Insurance Licensing Terms

Domestic Shipments

Covered through a variety of inland marine transportation forms that cover property being transported.

Loss Sustained Form

Covers losses that are sustained during the policy period and discovered either during the policy period or up to one year after the policy expires. This one-year discovery period terminates immediately when the insured obtains other commercial crime insurance.

Reasonable Expectation

Each party is entitled to the belief that the other party will not try to conceal pertinent information or otherwise act deceptively.

Negligence

Failure to exercise the care that a reasonable person would exercise in like circumstances. It is failure to do (or not do) something that ordinarily should be (or not be) done that results in a loss.

Basic Types of Construction // Class 1 - Frame

Frame structures have outside support walls, a roof, and floors constructed of wood or other combustible materials. The exterior walls may be covered with stucco or brick veneer.

Self-Insurers

Instead of transferring risk, self-insurers retain risk. The business sets aside reserve funds to cover losses in advance and may even have a claims system like an insurance company.

Punitive Damages

Intended to reform or deter the defendant and others from engaging in conduct similar to that which form the basis of the lawsuit. (Gross Negligence)

Unauthorized Insurer

Not authorized to transact the business of insurance in a state (Also non-admitted)

Occupying

Occupying means: in a vehicle, upon a vehicle, or getting into, onto, out of, or off of a vehicle.

Personal Property Replacement Cost Endorsement

Provides that the policy will reimburse losses to personal property on a replacement cost basis, rather than actual cash value (depreciated).

Robbery

Taking someone's property by threat or force

Indemnity

The concept of insurance is to restore the insured to their original pre-loss condition - no better and no worse.

Law of Large Numbers

The larger the group, the more accurately losses can be predicted

Suspension

The slowdown or cessation of the insured's business activities

Transportation Expenses Coverage

This may include rental cars, bus fares, train fares, or cab fares. This coverage pays up to $20 per day, to a maximum of $600, for: - Transportation expenses incurred by the insured because of physical damage losses to the insured's covered auto; and - Loss of use expenses for which the insured becomes legally responsible because of loss to a non-owned auto

Individual Named Insured Endorsement [BAP]

[BAP] Extends personal auto coverage to immediate family members of the named insured.

Principal [Bonds]

[Bonds] The part who promises to do (or not do) a specific thing (I.e., the person or company required to post a bond)

Pollutants [CGL]

[CGL] Any irritants or contaminants or waste. Waste includes materials to be recycled, Reconditioned, or reclaimed

Examination of Your Books and Records Condition [CPP]

[CPP] States that the company may examine and audit the insured's books and records at any time during the policy period and for up to three years after the end of the policy period.

First-Named Insured [CPP]

[CPP] The person or business whose name is listed first in the declarations. It is necessary to specify the first named-insured because the CPP may be issued to more than one named insured, such as business partners or entities. The insurer only corresponds with the first-named insured.

Coverage J - Medical Payments [Farm]

[Farm] Pays reasonable medical expenses incurred within three years from the date of an accident or injury regardless of fault

Part Five - Premium [WC]

[WC] Explains how the cost of the policy is determined.

Statues of Limitations

provide that certain type of lawsuits must be filed within a specified time of the occurrence to be valid under the law. (Don't wait too long to sue if you think someone else is at fault)

Errors and Omissions (E&O)

A broad term that refers to professional liability policies written for other professionals, such as insurance agents, accountants, architects, stockbrokers, engineers, consultants, and attorneys.

Bonds

A financial contract that promises to pay money (called a penalty) if a promise made by one party or another is broken.

Bailee

A person or organization that has temporary possession of someone else's personal property.

Direct Loss

A physical loss to property with no intervening cause. (Example: Lightning striking a house & an automobile hitting a tree.)

Direct Loss

A property loss caused by an unbroken chain of events covered under an insurance policy. (Immediate damage caused by the peril)

Pure Risk

A threat beyond human control, having only the possibility of a loss.

Endorsements

Add to, or modify coverage. (Changes to the original policy.)

Contribution by Equal Shares

All insurers contribute equally up to the limit of the policy with the lowest limit. At that point, the insurer with the lowest limit stops paying since it has already paid its policy's limit, and the other insurers share the remainder of the loss. This continues either until the loss is paid in full or each company has paid its limit.

Stated Amount (Value)

Allows the insured to determine the value of that property. An insurance policy is written for that amount. However, at time of loss, the insurer will pay the lesser of the amount stated on the declarations page or actual cash value - whichever is less. Unlike agreed value, it does not guarantee payment of the listed amount. (In an example of classic or antique vehicles, the insured would have to prove the amount of loss before the claim is paid. An appraisal is required before the insurance policy is issued.)

Utility Interruption Coverage

An extended coverage to business income, extra expense, or spoilage damage. Loss that result from the interruption of utility services and are the direct result of breakdown to the covered equipment are covered once a waiting period is met

Umbrella Policy

An insurance policy designed to help protect you from major claims and lawsuits, as a result helps protect your assets and future.

Stock Insurer

An insurer that is owned by its stockholders and formed as a corporation for the purpose of earning a profit for the stockholders.

Non-owned Auto

Any private passenger auto, pickup truck, trailer, or van not owned by or available for the regular use of the named insured or a family member, such as a short-term rental car or borrowed car.

Primary Insurance

Attaches immediately upon the occurrence or loss. The policy that attaches first in the occurrence of a loss.

Permitted Incidental Occupancies Endorsement

Overrides the exclusions under the homeowners forms that apply to the insured's business activities conducted on the residence premises. For instance, this endorsement eliminates the Coverage B exclusion if the insured is using a separate structure for business purposes. It also eliminates the $2,500 limit for business property on the residence premises with regard to furniture, supplies, and equipment used in the business listed in the endorsement.

Homeowners Policy

Package policy or multiline policy because it provides property and liability insurance in a single policy. By obtaining property and liability coverage in one policy, the insured is more likely to avoid gaps in coverage and the overlapping of coverages that often happen when several monoline policies are purchased instead of a package policy. Package policy, multiline; includes both property and liability. - The named insured must be the owner-occupant of the dwelling or condominium, or a renter who maintains a residential occupancy (personal property only). - The home cannot contain more than four families. - The named insured cannot purchase coverage for only personal property unless the name insured is a renter. - The dwelling must be used exclusively as a residence, except for certain incidental occupancies such as offices, professional or private schools, or studios. - Farm dwellings are not eligible; mobile homes are eligible if the mobile home endorsement is attached - Dwellings under construction are eligible (if the named insured is to be the occupant).

Gramm-Leach-Bliley Act (15 USC Section 206)

Passed in 1999 to allow financial holding companies to engage in any activities that are financial in nature. Regulation of these holding companies is managed on a functional basis. This means that regulatory authority is based on what activity is occurring, rather than on what type of company is engaging in the activity. For example, the sale of insurance is regulated by state insurance regulators even if the company making the sale is a bank or securities brokerage. This act requires financial institutions; companies that offer consumers financial products or services like loans, financial, or investment advice; and insurance companies to explain their information - sharing practices to their customers and to safeguard sensitive data

Coverage F - Medical Payments to Others

Pays all necessary medical expenses incurred within three years of an accident that causes bodily injury. This coverage applies to injuries: - Sustained while the injured party is on an insured location with any insured's permission; or - Sustained while the injured party is off the insured location if the injury arises out of a condition - On an insured location or ways immediately adjoining the insured location - Caused by the activities of an insured (anywhere), - Caused by any residence employee in the course of employment, or Caused by an animal owned by or in the care of any insured. This coverage has a base limit of $1,000 per person per accident, but it can be increased for additional premium.

Business Income Coverage Form

Pays for loss of income that the insured sustains due to a direct physical loss from a peril insured against that forces the insured to suspend operations during the period of restoration. The period of restoration begins on the date of the direct physical loss and ends on the date on which the property can be repaired, rebuilt, or replaced with reasonable speed.

Extortion - Commercial Entities

Pays for loss of money, securities, and other property resulting from extortion. The extortion - commercial entities endorsement covers payments made in response to threats of bodily harm to employees of the insured and relatives or invitees who are also captured in the covered territories. The territory is the United States (including its territories and possessions), Puerto Rico, Canada, and other locations shown on the schedule. (The surrender of property away from the premises as the result of a threat communicated to the insured to do bodily harm to the insured or to an employee or a relative of the insured who is being help captive)

Forgery or Alteration Coverage

Pays for loss resulting from forgery or alteration of checks, drafts, promissory notes, or similar instruments made, drawn by, or on the named insured or the insured's agent. This includes documents that are forged or altered with a mechanically reproduced facsimile signature. Coverage is provided worldwide. Forgery or alteration excludes employee acts of dishonesty, as this would be covered under employee theft.

Inside the Premises - Theft of Money and Securities Coverage

Pays for theft, disappearance, or destruction of money and securities while inside the insured premises or a banking premises. If the insured owns the premises or is liable for damages to it, it also covers damage to the interior or exterior of the premises that results from theft or attempted theft.

Bailee's Customer Policy

Pays the insured's customer for damage to a customer's property that is in the insured's care, regardless of whether the insured is liable for the damage, as long as the damage resulted from a covered peril. (Pays the Customer)

Valuable Papers and Records - Other Than Electronic Data Coverage Extension

Pays up to $2,500 to replace or restore information on damaged valuable papers and records.

Personal Liability Supplements // Coverage L - Personal Liability

Personal liability; at fault resulting in bodily injuries to others, property damage to others; on and off premises.

Physical Hazard

Physically identifiable factors that increase the chance of a loss. (Example: if the tires on a car are slick with little or no tread, the possibility of a car accident increases. A dead tree in a yard increases the possibility of the tree falling on the house.) The hazard can be seen

Dwelling Policy

Policy that does not require the building to be owner occupied and usually covers risks that may not qualify for homeowners insurance like rental property, older homes, and hunting cabins in rural areas. Does not automatically cover the peril of theft or personal liability, as these can be added by endorsement. May be used to insure any of the following: - Vacation Homes - Rental Property - Dwellings with four units in which each unit may accommodate occupants - Dwellings under construction - Mobile homes meeting certain qualifications, including that they are permanently located - Farm dwellings are not eligible

Difference in Conditions (DIC) Insurance

Property insurance that covers high severity , low frequency perils - the exact opposite of what is normally accepted by insurance companies. Catastrophic coverage for risks like floods and earthquakes is usually excluded from policies, but if the insured has an exposure, a DIC policy can be written to provide coverage. Other ways DIC insurance can be used is to provide additional limits of coverage for certain perils that standard markets are unable or unwilling to provide. The most common form of DIC policies are considered "all risk;" however, the perils that would normally be covered on a standard policy are excluded and the customary exclusions are covered. Unlike standard property policies, DIC policies do not generally have a coinsurance requirement. Deductibles are generally quite high due to the type of risks being insured and the potential for sizeable losses.

Liability Insurance

Protects an insured from financial losses arising out of liability claims by transferring the burden of the loss from the insured to insurer (insurance company). The insurer pays up to the limit of liability, for which the insured becomes legally liable to pay because of bodily injury and property damage. - Bodily Injury (BI) - Property Damage (PD) - Personal Injury (PI)

Annual Transit Policy

Protects the shipper or receiver of goods against loss to goods in transit. Coverage is available on a named-peril basis, protecting against such losses as fire, windstorm, collision, and theft, or on an open-peril basis. The policy covers all of the insured's incoming or outgoing shipments during the year

Surplus Lines Insurance

Provided by carriers that do not need to be filed with a state insurance department in order to offer coverage. An agent or broker that works with surplus or excess lines carriers is required to have a surplus lines license. Each state has specific regulations regarding business that is procured by way of excess or surplus lines insurers.

Scheduled Personal Property Endorsement

Provides a separate schedule of insurance for one or more of nine major categories of valuable property. - Many of these items represent property that has a limited amount amount of coverage under the homeowners policy. The endorsement allows the insured to separately schedule one or more of these major categories of property with a separate amount of insurance for each category scheduled. - After the insured schedules items of personal property using this endorsement, the property is not subject to the coverage limitations that apply to unscheduled personal property under the homeowners policy. In addition, the coverage is provided on an open peril basis with no deductible, even if the endorsement is attached to a named perils homeowner policy.

Commercial Property Declarations Form

Provides additional information about the premise to be insured and the specific property forms that will apply. It also includes the name and addresses of any mortgage or lienholders.

Marine Insurance

Provides coverage against loss or damage to a ship. It also covers in-transit cargo losses or damages over waterways, air, or land

Personal Articles Forms

Provides coverage for nine optional classes of personal property - the same nine categories covered under the homeowners scheduled personal property endorsement: jewelry, furs, cameras, musical instruments, silverware, golf equipment, fine arts, stamps, and coins. An appraisal may be required when the personal articles form is issued to help develop an accurate description of covered property and to arrive at the value for which the property should be insured.

Section I Property Coverages // Coverage C - Personal Property (Included in all HO policies)

Provides coverage for personal property owned or used by an insured while the property is anywhere in the world. At the insured's request, coverage will also apply to property owned by others including the property of a guest or residence employee at the residence occupied by the insured. Personal Property: Not attached to the dwelling, Anywhere in the world, Guest's Property (if requested). - Property away from the residence premises shown in the declarations is covered for up to 10% of the Coverage C limit or $1,000, whichever is greater. This is worldwide coverage. This restriction does not apply: - To property being moved from the residence premises to a new principal residence (full coverage applies for 30 days from the start of the move); or - When a personal property is moved from the residence premises because the residence is being repaired or is unfit to live in (full coverage applies while it is at the temporary residence). Certain classes of personal property are specifically excluded from coverage: - Animals, Birds, or Fish - Motorized vehicles or aircraft, including equipment and accessories (motorized vehicles for the handicapped and vehicles use to service the premise, such as riding lawnmowers, are covered.) - Property of boarders (renting a room from the insured) - Property rented to others off the residence premises - Credit Cards - Rental Property that is part of the apartment o In short: Pets, Motorized vehicles (unless used to service premises), & property of renters or boarders are excluded.

Time Element Coverage

Provides coverage for the loss of business income over a period of time that resulted from direct physical loss. Business income includes net income that would have been earned if the loss had not occurred and the costs of continuing normal operations, including payroll. For the loss of business income to be covered, the suspension of operations must be a result of a direct physical loss to property at the described premises caused by a peril insured against the cause of loss form.

Home Day Care Endorsement

Provides liability and medical payment coverage if the insured provides day care services at home. The premium for this endorsement is based upon the number of children. Claims due to sexual molestation or corporal punishment are excluded.

Business Pursuits Endorsement

Provides liability coverage for a business conducted away from the residence premises. This endorsement covers the insured only while in the employment of someone else, such as a school teacher.

Extra Expense Coverage Form

Provides no reimbursement for lost business income but concentrates on reimbursing the insured for extra expenses incurred to remain in operation. The extra expense coverage form is a time element coverage. Limits are applied to recovery depending on the period of restoration. For instance, limits might be states in the declarations as 40%/80%/100%. This means that if the restoration period was: - 30 days or less, 40% of the full amount of insurance would be paid; - 31-60 days, 80% of the full amount of insurance would be paid; or - Over 60 days, 100% of the full amount of insurance would be paid.

Covered Causes of Loss - Special [Farm]

Provides open peril coverage. Among the excluded losses are: - Dishonest or criminal acts; - Pollutants or containments; - Transfer of property due to unauthorized instructions; - Voluntary parting with property; and - Failure to save and preserve property from loss.

Electronic Data Processing Equipment Floater

Provides open-peril coverage for computer hardware, software, and data that is owned by the insured or in the insured's care, custody, or control. Property in transit is covered. Extra expense and business interruption coverage is also included.

Appraisal Condition

Provides that either party may demand an appraisal of a loss. This is common when the insured and the insurer cannot agree on the amount of the claim payment. In this event, each party chooses an appraiser. The two appraisers then select an umpire. If the appraisers fail to agree on an amount, they submit their differences to the umpire. The decision agreed to by any two of the three is the final amount of the claim payment. Each party pays its own appraiser and shares the cost of the umpire.

Section I Property Coverages // Coverage D - Loss of Use (Included in all HO policies)

Provides three types of coverage. - First, if a covered property loss makes the residence premises uninhabitable, the policy will cover additional living expenses related to maintaining the insured's normal standard of living. - Second, If a covered loss to the insured's property makes a part of the residence premises uninhabitable (in a multifamily dwelling) that is rented to others, the policy will cover the loss of fair rental value. - Third, if a civil authority prohibits the insured from using the residence premises by a peril insured against, the additional living expense or fair rental value loss will be covered for up to two weeks.

