NC Casualty

Which of the following is not a power granted to the North Carolina Insurance Commissioner?

Prosecuting individuals for violating insurance laws The Commissioner may examine financial statements of insurers, issue insurance regulations, and enforce insurance laws, but the state Attorney General or other law enforcement officials prosecute criminal acts.

Symbol 9

non owned autos only

Exposure

state of being subject to a possible loss

Proof of Loss Forms

Upon receiving the claimant's notice of claim, the insurer has 15 days in which to send the claimant the forms for filing proof of loss. If the insurer fails to do so, the claimant can instead provide proof of loss by giving a written statement describing the loss. The claimant has up to 90 days after the loss to file this written proof.

Jonas leased a brand new Lexus for three years. What definition in his personal auto policy defines the Lexus after Jonas adds it to his policy?

Your covered auto Vehicles listed on the Declarations page are included in the definition of 'your covered auto'. They must be owned by the named insured, or leased by the named insured for a period of at least 6 months.

Symbol 1

any auto -- broadest coverage

Jane is self-employed and hires two employees. When she purchases a workers compensation policy for the benefit of her employees, what endorsement does she purchase to provide WC benefits for herself?

Sole-proprietors, Partners, Officers, and Others Coverage endorsement

BOP-Libaility

three categories of coverage: -business liability coverage for covered damages for which the insured is legally liable, subject to the limit of insurance -supplementary payments -medical expenses in connection with an accident on the insured's premises or involving the insured's operations -bodily injury -property damage -personal and advertising injury

All of the following are considered 'covered workplaces' in the workers compensation policy purchased by TBC Florist Shops EXCEPT:

A self-insured TBC Florist Shop

State Workers Compensation Laws

Defenses: -assumption of risk (voluntarily entered into a job knowing of the unsafe nature) -contributory negligence (if employees negligence contributed to his own injury then the employee is not entitled to recover damages) -fellow servant rule (employer is not liable for an injury to an employee that resulted solely from the negligence of a fellow employee) Aspects of workers compensation laws: -compulsory versus elective laws workers comp laws are compulsory, meaning that an employer must accept the law and pay workers comp benefits 2 states currently have elective workers comp law (TX and NJ) meaning that an employer has the choice of either accepting or rejecting the workers comp law -exclusive remedy stipulates that the benefits prescribed in the act are the sole remedy against the employer for covered injuries sustained on the job -penalties for failure to secure benefits (usually in the form of fines, sometimes criminal) -covered employments number of employees (employers with fewer than a specified number of employees (3,4,or 5) are exempt from work comp law) type of work (include domestic employees, agricultural employees, real estate brokers paid on commission, an "casual" employments aka short-term) -independent contractors (some states say that indept contractors are not employees and the act does not apply to injuries, but only a few states actual address the distinction between an employer-employee relationship and a principal-independent contractor relationship) -sole proprietors, partners, executive officers, and limited liability companies (in most states SP and partners are not covered employees but they may choose to be covered) -elective coverage (choose to be covered) -suits against third parties -injuries not covered (intentional self harm, injuries sustained while attempting to injure someone else, injuries sustained while committing a crime, injuries as a result of employees willful failure to use a safety device, injuries caused by employee's intoxication or drug use, injuries caused by willful misconduct or negligence, injuries suffered while employee was participating in voluntary recreational activities) -occupational disease (must be a direct casual link between the employment and the disease) -extraterritorial application (out-of-state injuries, most common time limit is 6 months) -second injury funds (encourages employers to hire disabled workers, second injury fund addresses these situations by paying the difference in benefits between the disability that results from two separate injuries and what the employer would have to pay if only one occupational injury had occurred) -workers comp benefits medical (account for almost 34%) disability (replace the workers loss of income. 4 classes: temporary total, (most common; expected to recover and return to work but cannot work while recovering; usually replaces 66 2/3 % income) permanent total, (employee is unable to do any kind of work for the remainder of his or her life; receive % of weekly wages) permanent partial, and (employee will never recover but can still do some work; scheduled injuries) temporary partial (can still do some work but is unable to earn his or her usual wage until recovery)) rehab death (burial allowance and a weekly income benefit to help compensate those dependent on the lost income) dollar amounts vary from state to state -employers liability (for claims not covered under workers comp law the following are some examples of claims that would be covered under employers liability insurance: A suit filed by an injured employee who is excluded under workers compensation law. For example, many state workers compensation laws exclude farm labor and domestic employees. A suit brought by an injured employee whose employer is not subject to workers compensation law. In some states, employers with fewer than a specified number of employees (usually three) are not subject to workers compensation law. A suit filed by an injured employee whose employer has elected not to accept the workers compensation law, in one of the few states with an elective law. A suit brought by an injured employee who is unknowingly illegally employed. In certain instances, illegally employed minors or illegal aliens are not entitled to workers compensation benefits and may elect to sue the employer under common law. A suit filed by an injured employee's spouse, claiming loss of consortium. Under common law, a man or woman is entitled to the "services" of his or her spouse. These services include sexual relations, companionship, and help in performing household chores and maintenance. Many state courts have held that, when such a loss of consortium exists, the spouse of the injured employee has the right to sue and recover against the employer even if the injured employee is already being compensated for his or her disability. A suit filed by a third party seeking indemnity because it was held liable for an employee's injury. These suits are commonly referred to as third-party-over actions. As an example, suppose an employee is injured while using a piece of machinery that the employer has not properly maintained. Regardless of any payment under workers compensation law, the employee sues the manufacturer of the equipment who, in turn, sues the employer for contributory negligence. A suit brought by an injured employee against the employer under the dual capacity doctrine. Dual capacity suits generally involve an injured employee bringing suit against the employer when the injury arises from a product the employer manufactures. In such a case, the "exclusive remedy doctrine" contained in workers compensation law may not be effective because the employer was acting in a dual capacity as both employer and manufacturer at the time of the injury. A suit filed against the employer by a family member of the injured employee claiming a consequential bodily injury. For example, the spouse of a severely injured employee might, upon learning of the injury, suffer a heart attack or a nervous breakdown. -work-related vs non-work-related injuries employee has burden of proof: injury/illness has occurred, it occurred in the course of employment, and it arose out of employment. for wage replacement employee must prove: the work-related condition resulted in impairment, and the impairment resulted in a wage loss not covered if significant deviation- when employee deviates from their mission for some personal reason during work that is unrelated to their work (having dinner does not count, it must be significant) risks can be sorted into 3 categories: personal (associated entirely w/ individual; i.e heart attack) employment (linked to connections in the workplace or the nature of the job; i.e unguarded machine) neutral (which the public is exposed to an equal degree as are persons on the job; i.e tornado)

Symbol 2

owned autos only-- applies to all autos owned by the named insured. It can also includes trailers

Garage Coverage Form

used to provide insurance to franchised and nonfranchised auto and trailer dealers In a single form, the garage policy combines coverage for a dealer's general liability exposures and exposures arising from the garage's ownership, maintenance, or use of autos. The insured dealer can also buy coverage under the garage policy for exposures to loss related to physical damage to its own vehicles and also to vehicles in its possession on consignment for sale. may also buy garagekeepers coverage for loss to vehicles left in its care -Declarations: 21-any auto 22-owned autos only 23-owned private passenger autos only 24—owned autos other than private passenger autos only 25—owned autos subject to no-fault 26—owned autos subject to a compulsory uninsured motorists law 27—specifically described autos 28—hired autos only 29—nonowned autos used in your (the named insured's) garage business, 30—autos left with you (the named insured) for service, repair, storage, or safekeeping 31—dealers auto physical damage -Liability Coverage: general liability exposures and auto liability Insuring Agreement-Garage Operations-Other Than Covered Autos --The first insuring agreement states the insurer's promise to pay sums that an insured becomes legally obligated to pay as damages because of bodily injury or property damage resulting from the insured's garage operations other than the ownership, maintenance, or use of covered autos. For garage liability coverage to apply, the insured's legal liability for damages must be because of injury or damage that is caused by an accident and that results from garage operations. That term is defined as follows: The ownership, maintenance or use of locations for garage business and that portion of the roads or other accesses that adjoin these locations. "Garage operations" includes the ownership, maintenance or use of the "autos" indicated in Section I of this Coverage Form as covered "autos." "Garage operations" also include all operations necessary or incidental to a garage business. This garage liability insuring agreement applies, for example, to the following types of situations. A customer slips on a wet floor at the insured's dealership and is injured (premises-operations liability). The auto dealer's repair shop replaces brakes on a customer's auto. While the customer is driving home, the brakes fail and cause an accident (products-completed operations liability). Independent contractors are repairing the insured garage's roof. A customer is injured when one of the workmen drops a hammer and it hits the customer's leg (independent contractors' liability). -Who is an Insured-Other Than Covered Autos-- relates to garage operations other than covered autos is limited to apply to the named insured and the named insured's partners, members, employees, directors, or shareholders, but only while they are acting within the scope of their duties -Insuring Agreement-Garage Operations-Covered Autos-- The second insuring agreement relates to the insured's exposure to liability loss resulting from garage operations involving the ownership, maintenance, or use of covered autos -Who is an Insured-Covered Autos-- similar to BAP (customers from an auto dealership are excluded aka test driving) -Liability Exclusions: Bodily injury or property damage expected or intended from the standpoint of the insured is excluded. (There is an exception for reasonable force as it relates to garage operations other than covered autos.) There is no coverage for contractual liability. Any obligation to pay workers compensation, disability, unemployment, or similar benefits is excluded. Employee indemnification and employers liability are also excluded. Coverage is precluded for bodily injury to a fellow employee of the insured arising out of and in the course of the fellow employee's employment. Property damage to property owned, rented, occupied, loaned to, held for sale, or transported by the insured or in the insured's care, custody, or control is excluded. There is no coverage for autos leased or rented to others (except customers while their autos are being serviced or repaired). Bodily injury or property damage arising out of the actual, alleged, or threatened discharge, dispersal, seepage, migration, release, or escape of pollutants (other than covered autos) is excluded. No coverage exists for bodily injury or property damage arising out of the actual, alleged, or threatened discharge, dispersal, seepage, migration, release, or escape of pollutants (other than covered autos). There is no coverage even for covered autos while used in any professional or organized racing or demolition contest or stunting activity. Watercraft or aircraft are excluded, except watercraft while ashore on garage premises. Coverage is precluded for property damage to the insured's work resulting from the work itself, parts, materials, or equipment. Loss of use of property not physically damaged is not covered, if it is caused by the failure to perform or a defect, deficiency, inadequacy, or dangerous condition. Damages claimed for loss associated with product recall are excluded. Bodily injury or property damage due to war is of course excluded. Also excluded is the distribution of material in violation of the Telephone Consumer Protection Act (TCPA) or the Controlling the Assault of Non-Solicited Pornography and Marketing (CAN-SPAM) Act of 2003. Property damage to products is excluded if caused by an existing defect. -Broad Form Products Coverage (CA 25 01) Endorsement-- defective products exclusion can be deleted, $250 limit for any one accident -Limit of Insurance-- two separate limits (one to general and the other to auto)

