Insurance Exam Chapter 5

Dwelling Form Coverage B Personal Property

Covers direct physical loss as a result of flooding

Dwelling Form Coverage C Other Structures

Debris removal Mitigation Property Removed to Safety

Mail Coverage Form

Form that covers a financial institution against loss of securities and other negotiable instruments while in transit through specified types of mail.

National Flood Insurance Program (NFIP)

Part of Federal Emergency Management Agency (FEMA) Encourages and allows communities to adopt and enforce floodplain management ordinances to reduce future flood damage. Makes Federally backed flood insurance available to homeowners, renters, and business owners in these communities. Also identifies and maps floodplains to increase awareness and improve plans

Temporary Partial Disability Benefits (TPD)

Pay 80% of the difference between 80% of pre- and post-injury AWW Can't exceed 66 2/3 % of AWW at time of accident Time limit: 104 weeks

Workers' Compensation Policy: Medical Benefits

Pay for all medical expenses incurred because of a work-related injury: Doctor visits Surgery Emergency room visits X-rays Medicine Necessary medical equipment (e.g. crutches, leg braces) Physical therapy

Permanent Partial Impairment (PPI)

Permanent Partial Impairment Loss of function of a member or members of the body, or of the body as a whole Permanent Partial Impairment Benefits For permanent disability due to work-related injury Based on a patient's impairment rating (IR) or PPI rating Awarded after employee reaches MMI Impairment Rating (IR)/PPI rating: a way of determining the degree of permanent disability after a patient reaches Maximum Medical Improvement

Employer Liability

Suits by employees claiming negligence Claims by others for liability of employees Claims by relatives of injured employees

Condition of Cargo

The cargo owner is obligated to guarantee that the cargo is sound and is properly packed

Cost and Freight (C&F)

The price includes the cost of the goods and freight, but the buyer must pay for insurance separately

Competitive

The state has a fund in direct competition with private insurers, employees choose which they prefer

Monopolistic

The state provides WC coverage

Freight Insurance

Type of ocean marine insurance that protects the insured against the loss of shipping costs

Lagality

Voyage must be legal

Capitation

When an insurer pays a healthcare provider upfront and they agree to treat all members of that insurer

Compulsory

Workers comp is required

Review: Employee Benefits

Workers' Compensation Employee Benefits Disability and Impairment Benefits Medical Benefits Death Benefits Disability and Impairment Benefits Temporary Total Disability Permanent Total Disability Temporary Partial Disability Permanent Partial Impairment PPI is based on Impairment Rating: a doctor's assessment of the extent of a patient's permanent impairment

Review: WC Terms and Concepts

Workers' Compensation covers an employee's medical bills and lost wages following a work-related injury "Exclusive Remedy" for workplace injuries, protecting employers from lawsuits Average Weekly Wage (AWW) The employee's average weekly income in the 13 weeks leading up to the injury Maximum Medical Improvement (MMI) In cases of permanent injury, the point at which doctors determine that a worker has made as much medical progress as possible

War, Hi-Jacking and Other Perils Coverage

Adds by endorsement coverage for perils typically excluded

Sue and Labor Clause

Clause that covers the cost of reasonable measures that the insured is required to take to protect property from damage at the time of loss.

Cargo Coverage

Coverage available through an Ocean Marine policy. Cargo Coverage pays the cargo owner if the cargo is damaged while being shipped over water.

Out of State Coverage

Employer must let insurer know about out of state work State where work is taking place must be listed on policy

NFIP Standard Flood Insurance Policy (SFIP)

Federal Insurance Not subject to local or state courts Not subject to state departments of insurance

Federal Programs

Federal programs can provide coverage outside of state WC programs. Sometimes state WC doesn't apply, because the workers are protected under a different law. These workers are usually protected by one of several federal laws or workers' comp programs

Umbrella Policies

High limits of liability & broad coverage for a very reasonable premium charge

Insured's Duties

Immediately notify insurer Separate damaged property Submit NFIP Proof of Loss within 60 days

Dwelling Form Coverage D Increased Cost of Compliance

Increased Cost of Compliance

Cost, Insurance, Freight (CIF)

The cost of the goods, insurance, and freight are included in the price quoted

Hull Coverage

Under an Ocean Marine policy Hull coverage would provide a ship owner coverage for damage to a ship or vessel.