Outside the Premises Coverage

Provides two types of coverage: - Theft, disappearance, or destruction of money and securities while outside the premises and in the care and custody of a messenger (i.e., the insured, a relative of the insured, the insured's partners or members, or any employee), or an armored car company. - Loss of other property by actual or attempted robbery while outside the premises and in the care and custody of a messenger or an armored car company.

Policy Territory

Provisions state that a loss will not be covered unless it occurs within the specified location. (Where a loss must occur)

CANHAM

Pure Risks have certain characteristics and can be remembered using the acronym CANHAM 1. Calculable 2. Affordable 3. Non-Catastrophic 4. Homogeneous 5. Accidental 6. Measurable

Umbrella Insurance

Refers to liability insurance that is in excess of specified other policies and also potentially primary insurance for losses not covered by the other policies. Some insureds need higher limits of liability coverage than can be provided by their auto or homeowners policies. This need can be met through a personal umbrella policy, which has two important purposes: - Provide additional liability insurance over and above the other owned policies - Cover some losses excluded by the underlying liability insurance *Coverage limits for a personal umbrella policy begin at $1 million*

Compensatory Damages

Reimburse the injured party only for losses that were actually sustained. - Special Damages - General Damages

Accounts Receivable Coverage Form

Reimburses the insured for amounts that can't be collected from customers because of damage to the company's accounts receivable records. Damage to the records may prevent a business from being able to prove a debt is owed. It also covers extra collection expenses and interest on any loans the insured must obtain to stay in business while collections are impaired. Accounts receivable records in storage away from the premises are not covered. The insured must keep all accounts receivable records in receptacles described in the declarations when the business is closed and when the records are not in use.

Valuable Papers and Records Coverage Form

Reimburses the insured for the cost of replacing damaged items, such as manuscripts, films, maps, drawings, deeds, and books that belong to the insured or are in the insured's care, custody, or control. Architects, engineering businesses, or movie production companies may need this coverage.

Towing and Labor Costs Endorsement

Reimburses the insured up to the amount scheduled in the policy for towing and labor costs each time a covered auto is disabled. Labor must be performed at the place of disablement; work performed after the vehicle is taken to a garage is not covered

Business Income with Extra Expense Coverage Form

Replaces the extra expense coverage with an expense to reduce loss coverage that covers expenses the insured incurs to reduce loss, up to the amount the loss is reduced.

Self-Insured Retention (SIR)

Represents the amount of loss the insured must cover out of pocket. Self-insured retentions do not apply when the umbrella policy acts as excess coverage to the underlying liability coverage. Of course even an umbrella policy has exclusions, such as intentional acts, liability covered under workers' compensation, and liability arising out of business pursuits. When a loss is excluded under both the underlying policy and the umbrella, no coverage is available

Fair Credit Reporting Act (FCRA)

Requires consumer reporting agencies to adopt reasonable procedures for exchanging information on credit, personnel, insurance, and other subjects in a manner that is fair and equitable to the consumer with respect to the confidentiality, accuracy, relevancy & proper use of the information.

Insurable Interest

Risk of financial loss, may be present at the time of application and MUST be present at the time of loss.

Speculative Risk

Risks that are made as conscious choices and are not just a result of uncontrollable circumstances. Speculative risk have a possibility of loss and also the possibility of a gain. Speculative Risks are uncertain outcomes & not insurable (Example: Gambling)

Contributory Negligence Doctrine

Says that if a person contributed to his/her own damages in any way, another party cannot be held liable for the damages. To establish liability, an individual must show that the other party was negligent and that the individual did not contribute to the loss through any negligence on his own part. Some states retain this system, rebuking our liability when there has been contributory negligence. (Example: the insured (Jake) pulls in front of another car and an accident occurs. The driver of the other car (Linda) wants to be paid for medical bills and damages to her car. Jake argues that the accident was partly caused by the bald tires on Linda's car which caused her to not stop quickly enough. The judge agrees and finds Linda 30% at fault. Using the argument of contributory negligence, Jake owes Linda nothing because Linda contributed to the cause of the accident.)

Definitions

Section of a policy that clarifies the meanings of certain terms used in the policy. Insurance contracts are legal documents, so there must be an attempt made to clearly define terms used in the contract.

Trip Transit Policy

Similar to the annual transit policy. However, it is used to insure single shipments of goods for companies that have only occasional shipments to insure. Coverage extends from the time and point of organization to the time and point of destination.

Insured's Duties in the Event of Loss

Similar to what is found in other property forms. The insured must: - Notify the police if a law may have been broken; - Give the insurer prompt notice of the loss and describe the property involved; - Give the insurer a description of how, when, and where the loss occurred as soon as possible; - Take reasonable steps to protect the property from further damage, set damaged property aside if feasible, and keep a record of expenses related to the loss; - Make no statement that assumes any obligation if admits any liability without the insurer's consent; - Permit the insurer to inspect the property and records proving loss; - Submit under oath of questioning if requested; - Send a signed, sworn statement of loss within 60 days after it is requested by the insurer; - Promptly send the insurer any legal papers or notices concerning the loss; and - Cooperate with the investigation or settlement of the claim.

Combined Ratio

Simply the sum of the loss ratio and expense ratio.

Agreed Value

Some items of property are very difficult to value after a loss has occurred. In this situation, the insured and insurer will agree on a value before the policy is issued. (Example; antique furniture or fine are. Value is reset each year)

Watchperson

Someone retained specifically by the insured whose sole duty is to have care and custody of property inside the premises.

Messenger

Someone who has care and custody of property while it is outside the premises. It can include the insured, a relative of the insured, the insured's partners or members, or any employee. A messenger is acting on behalf of the insured/business.

Custodian

Someone who has care or custody of property inside the premises. It includes the insured, the insured's partners or members, or any employee. It does not include a watchperson or janitor.

Assignment Condition

Specifies that a policy may not be transferred to anyone else without the written consent of the insurer.

Standard Mortgage Clauses

Specifies the rights and duties of the mortgage under the policy. A Mortgagee is a bank or mortgage company that has a mortgage on an insured property. Mortgagees may be named in the declarations if they have an insurable interest in real property. This clause does not apply to moveable personal property. The mortgagee's rights and duties may include: - Filing proof of loss if the insured fails to do so; or - Paying the premium if the insured fails to do so

Control of Property Condition

States that an act of neglect of a person beyond the insured's direction or control will not affect the insurance. In addition, if the insured violates a condition of the policy with regard to a specific location, the insurance applicable to other locations will not be affected.

Loss Settlement Condition

States that covered property losses are valued at actual cash value but are not to exceed the amount necessary to repair or replace. DP-2 and DP-3 settle losses to personal property at actual cash value. Losses to the dwelling and other structures, however, are paid on a replacement cost basis, as long as the insured carries insurance equal to 80% or more of the full replacement cost of the building at the time of the loss.

Other Insurance Condition

States that if a loss is also covered by other insurance, the insurance company will pay only its proportion of the loss.

Recovered Property Condition

States that if the insured or insurer recovers property on which the insurer has made loss payment, the other party must be notified. The insured may have the property returned, in which case the loss payment will be adjusted, or allow the company to have it.

Liberalization Condition

States that if the insurer broadens coverage under a policy form or endorsement without requiring an additional premium, then all existing similar policies or endorsements will be construed to contain the broadened coverage.

Deductible Clause

States that only the amount of loss over the deductible will be paid, up to the limit of liability.

Concealment or Fraud Condition

States that the commercial property coverage is void if the insured intentionally conceals or misrepresents a material fact concerning the coverage, the covered property, the insured's interest in covered property, or a claim. (Concealment or Fraud voids coverage)

Salvage Condition

States that the insurance company can take possession of damaged property after payment of a total loss. When the insurance company determines it will cost more to fix the body damage then is actual cash value, the company will pay a total loss. The insured will receive what the insurance company deems as the actual cash value, then the insurer will own the remains of the vehicle. (This can reduce the cost of the claim for the insurance company)

Loss Payment Condition

States that the loss with be paid within 60 days after reaching an agreement with the insured.

Conditions

States the policy provisions, rules of conduct, duties, and obligations required for coverage. (Rules for the policy.)

Basic Types of Construction // Class 4 - Masonry Noncombustible

Structures in this construction class have exterior walls constructed of masonry materials and a roof and floor made of metal or other noncombustible materials.

Exclusions

Take coverage away from the insuring agreement by describing property, perils, hazards, or losses arising from specific cause which are not covered by the policy. (Specified items not covered)

Liquor Liability Insurance

The CGL coverage form does not cover businesses that sell or serve alcohol (bars, restaurants, liquor stores, etc.) For liability arising from this exposure. Therefore, there is a need for a separate form to cover this liability risk. This form provides coverage for bodily injury and property damage for which the insured may become liable as a result of contributing to a person's intoxication. The laws governing this risk exposure vary from state to state. This form may also be called dram shop coverage. A dram shop literally refers to a bar, tavern, or place where alcoholic beverages are served.

Employment Practices Liability Insurance

The CGL excludes losses arising out of wrongful termination, discrimination, sexual harassment, and other employment-related practices. This coverage is provided by employment practices liability (EPL) insurance. EPL covers a company and its directors, officers, and current and former employees against claims or lawsuits regarding inappropriate workplace behavior. The policy covers legal costs, whether the company wins or loses the suit. Here are some examples of actions that are covered by an EPL policy: - Discrimination - Harassment - Failure to Promote - Retaliation - Wrongful Termination

Commissioner of Insurance

The Commissioner supervises all insurance business transacted within Iowa, and all transaction for organizing or liquidating domestic insurance companies. The Commissioner is appointed by the Governor to a four-year term.

Captive (Exclusive) Agent

The agent represents only one company.

Deductible

The amount that must be paid out of pocket by the policy owner before an insurer pays any expenses.

Express Authority

The authority made explicit in a producer's written agency agreement with the insurer. Express authority is the wording in the contract that specifically tells the producer what they can and cannot do. For example, if the producer is given express authority to write a $500,000 life insurance policy he cannot write a $1,000,000 policy. (Authorities written in the agent contract.)

Apparent Authority

The authority that others believe the agent has. If the insurer's name is on the sign at the agent's place of the business and the agent takes applications for the insurer's policies, then the agent has apparent authority from the insurer to conduct business, as far as the public is concerned. Sometimes, agents may act with apparent authority that the insurer did not intend for to have. The insurer may still be bound by those actions if the agent's apparent authority creates a presumption of agency in the mind of the insured. (Example: If an agent sends an insured an email stating that the insured's policy covers flooding, but in reality, the policy excludes flooding from coverage, the company may be required to pay the claim because of the actions of the agent. (Tasks the agent does that a reasonable person would assume as authority, based on the agent's actions and statements.)

Peril

The cause of loss (Example: if electronics in a home are destroyed because of lightning, the cause of loss (Peril) is lightning.)

Other Insurance

The condition defines how reimbursement will occur when this happens and is also called other sources of recovery, or insurance under two or more coverages.

Provisions

The conditions section of a property insurance policy lists the duties and rights of both the named insured and the insurer.

Loss Provisions

The conditions that specify what the named insured and insurer must do when a loss occurs.

Indemnity

The contract is intended to restore the insured to the financial state he or she enjoyed prior to the occurrence of the loss - no more, no less. The insurer will pay for the loss with no gain

Functional Replacement Cost

The cost of acquiring another item of property that will perform the same function with equal efficiency, even if it is not identical to the property being replaced.

Repair Cost

The cost to repair a damaged or destroyed item of property. May be the basis of reimbursement for a loss when this amount is less than the actual cash value.

Actual Cash Value (ACV)

The current cost of replacing an asset that is damaged or destroyed property with an identical or comparable asset minus accumulated depreciation or obsolescence.

Bailment

The delivery of property by the owner to someone else to be held for a special purpose, and then to be returned to the owner.

Policy Period

The duration of the policy. It is the date and time, including where and in what time zone, coverage begins and ends. Six months, one year, or even three years are common policy periods. (When the policy begins and ends.)

Concealment

The failure to disclose known facts. If undisclosed information is material, the contract still may not be able to be voided.

Forgery

The fraudulent making or altering of any writing in a way that changes the legal rights and liabilities of another.

Written Premium

The gross amount of premium income received from insureds. It includes both earned and unearned premium. (Premiums for new business, renewals, and policy endorsements)

Commingling

The illegal act of mixing personal funds with the insured's or insurer's funds.

Utmost Good Faith

The insured and insurance company have a right to expect honesty from each other.

Abandonment Condition

The insured may not abandon property to the insurance company and ask to be reimbursed for its full value.

Prorated Basis

The insured will receive a portion of the premium back, depending on when the policy is canceled. (Insurer cancels)

Personal Liability Supplements // Coverage M - Medical Payments to Others

The insurer will pay all necessary medical expenses incurred within three years of an accident that causes bodily injury. This coverage applies to injuries sustained while the injured party is: - On the insured location with the insured's permission; or - Off the insured location if the injury arises out of a condition o On the insured location. o Caused by the activities of the insured, or o Caused by an animal in the insured's care There is a minimum limit of $1,000 per person under this coverage. The insured does not have to be legally liable for coverage to apply. Coverage does not apply to any injury sustained by the insured or the insured's family members.

Waiver

The intentional and voluntary giving up of a known right. (Example; an insurance company never asking the age of a building and still issuing a policy as if it doesn't matter)

Policy Limit

The limit of coverage, limit of liability, or limit of insurance. These limits represent the maximum amount the insurance company will pay for a loss.

Limited Fungi, Wet or Dry Rot, or Bacteria Endorsement

The limit of liability condition is modified to state that the insurer's total liability under Coverage E for all damages arising directly or indirectly out of the actual, alleged, or threatened contact with mold will not be more than the sublimit for this coverage shown in the schedule. The sublimit does not increase the Coverage E limit and applies separately to each consecutive annual period.

Ordinance of Law Coverage Endorsement

The ordinance or law policy exclusion prohibits payment for increased costs due to the enforcement of building regulations or demolition laws. The ordinance or law coverage endorsement removes this exclusion by providing coverage when an insured's loss is increased because of such laws

Out-of-State Coverage [PAP]

The out-of-state coverage provision modifies the personal auto policy to meet other states' financial responsibility requirements and other state laws concerning out-of-state drivers when the covered auto is being driven in that state. While temporarily driving in another state, the insured's liability coverage will pay higher of: - The insureds liability policy limits; or - The other state's minimum liability requirements

Bailor

The owner of the property (customer) giving it to the bailee

First-Named Insured

The person listed first on the declarations page when there is more than one name insured. The policy may assign a higher level of duties or rights to the first-name insured. (This is used in commercial insurance when there are multiple partners in a business.)

Named Insured

The person, business, or other entity named in the declarations to which the policy is issued. (Listed on the declarations.)

Retention Limit

The personal umbrella will provide broader coverage for some claims that would not be covered by the insured's primary insurance policies, which would be subject to the policy retention. This is called primary coverage, and the insured must select a retention limit that can vary from $250 to $10,000 and works like deductibles.

Risk

The possibility that a loss will occur. Two forms of risk: speculative & pure.

Earned Premium

The premium the company actually earned by providing insurance protection for the designated period. When an insured pays premiums for months in advance, the insurer has to "earn" that premium each month in return for coverage provided.

Market Value

The price one would pay based upon free market conditions, adjusting for supply and demand. Few insurers are willing to issue a policy with this unless that value is significantly lower than the replacement cost.

Application

The primary source of underwriting information. It contains information that will help the insurance company underwriter decide whether to accept the risk, and, if so, how much premium the insured will be charged if the policy is issued.

Adhesion

The provisions within an insurance policy are contracts, their provisions are written by only one party to the contract & the other party is required to adhere (or stick like glue) to them. In insurance, the insurer writes the entire contract and the insured can either accept or reject it. NOTE: The insured has no input in the agreement, & if the agreement is not clear, court will take the side of the insured.

Nonconcurrence

The result of two or more policies covering the same property but providing different or non-identical coverage. This situation is not ideal because it can cause gaps or disputed payments.

Safe Burglary

The taking of property from within a locked safe or vault by a person unlawfully entering the safe or vault, as evidenced by marks of forcible entry on the exterior of the safe or vault. It also includes the taking of the entire safe or vault from inside the premises.

Burglary

The taking or attempted takes of property from inside the premises by a person unlawfully entering or leaving the premises. While evidence of actual entry is not required, there is usually evidence of forcible entry or exit, such as marks made by tools, explosives, chemicals, or electricity. (Breaking and entering a building with the intention of committing a crime)

Medical Malpractice

The term commonly applied to medical professional liability policies written for medical professionals or institutions, including physicians, nurses, dentists, surgeons, opticians, optometrists, chiropractors, and veterinarians.