Peril

CAUSE of loss

What is the maximum amount an employer will pay for reasonable funeral expenses if an employee dies as a result of a work-related injury?

$10,000

If the bus drivers employed by a business are assigned a workers' compensation classification code with a rate of $2.50 and the employer has payroll of $100,000 for that classification code, what is the unmodified premium for that classification?

$2,500 A preliminary unmodified premium is determined by multiplying the appropriate rates for the applicable job classification by the premium basis. The unmodified premium for the bus driver classification would be $2.50 multiplied by $100,000 divided by $100, or $2,500.

What is the minimum amount of liability coverage required in a motor vehicle policy issued in North Carolina for property damage in any one accident?

$25,000

Part B-Medical Payments Coverage

-Insuring Agreement--coverage is granted for necessary medical and funeral services as long as they were incurred within 3 years from the accident date; provides protection for the named insured and family members, and other persons who are occupying the named insured's covered auto -Exclusions-- vehicles with fewer than four wheels public or livery conveyance vehicle used as a residence (such as a motor home parked at a campground) workers compensation noncovered vehicles owned by the named insured or available for the named insured's regular use noncovered autos owned by family members or available for the family member's regular use lack of permission to use the vehicle business use nuclear and war exclusions racing -Limit of Liability--anti-stacking -Other Insurance

BAP

-Insuring Agreement- insurer covers for bodily injury, property damage, or pollution cleanup costs, resulting from the ownership, maintenance or use of covered auto also states duty to defend -Bodily Injury or property damage caused by an accident -Resulting from Ownership, maintenance, or use -Covered Auto- for coverage to apply the auto must be a covered auto -Insured Status: The business auto policy includes three categories of insureds: The named insured qualifies as an insured under liability coverage for any covered auto. Which vehicles are covered autos depends on the use of the coverage symbols. If symbol 1 (any auto) is used for liability coverage, the named insured will have the broadest possible liability coverage. The permissive user category of insureds imposes at least one more obvious requirement. To be insured under liability coverage, any person who is not a named insured must be using the covered auto with the named insured's permission. In addition, the covered auto must be owned, hired, or borrowed by the named insured, and the person using it must not be described in any of several exceptions. One of the exceptions, for example, states that an employee of the named insured is not an insured if the covered auto is owned by that employee or a member of the employee's household. Anyone who is liable for the conduct of the named insured or a person who qualifies as an insured under the permissive user category is also considered an insured to the extent of this vicarious liability. -Supplementary Payments -Limitations on coverage- "which this insurance applies" phrase -Exclusions: bodily injury or property damage expected or intended from the standpoint of the insured; contractual liability; any obligation to pay workers compensation, disability, unemployment, or similar benefits; employee indemnification and employers liability; bodily injury to a fellow employee of the insured arising out of and in the course of the fellow employee's employment (claims for damages by an fellow employee's family members are also excluded); property damage to property owned or transported by the insured or in the insured's care, custody, or control; bodily injury or property damage resulting from the handling of property; bodily injury or property damage resulting from the movement of property by a mechanical device not attached to a covered auto (this exclusion does not apply to property moved with a hand truck); bodily injury or property damage arising out of the operation of certain mobile equipment; bodily injury or property damage arising out of the insured's work after that work has been completed or abandoned; bodily injury or property damage arising out of the actual, alleged, or threatened discharge, dispersal, seepage, migration, release, or escape of pollutants; bodily injury or property damage due to war; and covered autos while used in any professional or organized racing or demolition contest or stunting activity. -Limit of Insurance- limit shown on dec page -Policy Conditions: duties in the event of accident/claim/suit/loss (identify how, when, and where the accident/loss occurred also assume no obligation make no payment and incur no expense without the insurer's consent, send copies of any notices or legal papers immediately, cooperate with insurer in investigation, settlement, or defense of claims,, authorize insurer to obtain medical records,, submit examinations by physicians the insurer chooses) other insurance subrogation policy period and coverage territory cancellation

