massachusetts personal lines
consumer report
provides information regarding a customer's credit, character, reputation, etc.
risk-sharing arrangement
reciprocal insurer
insurers use _____ to protect themselves from catastrophic loss
reinsurance
bankruptcy of the insured will NOT
relieve insurer of its policy obligations (insurer must provide the coverage stated in the policy)
actual cash value
replacement cost minus depreciation
Coverage F: Medical Payments to Others
residence employees are eligible for medical payments if the bodily injury arises in the course of employment
Casualty
same as LIABILITY
special damages are
tangible damages that can be specifically measured in dollar amounts
the policy defines collision as
the impact of a covered vehicle with another vehicle/object
Severability of Insurance
the insurance applies separately to each insured. this condition does not increase the insurer's liability for any one occurrence.
the abandonment provision in property insurance policies states that
the insured may not relinquish ownership of damaged property to claim a total loss, but must protect damaged property from further loss
Substitute Transportation will reimburse the insured for transportation expenses if:
the insured's auto is out of service due to collision damage and the auto is covered for collision
personal property coverage would cover
the insured's camera if stolen while the insured is on vacation
experience rating
the insured's past experience with claims helps determine the cost of insurance
in return for the insured's promise to insure the property to some certain percent of its value:
the insurer agrees to give the insured a reduced rate per hundred on the insurance and pay partial losses in full
Primary Policy
the policy that pays first in the event of a covered loss, or in a layered program of insurance, the policy that covers the first layer of loss
who does a life settlement broker represent?
the policyowner
Assignment
the transfer of legal right in an insurance policy
the insured's homeowner policy will only pay to remove the tree if
the tree is blocking the driveway
example of a producer's fiduciary duty
the trust that a client places in the producer in regard to handling premiums
fine for impersonation of a licensed producer
at least $10 but no more than $100
the commissioner must examine companies in order to determine financial condition, ability to fulfill it obligations, compliance with insurance laws and dealing with its policyholders
at least once every 5 years and whenever deemed necessary the commissioner
after the insurer receives proof of loss,
it has 60 days to pay for the loss
after the insurer receives proof of loss:
it has 60 days to pay for the loss
what is the fee for a rating organization's license?
$25
The regular National Flood Insurance Program would insure an eligible single-family dwelling for up to
$250,000 on a replacement cost basis
who violates a cease and desist order must forfeit and pay a max sum of
$10,000 for each violation
silverware
$2,500
Pure Risk (characteristics)
- due to chance -definite -measurable -predictable
coverage for medical payments under an automobile insurance policy applies to expenses following a covered incident within
2 years
how long do rating organization's licenses remain in effect
3 years
Mortgagee
A lender
Coverage under Part 6 - Medical Payments in auto policies issues in this state is similar to
Accident insurance, because it provides legal protection if the insured causes injuries to others
which of the following is the closest term to an authorized insurer?
Admitted
what document grants express authority to an agent?
Agent's contract with the principal
Exclusions on a Dwelling Policy
All Homeowner Policy Exclusions apply to All Dwelling Policies
to legally transact insurance in this state, an insurer must obtain:
Certificate of Authority
auto damage caused by contact with a bird or animal is paid under
Comprehensive
which coverage would pay for damage to a covered auto due to colliding with a deer?
Comprehensive coverage
Which property coverages would provide protection to contents damaged by fire?
Coverage C - Personal Property provides coverage for the contents of an insured dwelling
breakage of glass included in
DP-2 and DP-3 only
which liability coverage must be added by endorsement to a homeowners policy in order to apply?
Personal Injury *personal injury only applies if added by endorsement and an additional premium is paid
what would pay for the insured's sustained injuries when struck by a hit and run driver?
Medical Payments
Does the homeowners policy cover a collapse cause by foundation cracks?
NO The foundation cracks would take years to cause collapse, meaning there would have been plenty of time to fix them
The Federal Fair Credit Reporting Act
Regulates consumer reports
what type of information would be found in a policy's insuring agreement?
Renewal Dates
an apartment occupant's personal property would be insured under which homeowners form?