Dwelling Form

1- to 4-family dwellings 1- to 4-family condo units Residential contents

Equipment Floaters

A category of inland marine policies covering various types of equipment, wherever it may be located in the policy period.

General Average

A partial loss sustained voluntarily, but done so to save a vessel or cargo from a total loss.

Accident

An unusual, sudden, and unexpected event or result

Particular Loss

Appropriates the loss to a particular company rather than each cargo owner sharing the loss

Dwelling Form Coverage A

1-4 family dwellings "Attached additions" connected to dwelling by rigid exterior wall solid load bearing wall stairway roof Detached garages up to 10% of Coverage A limit Construction materials Buildings

Workers' Compensation Policy: Death Benefits

66 2/3% of the employee's Average Weekly Wage (AWW) Paid upon employee's death from injury arising out of or in the course of employment Maximum of $150,000 for all claims combined Benefit split between dependents Funeral expenses up to $7,500

Admitted Aircraft Liability Coverage

A coverage sometimes written in conjunction with Aircraft Passenger Liability which can provide reimbursement for death or dismemberment without requiring legal action.

Permanent total disability (PTD)

A disability caused by a work-related injury or disease that renders an injured employee unable to ever return to gainful employment. Kick in after 7 days Pay 66 2/3% of employee's AWW No time limit PTD benefits are only paid for catastrophic, permanent injuries: Spinal cord injury involving severe paralysis Amputation of arm, hand, foot, leg Severe brain or closed-head injury Second or third degree burns to 25 percent of body or third degree to 5 percent of face and hands Total blindness or industrial blindness

Temporary total disability (TTD)

A disability caused by a work-related injury or disease that temporarily renders an injured worker unable to perform any job duties for a period of time. When employee has been out of work for 7 days Pays for first 7 days only if disability lasts at least 3 weeks Benefits expire on the earliest of the following: Employee is able to return to work Employee reaches Maximum Medical Improvement (MMI) 104 weeks Permanent Partial Impairment benefits can be considered after TTD benefits end if disability remains.

Workers Compensation

A form of insurance paid by the employer providing cash benefits to workers injured or disabled in the course of employment. Covers an employee's medical bills and lost wages following a work-related injury Purchased by the employer Primary coverage: pays before other policies "Exclusive Remedy": keeps employee from suing employer for covered injuries "No-fault" Policy: applies no matter who is at fault for the injury

Excess Liability

A liability contract that provides additional dollar amounts of coverage over and above the limits of the underlying coverages. Unlike umbrellas, this contract does not provide any primary coverage.

Actual Total Loss

A loss in which the subject property is totally lost or is so badly damaged that it has no value left

Constructive Total Loss

A loss that occurs when the cost to repair damaged property plus its remaining salvage value equals or exceeds the property's pre-loss value.

Flood Insurance Rate Map (FIRM)

A map that shows exact boundaries for special flood hazard areas, the various flood zones, and base flood elevations.

Coinsurance Payment

A percentage of medical expenses that the insured person must pay over and above the deductible

Bailee

A person who receives personal property from another as a bailment.

Network Provider

A physician or another healthcare professional who is a member of a managed care network

Jones Act ("Merchant Marine Act")

Allows injured seamen to sue before a jury. Insurers usually require Maritime Coverage endorsement under liability section to protect employer. Some employers choose Voluntary Compensation Maritime endorsement to provide workers' comp benefits without requiring a lawsuit

Copayment

Amount a policyholder must pay each time they access the benefits of a policy

Self-Insured Retention (SIR)

An amount that is deducted from claims that are payable under an umbrella liability policy and that are not covered at all by any primary policy.

Motor Truck Cargo

An uncontrolled inland marine coverage form that protects the carrier of shipped goods while the shipment is in transit

Annual Transit

An uncontrolled inland marine form that covers loss of goods in transit. It applies to all of the insured's shipments during the year.

Uncontrolled Line Floaters

As opposed to controlled line floaters, which are standard forms, uncontrolled line floaters are nonstandard forms tailored to meet the needs of the insured. They are not filed with state departments of insurance. They cover movable property and are typically used in Inland Marine insurance

Utmost Good Faith Contract

Both parties have a reasonable expectation that they can rely on the representations & statements made. Requires that one speak up & not remain silent if they have info that is relevant. Failure to do so could entitle the other party to void the contract.