Regulation of Auto Insurance

-Motor Vehicle of Insurance Policies-- owner must be certified that the vehicle is covered by liability insurance NC law requires the owner of every vehicle to maintain continuous liability insurance as long as the vehicle has a valid license plate in NC it is illegal to operate a motor vehicle without insurance -Motor Vehicle Policy Defined--A motor vehicle liability policy is an owner's or an operator's policy of liability insurance, certified as proof of financial responsibility, and issued by an insurance carrier duly authorized to transact business in North Carolina, to or for the benefit of the person named in the policy as insured required limits of liability- minimum required limits: $30,000 for bodily injury to or death of one person in any one accident; $60,000 for bodily injury to or death of two or more persons in any one accident; and $25,000 for damage to property of others in any one accident. UM/UIM coverage- UM (bodily injury) limit must be equal to the highest limits of bodily injury coverage but may not exceed 1M UM (property damage) must equal the highest limits of property damage liability, minimum is $25,000 per accident UM/UIM must be equal to the highest limits of bodily injury liability for any one vehicle, minimum $30K per person/$60K per accident, may not exceed 1M uninsured motor vehicle does not include: a motor vehicle owned by the named insured; a motor vehicle that is owned or operated by a selfinsurer within the meaning of any motor vehicle financial responsibility law, motor carrier law, or any similar law; a motor vehicle that is owned by the United States, Canada, a state, or any agency of any of these, excluding political subdivisions; a land motor vehicle or trailer, if operated on rails or crawlertreads or while located for use as a residence or premises and not as a vehicle; or a farmtype tractor or equipment designed for use principally off public roads, except while actually upon public roads. motor vehicle liability policy provisions: The liability of the insurance carrier is absolute whenever injury or damage covered by the motor vehicle liability policy occurs. The policy's liability may not be canceled or annulled by any agreement between the insurance carrier and the insured after the injury or damage occurs. A statement made by the insured or on his or her behalf and a violation of the policy will not void the policy. The satisfaction by the insured of a judgment for injury or damage is not a condition precedent to the right or duty of the insurance carrier to make payment on account of the injury or damage. The insurance carrier has the right to settle any claim covered by the policy, and if the settlement is made in good faith, the amount will be deductible from the specified limits of liability. The policy, its written application, and any authorized rider or endorsement constitute the entire contract between the parties. The requirements for a motor vehicle liability policy may be fulfilled by the policies of one or more insurance carriers which policies together meet the requirements. Any binder issued pending the issuance of a motor vehicle liability policy will fulfill the requirements for the policy. required notice- 12 point type Model language from the insurance code includes the following notifications: A driver is required to purchase uninsured motorist bodily injury coverage, uninsured motorist property damage coverage and, in some cases, underinsured motorist bodily injury coverage. This insurance protects the insured and his or her family against injuries and property damage caused by the negligence of other drivers who may have limited or only minimum coverage or even no liability insurance. The insured may purchase uninsured motorist bodily injury coverage and, if applicable, underinsured motorist coverage with limits up to $1 million per person and $1 million per accident or at lesser limits. The insured cannot purchase coverage for less than the minimum limits for the bodily injury and property damage coverage required for the insured's own vehicle. If the insured does not choose a greater or lesser limit for uninsured motorist bodily injury coverage, a lesser limit for uninsured motorist property damage coverage, and/or a greater or lesser limit for underinsured motorist bodily injury coverage, then the limits for the uninsured motorist bodily injury coverage and, if applicable, the underinsured motorist bodily injury coverage will be the same as the highest limits for bodily injury liability coverage for any one of the insured's own vehicles insured under the policy. The limits for the uninsured motorist property damage coverage will be the same as the highest limits for property damage liability coverage for any one of the insured's own vehicles insured under the policy. If the insured wants to purchase uninsured motorist and, if applicable, underinsured motorist coverage at different limits than the limits for the insured's own vehicle insured under the policy, then the insured must contact his or her insurance company or agent to discuss the options for obtaining different coverage limits. The insured should read the entire policy to understand what is covered under uninsured and underinsured motorist coverages. Penalties: suspension or revocation of a license or certification monetary penalty of not less than $100 nor more than $1,000 for each day during which a violation occurs an order for the violator to make restitution in an amount that would make whole any person harmed by the violation -Cancellation or Nonrenewal of Motor Vehicle Policy-- nonfleet private passenger motor vehicle insurance- policy issued on a motor vehicle of the private passenger or station wagon type that is owned by the insured named in the policy or under a long term lease to the insured and is not used for public transportation or rented to others. It also covers: a pick-up truck or van that is owned by an individual, or by a husband and wife, or individuals who are residents of the same household as the named insured; or a motorcycle, motorized scooter, or other similar motorized vehicle not used for commercial purposes. must have a gross weight of less than 10,000 pounds and may not be used for the delivery or transportation of goods or materials unless the delivery is incidental to the insureds business or farming or ranching termination-not effective unless the insurer notifies a named insured of the termination by sending a written termination notice by first class mail to the insured's last known address An insurer is not required to send a written termination notice if any of the following applies: The insurer has demonstrated its willingness to renew the policy by issuing or offering to issue a renewal policy, a certificate, or other evidence of renewal. The insurer has demonstrated its willingness to renew the policy by other means, such as mailing a premium notice or expiration notice by first class mail to the named insured, and the insured did not pay the required premium on or before the premium due date. The named insured has given written notification to the insurer or its agent that the named insured wants the policy to be terminated. The termination notice must be approved by the Commissioner and must state the reason and the date the termination is effective if nonpayment= 15 days from the date mailed if any other reason= 60 days from the date mailed must include: the penalty for driving a vehicle without complying with the motor vehicle proof of financial responsibility requirements, and that the insured has the right to request a review of the termination by the Department. keeps record for 3 years cancellation-occurs when a policy is terminated during the period. An insured may cancel the policy by returning the policy to the company or agent or by giving the company advance written notice of the date on which the insured wants to cancel the policy reasons of cancellation: nonpayment of premium or delinquent premium payments; policy no longer meets insurer's underwriting criteria; loss of driving privileges of the insured or a member of the insured's household during the policy period because of license suspension, revocation, or expiration; too many at-fault accidents; DUI; driving without a license; numerous traffic violations, particularly if within a short period of time; and filing an excessive number of accident claims. nonrenewal-n insurance company refuses to renew an insured's policy. mailing notification to the insured at least 60 days before the end of the policy period. Written nonrenewal notice requirements do not apply if the policyholder has: insured elsewhere, accepted replacement coverage, requested nonrenewal, or agreed to nonrenewal. automatic termination-if an insurance company offers to renew or continue an insured's coverage and the insured does not accept, the policy automatically terminates at the end of the current policy period. Failure to pay the required premium to renew or continue the policy means that the insured does not accept the offer. or also buying other insurance notification of cancellation/nonrenewal to the DMV- insurance company is required to notify the North Carolina Division of Motor Vehicles (DMV). The DMV is required to notify the individual when they receive the notification and let him or her know if there is a penalty and what action, if any, must be taken. -NC Motor Vehicle Reinsurance Facility-- definitions- company: refers to each member of the NC motor vehicle reinsurance facility eligible risk: a lot so basically going to say when a person is not considered an eligible risk: Payment of premium is not made in a timely manner. There is a valid unsatisfied judgment of record against the person for recovery of amounts due for motor vehicle insurance premiums and the person has not been discharged from paying the judgment. The person does not furnish the information necessary to effect insurance. motor vehicle insurance: direct insurance against liability arising out of the ownership, operation, maintenance or use of a motor vehicle for bodily injury including death and property damage and includes medical payments and uninsured and underinsured motorist coverages principally garaged: vehicle is garaged for six or more months of the current or preceding year on property in North Carolina, which is owned, leased, or otherwise lawfully occupied by the owner of the vehicle members- North Carolina Motor Vehicle Reinsurance Facility is a nonprofit, unincorporated legal entity whose members include all insurers licensed to write and who are engaged in writing motor vehicle insurance in North Carolina obligations of insurers: All insurers must accept and insure any otherwise unacceptable applicant who is an eligible risk if cession of the particular coverage and coverage limits applied for are permitted in the facility. Cession or cede refers to the act of transferring the risk of loss from the individual insurer to all insurers through the operation of the facility. All insurers equitably share the results of the otherwise unacceptable business through the facility. Each insurer provides the same type of service to ceded business that it provides for its voluntary market. Records provided to agents and brokers include an indication that the business is ceded. Upon the written request of any eligible risk who has been notified that his or her motor vehicle insurance policy has been ceded to the facility, the insurer ceding the insurance policy must provide in writing to that eligible risk the specific reason(s) for the decision to cede the policy to the facility. obligations of agents: A licensed agent of an insurer authorized to solicit and accept premiums for motor vehicle insurance by the company he or she represents may not refuse on behalf of the company to accept any insurance application from an eligible risk. The insurer must immediately issue a binder for the coverage. The binder must be valid for a period of at least six months if cession of the particular coverage and coverage limits applied for are permitted in the facility. It is the responsibility of the agent to write the coverage applied for at what he or she believes to be the appropriate rate level. If coverage is written at the facility rate level and the company elects not to cede, the policy will be rated at a rate defined by statute. If coverage written at this rate is not acceptable to the company, then it must either be placed with another company or rated at the facility rate level by the agent. functions of facility- The facility reinsures the following coverages of motor vehicle insurance and in at least the following amounts of insurance: bodily injury liability: $30,000 for each person, $60,000 for each accident; property damage liability: $25,000 for each accident; medical payments: $1,000 for each person, but not available for motorcycles; uninsured motorist: $30,000 for each person; $60,000 for each accident for bodily injury; $25,000 for each accident property damage with a $100 deductible; and any other motor vehicle insurance or financial responsibility limits in the amounts required by federal law or federal agency regulation; by any law of North Carolina; or by any rule duly adopted under North Carolina General Statutes (chapter 150B) or by the North Carolina Utilities Commission. The facility requires each member to adjust losses for ceded business fairly and efficiently in the same manner as voluntary business losses are adjusted and to effect settlement where settlement is appropriate. board of governors-The facility is administered by a 12-member Board of Governors, who each have one vote, and the Commissioner, who serves ex officio without vote. The Board includes: Five members representative of the industry selected by member insurers: one each from the American Insurance Association, the Property Casualty Insurers Association of America, stock insurers not affiliated with those trade associations, non-stock insurers not affiliated with those trade associations, and an industry-at-large representative regardless of trade affiliation. serve 3 year terms powers and duties: to sue and be sued in the name of the facility; to receive and record cessions; to assess members on the basis of participation ratios established in the plan of operation to cover anticipated or incurred costs to operate the facility; to contract for goods and services from others to assure the facility's efficient operation; to hear and resolve complaints about the operation of the facility from any company, agent, or other interested party; to maintain all loss, expense, and premium data relative to all risks reinsured in the facility; to establish fair and reasonable procedures for members to share any loss on facility business that cannot be recouped and other costs, charges, expenses, liabilities, income, property, and other assets of the facility; to assess or distribute appropriate shares to members, which may be based on the member's premiums for voluntary business for the appropriate category of motor vehicle insurance or by any other fair and reasonable method; to establish procedures for reviewing claims practices of member companies so that claims are handled fairly and efficiently; and to adopt and enforce all necessary rules to accomplish the purpose of the facility. rates-may be made by the facility or by any licensed or statutory statistical organization or bureau on its behalf and must be filed with the Commissioner. termination-A member may not terminate insurance to the extent that cession of a particular type of coverage and limits is available except for the following reasons: nonpayment of premium named insured no longer resides in NC member company has terminated an agency contract or the agent has terminated the contract named insured at renewal did not meet the requirements named insured is no longer an eligible risk -Physical Damage Insurance--A physical damage insurer may not refuse to make physical damage coverage available to an applicant or to levy a surcharge or increased rate for physical damage coverage because the applicant has, or may acquire, auto liability insurance through the facility plan. An insurer or representative who fails to comply with this requirement may be subject to any or all of the following: suspension or revocation of a license or certification monetary penalty of not less than $100 nor more than $1,000 for each day during which a violation occurs an order for the violator to make restitution in an amount that would make whole any person harmed by the violation -Other Coverages--endorsements -Towing and Labor (NC 03 13, PP 03 13)-- pays for towing and labor costs each time the covered automobile or any non-owned automobile is disabled. also pay for locksmith service if keys to the auto are lost, broken, or accidentally locked in the auto -Extended Transportation Expenses (PP 03 02)-- provides additional coverage when the covered auto or the non-owned auto is temporarily disabled for more than 24 hours due to a collision or accident otherwise covered by the original policy. This coverage does not apply to theft of the automobile. insurer will pay up to $15 per day to a maximum of $450 (with no deductible) for transportation expenses incurred and for loss of use expenses if the insured becomes legally responsible for a loss to a non-owned auto. Transportation expenses include train, taxi, bus, and rental car costs. -Extended Non-Owned Coverage (PP 03 06)-- applicable only to the named individual, his or her family members, or the named individual's spouse identified The coverage provided by this endorsement does not extend to: a vehicle owned by an individual named in the endorsement a vehicle owned by a family member or spouse of the named individual a temporary substitute vehicle for either of the above -Coverage for Damage to Your Auto (PP 03 15)-- The Full Safety Glass Coverage (PP 03 15) endorsement modifies Part D - Coverage for Damage to Your Auto by adding a statement to the insuring agreement that the insurer will pay for the cost of repairing or replacing damaged safety glass on the insured's covered auto with no deductible. However, the insurer will pay only if: The Declarations indicates that Other Than Collision Coverage applies. The Schedule or the Declarations shows that there is a specific premium charge for full safety glass coverage.

