ time the cause of action accrues (but may be difficult to establish when all elements of causation of action exist or when material facts have been discovered to determine when period starts) -for children/minors: statutory time period starts day they come of age/date incompetence removed (as long as incpometence existed before statue began to run) right to sue: -fixed time of accident/cause of action easy to determine and right to sue based on that -some torts allow right to sue on commission of the wrongful act regardless of consequences (injury, damage, trespass) and statute begins to run when wrongful act committed -some torts allow right to sue only if harm results (cause of action accrues/statute runs from date plaintiff sustains injury/damage) Canada: limitation acts and discoverability rules (statues of limitation and repose respectively) and periods start running until material facts that cause of action based on have been discovered/should have been discovered by reasonable diligence) -if plaintiff dies before expiration of time suit can be filed, legal rep has 1 year after death to sue -if defendant not in jurisdiction and plaintiff can't serve complaint, running of statute tolled (stopped) until service of complaint possible

(products liability) potentially liable parties in strict liability

strict liability generally applies to entities engaging in business of selling products -manufacturers, distributors, wholesalers, retailers, often times bailors/lessors -also extends to builders/contractors in many jurisdictions -probably won't apply to people occasionally selling product outside regular course of business

Part F - insurer right to recover payment -the subrogation clause and role of covered person -exception to subrogation clause -multiple sources of recovery and duties of insured

subrogation clause: if insurer makes loss payment to person who has right to recover damages from third party that caused/is legally liable for loss, insurer has legal right of subrogation against 3rd party. -covered person must do what's necessary to enable insurer's subrogation rights/can't do anything after loss that would prejudice this right -does not apply to physical damage for any person using covered auto with reasonable belief that they're entitled to do so -if person gets loss payment from insurer AND from another party, person has to hold proceeds of second recovery in trust and reimburse insurer for loss payment

commercial property conditions: transfer or rights of recovery against others to us -when insurer might not have to pay loss -when insured is allowed to waive right of property and when they're not

subrogation: -if insured takes any action that eliminates insurer right of recovery (other than one authorized), insurer may not be required to pay loss --insured allowed to waive right of recovery against any other part provided waiver made in writing before loss occurs --insured can waive right of recovery after loss ONLY to party insured under same policy, parent/subsidiary company or tenant of insured property

Term Life -what kind of protection -cash value -cost and how it changes over time -who it's useful for

temporary protection: provide coverage for specified period with no cash value -life insurance only (no savings/investment/cash value or loan value aspect) -if insured dies during policy term, policy value paid to beneficiary -may be able to renew (at higher rate) up to specific period/age -may be convertible to permanent policy low cost to obtain life insurance -premium may increase with age -level term: fixed annual premium for fixed # of years, higher rate in early years in exchange for flat/affordable rate in later years of term useful for someone whose current need for life insurance will diminish after a number of years (family with young child)

valuation of covered claims for liability insurance

the max insurer can pay is the lesser of two amounts: -compensable amount of claim -applicable policy limit

HO-3 Section I Exclusions

these exclusions apply to Covgs A,B,C -ordinance/law: eliminate coverages from ordinance/law reducing value of property, require testing for cleaning up pollutants, or requires demolition/construction/debris removal (limited coverage for buildings/structures damaged as result of insured peril) -earth movement -water (unless resulting from accidental discharge/overflow of water/steam) -power failure (unless damage due to power interruption by insured peril ON premises) -neglect -war -nuclear hazard -intentional loss -govt action (destruction/confiscation/seizure by order of any government/public authority) exclusions applying to only A and B -weather if contributing to any of the previously excluded perils -act or decisions (including failure to act/decide) of any person/group/organization/government body -damage resulting from faulty planning/zoning/surveying/design specifications/workmanship/construction/renovation/materials/maintenance

tort vs. other offenses -criminal case -breach of contract -moral wrong

tort is a civil (private), legal wrong : person injured as result of tort can file lawsuit against tortfeasor (accused wrongdoer) criminal case: a public wrong, government prosecutor brings action against accused on behalf of people breach of contract : binding agreement not honored by a party to the contract moral wrong: laws do not judge acts by moral standards

toxic tort -how liability determined -who is commonly involved -what goal of lawsuit is

toxic tort -refers to several types of tort suits arising from use of toxic substances -liability established by statue instead of common law most of the time -many times, a government agency is party and private party plaintiff may be involved -usually seek compensation or damages to individuals caused by toxic substances: plaintiff must prove all usual tort case things