Tenant broad form (HO-4) *the HO-4 form is for the apartment dweller. it covers what the insured owns, their contents and has no coverage for the apartment*
contrary to the basic concept of indemnity
replacement cost
first aid covers for others injured on the insured's premises
are paid in addition to the liability limit
General Compensatory Damages
are for intangible elements that cannot be specifically measured in terms of dollars
Reciprocity
occurs when the state in which the person resides accords the same privilege to residents of MA
Liberalization Clause
changes adopted by the insurer that broaden coverage automatically apply to the policy at no additional premium
a producer who fails to segregate monies from his own personal funds is guilty of
commingling
damage to car caused by wind or hail
covered with comprehensive coverage
Coverage D: Loss of Use
covers losses incurred as a result of your home being uninhabitable
portable electronics insurance
covers the repair/replacement of portable electronics if stolen, inoperable due to mechanical failure, or damaged
Misrepresentation
issuing sales material with exaggerated statements about policy benefits
comprehensive coverage would cover the financial loss due to
damage to your car caused by wind or hail
mandatory part of an insurance policy that varies with each individual policy
declarations
a person applying for a resident insurance producer license must make application to the commissioner on the uniform application and
have successfully passed the examinations for the lines of authority for which the person has applied
the policy conditions define
how parties to the contract must act following a loss
personal injury is NOT an additional
liability coverage automatically provided in a homeowners policy
The watercraft endorsement on a homeowners policy extends coverage for
liability protection for bodily injury or property damage caused by the ownership or use of watercraft (excluding when used to carry persons for a fee or when rented to others)
pro rata liability
limits the liability of the insurer to a portion of the loss no greater than the amount the insurer bears to all the insurance covering the same property
aggregate limit is the
maximum limit of coverage under a liability policy during a year
what is the major difference between a stock company and a mutual company?
ownership *mutual companies are owned by policyholders, while stock companies are owned by stock holders*
adverse selection is a concept best described as
risks with higher probability of loss seeking insurance more often than other risks
in the event of a total loss,
the coinsurance clause does not operate and the face amount of the policy is paid
watercraft damage coverage in the homeowners policy
up to $1,500
amount of loss assessment coverage included in a homeowners liability coverage section:
up to 1,000 per occurence
HO covers insurance even if
you are not liable
Fee for a rating organizations license:
$25
What is the minimum amount of coverage that should be carried on an HO-2 on a home that was purchased 4 years ago for $75,000, which today has a replacement value of $100,000?
$80,000
How much notice is required for the cancellation policy of coverage under a dwelling policy?
10
Minimum age requirement for an insurance producer in this state
18 years old
Dwelling Policies
3 forms DP 1 DP 2 DP 3
How long do rating organization's licenses remain in effect?
3 years
licensees must inform the Commissioner of a change of address within
30 days of the change
A homeowner, at the time of loss, must be insured for at least ____ % of replacement cost in order to collect the full replacement cost of a partial loss
80%
How much is covered for debris removal under the HO property additional coverages?
All reasonable costs if the debris was cause by a peril that is insured against, the reasonable cost of debris removal is paid by the insurer
Required to participate in the Insolvency Fund
Authorized Insurers are required to participate in the Fund as a condition of their certificate of authority
Under the HO-4 and HO-6 homeowners policy forms, property is insured against
BROAD form perils (provide the same level of coverage as Coverage C in the HO-2 and HO-3)
What is true regarding coverage for flood and earthquake perils?
Both flood and earthquake are excluded perils in all property policies can be purchased w an endorsement
Girl loses control and crashes into a neighbor's front porch. The neighbor, who was sitting on the porch is injured. The insured's liability policy has a limit of $500,000. This amount applies to the total of damages for any bodily injury and property damage resulting from one accident. Which type of liability does the insured have?
Combined Single
General Compensatory Damages
Compensate for non-monetary aspects of harm suffered, such as pain and suffering.
Vandalism and Malicious Mischief
Coverage provided in many property insurance policies that protects property against damage caused by vandals but will NOT be covered if vacant for more than 60 days immediately prior to the loss
Vicarious Liability
Legal doctrine under which a party can be held liable for the wrongful actions of another party. example: a 9 year old damages the neighbor's window.. the parents (insureds) will be held liable
Not a cover auto
a mobile home (if someone is injured exiting a friend's mobile home this is classified as a premises exposure)
Exclusions
are NOT found in the declarations section of a policy
Under the HO-4 and HO-6 homeowner policy forms, property is insured against:
broad form perils
Earthquake Damage
damage by earthquake is specifically EXCLUDED from coverage in all homeowners forms. However, coverage may be purchased by endorsement.