Limits in Commercial General Liability Forms (CGL)

-contains six different limits of insurance products-completed operations: includes losses that result from products the insured has sold or work that the insured has completed personal and advertising injury: includes group of specific offenses such as libel, slander, and false advertising aggregate limit: is the max amount the insurer will pay for applicable claims during the policy period (usually one yr)

Characteristics of Insurance Contract/Policy

-contracts of adhesion (drafted by one party and is offered on a take-it-or-leave-it basis) -aleatory (exchange of unequal amounts) -personal -unilateral (only one party makes an enforceable promise; once the premium is paid only the insurer makes a promise that can be enforced) -conditional (its force and effect depend on certain actions of the policyholder)

Statements in a policy or application

All statements or descriptions in an insurance policy or in an application for a policy are considered representations and not warranties. A representation will not prevent a recovery on the policy unless it is material or fraudulent.

BOP Exclusions

-utility services exclusion -power surges exclusion -computers and data exclusion -fungus, wet rot, dry rot, and bacteria exclusion -collapse exclusion -product errors exclusion

PAP Policy Structure

3 major parts: -declarations page (coverage limits, deductible, premium, endorsement number as well) -personal auto coverage form (liability, medical payments, uninsured motorists, and physical damage coverages, duties after a loss, and general provisions) -any applicable endorsements that amend various policy provisions Part A- Liability Coverage Part B- Medical Payments Part C- Uninsured Motorists Part D- Coverage for Damage to Your Auto Part E- Duties after an Accident or Loss Part F- General Provisions

Vacancy

45- 60 days

The liability coverage of Lana's personal auto policy has split limits of 25/50/10. Lana is responsible for an auto accident in which three pedestrians are injured. What is the maximum amount her insurer will pay for the resulting bodily injury liability claim against Lana?

50,000

Split Limit

50/100/50 -first is per person -second is per occurrence -last is per occurrence to property

Mr. Cooper requires his office manager to use her car to visit the bank and post office on a daily basis. What symbol appears on the Dec page of his business auto policy to provide liability coverage for him when his office manager's car is used for his business?

A Symbol 9 on the Dec page of a BAP indicates that coverage is extended to non-owned autos that are used in connection with the named insured's business.

Bliss Brothers Dairy is located in a state that only allows workers compensation to be purchased from the state workers compensation fund. What term is used to refer to the state in which Bliss Brothers Dairy is located?

A monopolistic state is one that only permits workers compensation insurance to be issued and purchased by the state's workers compensation fund. The monopolistic states are North Dakota, Ohio, Washington, and Wyoming.

Temp License

A person can obtain a temporary insurance producer's license that is valid for up to 180 days. No examination is required. A temporary license can be granted to the following individuals: the surviving spouse or court-appointed personal representative of a licensed producer who dies or is mentally or physically disabled, in order to sell the producer's insurance business or allow enough time for the producer (if merely disabled) to recover and return to the business or to allow enough time to train people to run the producer's business; a member or employee of an agency that is licensed as an insurance producer; a person designated by a licensed producer who is entering active service in the armed forces; or any person whose licensure the Commissioner believes will best serve the public interest.

Most of Cyril's deliveries can be made with his van, but he occasionally borrows another company's box truck when handling a large order. Cyril's business auto policy (BAP) will cover his use of the box truck for any coverage that uses symbol 1 or:

According to the BAP, an auto that the insured borrows is a hired auto, and symbol 8 applies to hired autos.

All of the following might cause an insurer to revise a standard policy form at the time of renewal EXCEPT:

Adverse economic conditions

Maria called a plumber to clear a drain. The plumber became frustrated when he was unable to unclog the drain and started banging on the pipe under the sink. The pipe broke and caused considerable water damage to Maria's kitchen floor. What element of negligence did the plumber's actions constitute?

Breach of duty of care

Priscilla has a commercial general liability policy with policy dates from January 1 of this year to January 1 of next year and a retroactive date of January 1 two years ago. On what form is Priscilla's CGL policy written?

Claims-made Form Claims-made CGL forms include retroactive dates. A retroactive date is a date on or before the policy's inception date; only losses occurring after this date will be considered covered by the policy'assuming all other policy conditions and terms are met.

Mr. Edmonds is upset because he was cited for driving without auto insurance and his car was impounded. He claims he never knew he was required to purchase auto insurance. What do you explain to Mr. Edmonds when he insists there must be a way he can avoid buying auto insurance?

Compulsory insurance laws are a form of state legislation that requires motorist to furnish proof of insurance or other financial responsibility before registering a motor vehicle.

Homer's business owns four vehicles, one of which he uses for business and personal pursuits. Homer does not personally own an auto. What endorsement can Homer add to his business' BAP to provide him with auto liability when using rented or non-owned cars for his own personal use?

Drive Other Car Coverage

Edie crashes her car and submits a claim to the insurance company. When the insurance company learns that the car is owned by, and titled to, Edie's boyfriend, it denies her claim. For what specific reason is the claim denied

Edie doesn't have insurable interest in the car In order to collect a claim against an insurance policy, a person must have an insurable interest in the insured property'meaning the person will suffer financial harm when a loss to the property occurs.

In which of the following incidents would Elba's personal auto policy's medical payments coverage provide no protection for the person who was injured?

Elba's car strikes a jaywalking pedestrian. The named insured, family members, and occupants of Elba's auto are protected persons, but the pedestrian is not. However, Elba's liability coverage would presumably apply if the accident is Elba's fault.

Fidelity and Surety Bonds

Fidelity bonds- deal with the employer-employee relationship, and they usually indemnify the employer for loss resulting from an employee's dishonest acts. However, a public officials bond may cover losses that result from the faithful performance of a public official's duties. Surety bonds- involve a wide variety of relationships in which one party has a responsibility toward another party to fulfill certain duties.

Trucking Company is the named insured under a motor carrier policy. Which one of the following parties is not an insured under this policy's liability coverage?

Georgia, whose peaches are being transported on one of Trucking Company's trucks, is not an insured. The named insured, permissive users, and the owner of a borrowed trailer connected to a covered power unit are covered as insureds.

Several residents of the Shady Grove Nursing Home claim that they are missing some expensive jewelry. An investigation reveals that an attendant was stealing the jewelry. Which crime coverage endorsement would pay for these losses?

Guests' property

What is the term used to describe a worker's reduction in ability to perform work, either temporarily or permanently?

Impairment An impairment is a reduction in an employer's ability to perform work'either permanently or temporarily.

chart

Injury Weeks Allotted thumb 75 weeks first or index finger 45 weeks second or middle finger 40 weeks third or ring finger 25 weeks fourth or little finger 20 weeks great toe 35 weeks any other toe 10 weeks hand 200 weeks arm 240 weeks foot 144 weeks leg 200 weeks eye 120 weeks loss of hearing in one ear 70 weeks loss of hearing in both ears 150 weeks total loss of use of the back 300 weeks

When broken glass is among the damage resulting from the collision of a covered auto, the insured may choose to have the glass breakage covered as part of the collision loss. What is the purpose of this provision

It allows the insured to avoid paying separate comprehensive and collision deductibles.

When determining the estimated annual premium for workers compensation insurance, an underwriter typically considers each of the following factors EXCEPT:

Jobs of individual employees

Mohammad's thumb was crushed in a printing press accident while working for his employer, Arthur's Print Shop. The accident was the direct result of a design defect in a Jewel Printing Press that Arthur bought three months ago. Which of the following statements accurately describes how Big Insurance Company, which provides workers compensation insurance for Arthur, is most likely to handle this situation?

It will pay benefits to Mohammad and subrogate against Jewel.

Jim's Auto has a garage policy with garagekeepers liability. Because Jim's Auto has not purchased one of the two direct coverage options, on what basis will the garagekeepers liability coverage pay if a customer's car is damaged by a neighbor's falling tree?

It won't pay In order for the garagekeepers liability coverage to apply, the insured must be legally liable for the loss.

Some employees do not receive workers' compensation benefits because they are exempted from the state's workers compensation statute due to the nature of their work. Which of the following would not be exempt?

Mary Lou, a salaried real estate broker

Salvador, a carpenter, is a contractor for Coogan Construction Company, which builds houses. After Salvador completes a large framing job, Coogan has financial problems and cannot pay him. How might Salvador recover for his labor and materials?

Mechanics liens are legal claims placed on property by suppliers and contractors who supply materials or provide labor related to the property. Unlike most products, materials and labor that are incorporated into a construction project cannot be reclaimed by those who supplied the materials or labor. Mechanics liens guarantee the contractor payment for work completed.

Ursula borrowed Felix's laptop computer to shop online. She dropped the computer and damaged the hard drive, which resulted in the loss of data files that Felix used in his business. If he files a property damage liability claim under his commercial general liability policy, will it cover the loss?

No, because a CGL policy does not define electronic data as tangible property,

BOP

Office buildings are eligible if they are not over six stories tall or exceed 100,000 square feet. Apartment buildings of any size are eligible for BOP coverage. However, eligibility for BOP coverage is limited to construction contractors doing work at heights of no more than three stories of mercantile risks, motels not more than three stories tall, and office buildings not over six stories tall.

