Property and causality insurance terms and related concepts

4 Stages of Negligence needed

1. Duty Owed 2. Violation of Duty Owed 3. Proximate Cause - "Unbroken chain of events" 4. Loss or Damages

Loss valuation

A factor in determining the premium charged and the amount of insurance required.

Special damages

A form of compensatory damages that awards a sum of money for specific, identifiable expenses associated with the injured person's loss, such as medical expenses or lost wages.

General Damages

A monetary award to compensate a victim for losses, such as pain and suffering, that do not involve specific measurable expenses.

Law of Large Numbers

A principle stating that the larger the number of similar exposure units considered, the more closely the losses reported will equal the underlying probability of loss.

Specific insurance

A property insurance policy that covers a specific kind or unit of property for a specific amount of insurance.

Unoccupancy

A property that contains personal property but has no occupants.

What additional coverage in an Insurance policy?

A provision that adds more coverage for a specific loss at no additional premium

Combined single

A single dollar limit of liability applying to the total of damages for bodily injury and property damage combined, resulting from one accident or occurrence.

Blanket insurance

A single property insurance policy that provides coverage for multiple classes of property at one location, or provides coverage for one or more classes of property at multiple locations.

Named peril

A specific cause of loss listed and described in an insurance policy. Also used to describe policies containing named perils.

What is proof of loss?

A sworn statement from an insured notifying the insurer about a loss

Absolute liability

A type of liability that occurs due to extremely dangerous operations, such as the use of explosives or working at extreme heights.

What does the term Unilateral contract mean?

A unilateral contract is a one-sided contract. This means only one party makes an enforceable promise

In property and casualty policies, what is required for an assignment to be valid?

A written consent of the insurer

Property damage

Actual monetary loss party suffered by property damage or loss of use

What are the four elements of an Insurance contract

Agreement Consideration Competent parties Legal Purpose

Salvage value

An estimate of an asset's value at the end of its useful life.· Is estimated value an asset can be resold at as a whole or in parts. (Car for parts)

Accident

An unexpected happening that may result in injury, loss, or damage.

Who is an insured in property and casualty insurance?

Anyone covered under the policy even if nor specifically named

What process is used to settle a casualty claim when the insurer and insured cannot agree?

Arbitration

Peril

Causes of loss insured against in an insurance policy.

Information about changes to the policy or return of premium can be found in what section of a policy?

Conditions

What part of the insurance policy indicates the general rules or procedures that the Insurer and Insured agree to follow under the terms of the policy?

Conditions

What is consideration in an insurance Contract?

Consideration is something of value that each party gives to the other. Consideration on the part of the insurer is binding.

Actual cash value (ACV)

Cost to replace property with new property of like kind and quality less depreciation. Replacement cost- liability

Comparative Negligence

Damages are reduced by percentage of fault

Limits of Liabilty

Determines an insurer's responsibility for payment, as stated in an insurance policy

Speculative Risk

Gambling. Loss is not insurable. Opportunity for loss or gain

What do individuals use to transfer their risk of loss to a larger group?

Insurance

Casualty Insurance

Insures against the loss and/or damage of property and resulting liabilities to others. Third party contract.

What does an endorsement do to an insurance contract?

It modifies the policy's original terms

The Fair Credit Recording Act

Law that protects consumers from circulation of inaccurate or obsolete information.

Insurance Contract

Legal contract designed to transfer risk from the insured to the insurer.

What determines an insurer's responsibility for payment, as stated in an insurance policy?

Limits of liability

(Insurance carried/ Insurance required) X Loss Amount =?

Loss Payment

Property Insurance

Loss of physical property or income abilities

Indirect loss

Loss that is a result or consequence of a direct loss or consequential losses. (Cost of living while home is being repaired.)

Limits of liability

Maximum amount of money insurance company is willing to pay.

What provision defines how a policy will respond if there is more than one insurance policy written on the same risk?

Other Insurance

Strict liability

Person or business makes implied warranty that product is safe. Is liable for defective products if defect can be proven. (Ladder that broke)

Types of Hazards

Physical, Moral, Morale

Indemnity

Policy allows for greater benefits than the financial loss incurred, the insured may be compensated only for the amount lost

Direct Loss

Property insurance only covers direct loss. Direct physical damage to property. Covers damage that the insured peril was proximate cause of loss. (Water damage on a fire)

What are an insured's duties after loss?

