What I Need To Review
5 coverages of dwelling policies
A: Dwelling B: Other structures C: Personal property D: Fair Rental Value E: Additional Living Expenses
DP Basic form is payed on an
ACV basis
Limit of theft on a HO-8 form policy get valued with
ACV value
How does the Auto Medical Payments Coverage endorsement modify the auto policy?
Adds medical pay to a commercial auto policy
Which of the following other coverages is NOT included in a basic dwelling policy?
Breakage of glass
Coverage forms in commercial auto
Business auto Business auto PD Garage Motor carrier
Which of the following is NOT an indicator of a competent party?
Business profession
The supplementary payments section of the commercial general liability policy would cover
Court costs assessed against the insured in a suit
2 Liability coverage forms under HO policies
Coverage E: Personal Liability Coverage F: Medical Payments to Others
Farm fences (except field and pasture fences) are covered by which farm coverage form?
Coverage G- Other farm structures
Major coverages in a HO policy includes:
Coverages A-D
Garage liability parts
Covered autos and other than
Coverage B: Other Structures
Covers building & structures on the premises other than the dwelling set apart by clear space from the dwelling - standard coverage 10% of coverage A
Functional Replacement Cost
Damaged property is repaired or replaced with less expensive, but functionally equivalent, materials.
Additional coverages available in HO without additional premiums
Debri removal, lawns, plants, removal, fire department charge
Parts of Policy structure
Definitions, Declaration page, Insuring agreement, conditions, exclusions, endorsements
What is true in regarding the difference in condtitions (DIC) policies?
Each DIC policy is an individually written contract that contains provisions unique to the particular risk that it covers
What are some of the exclusions found in all three dwelling forms?
Earth movement Water Damage Power failure War Freezing of plumbing etc
What is not covered by any HO policy?
Earthquakes
Which of the following is covered by auto other than collision comprehensive coverage? A: B C D
Electrical equiptment
Name some commercial crime coverages
Employee Theft Forgery/ Alteration Inside and outside theft of money Computer fraud Fund transfer fund
Apparent Authority ("precieved authority)
The appearance or the assumption of authority based on the actions, words, or deeds of the principal or because of circumstances the principal created.
DP Broad form is payed on a
Replacement cost if maintained 80%
Under Coverage C of an HO-3 policy, what is the amount of insurance provided for personal property?
50% except HO-4-6
Roger owned a grocery store and had a Reporting Form Policy with a $100,000 limit for the store's inventory. The last report Roger submitted was during a slow period and showed a value of $50,000. The value increased to $75,000, and Roger failed to submit his next report when due. What is the maximum amount of coverage Roger has?
50,000
Assuming the insurer and the insured agree on the amount payable for a loss covered under a dwelling policy, how soon after receiving the proof of loss must the insurer pay the claim?
60 days
A licensed producer moving to PA may become licensed as a resident if the producer submits a completed application within how many days or residency in PA with proof of licensing with their other state?
90 days
Valued Contract
A contract that pays a stated amount in the event of a loss (disability insurance/life insurance).
Twisting
A form of misrepresentation in which an agent persuades an insured/owner to cancel, lapse, or switch policies, even when it's to the insured's disadvantage.
Unilateral Contract
A one-sided contract wherein one party makes a promise so as to induce a second party to do something.
Insurance contacts are aleatory in nature. What does that mean?
Unequal values are exchanged
Extended covered perils on a basic dwelling policy
WHARVES+VMM
When does acceptance of an offer to enter into a unilateral contract generally occur?
When an insurer submits a prepaid application
Intervening Cause
an event that comes between the initial act in a sequence and the end result
According to the law of agency, insurance producers represent
insurers
Comparative Negligence
liability for injuries resulting from negligent acts is shared by all parties who were negligent
How is the premium paid for the businessowners policy?
one divisible premium
A stock insurer is defined as an insurer
owned by its stockholders
HO-5 Comprehensive Form
provides open perils coverage ("all-risks coverage") on the dwelling, other structures and personal property.
Coverage D: Loss of Use
provides protection when the residence premises cannot be used because of a covered loss; includes additional living expenses, fair rental value, prohibited use
Federal law makes it illegal for any individual convicted of a crime involving dishonesty or breach of trust to work in the business of insurance affecting interstate commerce without
receiving consent from insurance regulatory
What are the types of compensatory damages?
special and general
Contributory Negligence
the injured party must be completely free of fault in order to collect
Law of Agency
the legal relationship formed between two people when one person agrees to perform work for another person.
Adverse Selection
the problem of incomplete information - of choosing alternatives without fully knowing the details of available options
For the purpose of insurance, risk is defined as
the uncertainty or chance of loss
robbery is
the unlawful taking of property from a person's immediate possession by force or intimidation
burglary
visible signs of forced entry with felonious intent
What is the maximum civil penalty per violation of the regulations of the insurance code that define acts that are subject to fines, or license suspension or revocation?