Subrogation

The transfer to the insurance company of the insured's rights of recovery against others. (Insurer has the right to sue an at-fault party for the damages the insurer had to pay the insured. Common when at-fault party does not have insurance)

Theft

The unlawful taking of property. (stealth)

Exclusions to Coverage

The weight of ice, snow, or sleet peril that causes damage to awnings, fences, patios, pavement, swimming pools, foundations, retaining walls, bulkheads, piers, wharves, or docks is not included with broad peril coverage. The falling objects peril does not include damage to awnings, fences, outdoor equipment, or outdoor radio and televisions antennas, including their lead in wires, masts, and towers. Damage to a building's interior or its contents is covered only if the falling object first damages the roof or an exterior wall. Accidental discharge or overflow peril does not include continuous or repeated leakage or seepage, freezing, or damage to the system or appliances itself. It does not cover flooding from a natural water source (lake, river, etc.)

Direct Response Marketing

There is no producer or agent. Policies are sold directly to the public by the insurer. Direct response marketing is conducted through the mail, by advertisements in newspapers and magazines, on television and radio, or through the internet.

Personal

These are contracts between the insurance company and the applicant or insured; in most cases, they are non-transferable

Conditional

These require certain conditions to be fulfilled in order for performance under the contract to be enforced. (Example: The insured may pay a premium for the policy to be in force, or the contract may require certain documents to be submitted to prove that a loss has occurred. If certain conditions are not met, the contract may be voided and a claim may not be paid.)

Basic Types of Construction // Class 6 - Fire Resistive

These structures are constructed of masonry of resistive material with fire resistance rating of 2 hours or more.

Terrorism Risk Insurance Program Reauthorization Act of 2015 (TRIPRA)

This Federal law defines acts of terrorism and imposes certain obligation on insurers. The definition of terrorism is a violent act or an act that is dangerous to human life, property, or infrastructure that results in damage within the United States, or outside the United States, committed by either domestic or foreign terrorists. An act of terrorism must be certified by the secretary of treasury, in consultation with the secretary of Homeland Security and the U.S. Attorney General. Until recently, the Secretary of State, rather than the Secretary of Homeland Security, was one of the federal official who were part of the Certification process. - The triggering event for the program to go into effect is currently $100 Million. It will increase to $200 million from 2018 to 2020 in $20 million increments. - Each Insurance Carrier's deductible is set at 20% of their direct earned premium from the prior calendar year. This is the amount the insurer must pay before the federal program provides compensation. - The federal share of compensation that exceeds those deductibles will decrease from 85% to 80% by 2020. - The aggregate retention in the insurance marketplace will increase from $27.5 billion to $37.5 billion by 2020. - The insurance marketplace aggregate retention amount was established at $37.5 Billion - The cap on federal liability is not to exceed $100 Billion.

Employee Theft

This coverage pays for loss of or damage to money, securities, and other property resulting from theft or forgery committed by an employee, either acting alone or in collusion with others. Proof of loss may not be based on an inventory shortage or profit and loss computation. There is no coverage for: - An employee who has previous had similar insurance canceled and not reinstated; - Loss resulting from trading, either in the insured's name or in a genuine or fictitious account; or - Loss resulting from fraudulent or dishonest use of warehouse receipts. There are three ways a business can cover employees for theft. - Name scheduled - Employees are listed by name. - Position Scheduled - Only listed jobs within the business are covered, such as branch manager, accountant, et cetera. Employees occupying the covered positions are not listed. - Blanket - All employees are covered.

Agreed Value Optional Coverage

This coverage requires the insured to submit a business income report/worksheet every 12 months that shows financial data for the 12 months prior to the submission as well as estimated data for the 12 months following. As long as a new worksheet is submitted every 12 months, the coinsurance clause will not apply. Instead, the insured is expected to carry insurance to value, or agreed value established by the worksheets. If the insured fails to file the required financial data, the coinsurance clause is reactivated.

Builders Risk Coverage Form

This form covers commercial, residential, or farm building buildings that are under construction. Coverage includes both the building under construction and its foundation, fixtures, machinery, equipment used to service the building and the insured's building materials and supplies can be covered if they will become a permanent part of the building and are within 100 feet of the building. In addition, coverage may be extended to cover building materials and supplies owned by others but in the insured's care, custody, or control, provided they are within 100 feet of the described building. The most that will be paid under this extension is $5,000.

Excess Liability Coverage

This policy provides additional coverage when a claim exceeds an underlying policy's insurance limits. (Example: If an auto policy provides $250,000 in coverage but your claims settlement calls for $500,000, your umbrella policy would cover the additional $250,000.

Business-owners Policy

This small business policy is similar to the homeowners (HO) policy for individuals in that property, liability and other coverages are automatically included. In addition, there are some optional coverages a small business may need that can be added for a relatively small premium. The policy is called the business-owners policy (BOP).

Agent/Producer Authority

Three types of authority: Express, Implied, Apparent

Nationwide Definition

To help identify the kinds of risks eligible for either ocean or inland marine insurance, the insurance industry adopted the Nationwide Marine Definition in 1933 which laid out what types of property were eligible for inland marine insurance coverage. There are six categories of eligible marine risks: - Imports - Exports - Personal Floaters - Domestic Shipments - Instrumentalities of Transportation or Communication - Commercial Property Floater Risks A wide variety of seemingly unrelated risks falls into the categories eligible for commercial inland marine coverage. Usually, the characteristic that makes them eligible is an element of portability, although there are exceptions. As a general rule, inland marine insurance does not cover stationary property, such as real estate, furniture, fixtures, or merchandise while its being manufactured.

Write Your Own Program

Under this system, the government sets the rates, eligibility requirements, and coverage limitations. The participating insurer collects premium. If the amount of losses exceeds the amount of premium collected, the government pays the difference. If the insurer collects more in premium than it pays out in losses, the excess must be returned to the government. The insurance company is allowed to keep part of the premiums paid to cover its expenses of handling the policy and the investment income on those premiums

Reciprocal Insurer

Unincorporated groups of people that agree to insure each other's losses under a contract. The members of the reciprocal are known as subscribers. Members are assessed if a loss occurs to any members of the group, & managed by an attorney-in-fact.

Equipment Dealers Coverage Form

Used to cover dealers of mobile equipment and construction equipment. It covers the dealer's stock in trade, consisting primarily of mobile agricultural equipment and construction equipment. It also covers property of others in the dealer's care, custody, or control. It does not cover: - Automobiles, Trucks, Motorcycles, Aircraft, and Watercraft; - Money, Securities, Accounts, and Bills; - Property in the course of manufacture; - Property that is leased, rented, or sold, including property sold under a deferred payment sales agreement; - Furniture, fixtures, office supplies, improvements and betterments, machinery, tools, patterns, dies, molds and models; or - Property of others described in the declarations. *The form includes collapse coverage and covers damage caused by theft or attempted theft to the building*

Livestock Coverage Form

Used to insure livestock separately

Business Auto Coverage Form

Used to insure the private passenger and commercial auto exposures of all businesses other than garages (auto dealers, auto service businesses, etc.), truckers, and motor carriers (trucks hauling cargo). Because of the specialized nature of these businesses and their unique coverage needs, separate forms were designed to cover these risks. This form includes: - Liability coverage; and - Physical coverage (Comprehensive, specified causes of loss, and collision). The other casualty coverages of uninsured motorist, medical payment, and underinsured motorist coverage can be added by endorsement.

Value Reporting Form

Used to provide coverage bases on actual values at certain locations at specific times. The insured purchases a somewhat-higher amount of insurance than he thinks he will be needed, then reports actual values at each locations on a regular basis and pays the premium on the basis of these reports at the end of the policy period based on average exposures. Coverage amounts are also adjusted accordingly, reducing the risk that the insured will be underinsured or over insured at any one location. Property that can be covered by the value reporting form includes business personal property, stock, and the personal property of others. An example of an insured that may need this endorsement would be a large retailer with many locations and multiple warehouses.

Penalties

Violators of the Fair Credit Reporting Act may be subject to fines and imprisonment and may be required to pay any actual damages suffered by the consumer, punitive damages awarded by a court, and a reasonable attorney's fees. The maximum penalty for obtaining consumer information reports under false pretenses is $5,000, imprisonment for one year, or both.

Assigned Risk / Automobile Insurance Plans

Voluntary agreements between insurance companies licensed in a particular state. These companies agree to share the poor risks among themselves. Because these risks are randomly assigned to the participating companies, they are called assigned risks. Each company accepts its share of assigned risk drivers according to the size of the individual insurance company. In most cases, drivers in the assigned risk plan only have to be issued liability coverage in the minimum amount required by state law. In some states, physical damage and medical coverage may also be issued. (Assigned Risk Plans: High Risk Insureds, Assigned to an insurance company, usually only liability coverage)

Intervening Cause

When an independent event affects the chain of events. It may also serve as a defense against liability. If an insured suffers a heart attack while driving and it causes an accident that seriously injures another person, the insured could argue that the heart attack was an unexpected intervening cause that he has no liability

Short-Rated Basis

When an insured cancels a policy before the expiration date, the insurer is entitled to retain a larger percentage of the unearned premium. There is a surcharge of a penalty for early cancellation, and it is applied on this basis. (Insured cancels)

Causes of Loss Form

While the coverage forms explain what property is covered and what coverages are provided, the causes of loss form states what perils are insured against. It also lists specific exclusions. There are three causes of loss forms: basic, broad, and special.

Expediting Expenses Coverage

Will pay extra costs necessarily incurred by the insured to make temporary repairs and to expedite the permanent repairs or replacement of the damaged property

Arbitration Condition

Worded similarly to an appraisal, but it is not limited to disputes over the value of the loss. It may also be used to resolve other areas of disagreements between the insured and the insurance company such as a coverage dispute between the company and a third party in the case of liability insurance, or between two insurers. This is typically used before an insured turns to legal action. (Disagreement about other areas of the loss)

Supplementary Payments [BAP]

[BAP] - Cost of Bail Bonds up to $2,000 for violations because of a covered accident - Expenses the insured incurs at the insurer's request, including the insured's lost earnings up to $250 a day because of time off from work - Court costs the insured is required to pay because of a suit - Interest that accrues after a judgement and before it is paid - All expenses incurred by the insurer

Trailer Interchange Insurance [BAP]

[BAP] Covers damage to a specific trailer(s) under the policy of the trucker in whose possession the trailer is at the time of loss. For coverage to apply, the trucker must be liable under a written interchange agreement, and the damage must be caused by a covered peril.

MCS-90 [BAP]

[BAP] Endorsement attached to the Truckers coverage form to provide public liability coverage. (This endorsement provides public liability coverage for bodily injury, property damage, and environmental restoration) The limits of liability required by the Motor Carrier Act affect vehicles that have a gross vehicle weight of 10,000 pounds or more. The required limits are divided into three categories, depending on the kind of hazardous cargo hauled: - $750,000 for interstate transportation of nonhazardous property - $5,000,000 for interstate or intrastate transportation of large quantities of certain hazardous materials, such as compressed gas, radioactive materials, explosives, or oil. - $1,000,000 for interstate or intrastate transportation of oil or other hazardous wastes.

Drive Other Car - Broadened Coverage for the Named Individuals (DOC) Endorsement [BAP]

[BAP] Extends business auto coverage to non-owned vehicles operated by the person (or spouse) named in the endorsement. Coverage does not apply to autos owned by the person named in the endorsement or spouse.

Motor Carrier Coverage Form [BAP]

[BAP] For businesses that transport their own goods and property, and haul the goods of others. The truckers coverage form is for a trucking company hired to haul the goods of others. This coverage form is practically identical to the truckers coverage form. Like the truckers coverage form, it provides trailer interchange coverage. Unlike the truckers form, owned private passenger autos may be covered autos in the motor carrier coverage form.

Additional Insured - Lessor Endorsement [BAP]

[BAP] Leased vehicles can be considered owned vehicles for coverage purposes by attaching the additional insured - lessor endorsement to the policy.

Out of State Coverage Extensions [BAP]

[BAP] Modify the policy's liability coverage to meet other states' financial responsibility requirements (Minimum limits of liability) When the covered auto is being driven in that state.

Symbol 31 [BAP]

[BAP] Physical damage coverage only for the dealers' autos, including owned autos, autos for sale, and autos on consignment

Bobtail Endorsement [BAP]

[BAP] Provides coverage for non-trucking use when the truck-tractor is not being used to haul or carry a trailer for others.

Motor Carrier Act of 1980 [BAP]

[BAP] Requires trucking companies to certify that they are able to meet financial obligations if they become liable for injury or damage arising from their trucking operations.

Symbol 30 [BAP]

[BAP] Symbol for customers autos left for service

Truckers Coverage Form [BAP]

[BAP] The business auto coverage specifically excludes businesses that set themselves out for hire to haul the goods for others. Therefore, truckers must obtain coverage for their vehicles under the truckers coverage form, a modified version of the business auto coverage form that takes into consideration the special practices and regulations that apply to the trucking industry. This coverage form includes three coverages: - Liability - Trailer Interchange - Physical Damage

Symbol 48 [BAP]

[BAP] Trailers borrowed or leased by the named insured for which liability for loss has been assumed under a written trailer interchange agreement.

Symbol 49 [BAP]

[BAP] Trailers owned or hired by the named insured while the trailers are in someone else's possession under a written trailer interchange agreement.

Mobile Equipment Endorsement [BAP]

[BAP] When attached, mobile equipment is considered a covered auto

Utility Services - Direct Damage Coverage Endorsement [BOP]

[BOP] Covers loss or damage to property caused by interruption in water, communication, or power supply service. For coverage to apply, the property must be scheduled for coverage on the endorsement and the service interruption must be caused by a covered cause of loss.

Hired Auto and Non-owned Auto Liability Endorsement [BOP]

[BOP] Covers the insured's liability for one or both of the following: - Bodily injury or property damage that arises out of the maintenance or use of a hired auto (leased, rented, or borrowed) by the insured or the insured's employees in the course of the insured's business. - Bodily injury or property damage that arises out of the use of any non-owned auto in the insured's business by any person (an employee using their own vehicle while performing work for their employer). This endorsement covers the business, not the employee. (Example: A pizza owner would need this endorsement in case an employee is in an accident while delivering pizza. The owner of the pizza business could get sued even though the employee owned the car.) *This endorsement is available only when the insured's business doesn't have commercial auto insurance*

Utility Services - Time Element Coverage Endorsement [BOP]

[BOP] Pays for loss of business income or extra expense if damage to certain utility services property located outside the covered building by a covered cause of loss results in an interruption of utility service to the described premises.

Protective Safeguards Endorsement [BOP]

[BOP] Requires the insured to maintain the protective devices or services listed on the endorsement on specified property as a condition of the policy. (Example: Sprinkler system or burglar alarm.) The insurer will not pay for fire damages or burglary losses if the insured failed to keep the protective safeguard in working order or did not notify the insurer within 48 hours that the device was not working properly.

Limits of Insurance [BOP]

[BOP] The limits shown in the policy's declarations are the most that will be paid under the circumstances described in the policy. These limits are the limits, no matter how many insureds, claims, suits, people, or organizations are involved.

Common Policy Conditions [BOP]

[BOP] There are several sets of conditions in the business-owners policy. The conditions that apply to the entire policy are called the common policy conditions. There are two sets of conditions for the property coverage: the property general conditions and the property loss conditions. The liability conditions are called the liability and medical expenses general conditions.

Court Bonds

[Bonds] A general term used to describe bonds that can be required in court proceedings. Two examples of court bonds are fiduciary bonds and judicial bonds. - Fiduciary Bonds: Commonly used to bond guardians, administrators, trustees, and executors, all of whom are fiduciaries , or persons appointed by a court of law to manage the property of others. - Judicial Bonds: Used to protect individuals from possible losses pending civil court proceedings and can be issued to either the plaintiffs or defendants.

Fidelity Bonds

[Bonds] Guarantee an employee's honest discharge of duty and are written to protect the obligee against dishonest acts by employees. The crime coverage called employee dishonesty we discussed earlier provides coverage comparable to that provided by fidelity bonds. Unlike surety bonds, fidelity bones are purchased by the obligee.

Contract Bonds

[Bonds] Guarantees the fulfillment of contractual obligations. The contractor is the principal who makes the promise to the obligee.

Public Official Bonds

[Bonds] Required by law, guarantee that public officials will handle public money correctly and otherwise perform their duties faithful and honestly.

License and Permit Bonds

[Bonds] Sometimes required in connection with the issuance of licenses by government agencies. They guarantee that the person who posts the bond will comply with all applicable laws pertaining to his activities.

Surety [Bonds]

[Bonds] The party (often the insurance company) who is fiscally responsible (pays the penalty) if the principal defaults on the bond.

Obligee [Bonds]

[Bonds] · The party to whom the principal makes the promise, and for whose protection the bond is being written.