State Bank has a financial institution bond with seven separate insuring agreements. Which of these agreements is the bank's only source of recovery for money and securities lost in a fire, windstorm, or explosion?

On-premises insuring agreement

After receiving Shelton's claim that a car his policy covers has been stolen, his insurance policy obligates his insurer to do all the following EXCEPT:

Pay the claim.

Motor carriers are liable for their negligence in operating, maintaining, or using their motor vehicles. This includes liability for all of the following EXCEPT:

Personal and advertising injury

The Union Theater had two property policies in place the day it was destroyed in a fire. How did coverage apply under the policies if each made claim payment in proportion to the limits of liability contained in the policies?

Pro-rata When two primary policies provide coverage on a pro-rata basis, they share a loss in proportion to their limits of liability.

Who is ultimately responsible for ensuring that applicants receive the appropriate notices about their rights under the Fair Credit Reporting Act?

Producer

As newly elected county treasurer, Reid is required to post a public officials bond that guarantees

Reid will be able to pay any losses up to the bond's face amount. Unlike an insurance policy, the bond does not step in and pay losses; rather, it guarantees that the public official will be able to pay any losses up to the bond's face amount.

Ted is a carpentry contractor who builds decks, porches and room additions. Ted's business is eligible for a businessowners policy as long as

annual payroll is $300,000 or less and he does no work at heights greater than three stories

Augusta wants her business auto policy to provide liability coverage on every auto her business owns now or adds while her policy is in force, but she sees no need for coverage on any other vehicles. For liability coverage, what symbols should the declarations on Augusta's policy use?

Symbol 2 covers all autos owned at the beginning of the policy period plus any owned autos acquired during the policy period.

Side Street Restaurant owns a pick-up truck and a van that it uses in its business. It insures these vehicles using symbol 7. What is a limitation in coverage when symbol 7 is designated in the schedule of covered autos?

Symbol 7 imposes limitations with regard to newly acquired autos

What commercial crime endorsement provides coverage when an employee is held captive and forced to surrender money because of a threat to his physical safety?

The Extortion'Commercial Entities endorsement provides coverage for loss caused by the surrender of money, securities, and other property because of a threat to harm an employee, director, or other individual when being held captive.

State Regulation of Workers Comp

The Workers' Compensation Act of North Carolina ensures that an employee or an employee's family will receive workers' compensation benefits if the worker is injured or dies on the job. The Act requires companies doing business in North Carolina to carry workers' compensation coverage -NC Industrial Commission-responsible for administering the Workers' Compensation Act, identifying noncompliant businesses, and assessing penalties for noncompliance. -Who is covered- all businesses employing three or more employees on a regular basis (full or part time) Corporate officers, partners, and owners who are employed in the business may be exempted from coverage. However, corporate officer/employees are counted in determining whether the business has three or more employees. The following individuals are not covered by the Workers' Compensation Act: employees of businesses with less than three employees (with radiation exception noted); farm laborers when less than 10 full-time, non-seasonal farm laborers are regularly employed by the same employer; casual employees (employees who do not perform work pertaining to the regular course of the employer's business); residential domestic workers directly employed by the household; certain sawmill and logging operators with less than 10 employees; employees of certain railroads (who are covered by other state laws); federal government employees in North Carolina; sellers of agricultural products for commission or other compensation, which is paid by the producers who prepared the product for sale; and independent contractor -Workers Comp Insurance Premiums- policies are written annually and premiums may increase if there is an injury and may decrease if there is not -Injuries Covered- injury and personal injury refer only to injury by accident arising out of and in the course of employment, and do not include a disease in any form, except where it results naturally and unavoidably from the accident. -Occupational Disease- covered if: the occupational disease was due to a condition to which the employment significantly contributed, the employment was a significant factor in causing the disease's development, and the employment exposed the worker to a greater risk of contracting the disease than the general public. -Willful Misrep in applying for employment- compensation is not allowed when: The employee knowingly and willfully made a false representation as to his or her physical condition. The employer relied upon the employee's false representation, and the reliance was a substantial factor in the employer's decision to hire the employee. There was a causal connection between the employee's false representation and the injury or occupational disease -Notice to employer- an employee or his or her representative must give the employer written notice of the accident within 30 days. if not, no benefits will be paid -Filing claims- must be filed with the Industrial Commissioner within 2 years or losses the right to claim compensations -Employers obligation to report injuries- employer must immediately report all work-related injuries requiring medical attention to its insurance company or administrator if injury results in $2,000 in medical or more than one day lost work time -Waiting period-No compensation is allowed for the first seven calendar days of lost time unless the disability exceeds 21 days -Total Disability- the employer pays the injured employee a weekly compensation equal to 66⅔ of his or her average weekly wages, but no more than the maximum amount established annually or less than $30 per week -Permanent Diability- medical expenses during the healing period are covered Total loss of use of the part entitles the employee to 66⅔% of his or her average weekly wage multiplied by a specified number of weeks (see below). Benefits for less than total loss are figured on a percentage basis (look at chart) -Disfigurement and Damage to Other Organs-If the injury results in facial or head scars that seriously disfigure the person, or causes loss or permanent injury to an important organ of the body, the employee may be awarded additional compensation of up to $20,000. The maximum payable for serious bodily disfigurement is $10,000. No compensation is allowed for scars where the employee is paid for loss or partial loss of use of the same member. The employee is also entitled to payment for disfigurement due to the loss or crowning of permanent teeth. -Medical Compensaiton-Employers must provide, and injured employees must accept, all reasonable medical, surgical, hospital, nursing, rehabilitative services, vocational rehabilitation, and medicines, sick travel, and other treatment, including medical and surgical supplies, as may reasonably be required to effect a cure or give relief, and to lessen the disability period. The right to medical compensation ends two years after the last payment of medical or indemnity compensation unless, prior to the expiration of this period, the Commission upon request approves an extension due to a showing of the necessity of future medical treatment. -Vocational Rehab-if the employee has not returned to work or has returned to work but earns less than 75% of his or her average weekly wages and is receiving partial incapacity benefits, the employee may request vocational rehabilitation services. This includes education and retraining programs at a North Carolina community college or university so long as the education and retraining are reasonably likely to substantially increase the employee's wage-earning capacity. which the employer must pay -Death Benefits- The claim must be filed within 2 years of the date of death in the name of the dependents or next of kin of the deceased employee. Death is compensated by payment of 66⅔% of the deceased employee's average weekly wage at the time of the accident, but not to exceed the maximum compensation rate established annually for up to 500 weeks; reasonable actual funeral expenses of up to $10,000; and any medical expenses incurred due to the fatal injury or disease. A minor child or disabled spouse may receive more than 500 weeks of benefits. -Minors and Incompetents-employee under the age of 18 is entitled to receive the same benefits as other employees if injured. no time limitation applies -Denial of Claim- If an employer or insurer denies an employee's right to compensation, the employer must notify the Industrial Commission within 14 days of receiving written or actual notice of the injury or death or within reasonable additional time if approved. The employee must receive prompt written notification of denial of the claim, including: a detailed statement of the basis for the denial as to why the employee is not entitled to compensation, and information on the employee's right to request a hearing. -Agreements to Pay Compensation- must be approved by the Industrial Commission most common forms of agreements are those for the initial period of disability, for subsequent periods of disability, and the Compromise Settlement Agreement. (The Compromise Settlement Agreement provides for payment of all cash benefits and medical compensation due, and an additional sum in return for the employee's giving up his or her right to reopen the case based upon change of condition.) -Medical and Legal Fees- attorney: unlawful to accept or other person to accept a fee, gift, or any remuneration for any services in connection with the claim of a worker seeking compensation unless that fee or other consideration has been approved by Ind Commission fees for medical comp: Health care providers must submit their statements of charges for services to insurers or managed care organizations within 30 days of providing the service, 30 days after the end of the month during which multiple treatments were provided if the treatment is longer, or any other reasonable period of time as allowed by the Industrial Commission.

Arbitration is the submission of a dispute to one or more impartial persons for a final and binding decision. With regard to auto insurance, arbitration can be used to resolve disputes involving which coverage?

The personal auto policy (PAP) prescribes arbitration as a method for resolving UM/UIM disputes as to whether an insured is entitled to recover damages or the amount of damages to which the insured is entitled.

cover liability claims from consumers who eat the defective soup but not recall expenses.

The recall of products exclusion in the CGL policy precludes coverage for Soup's recall expenses.

Devon accidentally locked his car keys in his car and had to pay for a locksmith service to retrieve them. He knows that his original auto insurance policy does not cover this expense, but should check to see if it is covered in an endorsement on

Towing and labor costs coverage This coverage sometimes pays for locksmith service if car keys are lost, broken, or accidentally locked in the car.

The business auto policy (BAP) provides the broadest possible liability coverage when what symbol is used for liability?

When symbol 1 is selected, any auto—whether owned, nonowned, hired, or otherwise—is a covered auto for that coverage.

Ted, the insurance representative for Malone Company, does not understand the difference between insurance written on a stated amount basis or on an agreed value basis. How would you explain the difference to Ted?

With stated amount, Ted will recover no more than the stated amount, and may recover less if actual cash value is less. With agreed value, Ted recovers the listed value.

