P & C terms

-property damage -bodily injury

a tort may result in 2 forms of injury to another

Actually loss or damage

actual injury or damage must have been suffered by the party seeking recovery

stated amount

amount of insurance scheduled in a property policy that is not subject to any coinsurance requirements in the event of a covered loss

insured

anyone who is covered under the policy, whether named or not

Hazards

are conditions or situations that increase the probability of an insured loss occurring.

Special damages

are specific out-of-pocket expenses for medical, miscellaneous expenses, and loss of wages.

physical hazard

are those arising from the material, structural, or operational features of the risk, apart from the persons owning or managing it

frame

buildings constructed of combustible materials, or with noncombustible or slow burning walls and combustible floors and roof

noncombustible

buildings constructed of noncombustible materials (materials that will not ignite and burn when subjected to fire)

modified fire resistive

buildings constructed with masonry and/or other materials with fire resistance rating between 1 hour and 2 hours

fire-resistive

buildings constructed with masonry and/or other materials with fire resistance rating of not less than 2 hours

joint masonry

buildings constructed with masonry or fire resistive walls and combustible floors and roof

masonry noncombustible

buildings constructed with masonry or fire resistive walls and noncombustible or slow burning floors and roof

definitions

clarifies terms used in the policy

General damages

compensate the injured person for pain and suffering, mental anguish, disfigurement, and other similar types of losses

Obsolescence

depreciation in the value of a property due to becoming outdated

-protect the damaged property from further damage -prepare an inventory of damaged property -cooperate with insurer in settling the loss -notify the police in the case of a theft loss -submit to the insurer a signed sworn proof of loss after being requested to do so within a certain time

duties of the name insured in the event of a loss

Insuring Agreement

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

Deposit Premium

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

-declarations -definitions -insuring agreement -additional coverage -conditions -endorsements -exclusions and policy limits

every property and casualty policy is comprised of the following major components

-declarations -definitions -insuring agreement -additional coverage -conditions -endorsements -exclusions and policy limits

every property and casualty policy is comprised of the following major components

liability or casualty insurance

exist to pay damages to a third party for reason such as bodily injury, property damage , personal injury, or advertising injury

appraisal

if there is a disagreement between in the insured and the insurer on the value of property loss, wither party can make a written demand for a ----------------------

Fair Credit Reporting Act

protects consumers against the circulation of inaccurate or obsolete personal financial information, and to endure that consumer reporting agencies are fair and equitable in their treatment of consumers

-financial (monetary interest) -blood(relative) and -business( business partner)

The 3 elements of insurable risk are

assignment

is the transfer of a legal right or interest in an insurance policy

Risk

is the uncertainty or chance of a loss occurring

occurrence

losses caused by continuous or repeated exposure to conditions resulting in injury to person or damage to property that is neither intended or expected

named insured

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

actual cash value

method of valuation reinforces the principle of indemnity because it recognizes the reduction of value of property as it ages and becomes subject to wear and tear. ( current replacement cost - deprecation )

market value

method of valuing a loss based upon the amount a willing buyer would pay to a willing seller for the property prior to the loss

bodily injury

more difficult to determine the loss monetarily

legal duty

must be show that the defendant had a legal duty to act or not act

Strict Liability

often applied to product liability cases

exclusions and policy limits

perils that are not insured against and what person are not insured . maximum amounts an insured may collect or is protected under the terms of the policy

endorsements

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

terrorism risk insurance act

-temporary federal program -intended to share risk of loss from terrorist attacks with insurers -insurer must meet deductibles and retentions before the government reimbursement

-special -general

2 classes of compensatory damages that may be awarded

-legal duty -standard of care -unbroken chain of events (proximate cause) -actual loss or damage

4 primary elements of Negligence

Deposit premium audit

A condition that allows the insurer to audit the insured's books or records at the end of the policy term to make sure adequate premium has been collected for the exposure.

certificate of insurance

A legal document that indicates that an insurance policy has been issued, and that states both the amounts and types of insurance provided.

agreed value

A property policy with a provision agreed upon by the insurer and insured as to the amount of insurance that represents a fair valuation for the property at the time the insurance is written and suspend any coinsurance or other contribution clauses in the policy

binder

A temporary contract of insurance issued by an insurer or its agent that places insurance in effect prior to the policy being issued

warranty

An absolutely true statement upon which the validity of the insurance policy depends.

additional insureds

Individuals or business that are not named as insured on the declaration page, but are protected by the policy, usually in regard to a specific interest.

concealment

Intentional withholding of information of a material fact that is crucial in making a decision.