Commercial Auto Policy

[CAP] Can be written as a monoline policy or can be included in the commercial package policy (CPP). This policy must contain the follow elements: - Common Policy Declarations - Common Policy Conditions - One of five separate coverage forms: business auto, business auto physical damage, garage, truckers, or motor carrier. - Appropriate Declarations for Coverage Form Selected

Mobile Equipment [CGL]

[CGL] Any of the following types of land vehicles, including any attached machinery or equipment: - Bulldozers, farm machinery, forklifts, and other vehicles designed for use principally off public roads - Vehicles that travel on crawler treads - Vehicles, self-propelled or not, maintained primarily to provide mobility to permanently

Claims-Made Form [CGL]

[CGL] Coverage under the claims-made form is triggered when a claim is first made against the insured, regardless of when the loss or injury took place. Claims are covered under the claims-made form if the claim is made during the policy period and the occurrence is on or after the retroactive date.

Coverage B - Personal and Advertising Injury Liability [CGL]

[CGL] Covers liability arising out of such offenses as libel, slander, or advertisements. The claimant may be an individual or another business.

Coverage C - Medical Payments [CGL]

[CGL] Pays for medical expenses incurred for bodily injury caused by an accident on the premises the insured owns or rents, or arising from the insured's operations. To be covered, the expenses must be incurred and reported to the insurer within one year of the date of the accident. Medical Payments are made without regard to fault, unlike other coverages under the CGL forms. (Without regard to fault, must be reported within one year of accident)

Coverage A - Bodily Injury (BI) and Property Damage (PD) Liability [CGL]

[CGL] Pays the sums that the insured becomes legally obligated to pay as damages because of bodily injury or property damage to which the insurance applies. To be covered, the BI or PD must be caused by occurrences.

Extended Reporting Periods (ERPs) [CGL]

[CGL] Provide coverage for claims made after a claims-made policy's expiration date.

Supplemental Extended Reporting Period Endorsement [CGL]

[CGL] Provides an unlimited extension of the reporting period, although the event causing the claim must still occur between the retroactive date and the policy expiration date. This ERP takes effect at the end of either the 60-day or five-year ERP, whichever applies. The insured must request this endorsement and pay an additional premium.

Products-Completed Operations Aggregate Limit [CGL]

[CGL] Represents the most that will be paid under Coverage A because of injury and damage arising out of the products-completed operations exposure. This would cover a fire claim due to the faulty installation of a fireplace by the insured in a customer's home.

Damage to Premises Rented to the Insured Limit [CGL]

[CGL] Represents the most that will be paid under Coverage A for liability for property damages to premises rented to the name insured for fire damage. This sublimit is also subject to the per occurrence limit and the general aggregate limit.

Personal and Advertising Injury Limit [CGL]

[CGL] Represents the most that will be paid under Coverage B for the sum of all damages due to personal injury or advertising injury sustained by any one person or organization. This limit is also subject to the overall general aggregate limit.

Your Right to Claim and Occurrence Information Condition [CGL]

[CGL] The condition provides that the insurer will give the first-named insured certain information relating to the current CGL claims-made form and any previous claims-made forms the insurer has issued to the insured during the previous three years.

Supplementary Payments [CGL]

[CGL] The following supplementary payments are also available for Coverage A and B without reducing the limits of insurance: - All expenses incurred by the insurance company - Up to $250 for the cost of bail bonds - Reasonable expenses incurred by the insured to assist in the investigation and defense of a claim, including up to $250 per day for loss of earnings - All court costs taxed against the insured in a suit - Prejudgment and post judgement interest - Defense Costs

Per Occurrence Limit [CGL]

[CGL] The most that will be paid for any one occurrence under Coverages A and C because of all bodily injuries, property damage, and medical payments arising out of any one occurrence this limit is also subject to either the general aggregate limit or the products-completed operations aggregate limit, whichever is applicable.

General Aggregate Limit [CGL]

[CGL] The most that will be paid for the sum of Coverages A, B, and C during a policy period, except for damages arising out of the products-completed operations exposure.

Medical Expense Limit [CGL]

[CGL] The most that will be paid under Coverage C for all medical expenses because of bodily injury sustained by any one person. This sublimit is also subject to the per occurrence and general aggregate limits.

CGL Policy Coverages

[CGL] These Insurance Forms provide three coverages: - Coverage A - Bodily injury and property damage liability - Coverage B - Personal and Advertising injury liability - Coverage C - Medical Payments

Insured's Product [CGL]

[CGL] This means any goods or products, other than real property, that are manufactured, sold, handled, distributed, or disposed of by the insured. It also includes the following when furnished in connection with the product: - Containers - Materials - Parts - Equipment

Loading or Unloading [CGL]

[CGL] This means handling of property: - After it is accepted for movement into or onto an aircraft, watercraft, or auto; - While it is in or on an aircraft, watercraft, or auto; or - While it is being moved from an aircraft, Watercraft, or auto to the place where it is finally delivered.

Coverage Territory [CGL]

[CGL] This means the described territory of the United States of America, including its territories and possessions, Puerto Rico, and Canada. No coverage extends to Mexico.

Insured's Work [CGL]

[CGL] This means work or operations preformed by or on behalf of the insured and materials, parts, or equipment furnished in connection with such work or operations. It also includes warranties or representations made at any time with respect to the fitness, quality, durability, or performance of the insured's work and the providing of or failure o provide warnings on instructions

Occurrence Form [CGL]

[CGL] Traditionally, liability policies have been written on an occurrence basis. Coverage under the occurrence form is triggered by damage or injury that occurs during the policy period, even though a claim may be made after the policy has expired. (Example: An occurrence form policy expires on June 30, and the business owner (insured) obtains a new policy with a different carrier. A customer was injure in the insured's store on may 30, while the previous policy was in force. The insured files a claim on July 30 because the customer's injury that happened in May has gotten progressively worse. Because the business carried an occurrence policy, the insurer covering the business on May 30 will cover this claim.

Basic Extended Reporting Period [CGL]

[CGL] either 60 days or 5 years is available automatically and free of charge under specified conditions

CPP cannot include these

[CPP] - Workers' Compensation - Life Insurance - Health & Disability Insurance - Certain Types of Professional Liability

Newly Acquired or Constructed Property Coverage Extension [CPP]

[CPP] Applies to Coverage A and Coverage B. Up to $250,000 for each new building may be extended to cover new buildings being constructed at the same location, and buildings newly acquired at other locations that are intended for use as a warehouse or a use similar to that of the building described in the declarations. Business personal property insurance may be extended to cover business personal property located at newly acquired locations (other than fairs, trade whos, or exhibitions) and newly acquired or constructed buildings at the location described in the declarations. The maximum amount payable is $100,000 at each building.

Common Policy Declaration [CPP]

[CPP] Contains information about who is insured, when the coverage is in effect, and for what lines (property and casualty). It includes: - The name and mailing address of the named insured; - The policy period, including the time and date coverage begins and ends; - A description of the covered business; - The forms purchased and their premiums

Commercial Property Coverage Forms [CPP]

[CPP] Coverage forms that can be included: - Building and Personal Property - Builder's Risk - Condominium Association - Condominium Commercial Unit Owners - Business Income - Extra Expense - Commercial Inland Marine

Commercial Casualty Coverage Forms [CPP]

[CPP] Coverage forms that can be included: - Auto (Fleet) umbrella, medical, and uninsured motorists - General Liability - Crime - Farm Liability

Pollutant Cleanup and Removal [CPP]

[CPP] Covers the cost to extract pollutants from land or water at the insured's premises if the pollution was caused by a covered cause of loss. This coverage is subject to a $10,000 limit per policy period that applies in addition to the policy limit. The expenses must be reported to the insurer in writing within 180 days of the loss.

Valuation Condition [CPP]

[CPP] Describes how losses will be settled. Most losses are paid at actual cash value. However, if the coinsurance conditions are met and costs are $2,500 or less, the policy will pay the cost of building repair or replacement without taking depreciation into account.

Interline Endorsement [CPP]

[CPP] Endorsements that may be used with more than one line of insurance

Outdoor Property Extended Coverage [CPP]

[CPP] Extends a limited amount of coverage to fences, antennas, satellite dishes, trees, plants, and shrubs. The maximum payable is $1,000, with a $250 limit applying to any one tree, plant or, shrub

Property Off-Premises Extended Coverage [CPP]

[CPP] Extends up to $10,000 in coverage for covered property that is away from the described premises. Coverage is provided while the property is: - Temporarily at a location the insured does not own, lease, or operate; - In storage at a location the insured leases; or - At a fair, trade show, or exhibition

Inspections and Surveys Condition [CPP]

[CPP] Gives the company the right to make inspections or surveys of the insured business at any time. The company may choose to report on the conditions it finds and recommend changes. These inspections are related to insurability and are not considered safety inspections. The insurer will not warrant tht conditions are safe or healthful, or comply with laws and regulations.

Preservation of Property [CPP]

[CPP] Pays for loss of property that was removed from the insured location to protect it from a peril insured against. Coverage only applies if the loss occurs within 30 days after the property was removed.

Electronic Data Coverage [CPP]

[CPP] Pays to replace or restore electronic data that have been destroyed or corrupted by a covered cause of loss. Electronic data means information, facts, or computer programs.

Fire Department Service Charge [CPP]

[CPP] Pays up to $1,000 for a fire department service charge. This is paid in addition to the limit of insurance; no deductible applies

Mortgage Holder Condition [CPP]

[CPP] Promises to pay losses to any mortgage or lien holders named in the declarations as their interest may appear. The insurer must provide 10 days' written notice if it cancels for nonpayment of premium and 20 days' notice if it cancels for any other reason allowed by the policy. If the insurer decides not to renew, it must give the mortgage or lien holder at least 10 days' advance written notice.

Personal Effects and Property of Others Coverage Extension [CPP]

[CPP] Provides up to $2,500 of coverage for personal effects of the named insured, partners, and employees (excluding loss from theft) and personal property of others.

Cancellation Condition [CPP]

[CPP] Sets forth the circumstances under which the policy may be canceled. The first-named insured must cancel the policy in writing, and any premium refund due will be sent to the first-named insured. This refund may be less than a pro rata refund to make up for the expense of issuing the contract

The Duties in the Event of Loss Condition [CPP]

[CPP] States that after a loss, the insured must: - Notify the insurer about the loss or damage as soon as possible, provide a description of the property involved, and describe how, when, and where the loss or damage occurred; - Notify the police if a law may have been broken; - Take reasonable steps to protect the covered property from further damage and keep a record of expenses incurred to protect the property (If possible, the insured should separate the damaged property from the undamaged property); - Provide a complete inventory at the insurer's request; - Allow the insurer to inspect the property, examine books and records, and take samples of the property at its request; - Testify under oath with regard to the claim if requested by the insurer; and - Send a signed, sworn statement of loss within 60 days of the insurance company's request.

Vacancy Condition [CPP]

[CPP] States that if a building has been vacant for more than 60 consecutive days before the loss, the insurer will not pay for a loss due to vandalism, water damage, theft, or attempted theft, building glass breakage, or sprinkler leakage (unless the system has been protected against freezing). In addition, any amount that would otherwise be paid for a covered loss will be reduced by 15% NOTE: Buildings under construction are not considered vacant.

Changes Condition [CPP]

[CPP] States that only the first-named insured is authorized to make changed in the terms of the policy with consent of the insurance company. Terms can be amended or waived only by endorsement issued by the insurer that is made a part of the policy. (Change request from first-named insured)

Premiums Condition [CPP]

[CPP] States that the first-named insured is responsible for the payment of all premiums and will receive any return premiums due. (Responsible for payment of premium)

Loss Payment Condition [CPP]

[CPP] States that the insurance company will give the insured notice of how it intends to value the loss within 30 days after it receives the insured's sworn statement of loss. As long s the insured has complied with all of the terms of the coverage part and has reached agreement with the company on the amount of the loss, the insurer will pay the loss within 30 days after it receives the sworn statement of loss.

Transfer of Your Rights and Duties Under This Policy Conditions [CPP]

[CPP] States that the insured's rights and duties under the policy cannot be transferred without written consent of the insurance company, except in the case of the death of a named insured. This is sometimes called the assignment clause, and it is a common feature of both personal and commercial line policies.

Coinsurance Condition [CPP]

[CPP] States that when the insured's amount of coverage at the time of loss does not meet the required coinsurance percentage, the company reduces the payment it would otherwise make in the same proportion as the insurance carried bears to the insurance required.

Non-owned Detached Trailer Coverage Extension [CPP]

[CPP] Truck drivers that make deliveries to businesses sometimes leave the trailer for the insured to unload, and the truck driver returns later to pick up the empty trailer. Some businesses also use rented trailers as storage facilities. In both cases, the insured is usually responsible for damage to the trailer while its on the premises. This coverage extension applies to such losses. *The limit is $5,000 unless a higher limit is shown in the declarations*

Dwelling Policy // Coverage A - Dwelling

[Dwelling] Covers the dwelling, structures attached to the dwelling (such as an attached garage or carpet), and materials and supplies for use in the construction or repair of the dwelling, or other structures at the location.

Dwelling Policy // Coverage D - Fair rental value

[Dwelling] Covers the insured in the event a covered loss makes the rental portion of a property unfit for normal use. 20% of the insurance on the dwelling is available for this coverage. If a civil authority prohibits use of the insured property because of a covered peril damaged at ta neighboring location, payments are limited to a maximum of two weeks.

Dwelling Policy // Coverage C - Insured's personal property

[Dwelling] Covers the insured's personal property that is at the described location and is usual to the dwelling occupancy. Personal property belonging to the insured's guests or servants may be covered at the insured's request. If the property is a rental property, a tenant's property is not covered. Animals, aircraft, motor vehicles, boats, and accounts / bills are not covered.

DP-2 and DP-3

[Dwelling] Include all of the other coverages in DP-1 plus some other coverages that are not found in DP-1. Coverages included with no additional premium: - Trees, Shrubs, and Other Plants: Pays up to 5% of the Coverage A limit for damage to trees, shrubs, plants or lawns caused by a specified list of perils. The Policy will not pay more than $500 for damage to any one tree, shrub, or plant. - Collapse: Pays for the collapse of the dwelling caused by a specified list of perils. To be considered a collapse, the loss must involve the building or part of the building abruptly falling down or caving in, after which the building or part of the building abruptly falling down or caving in, after which the building or part of the building cannot be occupied. Collapse that result from hidden decay or hidden insect or vermin damage is not covered if the insured knew about the damage before the building collapsed. - Glass or Safety Glazing Material: Pays for the breakage of glass or safety glazing material and damage to covered property caused by glass breakage. - Ordinance or Law: coverage allows payment of up to 10% of the Coverage A limit of liability for the increased cost to repair or rebuild a dwelling or other structure to conform to applicable building and land use codes.

Dwelling Special (Open) Coverage Form (DP-3)

[Dwelling] Instead of the document listing what's covered, risks of direct physical loss are covered except for the exclusions specifically enumerated in the policy. Opposite of reading a Basic or Broad Form Policy. Risks of direct physical loss are covered perils. Under Coverages A and B, the Special Form excludes: - Any loss involving collapse, other than as provided in the other coverages section; - Freezing of plumbing, heating, air conditioning, automatic fire protective sprinkler system, or a household appliance, or overflow due to freezing unless reasonable care was taken to maintain heat in the building or to shut off the water supply and drain the systems and appliances. - Freezing, thawing, pressure, or weight of water or ice to fences, pavement, patios, swimming pools, foundations, retaining walls, bulkheads, piers, wharves, or docks; - Theft in or to a dwelling or structure under construction, or theft of any property that is not part of a covered building or structure; - Damage by wind, hail, ice, snow, or sleet to outdoor radio and television antennas and aerials, including their leading wires, masts, or towers, and damage by these same perils to lawns, trees, shrubs, or plants; - Vandalism, malicious mischief, theft, and attempted theft if the dwelling has been vacant for more than 60 consecutive days at the time of loss; - Constant or repeated seepage or leakage of water or steam over time from a plumbing, heating, air conditioning, or fire protective sprinkler system or from a household appliance; - Gradual and expected losses, such as wear and tear, deterioration, inherent vice, latent defect, mechanical breakdown, smog, rust, corrosion, mold, wet or dry rot, and smoke from agricultural smudging or industrial operations; - Discharge, dispersal, seepage, migration, release, or escape of pollutants such as smoke, vapor, soot, fumes, acids, alkalis, chemicals, and waste; - Settling, shrinking, bulging, or expansion, including resulting cracking of pavements, foundations, walls, floors, roofs, or ceilings; and - Loss caused by birds, vermin, insects, and domestic animals.

