Policy Provisions and Contract Law - NJ

Underwriting Process Forms

1. Application Form 2. Motor vehicle records 3. Interviews with neighbors, friends and employers 4. Inspection of property 5. Inspection of insurance history

Examples of conditions

1. Inspections 2. Changes to the policy 3. The liberalization Clause 4. Return of premium

Insuring agreements lists:

1. Parties to the contract 2. Effective and renewal dates 3. description of coverage provided 4. perils

In the event of an loss covered by the policy, the named insured is required to:

1. Protect the dp from further damage 2. Prepare an inventory of dp 3. Cooperate with the insurer in settling the loss 4. Notify the police in the case of a theft 5. Submit to the insurer a signed sworn proof within an allotted amount of time dp = damaged property

Every policy is compromised of the following major componenets:

1: Declarations 2: Definitions 3: Insuring Agreement 4: Additional Coverage 5: Conditions 6. Endorsement 7: Exclusions and policy limits

In order for insurance contracts to be legally binding, they must have 4 essential elements:

A - Agreement C - Consideration C - Competent parties L - Legal purpose

Concealment

A means of hiding

pro rata

A provision found in some property insurance policies that provides for the sharing of loss with other insurance that may be written on the same risk in the same proportion as their limits of insurance bear to the total of coverage of all policies covering the risk, whether collectible or not.

Additional or Supplementary Coverage

A provision in an insurance policy that provides an additional amount of coverage for specific loss expense, at no additional premium.

Definitions

Clarifies terms used in the policy

Examples of exclusions:

Earth movement and water damage

What is a binder?

Temporary coverage for an insurance applicant until the policy is issued

First Named Insured

The individual whose name appears first on the policy's declaration

Named Insured

The individual(s) whose name appears on the policy's declaration.

Policy limit

The maximum benefit an insurance company will pay a policyholder if/when an insured event occurs.

Declarations

The section of an insurance policy containing the basic underwriting information, such as the insured's name, address, amount of coverage and premiums, and a description of insured locations, as well as any supplemental representations by the insured.

Cancellation

The termination of an in-force insurance policy by either the insured or the insurer prior to the expiration date shown in the policy.

assignment

The transfer of a legal right or interest in an insurance policy. In property and casualty insurance, assignments of policies are usually valid only with the prior written consent of the insurer.

When does acceptance take place?

When an insurer's underwriter approves the application and issues a policy

application

a printed form that includes questions about a prospective insured and the desired insurance coverage and limits

Other Insurance

a provision in an insurance policy that defines how the policy will respond if there is other valid insurance written on the same risk

Material Misrepresentation:

a statement that would alter the underwriting decisions of the insurance company

Proof of Loss

a sworn statement that must usually be furnished by the insured to an insurer before any loss under a policy can be paid

A warranty is:

an absolute true statement upon which the logic of the insurance policy depends

Additional Insured

are individuals or businesses that are not named as insured on the DP, but are protected by the policy,

Endorsement

are printed addendums to a contract that are used to change the policy's original terms, conditions, or coverage.

When do Binders expire?

as soon as the policy is issued

Mortgagee Clause

attached to a policy to protect the interest of the mortgagee in the mortgaged property

The policy effective sate would be the same as the:

date when the binder was issued

Fair Credit Reporting Act

established procedures that consumer-reporting agencies must follow in order to ensure that records are confidential, accurate, relevant, and properly used

Insuring agreement

establishes the obligation of the insurance company to provide the insurance coverages as stated in the policy

apprasial

evaluation or estimation of worth

Breach of warranties can be considered

grounds for voiding the policy or a return of premium.

Conditions are:

indicates the general rules or procedures that the insurer and insured agree to follow under the terms of the policy

Notice of claim

is a form or statement from an insured to an insurer, informing the insurer that events leading to a possible claim have occurred.

What happens if misrepresentation are intentional?

it's considered fraud.

Exclusions

section of an insurance policy details the perils that are not insured against and what persons are not insured.

Nonrenewal

termination of an insurance policy at its expiration date by not offering a continuation of the existing policy or a replacement policy

If the insurer declines to issue the policy what happenes?

the binder expires on the sate after the receipt of the notice of cancellation.

Insurer's Consideration is:

the promise to pay for losses; insured's consideration is the premium and statements on the application

Misrepresention

untrue statement

What can concealment do

void a policy