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.