Dwelling Policy // Coverage B - Other structures (detached from the main dwelling (also referred to as appurtenant structures))

[Dwelling] Insures buildings on the premises that are separated from the dwelling by a clear space or connected only by a fence, utility line, or similar connection. The building may not be used for commercial, manufacturing, or farming purposes.

Dwelling Policy // Coverage E - Additional living expenses

[Dwelling] Is included in DP-2 and DP-3 and pays for additional living expenses the insured incurs after a covered loss, including reasonable motel, dining, laundry, and transportation expenses. The limit is 10% of Coverage A and applies when the insured occupies the premises. These additional expenses are covered for the time period needed to repair or replace the damaged property or for the insured to move to another permanent location. If a civil authority prohibits use of the insured property because a covered peril damaged a neighboring location, payments are limited to a maximum of two weeks. (NOTE: this coverage can be added to the DP-1 by endorsement.)

Dwelling Broad (Named) Coverage Form (DP-2)

[Dwelling] More expansive than basic form coverage. It includes coverage for all the perils included in a basic form policy plus several additional perils that are expressly named. Like with a basic form policy, this form policy covers only named perils. Again, if a coverage is not specifically named in the policy, that coverage is excluded. Fortunately, this form is designed to cover the most common forms of property damage. This form automatically covers fires, lightning, internal explosion, the extended coverage perils (WCSHAVVER), and vandalism and malicious mischief. It broadens some perils covered under the basic form and adds the following perils, remembered use the acronym BIG AFFECT) - B - Burglary Damage - I - Ice, Sleet, and Snow (weight of) - G - Glass Breakage - A - Accidental discharge of water - Accidental discharge of water or steam at the described location from within a plumbing, heating, air-conditioning, or automatic fire protective sprinkler system or household appliance. - F - Freezing objects - Freezing of plumbing, heating, air-conditioning, or automatic fire protective sprinkler systems and household appliances (insured must use reasonable care to maintain heat in the building or shut off the water supply and drain all systems and appliances) - F - Falling Objects - E - Electrical current - sudden and artificially generated electrical current (does not include damage to a tube, transistor, or similar electrical components) - C - Collapse - T - Tearing asunder - Sudden and accidental tearing apart, cracking, or burning of steam or hot water heating, air-conditioning, or automatic fire protective sprinkler system and water heaters

Extended Coverage Perils

[Dwelling] Not automatically included in a dwelling policy. They can be added for an additional premium. - Wind - Civil Commotion - Smoke (Smoke damage from fireplaces is not covered) - Hail - Aircraft - Vehicles - Volcanic Eruption - Explosion - Riot Additional premium required for Vandalism and Mischievous Mischief (V&MM)

Dwelling Basic Form (DP-1)

[Dwelling] Perils automatically covered: - Fire: Only covers damage from an unfriendly fire. Damage from a friendly fire (fireplace) is not covered. - Lightning: Natural Electricity - Internal Explosion: Includes the explosion of a furnace, stove, or hot water heater inside the dwelling. Other Coverages Included: - Other Structures (Allows use of up to 10% of the Coverage A limit of liability for covered losses to other structures as described in Coverage B.) - Debris Removal (Pays for the expense of removing debris as a result of a loss that is covered by the policy) - Property Removed (Covered for 5 days with Basic Form) - Reasonable Repairs (Pays for the reasonable cost to make necessary repairs to protect property from further damages following a covered loss) - Improvements, Alterations, and Additions (Provide coverage for the insureds who are tenants for improvements or alterations made to the dwelling at the tenant's expense. Up to 10% of Coverage C - Fire Department Service Charge ($500) - Worldwide Coverage (Provides 10% of the Coverage C limit for covered personal property while it is located anywhere in the world) - Rental Value (Up to 20% of Coverage A - reduces the limit of liability for Coverage A if used)

Coverage E - Scheduled Farm Personal Property [Farm]

[Farm] Allows a choice of items to be specifically insured. The items can include grain, farm products, poultry, livestock, machinery, vehicles, tools, and supplies incidental to the operation of a farm.

Causes of Loss - Broad Form [Farm]

[Farm] Covers all of the perils listed in the basic form and BIG AFFECT: - B - Burglary Damage - I - Damage - G - Glass Breakage - A - Accidental Discharge of Water - F - Freezing Objects - F - Falling Objects - E - Electrical Current - C - Collapse - T - Tearing Asunder Adds additional perils. Some that are unique to the farm risk include; - Electrocution of covered livestock; - Attacks on covered livestock by dogs or wild animals; - Drowning of covered livestock; - Accidents involving loading or unloading; and - Accidental shooting of covered livestock.

Coverage G - The Barns, Outbuildings, and Other Farm Structures Coverage Form [Farm]

[Farm] Covers barns, silos, fences, radio equipment, and other farm building and structures that are not dwellings

Farm Property Coverage Forms [Farm]

[Farm] Covers direct physical loss to a variety of properties. The insured can select any combination of three separate forms.

Coverage F - Unscheduled Farm Personal Property [Farm]

[Farm] Covers farm personal property on a blanker basis (not an itemized list) on or away from the insured location (e.g., $1,000 for any horse, mule, or head of cattle under one year of age at time of loss).

Farm Personal Property Coverage Form

[Farm] Covers scheduled and unscheduled farm personal property. - Coverage E - Scheduled Farm Personal Property: Allows a choice of items to be specifically insured. The items can include grain, farm products, poultry, livestock, machinery, vehicles, tools, and supplies incidental to the operation of a farm. - Coverage F - Unscheduled Farm Personal Property: Covers farm personal property on a blanker basis (not an itemized list) on or away from the insured location (e.g., $1,000 for any horse, mule, or head of cattle under one year of age at time of loss). - Coverage G - The Barns, Outbuildings, and Other Farm Structures Coverage Form: Covers barns, silos, fences, radio equipment, and other farm building and structures that are not dwellings. - Coverage H - Farm Liability Coverage: Pays up to the limit of insurance for sums the insured becomes legally obligated to pay as a result of bodily injury or property damage losses to others. - Coverage I - Personal and Advertising Injury Liability: Pays up to the limit of insurance for sums the insured becomes legally obligated to pay regarding injuries such as libel, slander, invasion of privacy, copyright infringement, and misappropriation of advertising ideas. - Coverage J - Medical Payments: Pays reasonable medical expenses incurred within three years from the date of an accident or injury regardless of fault.

Coverage H - Farm Liability Coverage [Farm]

[Farm] Pays up to the limit of insurance for sums the insured becomes legally obligated to pay as a result of bodily injury or property damage losses to others

Coverage I - Personal and Advertising Injury Liability [Farm]

[Farm] Pays up to the limit of insurance for sums the insured becomes legally obligated to pay regarding injuries such as libel, slander, invasion of privacy, copyright infringement, and misappropriation of advertising ideas

Farm Dwellings, Appurtenant Structures, and Household Personal Property Coverage Form

[Farm] Similar to Section I of the Homeowners policy. It contains the following coverages: - Coverage A - Dwellings - Coverage B - Other private structures appurtenant to dwellings - Coverage C - Household personal property - Coverage D - Loss of Use

Limited Fungi, Wet or Dry Rot, or Bacteria Endorsement [Homeowners]

[Homeowners] Adds coverage to the property sections of the policy for property damage arising out of fungi, wet or dry rot, or bacteria. It is used only for HO-3 and HO-5. The limits for the coverages are scheduled in the endorsement. - Fungi are defined as any type of form of fungus, including mold or mildew - Coverage only applies if the loss or costs resulted from a covered peril that occurred during the policy period. The insured must have used all reasonable means to save and preserve the property from further damage when the covered loss occurred.

Glass or Safety Glazing Material [Homeowners]

[Homeowners] Covers the breakage of glass that is part of a building, including windows and storms doors. (Broken glass is covered)

Property Removed Coverage [Homeowners]

[Homeowners] Covers trees, shrubs, and plants on the residence premises for loss by fire, lightning, explosion, riot, aircraft, vehicles not owned or operated by a resident, theft, and vandalism or malicious mischief. Coverage is limited to 5% of the Coverage A limit and the maximum of $500 for any one tree, shrub, or plant.

Home Day Care Endorsement [Homeowners]

[Homeowners] Extends liability coverage to apply to day care operations. The endorsement changes the liability coverage from an occurrence to an aggregate limit. Loss due to corporal punishment is excluded. This endorsement is carefully underwritten. Note: the premium charged is based upon the number of children.

Conditions - Claim Values [Homeowners]

[Homeowners] Losses to the following are paid at actual cash value (Replacement - Depreciation), but not more than the cost to repair or replace them: - Personal Property - Awnings, Carpeting, Appliances, Outdoor Antennas, and Outdoor Equipment - Structures that are not buildings (e.g., swimming pools & fences) Losses to the dwelling and other structures are paid at replacement cost as long as the insured carries an amount of insurance equal to or greater thean 80% of the building's replacement cost. To be paid for replacement, the insured must agree to replace the damage property. Otherwise, the insured will be paid actual cash value.

Reasonable Repair Coverage [Homeowners]

[Homeowners] Pays cost for repairs necessary to protect from additional loss.

Loss Assessment Coverage [Homeowners]

[Homeowners] Pays up to $1,000 for the insured's share of a loss assessment charged against the insured by the association of property owners as a result of direct loss to property owned by the association. For instance, this coverage might pay a condominium owner's assessment for repair of a community clubhouse that was damaged by lightning. The deductible applies only once, regardless of the number of assessments in a single occurrence.

Fire Department Service Charge [Homeowners]

[Homeowners] Pays up to $500 when the fire department is called to save or protect covered property form a covered peril. No deductible applies to this coverage. This coverage is not available for property located within the limits of the city furnishing the first department service.

Credit Card, Electronic Fund Transfer Card or Access Device, Forgery, and Counterfeit Money [Homeowners]

[Homeowners] Pays up to $500 with no deductible for the insured's legal obligation to pay losses resulting from: - Theft or unauthorized use of these cards; - Forgery or alteration of the insured's checks; or - The insured's acceptance in good faith of counterfeit money.

Earthquake Endorsement [Homeowners]

[Homeowners] Provides coverage for damage caused by land movement including volcanoes. If a major earthquake occurs, the insured only has to pay a single deductible for any aftershocks that occur within 72 hours of the original earthquake.

Limits of HO-4 and HO-6

[Homeowners] The HO-4 policy insures renters for direct damage to their unscheduled property on a broad named perils basis. Remember that the house or apartment they are renting is insured by the landlord, so the primary amount of insurance is based on Coverage-C - Personal Property. The policy providing coverage for condominium owners is an HO-6 policy. While the form is similar to HO-3, the property section of HO-6 only covers dwelling, personal property, and loss of use. Under HO-6, dwelling coverage insures the interior walls, built-in cabinets, and floors of a unit.

Cancellation Condition [Homeowners]

[Homeowners] The insurance company may cancel for any reason with 10 days' written notice to the insured during the first 60 days of a new policy. After the policy has been in force 60 or more days, the company may only cancel for the following reasons: - Material misrepresentation by the insured (30 days' notice required) - Substantial change in risk insured (30 day's notice required) - Nonpayment of premium (10 days' notice required) (Also, nonrenewal by the insurance company - 30 days advanced notice)

Deductible [Homeowners]

[Homeowners] The portion of a loss (a dollar amount or percentage) that the insured must pay before the insurance company will pay its share. Typical deductibles range from $500 to $2,500, although other amounts may also be available.

Insurance Limits [Homeowners]

[Homeowners] The primary amount of insurance is based on Coverage A, except for HO-4 and HO-6.

Coverage C - Special limits for theft [Homeowners]

[Homeowners] These coverage restrictions are designed to encourage insureds with personal property of high value to insure the property separately - $1,500—jewelry, watches, and furs - $2,500—firearms and related items - $2,500—silverware, goldware, and pewterware - Special limits for ALL losses - $200—money and securities - $1,500—watercraft and related items - $1,500—trailers - $2,500—business personal property on premises - $1,500—business personal property away from premises - $1,500—portable electronic apparatus away from the premises

Financial Responsibility Laws [PAP]

[PAP] All states have financial responsibility laws that require each driver to prove that he can pay for bodily injury or property damage liability losses arising out of auto accidents. A driver normally meets this requirement by purchasing an auto insurance policy with limits of liability that meet the limits required by the state's law.

Part D - Coverage for Damage to you Auto [PAP]

[PAP] Commonly known as physical damage coverage, pays for direct and accidental loss to the named insured's covered auto or any non-owned auto (for which the named insured is responsible such as rental cars and borrowed cars) against loss caused by: - Collision; or - Other than collision (Sometimes referred to as OTC or comprehensive)

Part B - Medical Payments Coverage [PAP]

[PAP] Covers reasonable expenses for necessary medical and funeral services incurred within three years of the date of the injury, regardless of fault. Insureds for medical payments coverage include: - The named insured and any family member(s) - While occupying a motor vehicle designed for use on public roads or a trailer, or - When struck while walking along a roadway by a vehicle designed for use on public roads or a trailer; and - Any other person while occupying the named insured's covered auto(s)

Extended Non-owned Coverage - Vehicles Furnished or Available for Regular Use Endorsement [PAP]

[PAP] Expands the extensive coverage automatically provided under the personal auto policy for the insured and the family while driving cars other than the insured's covered autos. It eliminates most exclusions applicable to autos that are furnished or available for the regular use of the named insured or family members (such as a company car)

Part A - Liability Coverage [PAP]

[PAP] Liability Coverage may be written alone or with any other coverages. Part A covers damages for bodily injury or property damage that an insured becomes legally responsible for because of an auto accident. The policy promises to settle or defend any claim or suit asking for such damages and to pay any defense costs incurred by the company. However, the duty to settle or defend ends when the limit or liability has been exhausted. Defense costs are paid in addition to the limit of insurance. There is no duty to settle or defend claims for BI or PD that are not covered under the policy

Miscellaneous Type Vehicle Endorsement [PAP]

[PAP] May be added to the personal auto policy to provide coverage for motorcycles, mopeds, and recreational vehicles such as motor homes and golf carts. (Some companies issue specialized policies to cover these vehicles rather than endorsing the standard policy.)

Named Nonowner Coverage Endorsement [PAP]

[PAP] May be issued to someone who does not own an automobile but may drive borrowed or rented autos. It may be used to provide coverage for an individual who drives a corporate-owned auto furnished for his use by an employer. Although the individual would have coverage while driving the company car under the company's auto policy, there would be no coverage for any other auto the insured might regularly or occasionally drive. This endorsement to the personal auto policy provides such coverage.

Part C - Uninsured Motorist Coverage [PAP]

[PAP] Pays the insured, family, and guest passengers for bodily injury, and in some states property damage, as a result of an accident with a legally-liable uninsured motorist or hit-and-run driver. - Uninsured motorist coverage is mandatory in some states; in others, it must be offered and may be rejected in writing

No Benefit to Bailee Condition [PAP]

[PAP] States that a bailee cannot benefit from the insurance policy if a loss occurs to the car while it is in the bailees' possession

Split Limit Liability [PAP]

[PAP] Usually expressed as a series of three numbers, such as 100/300/50. This means that the policy will pay a maximum of: - $100,000 per person for bodily injury or death; - $300,000 Per accident for bodily injury or death; and - $50,000 Per accident for property damage

Joint Ownership Coverage Endorsement [PAP]

[PAP] When the endorsement is attached, the policy can be issued to two or more unrelated people who live in the same household or two or more people who are related in another way besides being spouses

Longshore And Harbor Workers' Compensation Act of 1927

[WC] A federal workers' compensation act that provides compensation for lost wages, medical benefits, and rehabilitation services to longshore, harbor, and other maritime workers who are injured during their employment.

Part Four - Your Duties If Injury Occurs [WC]

[WC] Addresses the insured's obligations when an injury occurs for which there may be coverage. The insured must provide medical services required for the injured party, report the injury to the insurer, and cooperate with the insurer in the investigation and settlement of the claim.

Federal Employers Liability Act (FELA) [WC]

[WC] In most states, interstate workers are covered under the Federal Employers Liability Act (FELA) instead of a state workers' compensation laws. FELA allows the injured worker or a representative of a deceased worker to sue the employer for negligence and eliminates two of the common law defenses: contributory negligence and assumption of risk. Awards provided under FELA are often more substantial than those provided under FELA are often more substanial than those provided under state workers' compensation laws because FELA does not limit an injured employee's remedies to scheduled benefits.

