Property and casualty
most binders will be issued for no longer than:
60 days
Speculative risk
A chance of loss, no loss, or POSSIBLE gain.
Which person is not typically covered by a policy, but can be included in coverage by endorsement when they have insurable interest in property?
ADDITIONAL INSURED
Foreign Insurer
An insurer not organized under the laws of this state, but in one of the other states or jurisdictions within the United States,
Alien Insurer
An insurer organized under the laws of any jurisdiction outside of the United States, whether or not it is admitted to do business in this state.
Domestic Insurer
An insurer organized under the laws of this state, whether or not it is admitted to do business in this state.
Waiver or Change
Any waiver of rights or changes to the policy must be made in writing by the insurer and attached to the policy.
PERIL
CAUSE OF LOSS
Liberalization, Subrogation, and Other Insurance are all found in which section of a property or casualty insurance policy?
Conditions
excess insurance
Coverage for certain perils or causes of loss that is provided only after the limits of a primary insurance policy are exhausted
DICE
DECLARATIONS INSURING AGREEMENT CONDITIONS EXCLUSIONS
Which of the following may broaden the coverage found in an insurance policy?
Endorsements
Who is responsible for paying premiums, and will receive any premiums that have to be returned?
First named insured
The Conditions section of a liability policy would include which of the following pieces of information?
If another insurance policy also applies to a covered loss, the insurer will pay its pro rata share
short-rate cancellation.
If the insured cancels the policy, a financial penalty is put in place, and the insurer retains a portion of the unearned premium to cover administrative costs
Arbitration
If the insurer and the insured disagree about the amount payable for a claim or whether a claim is payable at all this settles the dispute
nonconcurrent
If two or more policies cover the same exposures but do not have the same policy periods
Immaterial Representation
Immaterial representations do not affect the acceptance or rating of the risk.
An individual faces the risk of economic loss in the event of property damage because of which of the following insurance concepts? A Right of recovery
Insurable interest
Reasonable Expectations Doctrine states that the insured:
Is entitled to coverage that a reasonable and prudent buyer can expect, even if it goes against the strict terms of the policy
Insurer FGH decides to increase the first aid benefits for one of its insureds for no extra premium. What is the name of the condition that automatically applies this broader coverage without additional premium to all policies currently in effect by the same insurer?
LIBERALIZATION
LEAD
LIMITS ENDORSEMENTS ADD COVERAGES DEFINITIONS
Generally, liability policies include all of the following in its coverage territory, except:
MEXICO
DECLARATIONS
NAME, DESCRIPTION OF INSURED PROPERTY OR BUSINESS, MAILING ADDRESS, THE POLICY TERM, ANNUAL PREMIUM, AND DEDUCTIBLE. DOES NOT INCLUDE PERILS COVERED
Additional Coverages
NO ADDED PREMIUM
The termination of an insurance policy at the expiration of its term is known as:
Nonrenewal
risk
Risk is a condition where there is a chance, likelihood, or probability of a potential loss
Contribution by Equal Shares
Some policies require the insurers to share the loss by contributing equal shares until each insurer has paid its limit of insurance.
Endorsements may be added to an insurance policy to do any of the following, except:
Specify the policy's annual premium
Material vs. Immaterial Representations
Statements that impact the acceptance of an insurable risk are considered to be material.
Which insurance policy condition prevents the insured from collecting twice for the same loss? A Liberalization
Subrogation
All of the following statements regarding the structure of a property policy are correct, except:
THINK DICE Additional Coverages not INCLUDED
certificate of insurance includes what info?
The effective date, names of the insurer and named insured, and the limits of liability
Pro Rata Liability
The policies share losses by the ratio of applicable limits of insurance each insurer writes compared to the total of all limits available for the loss.
When an insurance policy is not clear, the court will usually interpret in favor of the insured because of which characteristic?
The policy is a contract of adhesion
An insured should not profit from an insurance transaction. This describes which of the following principles?
The principle of indemnity
The Other Insurance condition on a casualty insurance policy specifies:
The process of paying claims when the insured has two policies apply to the same loss
Definitions
The purpose of this section is to clarify the intent of the insurer and to avoid coverage disputes with respect to the extent of coverage provided by the policy.
concurrent policies
Two or more policies covering the same exposures for the same policy period and with the same coverage triggers
Declarations
WHO, WHAT, WHERE, WHEN, HOW MUCH
Which of the following constitutes the acceptance of an offer?
When an insurer issues a binder
pro rata cancellation
a proportionate cancellation of insurance will refund the unearned premium, and the insurer only retains the earned premium
Nonrenewal
addresses the requirements for the insurer if it elects to not renew a policy.
Indemnity Contract
agreement to pay on behalf of another party under specified circumstances, such as when a loss occurs.
OCCURENCE
an accident, including continuous or repeated exposure to the same generally harmful conditions that results in loss or damage
Concealment or Fraud
any intentional concealment or misrepresentation of material information or fraudulent conduct is grounds for the insurer to void the policy.
Primary insurance
any type of coverage that responds to a loss first, before all other coverage responds
estimated premium (adv or deposit prem)
approximates the amount of coverage the insured needs to purchase
Personal Contract
between the insurance company and the individual, and it cannot be transferred or assigned to another party.
