ExamFX Policy Provisions & Contract Law Terms

In the Event of a loss covered by the policy, the Named Insured is required to:

* Protect the damaged property from further damage *Prepare an inventory of damaged property * Cooperate with the insurer in settling the loss * Notify the police in case of a theft loss * Submit to the insurer a signed sworn proof of loss within an allotted amount of time after being requested to do so.

Sources of Underwriting Information

*Application *Motor vehicle records; * Interviews with neighbors, friends and employers; *Inspection of property; and * Inspection of Insurance history

Examples of Conditions

*Inspections may be made as needed by insurer. * Changes to the policy must be made by the insurer and be in writing. * Liberalization Clause * Return of Premium

Two Disclosure required for Gramm-Leach Bliley Act

1. When he customer relationship is established ( policy is purchased) 2.Before disclosing protected information

Elements of a Contract

1.Aggrement - offer and acceptance 2.Consideration 3.Competent Parties 4.Legal Purpose

Offer

A offer by one party , and the other party must accept this offer in its exact terms. The applicant usually makes the offer when submitting the application

Obligations of an Insurance Company

An insurance company, in return for premium, must be fair in underwriting and must pay covered losses.

Additional Insureds

Are individuals or businesses that are not named as insureds on the declaration page, but are protected by the policy, usually in regard to a specific interest.

Endorsements

Are printed addendums to a contract that are used to change the policy's original terms, conditions, or coverages. ( Add, delete coverage, or may be used to correct items.)

Representations

Are statements believed to be true to the best of one's knowledge, but they are not guaranteed to be true.

Policy Limits

Are the maximum amount an insured may collect, or for which an insured is protected under the terms policy. ( Also Known as Limitations.)

Misrepresentations

Are untrue statements on the application and could void the contract.

Consumer & Investigative Reports

Can only be used by someone with legitimate business purpose, including insurance underwriting, employment screening, and credit transactions.

Terrorism Rick Insurance Act (TRIA)

Defines an act of terrorism certified by the Secretary of the treasury, in concurrence with the Secretary of State, and the Attorney General of the United States with the following characteristics: -Act must be violent or dangerous to human life, property, or infrastructure -Act must have resulted in damage within the US, to an air carrier as defined in the US Code, to a US flag vessel or other vessel based principally in the US and insured under US regulation, or on the premises of any US mission -Act must have been committed by someone as part of an effort to coerce the US civilian population, to influence US policy, or to affect the conduct of the US government by coercion; or -Act must produce P&C ins losses in excess of a specified amount.

Return of Premium

Dictates the method that will be used to calculate the return premium when the policy is cancelled before the expiration date.

Liberalization Clause

Ensures that if the insurer introduces an improved free coverage, the insured will get the benefit of the new coverage immediately and will not have to wait for the policy renewal.

Fair Credit Reporting Act

Established procedures that consumer-reporting agencies must follow in order to ensure that records are confidential , accurate, relevant, and properly used. The law also protects consumers against the circulation of inaccurate or obsolete information.

Legal Purpose

Every insurance contract must have this. This means the contract must be for a lawful reason, and not against public policy.

Policy Structure

Every property & casualty policy is compromised of the following major components: * Declarations *Definitions *Insuring agreement * Additional coverage *Conditions *Endorsements *Exclusions & policy limits

Appraisal

If there is a disagreement between the insured and the insurer on the value of any property loss, either party can make a written demand for this.

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.

Application

Is a printed form that includes questions about a prospective insured and the desired insurance coverage and limits.

Pro Rata

Is a provision found in some property insurance policies that provides sharing a loss with other insurance that may be written on the same risk in the same proportion as their limits of insurance bear to the total of coverage of all policies covering the risk, whether collectible or not.

Other Insurance

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

Additional Coverage

Is a provision in an insurance policy that provides an additional amount of coverage for specific loss expense, at no additional premium. Examples: claim-related expenses, reasonable expenses incurred by an insured to protect damaged property from further loss, and defense expense.

Material Misrepresentation

Is a statement that, if discovered, would alter the underwriting decision of the insurance company. If intentional they are considered Fraud.

Proof Of Loss

Is a sworn statement that must usually be furnished to an insurer before any loss under a policy can be paid. This form is typically used in the settlement of first party losses, and includes the date and description of the occurrence and the amount of indemnity claimed.

Binder

Is a temporary agreement issued by an agent or insurer providing temporary coverage until a policy can be issued.

Warranty

Is an absolute true statement upon which the validity of the insurance policy depends.

Insured

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

Mortgage Clause

Is attached to a policy to protect the interest of the mortgagee in the mortgaged property.

Consideration

Is something of value that each party gives to each other

Concealment

Is the legal term for the intentional withholding of information of a material fact that is crucial in making a decision. This may void a policy.

Insuring Agreement

Is the section of an insurance policy containing the insurer's promise to pay. This list the parties to the contract, effective and renewal dates, the description of coverage provided, and perils.

Conditions

Is the section of an insurance policy that indicates general rules and or procedures that the insurer and insured agree to follow under the terms of the policy.

Cancellation

Is the termination of an in-force insurance policy, by either the insured or the insurer, prior to the expiration date shown in policy. Termination may be voluntary or involuntary, or mutual accordance with provisions contained in the policy.

Nonrenewal

Is the termination of an insurance policy ay its expiration date by not offering a continuation of the existing policy or a replacement policy.

Assignment

Is the transfer of a legal right or interest in an insurance policy. ( Valid with prior written consent).

Reauthorization Act of 2007

Made several amendments to the Terrorism Risk Insurance Program, including the following: -An act of terrorism is redefined to eliminate the requirement that the individual or individuals committing a terrorist act be acting on behalf of a foreign person or interest. -This is Extended through 2014 -The Secretary of the Treasury is required to: *Notify Congress within 15 days of an act of Terrorism for which the secretary estimates a loss of more than 100billion -Devise a way to determine the pro rata share of insured losses that exceed $100 billion -Report to Congress on the process used

Gramm-Leach Bliley Act

Stipulates that in general, an insurance company may not disclose nonpublic personal information to a nonaffiliated third party except for the following reasons: -The ins co. clearly and conspicuously discloses to the consumer in writing that information may be disclosed to the third party -The consumer is given the opportunity, before the time that the information is initially disclosed, to direct that information not be disclosed to the third party. -The consumer is given explanation of how the consumer can exercise a nondisclosure option.

Acceptance

Takes place when the insurer's underwriter approves the application and issues a policy.

Definitions

The component of an insurance policy clarifies term used in the policy. Typically, words that are printed in bold, italics, and or quotations.

First Named Insured

The individual whose name appears first on the policy's declaration. In Commercial Policies this person has control of the policy and is the only insured who can cancel or request changes, and is also responsible for paying premiums and reporting losses.

Named Insured

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

Competent Parties

The parties to a contract must be capable of entering into a contract in the eyes of the law.

Declarations

The section of an insurance policy containing the basic underwriting information, such as name, address, amount of coverage and premiums, and a description of insured locations. Usually first page of policy.

Exclusions

The section of an insurance policy that details the perils that are not insured against and what persons are not insured. Restrict some of the broad terms used in the insuring agreement.