Part One - Workers Compensation Insurance [WC]

[WC] Promises to pay all compensation and other benefits required of the insured by the workers' compensation law in the state or states where the insured's business operates (which are listed in the information page). No dollar limit applies, except for those that are a part of the law. Coverage applies to any work-related accident or illness occurring during the policy period

Part Two - Employers Liability [WC]

[WC] Provides coverage to the insured for sums the insured becomes legally obligated to pay under common law because of a work-related injury or occupational disease. Three separate limits apply: - Bodily injury by accident - each accident - the most an insurer will pay for all claims arising out of any one accident, regardless of the number of employees. - Bodily injury by disease - policy limit - the most an insurer will pay for employee bodily injury by disease claims in one policy period, regardless of the number of employee claims. - Bodily injury by disease - each employee - the most an insurer will pay for damages due to bodily injury by disease to any one employee. Employers liability is needed because there are situations that are not covered by workers' compensation laws, such as exempt employments, illegal employments, and non-compensable injuries. An employee who is unable to collect workers' compensation under state law may still sue the employer for damages and the employer would be covered by this section of the policy.

Part Six - Conditions [WC]

[WC] Sets forth the conditions that apply to the policy, such as cancellation procedures, subrogation, and the insurer's right to inspect the insured's workplace.

Jones Act [WC]

[WC] The Jones Act is a federal law that allows members of a ship's crew to sue the employer or ship owner at common law for injuries caused by the employer's or ship owner's negligence.

Part Three - Other States [WC]

[WC] Used to provide coverage for states that are not specifically listed in the information page for Part One coverage. Each state to be covered must be listed and the insured must provide notice to the insurer as soon as work begins in a new state.

Covered Auto

- Any Vehicle listed in the declarations - Vehicles eligible to be listed include private passenger autos, which are four-wheel motor vehicles, pickup trucks, and vans that are under 10,000 pounds of gross vehicle weight (GVW) and are not used for business purposes. (Farming and ranching are not considered businesses.) The vehicles must be owned or leased under a long-term contract of six months or more. - Newly acquired autos: A private passenger auto, pickup, or van the named insured acquires during the policy period. - Any trailer owned by the named insured - This includes farm wagons or implements while towed by a vehicle listed in the declarations - Any auto or trailer not owned by the named insured that is being used as a temporary substitute for a vehicle shown in the declarations that is out of use because of breakdown, repair, servicing, loss, or destruction. Insurance follows the vehicle, not the driver. If a neighbor borrows your car with permission and has an accident, your insurance policy covers any at-fault damages up to the policy limit.

Jewelers Block Coverage Form

- Covers the insured's stock in trade, which includes jewelry, precious and semiprecious stones, precious metals and alloys, and other stock used in the business; - Covers property that is sold but not delivered; and - Contains two optional coverages. - Show window coverage covers theft of stock from a show window when the window is cut or smashed - Money coverage covers theft of money from locked safes or vaults on the insured's premises. This form does not cover property: - Exhibited in showcases or show windows away from the premises. - While being worn by the insured, an employee, or family member of either; or - In transit by mail

Breakdown

- Failure of pressure or vacuum equipment - Mechanical Failure, Including rupture or bursting caused by centrifugal force - Electrical Failure, including arcing The term breakdown does not include any of the following: - Malfunction, including but not limited to adjustment, alignment, calibration, cleaning, or modification - Defects, erasures, errors, limitations, or viruses in computer equipment and programs, including the inability to recognize and process any date or time or provide instructions to covered equipment - Leakage at any valve, fitting, shaft seal, gland packing, joint, or connection - Damage to any vacuum tube, glass tube, or brush - Damage to any structure or foundation supporting the covered equipment or any of its parts - The functioning of any safety or protective device (such as one that turns off equipment to prevent further damage) - The cracking of any part of an internal combustion gas turbine exposed to the products of combustion

Three parties involved in Bond

- Principal: The part who promises to do (or not do) a specific thing (I.e., the person or company required to post a bond) - Surety: The party (often the insurance company) who is fiscally responsible (pays the penalty) if the principal defaults on the bond. - Obligee: The party to whom the principal makes the promise, and for whose protection the bond is being written.

Section II Endorsements

- Watercraft endorsement - Business pursuits endorsement - Personal injury endorsement - Permitted incidental occupancies endorsement - Home day care endorsement - Limited fungi, wet or dry rot, or bacteria endorsement

Extended Coverage Perils

- Wind - Exterior damage; damage to the interior is covered only if there is damage to the exterior first (I.E, the wind broke the window and caused damage inside). - Civil Commotion - Damage caused by an assembly of individuals including striking employees (large in number) - Smoke - not from a friendly fire (fireplace) - Hail - A form of solid precipitation; hailstones are balls or lumps of ice - Aircraft - Loss caused by physical contact with part of or all of an aircraft - Vehicles - Damage caused by a vehicle contacting insured property - Volcanic Eruption - Damage from lava, ash, debris, and air shockwaves - Explosion - Damage caused by an explosion away from the covered location - Riot - Damage caused by an assembly of individuals including striking employees (usually smaller in number than civil commotion) - Vandalism and Malicious Mischief (V&MM) - Damage cause by willful and malicious actions, and it usually involves a crime. V&MM can only be written with extended coverage. o Acronyms: WCSHAVVER and V&MM

Contractual Liability

A business may sign a contract with another party agreeing to be liable for some action. If a restaurant owner needs additional parking space, the owner may sign a contract with the movie theater owner across the street to use the theater's parking lot. In the contract is a clause stating that the restaurant owner agrees to be liable for the use of the parking lot. This is called contractual liability. This liability exposure is normally excluded from the CGL with the exception of the following contracts (remember LEASE) - L - Lease of Premises - E - Easement agreement for the use of shared property (see example above) - A - Agreement to indemnify a municipality - S - Sidetrack agreement with a railroad - E - Elevator Maintenance Agreement

Indirect Loss

A consequential loss as the result from a direct loss. Consequence of Physical Loss (Example: Loss of rental income due to house fire, which cause a loss of profits for the landlord. The indirect loss is always consequential of the direct loss.)

Extra Expense Coverage

A coverage that reimburses the insured for expenses incurred to keep a business going after a loss caused by a covered peril. This coverage is for a business that must continue at all costs

Assumption of Risk

A defense against negligence that can be used when the plaintiff was aware of a danger and voluntarily assumed the risk of injury from that danger.

Pair or Set Condition

A loss settlement condition that appears in many property contracts. It states that if part of a pair or set is lost or damaged, the loss will be valued as a fair proportion of the total value of the set, giving consideration to the importance of the damaged article to the set. The insurer is not obligated to pay for the loss of the whole set when only part has been damaged. (Suppose the insured owns a pair of diamond earrings appraised for $30,000. One of the earrings is stolen. The one remaining is appraised for $8,000. The insured will be paid $22,000: value of the pair ($30,000) - the value of what remains ($8,000))

Basic Types of Construction // Class 3 - Noncombustible

A noncombustible structure is one whose exterior walls, floors, and roof are constructed of and supported by noncombustible materials such as metal, asbestos, or gypsum.

Fiduciary

A person in a position of financial trust. Is tasked with promptly sending premiums to insurer. Has knowledge of products, complies with laws and regulations, & does no commingle funds.

Fraud and False Statements (18 USC Sections 1033 and 1034)

A person who transacts insurance in interstate commerce and who intentionally makes false material statements in connection with financial reports or documents presented to insurance regulators appointed to investigate the person in attempt to influence the actions of such officials is subject to: - A Fine; - Imprisonment for up to 10 years; or - Both (It is illegal to make false statements. If guilty: fine, up to 10 years in prison, or both. Up to 15 years in prison if false statements jeopardize insurer.)

Personal Auto Policy (PAP)

A policy containing property and liability coverages. It is designed to insure an individual, not a business. - Caualty - Part A - Liability Coverage - Part B - Medical Payments Coverage - Part C - Uninsured motorist coverage - Property - Part D - Coverage for damage to your auto (physical damage)

Misrepresentation

A representation that is actually false. (Example: Suppose Adam signs an insurance application as Adam L. Jones, even though his birth certificate shows no middle name - he just adopted the "L" because he thinks it sounds good. Adam represents himself as Adam L. Jones, but the "L" is a false representation.)

Indirect Loss

A result, or consequence, of the original loss. It is also known as a consequential loss. Loss over time as a result of the direct loss. (Example: Loss of income a business suffers when the building burns. The cost of a rental car because someone ran into your car. Additional living expenses while your home is being repaired).

Morale Hazard

A state of mind or careless attitude. In common usage, a morale hazard is an unconscious change in a person's actions or behaviors. (Example: The insured carelessly leaving the doors and windows unlocked when not at home, or the insured leaving a car running and unlocked while running into the store for a quick item.) Carelessness

Warranty

A statement that is guaranteed to be true, and it may be relied on by the other party. If not kept, contract is voided.

Representation

A statement that the applicant believes to be true.

Material Misrepresentation

A statement that, if discovered, would alter the underwriting decision of the insurance company.

Binder

A temporary oral or written statement made by the agent that gives the insured immediate coverage for a specified time. If it is an oral statement, it must be backed up in writing as soon as possible. (Does not guarantee that a policy will be issued (underwriters decide); it guarantees temporary coverage that is identical to the policy.)

Business Income From Dependent Properties - Broad Form

A variation on the business income forms. It provides coverage for the following: - Insureds who depend on another business as their sole supply of merchandise or raw materials may suffer a loss if their supplier is forced to cut back or eliminate shipments because of a direct physical loss. The business income from dependent properties - broad form protects the insured against loss due to loss at such a contributing location. - Insureds that depend on a particular business as the primary buyer for their products are covered under this form if direct physical loss at such a recipient location causes the insured's earnings to suffer. - Insureds may depend on a manufacturer to deliver certain products or components to the insured's customers under a sales contract. Should the manufacturing location be unable to fulfill the contract because of direct physical loss, insureds may suffer a loss of income that can be covered under this form.

Comparative Negligence Law

Allows a finding of liability to be made even when both parties have contributed to the loss, with an award based on the extent of each party's negligence. (Each party pays for their percentage of negligence)

Personal Effects Floater

Also called traveler's baggage, is designed for individuals and families who want to insure their personal belongings while traveling. Open peril coverage on an unscheduled basis is provided for the types of property usually carried by tourists, such as clothing, cameras, sports, equipment, and souvenirs. - Specifically excluded are valuable papers, tickets, passports, currency, contact lenses, artificial limbs, and salesperson's samples. Property is excluded from coverage while the insured's premises or while in storage. Insured's that travel frequently might carry this coverage on a permanent basis. Often, however coverage is taken out for a short term to cover a specific trip.

Broad Peril Coverage

Also named peril coverage that lists what is covered. All of the basic form perils are included - first, lightning, internal explosion, the extended coverage perils (WCSHAVVER), and vandalism and malicious mischief (V&MM) - plus the following additional perils. Be sure to remember the acronym of BIG AFFECT: - B - Burglary Damage - I - Ice, Sleet, and Snow (weight of) - G - Glass Breakage - A - Accidental discharge of water - Accidental discharge of water or steam at the described location from within a plumbing, heating, air-conditioning, or automatic fire protective sprinkler system or household appliance. - F - Freezing objects - Freezing of plumbing, heating, air-conditioning, or automatic fire protective sprinkler systems and household appliances (insured must use reasonable care to maintain heat in the building or shut off the water supply and drain all systems and appliances) - F - Falling Objects - E - Electrical current - sudden and artificially generated electrical current (does not include damage to a tube, transistor, or similar electrical components) - C - Collapse - T - Tearing asunder - Sudden and accidental tearing apart, cracking, or burning of steam or hot water heating, air-conditioning, or automatic fire protective sprinkler system and water heaters

Installation Policy

An inland marine coverage that insures against loss to machinery, equipment, building materials, and supplies in transit to, being used with, or during the course of installation, testing, building, renovating, or repair.

Loss

An unintended, unforeseen damage to property, an injury, or amount paid. There are two types of loss, direct loss, and indirect loss

Fiduciary Liability Policy

Another type of professional liability policy, it protects those who manage private pension and employee benefit plans against liability for violation of the Employee Retirement Income Security Act of 1974, which governs employer-sponsored retirement plans

Pollutants

Any solid, liquid, gaseous, or thermal irritant or contaminant including smoke, vapor, soot, fumes, acids, alkalis, chemicals, and waste. Waste includes materials to be recycled, reconditioned, or reclaimed.

Consumer

Anyone about whom a company collects information.

Hazard

Anything that increases the chance that a loss will occur. Hazards do not cause losses, but they make a loss more likely. There are three types of hazards: physical, moral, and morale

Property Damage Coverage

Applies to direct damage to covered property located at a premises described in the declaration. The only difference between this coverage and commercial property coverage is the covered of loss; the damage must be caused by a breakdown of covered equipment (rather than fire, lightning, windstorms, et cetera.)

Moral Hazard

Arise from an individual's character. Losses will more likely occur to individuals who lack morals; as a result, the individuals are hazards to an insurance company. (Example: Dishonesty is a moral hazard because it may increase the chance that an individual lies on an insurance application or fakes a loss.) Dishonesty that intentionally causing a loss is acceptable

Limited Theft Coverage

Available for dwellings that are not owner occupied. Provides coverage for theft, attempted theft, and vandalism or malicious mischief as a result of theft. (Non-owner occupied)

Products or Completed Operations Exposure

Away from premises (Example: A claim against Hooks Bakery for injury resulting from the sale of spoiled cream puffs and a claim against Magic Carpets Inc. for injury that results when a customer steps on a carpet tack left behind by Magic's workers. Ordinarily, a products claim must occur away from the insured's premises and while the product is in the possession of the customer. However, spoiled food served by a restaurant to its customer is a products claim rather than a premises claim, even though it happened on the premises.)

Workers Compensation Funding

Because workers' compensation benefits often are paid over long periods of time, it is important that measures be taken to guarantee that the company will have the funds to pay benefits required under the law. There are five basic methods for funding these benefits. Compulsory states require that employers provide coverage through at least one of these methods: - Workers Compensation Insurance: Issued by private insurers. The employer transfers compensation obligations to the insurance company and the required benefits will be paid from the policy. Even though the employer has transferred the risk of loss to an insurer, it is the law that determines the benefits payable. - Monopolistic State Funds: Require employers to purchase workers' compensation insurance from the state. Private insurance companies are not allowed to compete against these funds. - Competitive State Funds: Give employers a choice between purchasing workers' compensation insurance from a state fund or a private insurance company. Thus, the state fund competes with private insurance. - Self-Insurance: Some employers assume their own workers' compensation exposure through self-insurance. If this method is chosen, the employer will set up a fund to pay workers' compensation claims and file evidence of its existence with the state workers' compensation authority. The employer pays benefit costs and claim expenses, as well as medical and legal services, or may contract with a third party (called a third party administrator) to handle the processing of the claims. If the employer chooses a third party for claims handling, the employer is still responsible for providing the funds necessary to pay the claims. - Group Funding: Many states allow employers to form groups to insure the group members' workers' compensation exposure in a particular state. Eligibility requirements vary from state to state. (Example: In some states, the group members must be involved in the same type of business; in others, the members must have a minimum amount of workers' compensation premium.

Commercial Package Policy (CPP)

Begins with coverage for property and general liability insurance and then other forms of insurance are added on to create a "bundle". A majority of commercial risks may be eligible for coverage under the CPP - To call it a package policy, the CPP must include at least one property coverage and one casualty coverage. - In a CPP, you pick and choose the coverages you need to have a perfect insurance policy for your business.

Basic Types of Construction // Class 5 - Modified Fire Resistive

Buildings that are modified fire resistive have exterior walls, floors, and a roof constructed of masonry or fire resistive material with a fire resistance rating of 2 hours or less.

Excess Coverage

By definition, pays whatever is not paid by the primary policy up to the amount of the loss or excess coverage limit, whichever is less.

Expense Ratio

Calculate by dividing underwriting expenses by the amount of written premium. It is an indicator of the cost of doing business.

Loss Ratio

Calculated by dividing the amount of incurred losses by the amount of earned premium. It is used to compare the company's operations from year to year. It shows the percentage of losses the company incurred for every dollar of earned premium. (Compares company's operations year over year)

Basic Types of Construction

Class 1 - Frame Class 2 - Jointed Masonry Class 3 - Noncombustible Class 4 - Masonry Noncombustible Class 5 - Modified Fire Resistive Class 6 - Fire Resistive

General Damages

Compensate for things such as pain and suffering and mental anguish. These are sometimes referred to as full tort. (Nonmonetary losses)

Duties After Loss

Condition lists the named insured's responsibilities after a property insurance loss.

National Flood Insurance Program (NFIP)

Congress created the National Flood Insurance Program to make flood insurance available to eligible communities through federal subsidization. The NFIP is managed by the Federal Emergency Management Agency (FEMA).

Consumer Rights

Consumers who feel that information in their files is inaccurate or incomplete may dispute the information, and the reporting agencies may be required to reinvestigate and correct or delete information. Insurance companies may use consumer reports, or investigate consumer reports, to compile additional information regarding the applicant. If applicants feel that the information compiled by the consumer inspection service is inaccurate, they may send a brief statement to the reporting agency with the correct information.