Protect the damaged property from further damage, cooperate with the insurer in settling a loss, and submit proof of loss

Depreciation

Reduction in value, mainly from wear in tear.

Indemnity

Reimbursement. Insurance policy states that the insured is only to collect the extent of financial loss and not allowed to gain. To restore not benefit.

Open peril

Term used in property insurance to describe the breadth of coverage provided under an insurance policy form that insures against "any risk of loss" that is not specifically excluded.

Replacement Cost

The cost to repair or replace property using new materials of like kind and quality with no deduction for depreciation.

Physical Hazard

The material, structural, or operational features of a business that may create or increase the opportunity for injury or damage.

Aggregate limit

The maximum amount an insurer will pay for all covered losses during the covered policy period.

Per person

The maximum amount available for payment of bodily injury to a single person in an accident, regardless of the policy limit stated in the policy for bodily injury claims.

Underwriting

The process of selecting, classifying, and rating a risk for the purpose of issuing insurance coverage

Loss

The reduction, decrease, or disappearance of value of the person or property insured in a policy, by a peril insured against.

Statue of Limitations

Time limit in which an injured party can collect

Vicarious liability

Transfer liability to person with greater ability to pay parents being held liable for acts of children. Employers liable for act of employee.

When does pro rata liability apply?

When an insured has more than one policy covering a loss

In Insurance Contracts, when does acceptance usually occur?

When the insurer approves a prepaid application

Pure Risk

a risk that presents the chance of loss but no opportunity for gain

Coinsurance

a type of insurance in which the insured pays a share of the payment made against a claim. To get an insured to get insurance closer to value of the home.

Insurance Policy

a written contract between the insured and an insurance company that promises to pay for all or part of a loss

Theft

act of stealing and includes both burglary and robbery

Market value

amount that a willing buyer would pay a seller for property prior to loss. Takes value of land and location

Premium

an amount to be paid for an insurance policy.

Deposit premium

an estimated premium paid in advance at the time the policy is issued that may be adjusted based on actual exposures.

Moral Hazard

applicants who falsify information

Bodily injury

calculated by medical expenses, loss of wages, pain and suffering, disfigurement, mental anguish, loss of consortium.

Morale Hazard

carelessness or indifference to a loss because of the existence of insurance

Obsolescence

depreciation value due to being outdated

Mysterious disappearance

disappearance of property without knowledge of location, time, or how property was lost.

Proximate cause

event in which is considered natural and foreseeable cause of damage. Chain of events because of negligence. (accident-> BI-> Utility pole)

Negligence

failure to use reasonable care that a practical person would take under same circumstance.

Punitive damages

for of punishment for extreme behavior, negligence, willful intent

Burglary

forced entry in or out of the premises with felonious intent. o Policies covering peril of burglary will require visible signs of forced entry or exit.

Occurrence

includes loss that is cause by continuous or repeated exposure resulting in injury or damage.

Subrogation

insurance company right to seek damages from 3rd party after they have reimbursed for the loss.

Life insurance

insurance paid to named beneficiaries when the insured person dies

Vacancy

insured structure which h no one has been living or working or property stored within period of time required by state. (normally 60 days)

Deposit premium audit

insurer may audit insured's books and records to determine adequate premium. 3 years from expiration to audit.

Stated value

maximum amount insurance company is will pay in event of loss

Health Insurance

medical expenses or loss of income because of health

Contributory Negligence

must be completely free of fault to collect

Insurable interest

o Financial o Blood o Business Must be present at time of loss

Implied warranty

product is suitable for its intended purpose and should fits buyer's expectation

insurable risk

risk that meets an insurance company's criteria for insurance coverage

Intervening cause

something that breaks the chain of events

Split limits

the amounts of insurance for bodily injury liability and property damage liability are stated separately. (25 per single person 50 for BI for two or more people but no more than 25 to one person.)

Insurer (principle)

the company who issues an insurance policy

Hazard

the conditions or situation that increase probability of loss occurring.

Per occurrence

the maximum amount that can or will be paid by an insurer in the event of a single claim

Robbery

the unlawful taking of property from a person's immediate possession by force or intimidation

Assumption of risk

voluntarily and knowingly subjecting oneself to danger

Exposure

vulnerability to risk