Coinsurance clause purpose
encourage the insured to insure the property closer to its value
Dwelling is used
for properties not where the policyowner lives. used for tenant dwelling is used for property
unfair trade practices
if an auto repair facility/insurance company fails to discloses whether the parts installed were used, rebuilt or aftermarket crash parts
DP-1 and DP-2 policy forms
loss or damage from falling objects is covered except for damage to awnings, fences, outdoor equipment, outdoor radio and tv antennas. damage to the interior of the building is covered only if the exterior has been damaged first
Personal Injury
may be added as an endorsement
MA Financial Responsibility Law
requires that the insurance policy provides coverage limits not less than the following: $20,000 on account of injury or death to any 1 person in a single accident $40,000 on account of injury or death to 2 or more persons in a single accident $5,000 for damage to property of others arising out of a single accident
Coverage F (Medical Payments) under a homeowners policy would cover:
residence employee who is injured on the job.
What is not considered a flood?
sewage backup
the commissioner will serve a notice hearing, the time and place of which CANNOT be
sooner than 21 days after the date such notice was served
who is covered by an HO-4 policy?
tenants
location of premises, policy limits, supplemental representations, and insurer's name/address can all be found in
the Declarations
the amount an insurer will pay under Coverage D (loss of use) depends on
the amount of coverage on the dwelling
Definitions
the part of the policy that clarifies terms in the policy
The Personal Auto Policy does NOT provide coverage outside
the united states, its territories or Canada
How much will the Loss Assessment additional coverage of the insured's homeowners liability policy pay?
up to $1,000 per occurrence for the insured's share of loss assessment charged against them as owner or tenant of the residence premises during the policy period by a corporation or association of property owners
Eligibility requires that the dwelling have not more than __ residential units
4
Domestic Insurer
insurer's home office is in this state
Boatowners Policy contains
property, liability, and medical payments coverage
coverage D
provide for loss of use indirect or consequential losses
Liability limits
$20,000/$40,000/ $5,000
Auto liability policy limits explained
- first limit shown is the most the policy will pay for injuries to any one person - second limit is the most policies will pay for all injuries if more than one person is injured in a single accident - third limit is the most the policy will pay for property damage resulting for a single accident
at the time of loss, the insured's claim settlement options include:
- pay the value of the lost or damaged property - pay the cost or repair/replacement - appraisal
Risk Retention
- to reduce expenses and improve cash flow - to increase control of claim reserving and claims settlements - to fund losses that cannot be insured
Homeowners Insurance
-for your own home you live in -equivalent to property/liability coverage
Coverage B: Other Structures
-protects other, unattached, dwellings on the property. -covers landscaping as well as buildings, but not the land. -does not cover other structures used for business purposes.
personal property being moved to a new location can be covered for up to ___ days without notice to the insurer
30
moving to a new location, personal property will apply on pro rata basis to both locations for
30 days
under Coverage C of a homeowners policy, the amount of insurance provided to cover personal property of the insured is
50% of the amount provided as Coverage A
what type of compensatory damages will pay for pain and suffering and disfigurement?
General Compensatory
the homeowners policy form that covers condominium unit owners
HO-6
What does Massachusetts Automobile Insurance policy cover?
Medical Payments: paying for injuries arising out of an auto event, regardless of fault
fiduciary responsibility
Money collected with respect to an insurance transaction must be held in a position of trust by the agent or broker.
A participating insurance policy may ..
Pay dividends to the policy owner
An insurance company receives an application with some information missing and issues the policy anyway. What is this called?
Waiver *in insurance policies, a waiver is giving up one's known right or privilege*
An insurer was just caught misrepresenting the terms of a policy. What fine does he face?
a fine of up to $1,000 or imprisonment for up to 6 months
insurable interest in a property policy must be proven
at the time of loss
which type of insurer must participate in the MA joint underwriting association?
authorized property insurance companies
accessories installed on a mobile home that would be covered:
auto radio antenna
comprehensive cover would cover financial losses due to
damage to your car caused by wind or hail *comprehensive coverage includes losses caused by falling objects, fire, theft, windstorms, hail, vandalism*
a beauty parlor burns to the ground. what type of loss is this?
direct
the coverage afforded by the Use of Other Autos - Broad Form is considered to be
excess over the auto owner's coverage
HO-6 is designed specifically to cover the
exposure of a condominium
larcency
failure to pay premiums collected to the company after written demands
larcency
failure to pay the premiums collected to the company after written demand
DP-1 Basic Form
fire insurances + a few mentioned perils
most likely to have the most favorable premium rate for fire?