second to die (survivorship) life insurance

two lives insured in single policy, death benefits payable to beneficiary when both insureds have died -death benefit mostly to pay for federal estate taxes due in larger estates -lower than those on comparable policy because benefits not payable until both lives have ended

how insurers deal with rate filing requirements -what influences filing requirement -2 questions regulators ask insurers to justify rates in relation to (what insurers consider in each one)

type of regulation influences amount information insurer has to prepare in rate filing application -prior approval usually requires detailed data/analysis while flex might not if in range regulators require insurers to justify rates in relation to: -are rates based on realistic/factual estimates of future costs? --insurers use actuarial techniques to get indicated rates (project historical losses to ultimate and adjust for trend to reflect cost level expected in rated policy period, add admin/claim management expenses and provisions for profit/contingency and offset for investment income) --also consider CAT losses to make sure they have sufficient funds if one occurs -is level of profit associated with rate reasonable --for profit, insurers may rely on fixed % of premium or sophisticated model incorporating ROE --regulators usually want supporting documentation for profit provision. Agree ROE should be high enough to maintain insurer willingness to serve/financial strength but don't agree with level of ROE a lot of the time

commercial umbrella aggregate limits -2 types

umbrella policies almost all have aggregate limits -can apply to all claims under umbrella -or only to coverages subject to aggregate in underlying policy

class action litigation trends -why trend is -forum shopping -role of actuaries

until recently only a few countries allowed class action lawsuits (aggregate litigation) -now more European/South american countries have it can be from: -globalization of economy -shift in cultural attitudes towards protecting consumers -influence of US legal system beyond its borders expansion of class action litigation opened attorneys who practice personal injury law to 'forum shop' beyond country borders to find most favorable venue to try a case -not the U.S due to several class action reforms (restrictions on approval settlements/attorney fees) management of organization involved in class action: may call on actuaries to help estimate potential damages that could be awarded (as part of litigation of strategy) and can testify to policymakers relating to costs/effects lawsuits have on issues (like product innovation)

Part A limits -what kind -max recovery

usually split limits -max recovery = limit: limits will not be increased regardless of # of injured persons, claims, vehicles/premiums shown, vehicles involved -no one can get duplicate payments for same elements of loss under Parts A, B, C

2 types of coverage to extend limits of other policies

usually to extend CGL, commercial auto, other primary liability policies -excess liability policy: cover liability claims in excess of limits of underlying policy/stated retention amount -umbrella liability policy: provide excess coverage over several primary policies and may also provide coverage not available in underlying policies subject to self-insured retention

source of life insurance - individual

varies by coverage needs/budget -can choose a wide variety of products -not tethered to employment status/kind of changes made to group insurance plan -cost of individual life insurance does not include a group/volume discount and bears entire cost (varies on age/gender/health/habits) -application is evaluated by insurer (increasing cost) -ideal for younger individuals in good health (premiums might be more attractive than from other sources

trailer definition

vehicle designed to be pulled by auto/pickup/van

components of commercial property coverage part

what it is: commercial package policy coverage component providing broad range of coverage to middle market/larger firms to insure buildings/business personal property Components: -commercial property declarations -1+ property coverage forms -1+ causes of loss forms -Commercial Property Conditions -Any applicable endorsements

license/permit bonds -who needs these -guarantees

who needs licenses: -political subdivisions often require person/org wanting to be in certain business/trade to get a license -person/org wanting to exercise privilege in connection w/ business vary in guarantee: -compliance with laws applying to licensed activities -possibly guarantee payment of damages to anyone suffering loss resulting from noncompliance w/ those laws -specific activities: --merchandising/dealer: guarantee principal conducts merchandising according to law/account for funds in trust --reclamation/environmental: guarantee after operations complete principal restores land to original state

impairment

-asset considered impaired if it no longer expected to produce economic benefits expected when first acquired -impairment tests used to prevent inconsistency between different valuations for balance sheet and income statement -- can test if permanent impairment exists and reflect this in income statement (for when fair value of asset dropped significantly for balance sheet)

bordereau reporting

-summarized report of transactions (as opposed to individual claim/premium transaction detail) -additional data available only through special request or inspection -affects level of detail in assumed company records

methods to deal record earned premium before written (2)

Method 1: deferral matching or asset liability -record estimated amounts as written premium -as actual data comes in, actual values are booked/recorded as written premium and estimated amount reversed. Method 2: deferral matching only EP = WP + beginning UEP - ending UEP premium revenue is affected through unearned premium component (expected updated premium from previous periods added by adjusting ending unearned premium) -unearned premium adjustment continually updated -eliminates need to reverse WP estimates