Property and Casualty insurance exam

DICE

4 major parts to an insurance policy

HO-2

Broad Named Peril Coverage

HO-6

Condo insurance

HO-8

For older homes

Commercial Lines

Insurance for Business

Personal lines

Insurance for families and individuals

Direct Liability

Insured is the wrongdoer

Fair Access to Insurance Requirements

Insureds meeting underwriting criteria and declined twice by authorized insurers cannot be declined by the plan.

Coverage E

Personal Liability; covers claims for bodily injury to others

Coverage C

Personal Property; 10% of C or $1000 for stuff off premises

HO-4

Renters policy

occurence

an event that happens over time

alien

another country

Admitted Carrier

authorized insurer, issued a certificate of authority to transact business in the state.

Assessment

authorized insurers in the state are required to pay into the fund. The amount they pay is based upon their share of the market in texas

DP-1

basic policy, covers fire, lightning, explosion

Perils

causes a loss

Legal Duty Negligence

owe an obligation to act or not act

2 common methods of rate regulation

prior approval & file and use

strict liability

product defect claims

Domestic

same state

Physical Hazard

something you can physically look at

Binder

temporary contract of insurance. Pending issue of the policy, good for 30 days

proximate cause negligence

the breach of duty is the direct causer of the loss

nonadmitted carrier

unauthorized insurer, not regulated to get certificate of authority, can only transact surplus lines insurance

Flood Limits

250,000 structure, 100,000 contents

Board of Directors

5 members from insurers, 4 from the public

Declarations

6 P's policy number, parties, property description, policy term, policy limits, premium

hazard

Are not causes of loss but are things that increase the chance of a peril happening.

DP-2

Broad, damage by burglars, falling objects, accidental discharge, freezing of home systems, damage caused by ice, sleet, snow

Pure Risk

Chance of loss only (insurance only covers)

Speculative Risk

Chance of loss or gain

Elements of a legal contract

Competent parties, Agreement, Legal Purpose, consideration

HO-5

Comprehensive of all property including mysterious disapperance

Exclusions

Contains property and perils not covered.

Coverage F

Covers Med Pay to others up to 3 years

Property

Covers real property and personal property against damage or loss resulting from covered causes of loss called perils

Coverage D

Loss of use; Fair Rental Value, Additional living expenses

Coverage B

Other Structures: anything not attached to house, 10% of coverage A

Insuring Agreement

Promise to Pay, Perils, Liability

Texas Property and Casualty Insurance Guaranty Association

Protects claimants and policy holders in the event of insurer insolvency

Conditions

Rules of the Game, Insured's duties in a loss, Insurer's subrogation rights, mortgagees rights

Commissioner

Runs Tx Dept of Ins. Appointed by Governor, does not write laws

HO-3

Special and most common coverage

Dp-3

Special, all perils except ones specifically excluded

State regulation

State legislature passes the laws

Insurance

The transfer of risk through a legal contract

Risk

Uncertainty of financial loss

foreign

another state

actual loss negligence

another suffers a loss

law of large numbers

as the number of homogenous loss exposures increases, the more accurate claims can be predicted from the group

morale hazard

attitude of carelessness

open peril

cover all perils except those specifically excluded by the policy

Coverage A

covers dwelling and anything attached plus permanent fixtures

casualty

covers non-property losses (3rd Party)

Moral Hazard

dishonest tendencies

accident

event that is sudden and unexpected

breach of duty negligence

failure to comply with the duty

Direct Loss

immediate physical damage to property

contractual liability

insured assumes another's liability under a written agreement

Vicarious Liability

insured is responsible for actions of wrongdoer

Absolute Liability

liability w/o fault

Named Peril

lists the perils that are covered

indirect loss

loss that happens after the direct loss but due to the loss of use of the property. Also called consequential

proximate cause

the first cause in an unbroken chain of events