Risk

means the chance of loss can also be refered to the person, property, or activity that is insured

Grounds

refers to the rationale for an insurer's decision to cancel or nonrenew a policy

National Council on Compensation Insurance (NCCI)

serves as the filing agency and rating org for worker comp insurance in the majority of states developed standard workers comp and employers liability policy

CGL Policy Conditions

two sets- CGL conditions (address such subjects as the insured's duties in the event of an occurrence, the way in which the policy will be coordinated with other policies that might cover the same loss, and the way in which the policy's coverages will apply to multiple insureds) and common policy conditions ( part of most standard liability and property coverages) -bankruptcy -duties in the event of occurrence, claim, or suit (4 duties: notice of occurrence or offense (as soon as practical) notice of claim or suit (as soon as practical) cooperation with the insurer voluntary payments (do not make any payments to claimant without insurer's consent) ) -legal action against us -other insurance -premium audit -representations (statements on policy dec are accurate and complete) -separation of insureds -transfer of rights of recovery against others to us -when we do not renew (30 day notice) -your right to claim and occurrence info

Inez was notified by her insurer that her property and casualty insurance policy was being canceled. The cancellation provisions of the policy would typically NOT describe

where the policy may be canceled

What is the minimum amount of liability coverage required in a motor vehicle policy issued in North Carolina for bodily injury to or death of any one person in any one accident?

$30,000

CPP Selected Endorsements

-Ordinance or Law Coverage (CP 04 05) -Spoilage Coverage (CP 04 40) -Peak Season Limit of Insurance (CP 12 30) -Value Reporting Form (CP 13 10)

4 Property General Conditions-BOP

-control of property -mortgage holders -no benefit to bailee -policy period and coverage territory

Policy Structure

-declarations (front page; contains info that is unique (i.e. name, address, type of business organization, policy period, policy limits, deductible(s), and premium) -definitions (key words and phrases) -insuring agreement(s) (sets forth the insurer's basic promises under the policy) (additional coverages, extensions of coverages, supplementary coverages, optional coverages) -exclusions (eliminate/reduce overlapping coverage, remove coverage not needed by a typical insured, reduce the incentive to create losses and provide an incentive to prevent losses, remove coverage for uninsurable risks) -conditions (identifies general requirements of an insured and the insurer on matters such as loss reporting and settlement, property valuation, other insurance, subrogation rights, cancellation and nonrenewal)

Measuring Underwriting Results

-loss ratio -expense ratio -combined ratio (underwriting profit or loss)

Types of Property Loss

-real property (house) -personal property (stuff inside the house, i.e. furniture) Personal property is anything tangible that is located on land or within a building, and not a building or other structure attached to land. -direct or indirect

Methods of Handling Risk

-risk avoidance- refuse to own a car -risk control- risk reduction (having fire extinguishers) and risk prevention (shoveling snow off driveway) -risk sharing (pooling) -risk retention -risk transfer (having insurance)

Oscar rents a car for a business trip and runs into a pedestrian who was crossing the street in a marked crosswalk. Oscar's businessowners policy (BOP) includes a hired auto and nonowned auto liability endorsement. The endorsement's schedule indicates coverage for hired autos but not nonowned autos. The pedestrian wants Oscar to pay her medical bills. Oscar's BOP

covers this loss because the endorsement applies to a hired auto.

economic vs noneconmic damages

economic= lost wages (special) non= pain and suffering (general)

Building and Personal Property Coverage Form-CPP

includes: -building property (building and structures indoor and outdoor fixtures, property used to service the building, additions under construction, alteration, and repairs) -business personal property of the insured (property located on premises, includes property in the open and vehicles within 100 feet, all other personal property owned by the insured and used in the business, value of work, improvements and betterments, includes leased personal property) -personal property of others (covers personal property of others in the insureds care, custody, or control; includes property that the insured leases from others, lent to the insured, visitors, and employees)

Adverse Selection

means to "select against." It is the tendency of persons more likely to have a claim to buy and maintain insurance.

Symbol 5-6

owned autos subject to no-fault owned autos subject to a compulsory UM motorist law

Symbol 3-4

owned private passenger autos owned other-than private passenger autos

In connection with an upcoming construction project in which his firm hopes to participate, Frank furnishes a performance bond. His firm's bid is accepted, and the firm is awarded the project. If Frank should default in performing the contract, the surety's options include all the following EXCEPT

place a mechanics lien on the project. Because a mechanics lien is a legal claim placed on property by suppliers and contractors who have supplied material and labor, it would not be imposed by a surety.

Carryover Credit

there is no limit on the number of ICECs that can be carried over -military: exempt for one year

Loss

unwelcomed and unplanned reduction in economic value -direct or indirect

Part D- Coverage for Damage to Your Auto

"collision and other than collision"- apply regardless of negligence -Insuring Agreement- insurer agrees to pay for direct and accidental losses to the named insured's covered auto or any nonowned auto -Collision Coverage -Other-than-Collision Coverage- open perils protection for damage from perils other than collision (missiles/falling objects, fire, theft, explosion, earthquake, windstorm, hail, water, flood, vandalism, riot, contact with bird or animal, glass breakage) -Nonowned Autos- If a physical damage loss occurs to a "nonowned auto," the insurer will provide the broadest physical damage coverage applicable to any of the named insured's covered autos shown on the declarations. The physical damage part of the PAP recognizes two basic categories of nonowned autos: Vehicles not owned by or available for the regular use of the named insured or any family member while being used by the named insured or a family member are considered nonowned autos. For example, if Sam borrows his friend's car, or if he rents a car for a special occasion, these vehicles would both fall under this category. The broadest physical damage coverage available on any of Sam's owned autos would apply to the nonowned vehicle. Any auto or trailer the named insured does not own but uses as a temporary substitute for the covered auto that is unusable because of its breakdown, repair, servicing, loss, or destruction is also a "nonowned auto." For example, if John's car is undergoing repairs, and the dealership loans a car to him, damage to this car is covered under John's PAP. -Transportation Expenses- if covered auto has a loss, transportation expenses will be covered -Key Exclusions: wear and tear, freezing, mechanical breakdown, or road damage electronic equipment receiving or transmitting audio, visual, or data signals destruction or confiscation by govnt authorities owned trailers, camper bodies, or motor homes not listed in the declarations custom furnishing or equipment -Limit of Liability- lesser of the two amounts: ACV or the amount to repair/replace nonwoned trailer-1,500 equipment that reproduces, transmits audio, visual, data signals- 1,000

Lara's businessowners policy (BOP) shows a $500,000 limit on the covered building. What is the maximum amount she can recover for complete destruction of the building by a covered peril when the policy has been in force exactly six months?

$520,000 The BOP includes built-in inflation guard coverage that increases limits by 8 percent by the end of the policy period. Halfway through the 1-year policy term, Lara's limit on the building will be increased by one-half the 8 percent annual increase, which is 4 percent, or $20,000.

Gertrude's television set was stolen from her home. She bought it five years ago. The life span of the TV was expected to be ten years. A similar TV costs $1,200 today. Based on the actual cash value of the TV, how much can Gertrude recover for this loss?

$600 A similar TV would now cost $1,200. Because half of the normal life of Gertrude's TV has already passed (depreciated), the current actual cash value of the TV is half its current replacement cost, or $600.

Unauthorized Insurers

- Class 1 misdemeanor if the person or entity does not know that the insurer is an unauthorized insurer - Class H felony if the person or entity knew or should have known that the insurer is an unauthorized insurer

CGL Coverage C-Medical Payments

- primarily intended to pay for injuries sustained by members of the public while on the insured's premises or otherwise exposed to the insured's operations -only expenses incurred and reported to the insurance company within a year of date of accident are payable -provided at no-fault basis Exclusions: -athletic activities -bodily injury to any insured -bodily injury to a person hired to do work on behalf of any insured -bodily injury to a person injured on that part of the named insured premises that the person normally occupies -bodily injury to a person, whether or not an employee, if benefits for the bodily injury are payable or must be provided under workers comp -any injury excluded under coverage A -bodily injury included in the products-completed operations hazard

Other Regulation of Auto

-Aftermarket Crash Parts Regulation-- (afa non-OEM parts) parts not manufactured by the original equipment manufacturer (OEM), keeps cost of accident repairs and auto insurance down) -Residency Statements (statement requires that the insured be a resident of the state or indicates that the insured is not a resident of that state but the vehicle is principally garaged in that state) -Arbitration (method for resolving UM/UIM disputes as to whether an insured is entitled to recover damages or the amount of damages entitled,, it is the submission of a dispute to one or more impartial persons for a final and binding decision) -Notice of Rental Car Coverage (must contain clear notice whether covers collision to rental vehicles and any limitations) -Constructive Total Loss Claims (when the cost of repairing exceeds the property's pre-loss value,, 75-80% of vehicle ACV)