Commercial Property Coverages Forms

Contains descriptions of the specific coverages being provided to the business. Each commercial property coverage form defines what property is covered, what property is not covered, how limits and deductibles apply, and what special conditions apply.

Unoccupied

Contents remain, but no people, & there is no loss of coverage. (Less than 60 consecutive days)

CEC

Continuing education credit

Named Peril / Specified Peril Coverage

Coverage lists the perils or causes of loss insured against under the contract, such as lightning, fire, windstorm, hail, vandalism, or other similar natural or man-made losses. (Covers only perils listed, all risks of direct physical loss unless specifically excluded.)

Property Insurance

Coverage on real property such as office buildings, factories, warehouses, and insurance on business personal property such as furniture, fixtures, machinery, and inventory. A commercial property policy must include: - The commercial property declarations form; - The commercial property conditions form; - One or more commercial property coverage forms; - The cause of loss form; and - Other mandatory endorsements

Other Than Collision Coverage

Coverage pays almost every other type of direct, accidental loss to the vehicle that is not specifically excluded by the policy. These perils are specifically listed in the policy as being other than collision losses. The list includes damages caused by the following: - Missiles or Falling Objects - Fire - Theft or Larceny - Explosion or Earthquake - Windstorm - Hail, Water, or Flood - Malicious mischief or vandalism - Riot or Civil Commotion - Contact with a Bird or Animal - Breakage of Glass

Underinsured Motorist Coverage

Coverage that pays the difference between the insured's actual damages for bodily injury and the amount of liability insurance the insured was able to collect from the at-fault driver's insurance. Underinsured motorist coverage is mandatory in some states and optional in others.

Business Personal Property

Covered while it is in the building, in the open, or in a vehicle within 100 feet of the premises. It includes: - Furniture (desks, chairs, file cabinets, etc.); - Fixtures (lights, permanent shelves, bathroom fixtures, etc.); - Machinery; - Equipment; - Stock (finished product); - The value of labor, parts, or services on the personal property of others (e.g., the business has invested money and labor in a tractor it is repairing for a farm customer); - If the insured is a tenant, the improvements and betterments added by the insured; and - Leased personal property (e.g., a copy machine) that the insured has a contractual responsibility to insure, unless it's otherwise covered

Cause of Loss - Special Form

Covers any direct physical loss not specifically excluded or limited in the form. In other words, it provides open perils coverage. Because of this, the list of exclusions is more extensive and detailed than in the other causes of loss forms you've studied. In addition to some of the exclusions contained in the other forms, such as earth movement, war, and nuclear hazard, the special form excludes: - Wear and Tear; - Rust, Corrosion, Fungus, Decay, Deterioration, and Hidden or Latent Defects - Smog - Pollutants (Unless the Release, Discharge, or Dispersal is caused by a specified cause of loss); - Settling, Cracking, Shrinking, or Expansion; - Damage Caused by Insects, Birds, Rodents, or other Animals. - Mechanical Breakdown; - Explosion of Steam Boilers, Pipes, and Engines; - Dishonest or Criminal Acts of the Insured or the Insured's Employees; - Voluntary Parting with Property If Induced to do so by Fraud or a Trick; - Rain, Snow, Ice, or Sleet Damage to Personal Property That is Not in a Building; - Loss Resulting From Acts or Decisions, Or the Failure to Act or Decide; - Collapse (other than that specifically included under the collapse additional coverage); and - Faulty Planning, Development, Design, Specifications, Workmanship, or Repair.

Building and Personal Property Coverages Form

Covers buildings, the insured's business personal property, and the personal property of others located at the business premises. The insured may select coverage for one or more of these categories. Coverage is only provided for coverages that have a limit of insurance shown in the declarations. In addition to the building itself, building coverage includes: - Completed additions; - Fixtures, including outdoor fixtures; - Permanently installed machinery and equipment; - Personal property used to maintain or service the premises, such as fire extinguishers; - Outdoor furniture, floor coverings, and certain appliances; and - If not otherwise covered, additions under construction and alterations or repairs to the building, including materials, equipment, supplies, and temporary structures within 100 feet of the described premises.

Legal Liability Coverage Form

Covers damage to property of others while in the insured's control, but only if the insured is legally liable for the damage. An insured may choose this form to obtain a lower rate because this form covers fewer types of losses. Payment is made on behalf of the insured. Coverage may apply to exposures arising from the insured's occupancy of another's building or from having custody of the property of others, such as customers' goods.

Coverage E - Personal Liability

Covers damages that the insured becomes legally obligated to pay because of bodily injury or property damage caused by an occurrence to which coverage applies. As used in the homeowners policy: - Bodily Injury (BI) - Means bodily harm, sickness, or disease, including required care, loss of services and death; and - Property Damage (PD) - Means physical injury to or destruction of tangible property, including loss to use. (The base liability limit provided for any one occurrence is $100,000, but this can be increased for additional premium. Bodily injury and property damage, when the insured is at fault anywhere around the world)

Computer Fraud Coverage

Covers loss of a damage to money, securities, and other property due to the use of a computer to fraudulently transfer that property from inside the premises or banking premises to a place or person (other than the messenger) outside the premises. Proof of loss may not be based on an inventory shortage or profit and loss computation. Coverage is provided worldwide.

Funds Transfer Fraud Coverage

Covers losses resulting from fraudulent instructions to a financial institution to pay money from an insured's account. Loss resulting from the use of a computer to a fraudulently transfer money, securities, or other property is not covered. Fraudulent instructions are defined as instructions by someone who is impersonating an insured or an employee to transfer money without the insured's knowledge or consent. (Impersonation of insured or employee of insured)

Money Orders and Counterfeit Paper Money Coverage

Covers losses that result when the insured accepts invalid money orders or counterfeit money in good faith. Suppose a customer at the insured's clothing store uses cash to purchase $1,000 worth of merchandise. When the insured attempts to deposit the money, it is found to be counterfeit. The money orders and counterfeit paper money coverage would pay for the loss. (Accepted by the insured in good faith)

Mobile Agricultural Machinery and Equipment Coverage Form

Covers mobile agricultural equipment and machinery separately from other property

Section I Property Coverages // Coverage B - Other Structures or Appurtenant Structures (not included in the HO-4 Renters Policy)

Covers other structures on the residence premise that are separated by a clear space are covered. This includes structures connected to the dwelling by only a fence, utility line, or similar connection. Other structures to the property will be excluded if used for business purposes or rented to non-tenants. The exception to this is a rental of garage space to a non-tenant. Not attached to dwelling, Not used for business purposes.

Section I Property Coverages // Coverage A - Dwelling

Covers the dwelling and structures attached to the dwelling as well as materials and supplies for repair and construction of those structures if they are located on or next to the residence premises (The dwelling location listed in the declarations). HO-4 Renters does not insure the dwelling. HO-6 - Condominium Owners does not insure the dwelling, but does include limited Coverage A for inside walls and floors. The standard Coverage A minimum limit for HO-6 is $1,000 (can be increased).

Contractor's Equipment Floater

Covers the heavy machinery, equipment, and tools a contractor needs to conduct business. It covers the contractor on an open-peril or named-peril basis for loss to all types of tools, machinery, and equipment owned, rented, or borrowed by the insured. The commercial building and personal property coverage form does not provide the extensive coverage that can be obtained under the contractor's equipment floater.

Reinsurance Department

Created to cover their own exposure to loss, insurance companies often purchase insurance themselves. This is referred to as reinsurance, and would fall under the responsibility of the insurer's reinsurance department.

Collapse Additional Coverage

Defined as an abrupt falling down or caving in of the building or part of the building that results in it being unusable. Collapse of a building, part of a building, or a building that contains covered property is covered only when it is caused by one of the specified broad form perils or any of the following additional perils: - Breakage of Glass - Hidden Decay - Hidden Insect or Vermin Damage - Weight of People or Personal Property - Weight of Rain That Collects on a Roof - Use of Defective Material or Methods In Construction, Remodeling, or Renovation if the collapse occurs while the construction, remodeling, or renovation is in progress. Collapse that results from hidden decay or hidden insect or vermin damage is not covered if the insured knew about the damage before the collapse occurred. If a collapse occurs after construction, remodeling, or renovation is completed and is caused by a covered peril, the loss or damage is covered even if the use of defective materials or methods contributed to the collapse

Mysterious Disappearance

Defined as property of the insured which has vanished with no explanation. This is the only definition listed that does not involve theft. Theft must be ruled out! The item is just gone with no explanation as to where it is.

Collision

Defined as the impact of an auto covered by the policy with another object or vehicle, or the upset (overturn) of a vehicle

Occurrence

Defined in the CGL as an accident, including continuous or repeated exposure to the same general harmful conditions.

Additional/Supplementary Coverage

Depending on the policy, this coverage may have separate limits of insurance and may be paid in addition to the maximum limit of liability. (Example; The cost to pay attorney fees for the insured if the insured is sued by another party, the cost of making temporary repairs to a damaged building, bail & appeal bonds, and other court-related costs)

Termination Provision

Describes conditions for cancellation and nonrenewal. The insured may cancel the policy at any time by returning the policy or providing advance written notice of the desired cancellation date. The insurer must provide advance written notice to the insured for policy cancellation or nonrenewal. State insurance department guidelines must be followed for the number of days needed for written notifications. Insured may cancel at any time, insurer must provide written notice.

Insuring Agreements

Describes the covered perils or risks assumed by the insurer and makes reference to the contractual agreement between the insurer and insured. If the policy provides liability coverage, the promise to defend the insured, if sued, is found here. It summarizes the major promises of the insurance company, as well as states what is covered. (Promise to pay and perils covered.)

Specific (Scheduled) Coverage

Detailed list of covered items (Example: Coverage for a diamond ring described with a jeweler's written appraisal.)

Boatowners / Watercraft Package Policy

Developed by individual insurance companies and they combine property, liability, and medical payments insurance on an open peril basis. They are used to insure boats under a specified - such as 26 feet - or under a maximum dollar value, such as $25,000. Losses are usually paid on an actual cash value basis. There is usually a mileage restriction for coverage to apply if the boat is used offshore.

Last Clear Chance

Doctrine that is employed in contributory negligence jurisdictions. Under this doctrine, a partially negligent person can, nonetheless, recover if he is able to show that the defendant had the last opportunity to avoid the accident.

Directors and Officers Liability

E&O insurance is also appropriate for directors and officers of corporations who may be sued as individuals by stockholders. Directors and officers have no coverage under a CGL for personal liability, and they also have no coverage under the homeowners contract for liability arising out of business pursuits. This exposure is properly insured under a type of E&O insurance called Directors and Officers Liability.

Contribution by Limits

Each company pays a proportion of the loss equal to the proportion its policy limits bear to the total amount of insurance available.

Forms of Homeowner Policies

Each of these forms provides identical liability coverage. The property coverage varies with the homeowners form selected. The following is a list of the forms with the covered perils of each: - HO-2 - Broad Form; Owner Occupant - HO-3 - Special Form; Owner occupant - HO-4 - Tenants or Renters - HO-5 - Comprehensive Form; Owner-Occupant - HO-6 - Condominium Owners - HO-8 - Modified Form for Special Risks

Commercial Property Floater Risks

Embrace a number of subcategories of inland marine forms, including bailee's customer forms, equipment forms, and business floaters. Inland marine insurance can be included in the commercial package policy, but quite often it is written in a separate policy because of the unique nature of some risks. However, inland marine coverages do have several common features. First, they are usually written open peril instead of named peril. Second, they usually do not require the property to be at a specific location when a loss occurs. (Remember that the commercial personal property coverage from the previous unit required that the property be in the building or within 100 feet of the premises to be covered.) Third, they are quite often called "floaters" because the insurance moves (floats) with the property as it moves.

Vacant

Empty building, no people or contents for more than 60 consecutive days.

Conditions Form

Establishes the policy provisions with respect to the following issues: - Control of Property - Legal Action Against the Insurer - Other Insurance - Policy Period and Coverage Territory - Transfer of Recovery Rights Against Others (Subrogation) - Concealment, Misrepresentation, and Fraud - No benefit to Bailee - Insurance under two or more coverages - Liberalization Attached to EVERY commercial Property Policy

Section I Property Coverages [Homeowners]

Four separate property coverages are provided by the homeowners policy under Section I: - Coverage A - Dwelling - Coverage B - Other Structures - Coverage C - Personal Property - Coverage D - Loss of Use

Fraternal Benefit Societies

Fraternal Benefit Societies, or Fraternal Associations, are non-profit, mutual aid organizations that engage primarily in charitable or benevolent activities. They offer their members insurance against death, disease, and disability. (Must meet specific membership requirements)

Personal Property

Furniture, Appliances, Clothing, Tools, & Other moveable property

Workers' Compensation Laws

Gives employees the right to collect for injury, disability, or death that occurs in the course of employment. Prior to the enactment of such laws, a worker had to sue an employer and prove that the employer was at fault to be reimbursed for a work-related injury. Employers were often successful at not being found at fault through the use of three common law defenses that were allowed by the law. - Assumption of Risk - Contributory Negligence - Fellow Servant Rule Workers' compensation laws today are no fault laws, and the employer has agreed to pay the costs of occupational injury or disease according to the benefits stated in the law. This cost to the employer is passed on to the consumer in the prices a business charges for its products and services. In return, the benefits states in the workers' compensation laws are the only benefits - called the exclusive remedy - available to employees. Employees cannot sue employers in court to obtain additional benefits.

Transfer of Right of Recovery Against Others to Us Condition

Gives the insurance company subrogation rights. Subrogation is defined as a legal right that allows one party (E.g., your insurance company) to make a payment that is actually owed by another party (e.g., the other driver's insurance company) and then collect the money from the party that owes the debt after the fact.

Legal Action Against Us Condition

Gives the insured two years from the date that direct physical loss occurred to bring an action against the insurer. Such an action cannot be brought unless the insured has compiled with all conditions of the policy.

Our Option Condition

Gives the insurer the right to repair or replace damaged property with material or property of like kind and quality within 30 days of receiving the insured's statement of loss.

Risk Retention Groups

Groups where the members insure each other, using their own capital to write insurance policies. Policyholders must all be members of the same type of business.

Inside the Premises - Robbery or Safe Burglary of Other Property

Has two primary coverages: - Loss of property (not money or securities) while inside the premises from actual or attempted robbery of the insured, the insured's partners or members, or any employees. - Loss of other property from a safe or vault inside the premises from actual or attempted safe burglary. *If the insured owns the premises or is liable for damages to it, this coverage also covers damage to the interior or exterior of the premises that results from actual or attempted robbery or safe burglary*

Damages

If an individual is liable for the loss of another, the courts may require the individual to pay monetary compensation to the injured party.

Increased Cost of Compliance

If the cost to repair flood damage is increased due to state or local flood management laws or ordinances, the policy will pay up to $30,000 to cover these extra expenses

Fellow Servant Rule

If the injury was caused by a fellow employee, the employer could not be found to be at fault.

Permitted Incidental Occupancies Endorsement

If the insured operates a business from home, such as a piano teacher, the permitted incidental occupancies endorsement is necessary to provide liability and medical payment coverage for this business exposure.

Transfer of Rights

If the named insured dies, then the rights and duties under the policy are transferred to the insured's legal representative and they remain insured up to the policy renewal date.

Absolute (Strict) Liability

Imposed by law on those participating in certain activities that are considered especially hazardous. Individuals involved in such operations may be held liable for the damages of another, even though the individual tried to be as careful as possible. (Most frequently applies to activities involving dangerous materials, hazardous operations, or dangerous animals)

Foreign Insurer

In another state or U.S. Territory. For example, an insurer that was domiciled in Texas would be a foreign company to residents of Oklahoma - or any other state or U.S. Territory beside Texas. Company is incorporated in another state or U.S. Territory.

Aleatory

In insurance, the receipt of unequal value arises because the insurer's performance under the contract depends upon an uncertain event - the occurrence of a loss which may not happen. (Pay small premium and have a large claim, or pay premiums for many years without a claim.)

Workers Compensation Benefits provided

In most states there are four workers' compensation benefit categories. - Disability / Loss of Income Benefits: Compensate employees who are unable to work as the result of a work-related injury or disease. These benefits are intended to replace a portion of lost income, but not all of it. - Medical Benefits: Pays for the cost of various types of medical services required because of an employment-related injury or disease. Payment for basic medical expenses are generally unlimited and do not contain deductibles. - Survivor / Death Benefits: Compensate a surviving spouse, children, or other relatives of an employee whose death results from a work-related injury or disease. Survivor benefits include a weekly benefit and stipulated amount for funeral and burial expenses. - Rehabilitation Benefits: Include medical rehabilitation, such as physical therapy designed to improve physical functioning, and vocational rehabilitation, such as retraining for a different occupation. Workers' compensation rehabilitation benefits pay reasonably justifiable expenses for these purposes.