Conditional Contract
both parties must perform certain duties to make the contract enforceable
Duties in the Event of Loss
condition specifies the obligations of the insured in the event of a loss
Valued Contract
contract that pays a stated amount in the event of a loss.
Loss Cost (Pure Premium)
cost of claims paid for a certain kind of risk. The loss cost only accounts for claim amounts and does not include overhead costs or profits.
Waiver of Subrogation Rights
denies the insurer the opportunity to recover paid claims, this waiver exposes the insurer to greater risk. Insurers may charge an additional fee to add this waiver as an endorsement.
moral hazard
dishonest tendencies (lying, cheating etc)
certificate of insurance
document that shows evidence that specific types of insurance were purchased by the insured, at certain limits, and that they were in place on the date the certificate of insurance was issued.
pure risk
either loss or no change in status- NO POSS.IBILTY OF GAIN
named insured
erson, company, or organization designated on the Declarations page of the policy
Profit Factor
estimate insurers use to ensure the business is profitable
Misrepresentations
false statement contained in the application.
Actuarial Departmen
gathers and interprets statistical information to determine the probability of a loss.
Insuring Agreement
he Insuring Agreement is the insurer's promise of protection to the insured, affirming that the insurer will indemnify the insured for covered losses. The perils insured against by the policy are specified in the Insuring Agreement..
Assignment (Transfer of Your Rights and Duties Under This Policy)
he insured may not transfer rights of policy ownership without the insurer's prior written consent. The exception to this is included in the Death condition:
Judgment Rating ("A" Rating)
he underwriter uses their best judgment about the risk to establish its rate.
policy territory
imited to the premises, such as only covering property and liability losses at a residence or business building, or it may be more expansive for mobile property and liability claims. typically the United States, its territories and possessions, Puerto Rico, and Canada. Some policies provide worldwide coverage.
HAZARD
increases possibility of a loss
morale hazard
indifference toward the risk of loss (ex: carelessness)
Liberalization Clause
insurer broadens coverage under a new edition of the policy form with no increase in premium doesnt apply to changes that broaden and restrict
Subrogation
legal process allowing an insurer to seek recovery for a paid claim from a third party responsible for the loss
limit of liabilty
listed under declarations
earned premium
mount of premium already paid by the insured that applies to the actual number of days coverage was in place
unearned premium
mount of premium already paid by the insured that applies to the actual number of days coverage will not be in place after cancellation.
Personal lines
offers protection to individuals and families.
unilateral contract
only one party is legally bound to the contractual obligations
additional insured
person, company, or organization not ordinarily protected by a policy but who, through the addition of an endorsement to the policy, is granted status as an insured
First named insured
person, company, or organization whose name appears first on the Declaration
Endorsements
policy forms that alter the provisions of an insurance contract, typically added to the policy for an additional premium
flat cancellation
policy is cancelled within a certain number of days after being issued, or if the insurer reverses an offer of coverage, the policy may be cancelled retroactive to the effective date of the policy, meaning no coverage is provided whatsoever.
Commercial lines
protection to business and similar organizations
Individual Rating
rate for a particular policyholder because a large enough pool of similar risks is not available for any other type of rate. ex: commercial and specialty risks
Manual Rating (Class Rating)
rates are contained in a rating manual published by the insurer
waiver
relinquishment of a legal right
underwriting dept
responsible for selecting risks and selecting the specific rate that applies to those risks
underwriter
select risks whose future losses fall into the normal range of expected losses
policy period
specified in declaration
Conditions
specifies the obligations that the insured and insurer agree to follow in order for the policy provisions to take effect
Exclusions and Limitations
specifies the perils that are not insured against or the property that is not covered by the policy
The Other Insurance condition
specifies the process to be followed when the insured has more than one policy that covers the same loss.
Restoration/Nonreduction of Limits
specifies the sum and circumstances under which an insurer charges the insured, usually a business firm, to restore a policy to its initial value after the insurer has paid a claim either to the insured business or to a third party on behalf of the business.
Cancellation
specifies the terms under which the policy can be cancelled by the insurer or named insured
Contract of Adhesion
take it or leave it basis
binder
temporary written or oral legal agreement (contract) that provides short-term insurance
Ambiguities in a Contract of Adhesion
the insurer bears more responsibility in the event that any of the contract's language is deemed unclear. If legal questions arise regarding any doubt or ambiguity found in the contract and it is determined by a court that the policy language is not clear, the courts will rule in favor of the party that did not write it (the insured).
the Other Insurance condition
the policies will coordinate coverage in the event of a loss so as not to overcompensate the insured, and the process of this coordination varies by contract:
principle of indemnity
the same financial or physical condition that existed prior to the loss
Expense Load
total of the expenses associated with handling claims and operating the business.
Aleatory Contract
unequal exchange of consideration due to the uncertainty of an event or loss
Experience Rating (Merit Rating)
uses the insured's actual loss history to determine the rate
legal action
usually a time limit for bringing action against the insurer, usually 2 years. all policy terms and conditions must be complied