Executive and Professional Liability Insurance

-Directors and Officers (D&O) Liability Insurance--protects a corporation's directors and officers—and sometimes the corporation—against liability arising out of wrongful acts. It also reimburses the corporation in situations where the corporation indemnifies its directors and officers for their wrongful acts (wrongful acts protects a corporation's directors and officers—and sometimes the corporation—against liability arising out of wrongful acts. It also reimburses the corporation in situations where the corporation indemnifies its directors and officers for their wrongful acts) -Employee Benefits Liability (EBL) Insurance (CG 04 35, CU 04 03)-- deals with claims that involve errors or omissions in administering employee benefit plans. Coverage is usually provided through an endorsement to the employer's commercial general liability policy by using Employee Benefits Liability Coverage (CG 04 35) endorsement. Employee benefits liability coverage may also be added to an Insurance Services Office, Inc. (ISO), commercial umbrella liability policy with Employee Benefits Liability Coverage (CU 04 03) endorsement attached. These endorsements provide coverage for the insured employer's liability arising out of errors or omissions in the administration of employee benefits programs. Specifically, the endorsements cover damages the employer must pay in connection with providing information to employees about eligibility for, or the scope of, various employee benefits plans aggregate and per employee limit apply -Fiduciary Liability Insurance--A fiduciary exercises discretionary authority over, or has control in, managing an employee benefit plan or its assets. Fiduciary liability insurance covers claims alleging the breach of these duties. -Employment Practices Liability Insurance (EPLI)--(EPLI) can be purchased as a stand-alone policy that only covers employment practices liability, as an endorsement to a D&O liability policy, or as part of an executive liability package policy that also provides D&O and fiduciary liability coverage. coverage for workplace torts (wrongful termination, sexual harassment, retaliation, etc) -Medical Professional Liability Insurance-- 5 types of medical professional liability insurance coverage: physicians professional liability-(covers:Doctors can be held legally liable to their patients when they suffer injuries resulting from: misdiagnosis or failure to diagnose inappropriate treatment delay in treatment failure to treat injuries from therapeutic treatments injuries from equipment and premises failure to admit or inappropriate discharge intentional torts (such as assault, invasion of privacy, sexual misconduct) hospital professional liability-(covers: following acts of negligence can also be made against hospitals: failure to admit to a hospital, or inappropriate discharge failure to monitor or observe failure to notify appropriate physicians or seek appropriate consultations failure to prevent falls or other self-inflicted injury failure to hire qualified personnel failure to use care in credentialing physicians or allied healthcare professional failure to adequately supervise personnel failure to staff adequately failure to use appropriate operating policies and procedures allied healthcare professional liability-(2 major classes of risk: institutions (testing labs, day surgery centers, blood bans, and ambulance) and individuals (emergency medical technicians, psychologists, nurses, pts, etc) nursing home liability insurance-(covers the liability exposures of facilities that provide medical, nursing, custodial, social, and community services over an extended period of time) managed care liability insurance-( such as a health maintenance organization (HMO) or a preferred provider organization (PPO), is a healthcare provider engaged in delivering medical services on a managed-care basis) -Errors and Omissions (E&O) Liability Insurance-- lawyers and professional liability insurance: provide attorneys with liability coverage for financial loss suffered mainly (but not solely) by clients and arising from acts, errors, and omissions in providing professional, legal services provide coverage for personal injury perils (such as defamation and invasion of privacy) since allegations of such acts often arise in the legal arena 2 main types of claims: litigation or nonlitigation Claims against attorneys can be classified by type of legal error: administrative (e.g., failure to file suit before the statute of limitations expires) substantive (e.g., as a result of his lawyer's failure to search a public record, a client buys real estate with a defective title) client relations (e.g., failure to get a client's consent before settling a case in which the client was injured in an auto accident) intentional wrongdoing (e.g., filing suit only to harass a defendant) accountants professional liability insurance: provide coverage for financial loss resulting from the delivery of professional accounting services exclusions: fraud intentional acts criminal acts bodily injury property damage architects and engineers (A&E) professional liability insurance: policies cover individuals involved in designing or preparing plans and specifications for construction projects. Architects and engineers (A&E) liability coverage, also referred to as design liability insurance, covers claims involving three functional areas: (1) design, (2) management (i.e., construction project supervision), and (3) payment authorization does not exclude bodily injury and property damage insurance agents errors and omissions insurance: cover claims resulting from errors and omissions caused by insurance agents and brokers 2 major classes of claimants are clients and insurers: Among the most common allegations made by clients are: failure to place coverage promptly failure to place the type of coverage requested failure to increase the coverage limit failure to recommend needed coverage failure to explain limitations of coverage verbal extensions of nonexistent coverage inadvertent cancellation or failure to renew failure to place coverage with a solvent insurer Among the most common allegations made by insurers against insurance agents and brokers are: failure to follow underwriting guidelines failure to exercise reasonable diligence in discharging duties to the insurer failure to act in the best interests of the insurer failure to revise coverage on request failure to cancel on request failure to disclose material information about an insured or applicant exceeding underwriting authority real estate brokers errors and omissions insurance: cover people engaged in buying, selling, leasing, or otherwise dealing in real estate on behalf of others Typical claim allegations against real estate brokers for which coverage is afforded include misrepresentations about creative financing arrangements, failure to reveal important information about the surrounding physical features of a property, failure to identify title problems, failure to advise a buyer or seller about a better price, negligence in screening prospective tenants who file for bankruptcy protection or damage the leased premises, and appraisal errors that result in inaccurate valuations. technology errors and omissions insurance: policies cover companies that sell technology-related products and services to third parties covers 5 major types of exposures: errors or omissions product failure security failure professional liability (Loss caused by the insured technology professional's infringement of copyright, trademark, or trade dress) personal injury (Loss caused by the insured technology professional's acts, errors, or omissions while supplying a product or providing a service, such as defamation or invasion of privacy.) cyber liability and data breach coverage: protect consumers of technology products or services insurance pays for the costs arising from the data breach, including those incurred in notifying customers of the breach, credit monitoring, defending claims by state and federal authorities, fines and penalties, and losses from identity theft. Coverage also extends to liability arising from the content of a website and property exposures from business interruption, loss or destruction of electronic data, computer fraud, funds transfer fraud, and extortion by hackers. misc errors and omissions liability coverage: policies are therefore generic professional liability policies written to cover a broad range of professionals including, but not limited to interpreters, sports agents, interior decorators, process servers, detective agencies, auctioneers, customs house brokers, title abstractors, and franchisors, to name a few. Consultants are one of the most common types of businesses covered by MPL policies.

Federal Regulation of Insurance

-Fair Credit Reporting Act (FCRA)- consumer protection law that allows insurers to use credit reports in determining whether an applicant is eligible for insurance -privacy protection- Gramm-Leach-Billey Act (GLB)- bars a financial institution from disclosing a consumer's nonpublic info to an unaffiliated third party unless it provides consumers with notice and ability to pot out Federal Trade Commission Act (FTCA)- makes deceptive or unfair trade practices illegal Health Insurance Portability and Accountability Act (HIPAA)- requires enforcement of privacy rules by the Dept of Health and Human Services for health plans, health care providers, and healthcare clearinghouses to limit use and disclosure of protected health info -Terrorism Risk Insurance Act (TRIA)