$5,000
Within how many days must a producer respond to an inquiry from the commisioner?
30 days
An insured owns a large dog. The first day he has to leave the dog home alone. $400 couch damage, $50 window curtain, $200 window pane destroyed.
$0 because you don't pay for damage caused by animals
How much does a dwelling policy cover for accounts, deeds, manuscripts, passports, etc..?
$1,500
How much does a dwelling policy cover for other trailors, jewerly, watches, etc..?
$1,500
How much does a dwelling policy cover for watercraft, funrnishings, equiptment, etc..?
$1,500
How much does a dwelling policy cover for firearms, gold/silver ware, tea sets, etc..?
$2,,500
The cost of restoring farm records is an additional coverage offered under a farm policy. How much will the policy pay to restore the records?
$2,000
How much does a dwelling policy cover for money, bank notes, etc...?
$200
A commercial property special form covers property in transit up to how much?
$5,000
HO - gravemarkers limit
$5,000
Coverage A: Dwelling
-protects the dwelling and any attachments -does not cover any damage to the land
Element of Negligence
1. Duty 2. Breach of Duty 3. Proximate Cause 4. Damages
5 basic individual rate-making approaches
1. Judgment rating 2. Schedule Rating 3. Experience Rating 4. Retrospective Rating 5. Merit Rating
An employee was injured during the course of their employment. According to the workers compensation laws in this state, the employee is required to report within how many days?
30 ddays
Once an insurer receives a claim, within how many days must the insurer provide claim forms to the insured?
15 days
What amount of coverage is provided on HO policies for watercraft?
1500
For how long after the death of the named insured must the basic property insurance continue?
180 days
Under coverage E- scheduled farm personal property, live stock that is not specifically insured is limited to a coverage of
2000 per head
What is the waiting period for transportation expenses coverage for a loss other than theft of a covered vehicle?
24 hrs
An insurer must notify the consumer in writing that an investigating consumer report has been requested, within how many days of the initial request?
3 days
Coverage is how long for newly acquired buildings?
30 days
Insured duties after a loss provision in a HO for proof signed is how many days?
30 days
DP ISO Form Structure
Agreement Definitions Deductibles Coverage and other coverges Perils Insured General exclusions Conditions
What are the 4 required elements of an insurance contract?
Agreement (offer & acceptance) Consideration Competence Legal purpose
All of the following qualify as an insured contract as defined in commercial auto policies EXCEPT
Agreement for demolition near railroad
An insurer who transacts business in this state but whose articles of incorporation are registered in Canada is considered to be what type of insurer?
Alien
A producer sold an insurance policy. Subsequentially, his license was suspended. In this case how much of the commission will the producer receive?
All
Inland Marine Coverage
Also known as a floater endorsement. Insure special items, such as computers, light and sound equipment, and camera equipment at an agreed amount.
Warranty in Insurance
An absolutely true statement upon which the validity of the insurance policy depends.
Which of the following perils is not covered by DP-2? A B C D
Animals
The extended non-owned coverage provides protection to
Anyone who is given permission to drive by the named insured
Because an agent is using stationery with the logo of an insurance company, applicants for insurance assume that the agent is authorized to transact on behalf of that insurer. What type of agent authority does this describe?
Apparent
How much is the premium for the dwelling under construction endorsement under the dwelling policy?
Average amount
What two items are not included in a dwelling policy?
Contents and liability
Which of the following best describes liberalization clause in a poliucy?
Changes adopted by the insurer that broaden coverage automatically apply to the policy at no additional premium
What authority is authorized to issue a temporary license?
Commissioner
General Compensatory Damages
Compensate for non-monetary aspects of harm suffered, such as pain and suffering. Not available for businesses
Which dwelling coverage form(s) will pay for the replacement cost of a dwelling?
DP-2 & 3
What method or premium computation relates an employer's losses, payroll, and premiums to the rating bureau's classification of operations
Experience modification factor
The authority granted to an agent's contract is referred to as
Expressed Authority
3 elements of insurable risk
Financial, Blood, Business
Which homeowners policy insures both buildings and personal property on an open peril basis?
HO-3
What does a property insurance policy that insures a commercial building on a replacement cost basis that includes ordinance of law coverage endorsement NOT do?
Have ordinance with which the insured was required to comply prior to loss
Watercraft Endorsement
Homeowner's policy endorsement that provides coverages for BI or PD arising out of the use of watercraft excluding rented
Scheduled Personal Property Endorsement
Homeowner's policy endorsement that provides open peril, scheduled coverage for 9 optional classes of property on a valued basis
pro rata share
If a loss occurs that is covered by more than 1 insurance policy that was purchased by the insured, then each policy pays a portion of the loss that is proportional to the amount of that policy over the total amount of all policies for the loss
When would livestock not be insured/
If it involves injury from a vehicle
What can a commissioner not do?