Trip Transit

Covers a single shipment-one time, one way

Federal Employers Liability Act (FELA)

Covers interstate railroad workers and their families. FELA provisions: Railroad workers who are not covered by state WC laws may sue employers Worker must show legal negligence of employer Awards are usually much greater than WC benefits.

Mechanical Breakdown Insurance (MBI)

Covers repairs to all mechanical parts of the car, protecting you from expensive repair bills.

Stand Alone Excess Liability

Covers what base policy covers, but sets own exclusions and limitations to coverage

Adjusters Duties

Determine if there was a general condition of flooding Determine how the water entered the building Check for exterior and interior waterlines Investigate and document all other evidence of loss Confirm that any previous flood damage has been repaired

Employer Classification

Employee Rate Classifications: High-risk Low-risk Factors that Affect Premiums: Size of payroll Risk level of work done Location, safety records, etc

Workers' Compensation Review

Employer Liability: Protects the employer in situations where suit can be brought for workplace injuries or negligence. Three WC Options: Purchase Workers' Comp Self-Insure Join a Self-Insurance Group Federal Programs Federal Employees Compensation Act (FECA): WC benefits for civilian federal employees Federal Employers Liability Act (FELA): Covers interstate railroad workers and their families Jones Act ("Merchant Marine Act"): Allows injured seamen to sue before a jury Longshore and Harbor Workers' Compensation Act: For employees working on navigable waters or in navigation-related industries Black Lung Benefits Act: For coal miners totally disabled from black lung disease

Free of Particular Average Clause

Excludes coverage for all partial or accidental losses, except those caused by stranding, sinking, burning, or collision. Acts like a deductible: insurer is only liable for losses that exceed a set percentage of the value. Percentage is usually 10%.

Follow Form Excess Policy

Follow form liability policies provide the exact coverages and provisions as the underlying policy. There are times when the policyholder needs additional liability protection and is ineligible for an umbrella. In these cases, the insurance agent may write an excess liability policy that is often follow form. Follow form means that if the underlying policy would exclude coverage, the excess liability policy would exclude coverage also. The coverage, exclusions, insureds and other provisions are exactly the same, only the dollar amount of coverage is different.

Group Health Insurance

Health insurance consisting of contracts written between a group, (employer, union, etc.) and the health care provider

Business Floater

Inland marine coverage form designed for items that are excluded from most property contracts, such as accounts receivable records, manuscripts, blueprints, etc.

Flood Insurance

Insurance that compensates for physical property damage resulting from flooding. It is required for properties located in federally designated flood areas.

Inland Marine Insurance

Insurance that covers many different classes of property that typically involve an element of transportation.

Protection and indemnity (P&I) insurance

Insurance that covers shipowners against various liability claims due to operating the insured vessel.

Ocean Marine Insurance

Insurance that covers vessels and their cargoes, including various vessel-related liability exposures.

Aviation Insurance

Insurance, which provides both liability and physical damage (also called Aircraft Hull insurance) coverage for aircraft. Liability coverage is available separately for hangar keepers and airport owners or operators

Residential Condominium Building Association Policy Form (RCBAP)

Insures residential condo associations

Employer Liability Exclusions

Liability assumed under contract Damages for employment that is against the law Injuries to employees while knowingly working in violation of the law Obligations under any compensation law Injuries intentionally caused or aggravated by insured Injuries outside US or Canada Claims arising from unlawful discrimination, coercion, or discharge Obligations under federal acts Penalties imposed for breaking state or federal law

Loss Payment

Losses will be paid within 60 days of receiving proof of loss and coming to an agreement with the insured as to the amount payable.

Elective

May opt out of workers comp

Eligible Property

Movable, in transit, instruments used for communication or transportation

Personal Articles Floater (PAF)

Personal Inland Marine insurance that provides All-Risk coverage on nine optional classes of personal property: jewelry, furs, cameras, musical instruments, silverware, golf equipment, fine arts, stamp collections and coin collections.