Additional Insured

In some circumstances, another individual or business may be listed as an additional insured. This is usually done by endorsement.

Valuation

In the event of a loss, the insurance company has a legal duty to determine the appropriate amount of claim payment according to the terms of policy. In general, the insured can collect the lesser of: - Insurable interest (If the insured burns down his house and is found guilty of an intentional criminal act like arson, the mortgage company would be made whole by the insurer up to its insurable interest in that property.); - Policy limits; - Actual Cash Value; - Cost to repair; or - Replacement cost.

Principal

In the insurance business, the name for the insurer or insurance company

Special Damages

Include all direct and specific expenses involved in a particular loss, such as medical expenses, lost wages, funeral expenses, and the cost to repair or replace damaged property. These are sometimes referred to as limited tort. (Provable monetary losses)

5 Types of Risk Exposures

Include; - Premises and Operations - Product and Completed Operations - Fire Legal - Independent Contractors - Contractual Liability

Incurred Losses

Includes amounts paid on claims for covered losses and various expenses related to handling claims.

Instrumentalities of Transportation or Communication

Includes forms that cover property related to transportation or communication, such as bridges, pipelines, and television towers.

Inland Marine Insurance

Indemnifies loss to movable or specialized types of property, historically developing as an outgrowth of ocean marine insurance. Inland marine policies became known as "floaters" since the property to which coverage was originally extended was essentially "floating". The coverage has grown to include property that just involves an element of transportation, or better described as coverage for "property on land". - Actually in Transit - Held by a Bailee - At a Fixed Location that is an instrument of transportation - A movable type of goods that is often at different locations

Section II - Liability Coverage

Indiviuals face many direct and indirect exposures to liability. A homeowner may be held liable for damages arising from his home or yard, as when a visitor slips and falls on a freshly waxed floor or a dead tree falls on and crushes a neighbor's bicycle. An individual can also be held liable for the actions of his children and pets, as when a five-year-old breaks all the windows in a neighbor's garage or the family dog bites a person. Finally, an individual may be help liable for damages arising out of personal activities away from the home, such as when an individual opens an umbrellas in a crowded stands at a football game and accidently pokes the eye of another sports fan. Two Major Coverages: - Coverage E - Personal Liability - Coverage F - Medical Payments to Others

Declarations

Information relative to who, what, when, and where is found on the first page of the policy. The name of the insured(s), current address, a legal description of the insured property, the policy deductibles, and the term of the coverage are contained in this section. (Who, What, When, Where & How Much)

Commercial Crime Insurance

Insurance designed to protect businesses and government entities against property loss resulting from such crimes as burglary, robbery, theft, and employee dishonesty. Can be provided as a monoline policy or as part of a commercial package policy (CPP).

Reinsurance

Insurance for insurers. Transfers risk from one insurer to another insurer, spreading risk. One insurer may pay the other insurer a premium to assume a portion of the risk.

Unearned Premium

Insurance premium paid in advance which is used for future coverage. Must be paid back if the policy is terminated.

Surplus Lines

Insurance sold by an unauthorized insurer - if the state's approved list of surplus insurers. Can only be sold to certain high risk insured, however cannot be sold solely for a cheaper rate then licensed/admitted insurers.

First Party Losses

Insured's property losses.

Condominium Association Coverage Form

Insures a condominium association against direct physical loss or damage to: - Buildings; - Business Personal Property; and Personal Property of others in the care, custody, or control of the association while it is at the premises.

Open Peril Policy

Insures against all risks of direct physical loss except those specifically excluded in the policy. This type of contract is sometimes called all risk, special, or comprehensive coverage.

Special (Open) Peril Coverage

Insures against all risks of direct physical loss unless they are specifically excluded. Examples of commonly excluded perils with this policy: - Flooding - Earthquake - Intentional damage caused by the insured - Losses due to enforcement of building codes - Damage caused by a power interruption occurring off the premises - Government Seizure

Actual Cash Value Endorsement

Insures older property on an actual cash value (ACV) basis rather than replacement. The payment will be the lesser of the cost to repair or replace the damaged property with property of the same kind, capacity, size or quality, or the actual cash value of the damaged property. Also, the insurer will not pay for damaged property that is obsolete and useless to the name insured.

Implied Authority

Is not written in the agency contract, but it is assumed to be granted to an agent in accordance with general business practice. For example, an agent's contract may not say in writing that the agent has the right to print business cards with the insurer's logo on them, but this authority is implied by allowing the agent to act on the insurer's behalf. Implied authority is power that the agent believes he or she has because the power is necessary for the agent to conduct the business of the insurer. (Authorities not written in agent contract but tasks agent must perform; implied that agent has the authority.)

Business Income and Extra Expense Coverage

Is similar to these same coverages under the commercial property coverage part. The only significant difference is the covered cause of loss; the damage must be caused by a breakdown of covered equipment (rather than fire, lightning, windstorm, and et cetera.)

Basic Types of Construction // Class 2 - Joisted Masonry

Joisted masonry structures have outside support walls made of noncombustible masonry materials (such as concrete, brick, hollow concrete block, stone, or tile) and a roof and floor made of combustible materials (such as wood).

Commercial Umbrella Liability Insurance

Just as personal umbrella policies are available to cover the catastrophic liability exposures of personal risks, high-limit commercial umbrella policies are designed to provide catastrophic liability coverage for business risks. Because the umbrella policy is not designed to handle usual or everyday exposures, the insured must have underlying liability coverage, such as commercial auto liability or commercial general liability coverage, before an umbrella policy will be issued. A commercial umbrella policy provides coverage in three situations: - The policy limit applying to a loss under an underlying policy have been exhausted. - A loss is excluded under an underlying contract but not excluded under the umbrella. (The insured must first meet the retention - deductible limit.) - Previous losses reimbursed under an underlying policy have reduced its aggregate limit so that a subsequent loss is not fully covered. Business that need high limits, requires underlying policies, primarily excess coverage.

Professional Liability

Liability arising out of rendering or failing to render services of a professional nature - is excluded under CGL policies.

Premises and Operations Exposure

Liability arising out of the business location or the activities of the business.

Combined Single Limit

Liability coverage covering bodily injury and property damage

Watercraft Endorsement

Liability coverage for: - Watercraft powered by outboard engines or motors exceeding 25 horsepower; - Watercraft powered by inboard or inboard-out-drive engines greater than 50 horsepower; and - Sailboats 26 feet or more in length.

Vicarious Liability

Liability for the actions of another.

Requirements of BOP

Many types of small business are good candidates for a BOP. Each insurance company has its own underwriting criteria; however, there are some common requirements: - Less than 100 employees - Revenues of $3 Million or less - Businesses occupying up to 25,000 square feet - Owned buildings up to 100,000 square feet and less than six stories - A majority of the operation is located on-premises *Property coverage in the BOP is provided on an open peril basis. This means that the policy covers any causes of loss that are not specifically excluded or limited. An endorsement can be added to the policy so that coverage is provided on a named peril basis, meaning that the policy covers only the cause of loss specifically named in the endorsement*

Spoilage Endorsement

May be added to the building and personal property and condominium commercial unit - owners coverage forms to provide coverage for the insured's perishable stock - personal property that must be maintained under controlled conditions (such as refrigerated property) to protect it from loss or damage

Property Damage (PD)

Means damage to or destruction of property, including loss of use of the property. (Injury to property)

Property Damage

Means destruction of or loss of use of tangible property

Bodily Injury (BI)

Means injury, sickness, disease, and death arising out of injury, sickness, or disease. (Injury to the body; Medical bills, lost wages, pain and suffering, and death)

Covered Property

Means property that the insured owns or that is in the insured's care, custody, or control, and for which the insured is legally liable. Includes: - Equipment built to operate under internal pressure or vacuum other than the weight of contents; - Electrical or Mechanical Equipment that is used in the generation, transmission, or utilization of energy; - Communication equipment and computer equipment and - Any equipment that is owned by a public or private utility and used solely to supply utility services to the insured's premises.

Volcanic Eruption

Means the eruption, explosion, or effusion (pouring forth) of a volcano. All earthquake shocks or volcanic eruptions that occur within any 168-hour period constitute a single earthquake or volcanic eruption. The expiration of the policy does not reduce the 168-hour period

Notice to Applicant

Must be issued to all applicants for property or causality and life or health insurance coverage. This notice informs the applicant that a report will be ordered concerning their credit history and any other life or health insurance for which they have previously applied.

Causes of Loss - Basic Form

Named perils form that lists 11 covered perils. (WCSHAVVER & V&MM) - Fire - Lightning - Explosion - Windstorm or Hail - Smoke - Aircraft - Riot of Civil Commotion - Vandalism (V&MM) - Sprinkler Leakage - Sinkhole Collapse - Volcanic Eruption *Also includes the limited coverage for fungus, wet rot, dry rot, and bacteria additional coverage*

Workers' Compensation and Employers Liability Policy

Nearly all states that allow private insurance companies to offer coverage use the standardized Workers' Compensation and Employers Liability Policy filed by the National Council on Compensation Insurance (NCCI). A complete policy contains an information page (similar to the declarations used with other types of policies) and a policy form that contains the following sections: - General Section - Part One - Workers' Compensation Insurance - Part Two - Employers Liability - Part Three - Other States Insurance - Part Four - Your Duties if Injury Occurs - Part Five - Premium - Part Six - Conditions

Third Party Losses

Negligent acts or omissions that cause injury or property damage to others.

Blanket Coverage

No detailed list of items insured. (Example: All the contents (personal property) in your house).

Earthquake and Volcanic Eruption Endorsement

None of the causes of loss forms cover earthquake or volcanic eruption (land movement). An insured can obtain coverage for these perils by adding the earthquake, and volcanic eruption endorsement to the policy. This endorsement must be used in conjunction with one of the causes of loss forms.

Third-Party Losses

Occurs when a person claims to have been injured by an insured, or when a person's property has been damaged by the insured's actions. ("Other Guy")

Personal Yacht Policies

Ocean Marine Forms that provide a package of property and liability coverages. Most inboard boats, sailboats with inboard auxiliary power, a large pleasure boats are insured under personal yacht policies. Owners of larger vessels are more likely to purchase the complete package of yacht coverages, which includes: - Hull insurance (pays replacement costs for partial losses and on a valued basis for total losses); - Boat trailer insurance (pays on actual cash value basis); - Protection and indemnity (a form of bodily injury and property damage liability insurance); - Medical payments coverages; and - Federal Longshore and Harbor Worker's Compensation Insurance (provides benefits for maritime works). *Coverage is usually provided on an open peril basis*

Estoppel

Once a right has been waived, it cannot be reinserted and used against the insured (Waiver cannot be undone)

Broad Theft Coverage Endorsement

Only available to owner-occupied dwellings and can apply to on and off-premise theft. Provides coverage for theft, attempted theft, and vandalism. (Owner occupied)

Extended Period of Indemnity

Option gives the insured extended business income coverage for the number of days states in the declarations, rather than the 60 days allowed by the extended business income additional coverage.

Monthly Limit of Indemnity

Optional coverage allows the insured to establish the amount of reimbursement for loss of business income during each 30-day period. The insured selects a fraction that is multiplied by the limit of insurance to determine the maximum that could be paid for each 30 days.

Maximum Period of Indemnity

Optional coverage limits reimbursement for extra expenses or loss of business income to no more than the amount of loss incurred during the first 120 days following the direct loss.

Personal Inland Marine Insurance

Originally developed from ocean marine insurance, which provides very broad coverage for property being transported over water. This type of insurance provides the same type of broad, flexible coverage for portable personal property on land (inland). The two most commonly used personal inland marine forms are: - Personal Articles; and - Personal Affects

Peak Season Endorsement

A variation of the reporting form that allows the insured to carry increased coverage during certain seasons of the year when inventory or other covered property is higher than usual.

DICEE

Acronym to Remember the parts of a policy 1. Declarations 2. Insuring Agreements 3. Conditions 4.Endorsements and additional supplementary coverages 5. Exclusions

CLOAC

Acronym to break down the five elements needed to form a valid legal contract 1. Consideration (Money) 2. Legal Purpose 3. Offer 4. Acceptance 5. Competent Parties

STARR

Acronym to remember various ways risk can be managed 1. Sharing 2. Transfer 3. Avoidance 4. Retention 5. Reduction

Authorized Insurer

An insurance company which is licensed by the state to sell insurance. Also known as admitted.

Alien Insurer

An insurer formed under the laws of any country other than the United States and its territories. To citizens of the United States or any U.S. Territory, such as Puerto Rico or Guam, an insurer based in any other country is an alien insurer. Company is incorporated in another country.

Mutual Insurer

An insurer that is owned by its policyholders and formed as a corporation for the purpose of providing insurance to them.

Fraud

An intentional act designed to deceive and induce another party to part with something of value.

Family Member

Any person related to the named insured or spouse who is a resident of the named insured's household. This includes those related by blood, marriage, or adoption, and ward or foster children.

Discovery Form

Certain crime losses, such as extortion and embezzlement, may not be discovered until weeks, months, or years after they occur. Crime insurance written on a discovery basis covers losses that are sustained at any time and discovered.

Tort

Civil wrong that causes someone else to suffer loss.

Dwelling Policy Coverages

Coverage A - Dwelling Coverage B - Other structures (detached from the main dwelling (also referred to as appurtenant structures)) Coverage C - Insured's personal property Coverage D - Fair rental value Coverage E - Additional living expense

Causes of Loss - Broad Form

Covers all of the perils listed in the basic form and BIG AFFECT: - B - Burglary - I - Ice, Sleet, and Snow (Weight of) - G - Glass Breakage - A - Accidental Discharge of Water - F - Freezing Objects - F - Falling Objects - E - Electrical Current - C - Collapse - T - Tearing Asunder *Water damage coverage also includes the cost of tearing out or replacing any part of the building that results in it being unusable*

Personal Injury Endorsement

Covers the insured from the nonbodily injury claims of "hurt feelings" such as libel, slander, false arrest, invasion of privacy, or malicious prosecution.

DOI

Division of insurance or known as the Iowa Department of Insurance

Customer

Has an ongoing relationship with the financial institution.

Unilateral

Insurance policies are one-sided contracts because only one party is legally bound to perform under the contract. The insurance company makes a legal promise to pay for a covered claim. The insured may cancel the contract anytime

Adverse Selection

Is the tendency for higher-risk individuals to get and keep insurance as compared to individuals that represent an average level of risk. The higher risk the less they are wanted by insurers.

Cause of Loss Forms

Lists the perils that the property is insured against. There are there separate causes of loss forms: - Basic - Broad - Special (Open)

Bodily Injury

Means bodily harm, sickness, or disease, including resulting death

Real Property

Permanent structures and buildings.

Underwriting Expenses

The cost to acquire and to keep policies. This includes expenses for advertising, commissions, salaries, other administrative costs, and regulatory costs such as taxes and licensing fees.

Uninsured Motor Vehicle

The policy defines an uninsured motor vehicle as one that: - Has no liability coverage at the time of the accident or less than the state minimum required liability limits; - Is operated by a hit-and-run driver who cannot be identified and who strikes the insured's covered auto, or any auto occupied by the insured or a family member (The insured has a duty to notify the police if involved in an accident with a hit-and-run driver.); - Has invalid liability coverage at the time of the accident because of insurer insolvency (bankruptcy), or because coverage was obtained fraudulently by the insured.

Underwriting

The process of evaluating the risk and exposure of potential clients.

Domestic Insurer

The state in which the insurer was formed (chartered or incorporated) and usually headquartered - an insurer's home state is also called its state of domicile. The state where a company is incorporated.

Fire Legal Liability

This coverage in the CGL pays for this fire damage, but only to the part of the building actually occupied by the insured.

Contributory Negligence

Was a rule of law that stated if there was any fault by the injured party, the injured party is considered to be totally at fault and cannot collect from the party being sued. If the employer could prove fault by the employee, the employer had no responsibility.

Flat Cancellation

When a policy is cancelled on the effective date, by either the insurer or insured.

Garage-keepers Insurance [BAP]

[BAP] Covers damage to customers' property that the insured has for servicing, repair, parking or storage.

Application Requirements for NFIP

- Agent does not have binding authority - Initial Premium Paid in Full - 30-Day Waiting Period - Waived if bought when a house has a mortgage - Applies to requests to increase coverage on an existing policy

Basic Cause of Loss Form

- Fire - Must be hostile; intentional loss (arson) is not covered. - Lightning - Natural Electricity - Internal Explosion - Any explosion inside a covered location