Speculative Risk

Involves the opportunity for either loss or gain. An example of speculative risk is gambling. These types of risks are not insurable.

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.

-physical -moral -morale

There are 3 different types of Hazards

Insurance Policy

a contract between a policy owner(and/or insured) and an insurance company which agrees to pay the insured or the beneficiary for loss caused by specific events

implied warranty

a legal term meaning that a product is suitable for its intended purpose and that it fits an ordinary buyers expectation

third party

a person(or group) other than the two involved in an insurance contract ( insured and insurer )

appraisal

a professional assessment to determine extent of damage

personal injury liability

includes injury to the character of another person cause by libel, slander, false arrest, invasion of privacy and other acts

conditions

indicates the general rules or procedures that the insurer and insured agreed to

loss valuation

is a factor in determine the premium charged and the amount of insurance required

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

specific insurance

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

indemnity

is a provision in an insurance policy that states that in the event of a loss, an insured or a beneficiary is permitted to collect only to the extend of the financial loss, and is not allowed to gain financially because of the existence of an insurance contract

blanket insurance

is 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

Material Misrepresentation

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

accident

is a sudden, unplanned and unexpected event, not under the control of the insured, resulting in injuries or damage that is neither expected nor intended

Unbroken Chain of Events (Proximate cause)

is an act or event considered a natural and reasonably foreseeable cause of the damage or event that occurs and damages property or injures plaintiff

attractive nuisance

is an exception to the rule that an individual owes no duty of care to someone trespassing on his/her property

replacement cost

is defined as the cost to replace damaged property with like kind and quality at todays price, without and deduction or deprecation

absolute liability

is imposed on defendants engaged in hazardous activities, such as harboring wild animals, using explosives, etc. The injured party does not need to prove negligence.

property damage liability

is legal liability arising from physical damage to tangible property of others cause by the negligence of an insured

bodily injury liability

is legal liability arising from physical trauma to a person or death arising fro the negligent or purposeful act and omission by an insured

salvage value

is the estimated value an asset will realize upon its sale at the end of its useful life.

negligence

is the failure to use the care that a reasonable, prudent person would have taken under the same or similar circumstances

Subrogation

is the insurers legal right to seek damages from third parties, after it has reimbursed the insured the insured for the loss

cancellation

is the termination of an in force insurance policy, by either the insured or the insurer, prior to the expiration date shown in the policy

nonrenewal

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

additional coverage

provides an additional amount of coverage for specific loss expense, at no additional premium

other insurance

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

Depreciation

reduction in value, particularly due to wear and tear

moral hazard

refer to those applicants that may lie on an application for insurance,or in the past, have submitted fraudulent claims against an insurer

morale hazard

refers to an increase in the the hazard present by a risk, arising from the insured's indifference to loss because of the existence of insurance (i.e. I'm not going to fix this, if it breaks my insurance will cover it

Pure risk

refers to situations that can only result in a loss or no change

property damage (which is measured by the value of the property damaged or destroyed and the loss if yes if that asset

simple to determine, it is measured by the the actual monetary loss the injured party suffered

representations

statements believed to be true to the best of ones knowledge, but they are not guaranteed to be true

Law of Large Numbers

states that the larger the number of people with a similar exposure to loss, the more predictable actual losses will be

Exposure

susceptibility to risk

proof of loss

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

binder

temporary agreement issued by an agent or insurer proving temporary coverage until a policy can be issued

Insurer(principal)

the company who issues an insurance policy

standard of care

the degree of care that a reasonably prudent person should exercise under the same or similar circumstances

First Named Insured

the individual whose name appears first on the policy declaration

Premium

the money paid the insurance company for the insurance policy

policy owner

the person entitled to exercise the rights and privileges in the policy

earned premium

the portion of premium paid in advance the now below to the insurer because it applies to the elapsed part of the policy

Underwriting

the process of reviewing applications for insurance to determine eligibility for coverage

liberalization

the removal or loosening of restrictions

Vicarious liability

transfer the liability from one person to another person who would be probably have a greater ability to pay

loss settlement

under a professional liability policy, the insurer must gain insureds consent before settling claim

Misrepresentation

untrue statements on the application,which could void the contract

arbitration

utilized when insurer and insured do not agree on how to settle claim,

-pure -speculative

what are the 2 types of risk

Punitive damages

which is a form of punishment for extreme outrageous behavior, gross negligence or willful intent