Injury

Personal injury or death caused by accident Infection or disease naturally arising from accident

Transportation Forms

Protect against losses occurring during shipment or transport of goods. Includes travel by truck, train, ship, mail, or plane

Airport Liability Coverage

Protection for loss associated with bodily injury and property damage associated with the operations of an airport.

Cargo Liability Coverage

Protects against legal liability for loss or damage to cargo or baggage. May be part of an Ocean Marine or Aviation Policy.

Longshore and Harbor Workers' Compensation Act

Protects employees working on navigable waters or on shore in navigation-related industries Covered employees get medical expenses and 2/3 of weekly salary while injury continues Injury includes occupation-related illness Employers have two options: Buy insurance from licensed insurer Self-insure with permission of U.S. Dept. of Labor

Employer's Duties

Provide necessary medical care for injured employee Report injury to insurer and cooperate with insurer's investigations Utmost integrity is expected of all parties, including employer

Federal Employees Compensation Act (FECA)

Provides WC benefits for civilian federal employees Pays medical expenses, plus 2/3 of normal monthly salary Additional payments available for permanent injuries or to dependents Includes compensation for survivors in the event of death

Health Insurance

Provides money to pay for health care for illness, injury, or, in some cases, preventive care

Black Lung Benefits Act

Provides monthly payments and medical treatments to coal miners who become totally disabled from black lung disease or pneumoconiosis. Employers must secure funding for benefits one of two ways: Qualify as self-insured Buy insurance from state or commercial insurer Payments must begin within 30 days of the determination of liability

National Council on Compensation Insurance (NCII)

Rating bureau that develops the rules for setting workers' compensation premiums that are used by most states

Reduction and Reformation

Reduces flood coverage limits if the insureds premium was too low Insurer gives policyholder a chance to give more complete information Insurer uses this info to calculate a more accurate premium

Exclusions

Self-inflicted Caused by intoxication Inflicted by a third party for personal reasons Mental injuries caused by excitement or fright only Aggravation of venereal disease by accident Diseases caused by drug or alcohol use Mental illness causing fear or dislike of a person or group of people WC benefits will be reduced by 25% if injured person did not follow required safety measures.

Seaworthiness

Ship's ability to operate in all kinds of weather. Competent captain and crew

Out of Pocket Expenses

Specific amount of money that you pay when insurance only covers a portion of costs

Controlled Line Floaters

Standardized forms provided by a bureau and filed with the state. These forms disclose the rates being charged and can be used as both general property floaters (such as "personal effects" or "personal property") and specific property floaters that break down covered property by type.

Average Weekly Wage (AWW)

The average amount of income that an employee earns each week while able to perform normal job duties. When an employee is injured on the job, his workers' compensation income benefits will depend on his AWW before the injury. Based on the employee's Average Weekly Wage Cannot exceed 2/3 of Statewide Average Weekly Wage Maximum Benefit Amounts: Permanent Total Disability: 66 2/3% of AWW, no time limit Temporary Total Disability: 66 2/3% of AWW, 104 weeks Permanent Partial Impairment: 75% of TTD benefit, according to rating schedule Temporary Partial Disability: wage loss formula, 104 weeks

Employer Benefits

The employer's only responsibility is to pay premiums or, in the case of self-insurance, pay benefits to an injured employee

Maximum Medical Improvement (MMI)

The point at which the health or medical condition of a worker who has sustained a work-related injury or illness has stabilized and further improvements are considered unlikely despite continued care and treatment. The treating physician at this time usually explains that no other reasonable treatment can be done to help the worker improve.

Ocean Marine Premiums

The policyholder has 45 days to pay the premium in full or develop a payment option that is acceptable to the insured and the insurer. Upon cancellation, the premium will be paid on a pro-rata basis

Free on Board (FOB)

The price for goods includes delivery at the seller's expense to a specified point and no further.

No Deviation in Voyage

The ship must sail the course that was filed with the insurer at the time the policy was underwritten. Exceptions that don't void coverage in the event a loss include a deviation in voyage to avoid bad weather, make necessary repairs, save a human life, or obtain medical care.

General Property Form

The version of the National Flood Insurance Program (NFIP) Standard Flood Insurance Policy that is used for insuring commercial buildings and contents.

Hangarkeepers Liability Coverage

This is a form of bailee insurance that covers the insured's liability for damage to aircraft stored for safekeeping or repair.