Imprison the licensee
When an insured has multiple autos insured, what effect does the stacking on UM and UIM coverage have in terms of benefits available?
Increases the limit of BI available to a total equal to the sum of the bodily injury available on all autos insured
Mutual Companies
Insurance organizations that have no capital stock, but are owned by the policyholders.
Section 2 of HO policy
Liability and medical payments. paid to others only
Ocean Marine Insurance
Insurance that covers vessels and their cargoes, including various vessel-related liability exposures.
Coverage E: Personal Liability
Insurance that protects an insured when a claim or suit for damages is brought because of bodily injury or property damage allegedly caused by an insured's negligence. Base coverage is 100,000 per occurrence
If more than one person has an insurable interest in the property covered under a dwelling policy
Insurer will be liable for only the insured's interest in the damage property
Reinsurance
Insurers deal with catastrophic loss through reinsurance, which is defined as a contractual arrangement that transfers exposure from one insurer to another insurer.
In a dwelling policy what is true regarding personal liability coverage?
It must be added as a supplement or written as a separate policy
5 characteristics of an ideally insurable risk
Loss must be 1) due to chance, 2) definite and measurable, 3) statistically predictable, 4) not catastrophic, and 5) Coverage cannot be mandatory.
Bodily Injury and Property Damage Liability
Mandatory coverage that provides payment for injuries or damages caused through your negligence to another person or another person's property.
A business uses it's own trucks to deliver their own products to the customer. Which commercial auto coverage should the business buy to insure the truck?
Motor carrier coverage
When is a hired and nonowned auto liability endorsement available in a businessowners policy (BOP)?
Only if the insured does not have commercial auto coverage
Risk Retention
Planned assumption of risk by an insured through the use of deductibles, co-payments, or self-insurance.
Commercial Package Policy (CPP)
Policy that covers two or more lines of business by combining ISO's commercial lines coverage parts.
Who might recieve dividends from a mutual insurer?
Policyholders
The defendant being released on a surety bond is the
Principal
What is an insurers consideration?
Promise to pay a claim related to losses
H0-3 special form
Provides protection for dwelling and other structures on an open peril basis and personal property is covered only for a broad peril
Non-concurrency
Refers to other insurance written on the same risk, but not on the same coverage basis.
What method do insurers use to protect themselves against catastrophic losses?
Reinsurance
Who is the principal?
Seller/insurer who lists with the broker
Insurable Interest and Limit of Liability
Specifies that the insurer will not be responsible for an amount which is greater than the financial interest of an insured person or more that the limit of liability stated on the Declarations Page
insurance rate
The amount charged for a certain value of insurance
What is the maximum amount of protection available to insureds under the PA P&C Insurance guaranty association?
The amount of loss up to the amount of coverage in the original policy but not to exceed $300,00 per claimant
UIM coverage will pay the difference between which 2 limits?
The insureds UIM limits & the at fault BI drivers insurance
an insured is at fault in an auto accident, damaging the insured's own car. the damage to the car is covered by a. the insured's comprehensive coverage b. uninsured motorist coverage c. the insured's collision coverage d. the other driver's liability coverage
The insureds collision coverage
Strict Liability
The legal responsibility for damage or injury even if you are not negligent
Coverage F: Medical Payments to Others
The policy will pay necessary medical expenses that are incurred or medically ascertained within 3 years from the date of an accident causing bodily injury. Legal liability, negligence, and fault do not trigger this coverage. Medical payments to others is a goodwill coverage and designed to discourage the submission of liability claims.
Moral vs. Morale Hazard
The primary difference between a 'moral' and 'morale' hazard is the intention of the action taken, meaning that an intended action, such as texting while driving, is considered a moral hazard, whereas an unintended action, such as failing to stop at a red light, is considered a morale hazard.
supply bonds
The relationship between the interest rate and the quantity of bonds supplied in an economy, all else held constant.
Who determines minimum and maximum limits of the FAIR plan act/
The state
embezzlement
a criminal act having no standard for director or officer policy
Who acts on behalf of the principal?
agent
How is professional liability policy written
claims made
HO-4 (contents broad form)
covers a tenant's personal property on a named perils basis
HO-6 (unit owners form)
covers personal property on a named perils basis. A minimum of $5,000 of insurance is also provided on the condominium unit that covers improvements and additions
HO-2 (broad form)
covers the dwelling, other structures, and personal property on a named perils basis
Coverage C: Personal Property
covers the insured's personal property that is at the described location and is usual to the dwelling occupancy.