fire-resistive
punitive damage:
form of punishment, intended to serve as an example to others to discourage undesirable behavior
Combined single
is a single dollar limit of liability applying to the total of damages for bodily injury and property damage combined resulting from one accident or occurrence
the MA automobile insurance policy does not automatically provide coverage for
non-owned trailers
temporary insurance producer license without requiring an examination for a period
not to exceed 180 days
any person who violates a cease order of the Commissioner after it has become final must:
pay a fine to the state not to exceed ten thousand dollars for each violation which may be recovered in a civil actions
pretext interviewing
pretending to be a reporter to determine the final underwriting process
Who is afforded coverage under the Use of Other Autos - Broad Form endorsement?
this endorsement provides coverage for the insured, spouse and residents of the household, provided they are named in the schedule in the endorsement and premium is paid for each
HO-4 covers
those who rent their dwelling
Discrimination
two individuals in the same risk/age class yet they are charged different rates for their insurance policies due to an insignificant factor
scheduled personal property endorsement
values beyond the limitations of the homeowners policy *covered on a valued basis*
Speculative Risk
when a person has both the chance of winning or losing
Mobile Home Endorsement
when an auto that is shown on the declarations page is a mobile home, coverage extends to include certain permanently installed equipment and accessories
Personal Injury Protection Coverage
will only pay $2,000 in benefits if the insured has medical coverage that will pay some of the medical expenses. If the insured has more expenses after $2,000 PIP and the insurance has paid the limit will be returned to $8,000
if a producer has administrative action taken against his license, he must report such action
within 30 days of the final disposition on such action
a camera the insured has with him on vacation
would be covered by the broad theft endorsement on a dwelling policy
HO forms place a $______ limit for business personal property that applies ON premises only
$2,500 limit. *a limit of $500 applies to loss of business personal property while away from the premises*
Endorsement M-0099-S
- is a mandatory endorsement - adds $500 minimum collision deductible - causes the limits of insurance to comply with the minimum limits of any state in which the vehicle is being operated
Risks that contain farming exposure
are not eligible for homeowners insurance
Permitted incidental occupancies endorsement
covers liability exposures arising from an incidental business conducted within a building on the residence premises
comprehensive automobile insurance
covers property and liability everything other than you crashing into someone
auto policy - casualty
if you crash into someone damage to OTHERS not covering your car
retention
in casualty (liability) insurance, it is the portion of a claim not paid by insurance (property insurance calls this a deductible)
foreign insurer
insurer with an office out of state
Automatic Increase in Insurance Endorsement
is used to provide at the annual renewal date of the policy, an automatic increase in the Coverage A and B limits of insurance to help offset inflation
WYO Program (Write Your Own)
made up of private insurers that write and service National Flood Insurance policies on a no risk-bearing basis through a special arrangement with the Federal Insurance Administration.
Specific Coverage
one location is insured for a specific amount of insurance on the structure and contents
Uninsured motorist coverage applies
only when the other party is legally liable but has no insurance
absolute liability example
owning wild animals *any conduct that is inherently dangerous, such as using explosives or keeping wild animals, imposes ABSOLUTE liability*
the Insuring Agreement lists:
parties to the contract, effective and renewal dates, the description of coverage provided and perils (among other things)
Any person who violates a cease and desist order of the Commissioner after it has become final must:
pay a fine to the state not to exceed $10,000 for each violation, which may be recovered in a civil action.
Reciprocity of Licensure
permits nonresident licensure for all nonresidents of the state whose home is in good standing, licensed as resident, submitted the proper request
Section 1 of a boat owners policy covers:
physical damage
An accurate comparison between private and government insurers
private insurers may be authorized to transact insurance by state insurance departments
Who would participate in a Write Your Own (WYO) flood insurance program?
private insurers that wish to write and service National Flood Insurance policies on a no risk-bearing basis
errors and omissions coverage is provided ONLY in a
professional liability policy
Declarations section
provides information as to who is insured, where they are located, when the policy provides coverage, how much coverage and the amount of deductible applied to a loss
Farm Property is
specifically excluded under the liability section of a HO policy
Which perils are covered by the HO-2 and HO-3?
sudden and accidental rupture of a heating system
Apparent 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
Express Authority
the authority granted to an agent through the agent's contract - written into the contract between the insurer and the agent
What is the maximum amount that can be charged to the insured for the fire department services?
the homeowners policy will pay up to $500 of the fire department service charge
Declarations
the part of a property policy that shows the amount of insurance, premium and policy term