Workers Comp and EL

-Information page (dec page; item 3.A. lists the state or states to which workers comp (part one) of the policy applies item 3.B. lists the dollar limits that apply to part two, employers liability item 3.C. describes the states to which part three, other states insurance, applies -General section who is insured (in partnerships, each partner is insured; in joint venture only the entity is covered covered workplaces (all that are listed) applicable law ("the workers or workmen's compensation law and occupational disease law of each state or territory named in Item 3.A. of the Information Page.") -Part One-Workers Comp-- provides coverage for statutory benefits payable under the laws of the covered states specified in the policy insurer also agrees to defend, at its own expense the insurer also agrees to pay: reasonable expenses incurred at the insurer's request (but not loss of earnings) premiums for bonds to release attachments and for appeal bonds litigation costs taxed against the insured interest on any judgments expenses incurred by the insurer The insured is "responsible for any payment in excess of the benefits regularly provided by the workers compensation law." -Part Two-EL-- provides coverage for the employer for liability claims by employees or their dependents that fall outside the protection of the workers comp law Employers liability insurance applies to bodily injury, including death, by accident or disease. For a bodily injury to be covered, the following criteria must be met: The bodily injury must "arise out of and in the course of" the employee's employment with the insured. The injured worker's employment must be necessary or incidental to the insured's work in a state or territory listed on the Information Page. If the bodily injury is caused by an accident, the accident must occur during the policy period. If the bodily injury is caused by disease, the disease must be caused or aggravated by the conditions of the employment. In addition, the employee's last day of last exposure (to the conditions that cause or aggravate the bodily injury by disease) must occur during the policy period. The suit for damages must be brought in the United States, its territories or possessions, or Canada. exclusions: Although the employers liability insurance portion of the policy expressly covers third-party-over actions, the contractual liability exclusion eliminates coverage when the basis of the suit is indemnity under contract. Suppose, for example, that a subcontractor working on a construction project agrees to hold the general contractor harmless with regard to liability arising out of the acts or omissions of the general contractor (in a state where this type of indemnity clause is valid). An employee of the subcontractor is injured because of the general contractor's negligence. The employee collects workers compensation benefits under the subcontractor's workers compensation insurance policy and then sues the general contractor for its negligence. The general contractor is found negligent, but the subcontractor is obligated to pay the damages imposed by the court because of its hold harmless agreement with the general contractor. Because of the contractual liability exclusion, the subcontractor's employers liability coverage will not respond. However, the subcontractor's general liability insurance policy will respond because of the exception for contractually assumed liability in the commercial general liability (CGL) policy's employers liability exclusion. Punitive or exemplary damages that are required because of bodily injury to an employee employed in violation of the law are excluded (e.g., an illegally employed minor). Bodily injury to an employee who is employed in violation of the law is excluded, but only if the insured or any executive officer of the insured has knowledge, prior to the injury, that the employee is employed in violation of the law. Injury claims that come under workers compensation law, occupational disease law, unemployment compensation law, disability benefits law, or other similar laws are not covered. Coverage is precluded for bodily injury intentionally caused or aggravated by the insured. Bodily injury that occurs outside of the United States, its territories or possessions, and Canada is excluded. However, this exclusion does not apply to bodily injury to a citizen or resident of the United States or Canada that occurs while he or she is temporarily outside of these countries. Damages arising out of coercion, criticism, demotion, evaluation, reassignment, discipline, defamation, harassment, humiliation, discrimination against, or termination of any employee, or any personnel practices, policies, acts, or omissions (employment-related practices) are not covered. Bodily injury to any person in work subject to federal acts is excluded. The acts are enumerated to include the Longshore and Harbor Workers Compensation Act (LHWCA), the Nonappropriated Fund Instrumentalities Act, the Outer Continental Shelf Lands Act (OCSLA), the Defense Base Act, and the Federal Coal Mine Safety and Health Act (FCMS&HA) of 1969. Also excluded are any other federal workers compensation law or other federal occupational disease law, or any amendments to these laws. Bodily injury to any person in work subject to the Federal Employers Liability Act (FELA), any other federal laws obligating an employer to pay damages to an employee due to bodily injury arising out of or in the course of employment, or any amendments to those laws. Prior to the addition of this exclusion, Part Two of the policy provided coverage for injuries arising out of FELA unless excluded by endorsement. The exclusion is now added to the policy form. Also excluded is bodily injury to a master or member of the crew of any vessel. Damages payable under the Jones Act are excluded. Fines or penalties imposed for violation of federal or state law are excluded. Coverage is precluded for damages payable under the Migrant and Seasonal Agricultural Worker Protection Act (MSAWPA) of 1983 and under any other federal law awarding damages for violation of those laws or regulations. limits of liability: The bodily injury by accident—each accident limit shown on the Information Page is the most the insurer will pay for all claims arising out of any one accident, regardless of how many employee claims or how many related claims (such as a loss of consortium suit brought by an injured worker's spouse) arise out of the accident. basic limit is $100,000 The bodily injury by disease—policy limit shown on the Information Page is the most the insurer will pay for employee bodily injury by disease claims in the policy period (usually one year), regardless of the number of employees who make such claims. basic limit is $100,000 The bodily injury by disease—each employee limit shown on the Information Page is the most the insurer will pay for damages due to bodily injury by disease to any one employee. basic limit is $500,000 -Part Three-Other States Insurance-- provides coverage for liabilities payable under the workers comp statutes of specified additional states the only "other states" that may not be listed are the mono fun states and territories (ND, OH, WH, WY, Puerto Rico, and US Virgin Islands) and states already designated for workers comp/EL -Part Four-Your Duties If Injury Occurs the insured has the following duties. Notify the insurer of the injury "at once." Supply the insurer or the insurer's agent with the names and addresses of the injured parties and the witnesses and any other information the insurer may require. Promptly give the insurer all notices, demands, and legal papers concerning the claimant's suit. Cooperate with the insurer and assist the insurer, if necessary, in investigating, settling, or defending a claimant's suit. Do nothing after an injury occurs that would interfere with the insurer's right to recover from others. Make no voluntary payments, assume no obligations, and incur no expenses, except at the insured's own expense. Provide immediate medical attention and any other services that are required by the workers compensation law. -Part Five-Premium The premium for a work classification is determined by multiplying the rate by the appropriate premium basis. remuneration is the most common premium basis for workers comp (includes payroll and all other remuneration paid or payable during policy period) -Part Six-Conditions insurer has the right to inspect insured's workplace to help determine the insurability of the workplace and the premium to be charged insured's rights or duties cannot be transferred to another without written consent of insurer cancellation: can mail or deliver written notice, not less than 10 days advance notice

Part A-Liability

-Insuring Agreement--provides overall framework for liability coverage -Defense Costs (the duty to indemnify and the duty to defend) - Supplementary Payments -Liability Exclusions: intentional injury or damage property damage to owned or transported property (cannot sue themself) care, custody, or control bodily injury to an employee public or livery conveyance use (i.e. taxicab) business use-commercial trucks nonpermissive use vehicles with fewer than four wheels or recreational vehicles noncovered autos vehicles located inside a facility designed for racing -Transportation Network Companies--covers traditional car-pooling or ride sharing activities but transportation for a fee is usually excluded -Limit of Liability--(per person limit for bodily injury) -Out-of-State Coverage--provides that if the laws of a particular state require higher limits than the nonresident motorist has when he enters the state, his coverage automatically expands to match the minimum limits the host state requires -Other Insurance--insurer will only pay its share of liability loss if other applicable liability insurance is in force

Other Crime Coverages/Endorsements

-Lessees of Safe Deposit Boxes (CR 04 09)-- covers an insured's property that is kept in a safe deposit box in a bank or other depository premises covers securities and property other than money or securities exclusions: exchanges or purchases fire transfer or surrender of property voluntary parting of title to or possession of property loss to property -Securities Deposited with Others (CR 04 10)-- cover securities that the named insured has deposited with others that are not in a safe deposit box or a vault. It provides coverage for theft, disappearance, or destruction of securities deposited with others: while the securities are anywhere inside a named custodian's premises; while the securities are being transported outside the custodian's premises by the custodian or an employee of the custodian; and while the securities are on deposit by the custodian with a named depository for safekeeping. exclusions: exchange or purchases transfer or surrender of property voluntary parting of title to or possession of property loss to property owned by the depository or held by the depository as collateral or in trust for more than 30 days loss to property at any premises occupied by the insured -Guests Property (CR 04 11)-- protects an insured—such as a hotel, motel, hospital, or nursing home— that has guests staying on its premises. It covers the insured's legal liability for damage to guests' property while it is: in safe deposit boxes in the insured's business premises; or inside the insured's premises or in the insured's possession. coverage also applies to legal expenses "premises" is defined to mean the interior of the portion of a building at the address shown in the schedule that is occupied by the insured's business. exclusions: the insured's release of any person or organization from liability liability assumed in a written contract—However, this exclusion does not apply to the insured's pre-loss agreement with a guest to increase up to $1,000 any statutory liability the insured would otherwise have for damage to guests' property inside the insured's premises or in the insured's possession. fire, insects, animals, wear and tear, gradual deterioration, or inherent vice vehicles, vehicle accessories, and property in or on vehicles samples and articles held for sale (except property in safe deposit boxes) damage caused by the spilling or leaking of food or liquid (except property in safe deposit boxes) damage to property in the insured's care for laundering or cleaning. -Safe Depository (CR 04 12)-- designed for businesses other than financial institutions that provide safe deposit boxes for their customers. There are two insuring agreements: Under section 1.a., coverage applies to the insured's legal liability for loss to customers' money, securities, or other property. Coverage also applies to legal expenses incurred in defending a suit that results from the insured's refusal to pay for loss to guests' property, provided that the insured has the insurer's written consent to defend against the suit. Amounts paid under this extension are in addition to the limit of insurance shown in the endorsement schedule. Under section 1.b., coverage applies to loss to customers' securities or other property (but not money) resulting from destruction, damage, or actual or attempted robbery or burglary damage, regardless of whether the insured is legally liable for the damage. Coverage also applies to resulting damage to the premises or its exterior, provided the insured is the owner or is liable for the damage, and to resulting damage to a locked safe, vault, or safe deposit box. coverage applies to loss of or damage to customers' property under three sets of circumstances: (1) while the property is being kept in a safe deposit box inside a vault in the insured's premises; (2) while the property is otherwise stored in a vault in the premises; and (3) while the property is elsewhere in the premises during the course of being deposited in or removed from the safe deposit box or vault. exclusions: With respect to section 1.a., liability assumed in a written contract With respect to section 1.b, loss from fire (except loss from damage to a safe deposit box, safe, or vault) With respect to section 1.b, loss from insects, animals, wear and tear, gradual deterioration, or inherent vice -Extortion-Commercial Entities (CR 04 03)-- provides commercial entities with protection against kidnap and ransom losses. it covers loss caused by the surrender of money, securities, or other property as the result of: a threat to harm an employee, director, trustee, partner, an LLC member or manager, or proprietor of the insured, or a relative or invitee of any of these, when such a person is, or allegedly is, being held captive; or a threat to damage the insured's premises or property inside the premises. exclusions: loss of property surrendered before "a resonable effort" has been made to report to law enforcement must take place within the U.S. its territories or possessions (Puerto Rico and Canada) no coverage outside policy period broader coverage for this exposure is available under CR 00 40/41 -Kidnap/Ransom and Extortion Forms (CR 00 40, CR 00 41)-- CR 00 40- Kidnap/Ransom and Extortion Coverage Form CR 00 41- Kidnap/Ransom and Extortion Policy The "coverage form" is for use as part of a package policy that would include the common policy conditions form. The "policy" is used when the kidnap/ransom and extortion coverage is being provided as a monoline policy has 4 insuring agreements: kidnap/ransom and extortion-direct loss-- pays for the loss of money, securities, or other tangible property surrendered as a ransom payment as a result of the actual or alleged kidnap of an "insured person," as defined. also provides coverage for loss of money, securities, or other tangible property surrendered as an extortion payment as a result of an extortion threat communicated to the insured to: harm an insured person; damage property or premises (the insured's premises or the residence of an insured person); introduce a virus into the insured's computer system; contaminate or render the insured's goods substandard; and distribute or use the insured's proprietary information. kidnap/ransom and extortion-expenses incurred-- provides coverage for certain expenses incurred by the insured in connection with an actual or alleged kidnapping or an extortion threat covered under the direct loss insuring agreement. The covered expenses are set out in the form's definition of the term "expenses." fees and costs are payable in addition to the limit of insurance shown in the declarations Other covered expenses are subject to the limit shown for this insuring agreement: fees and costs of independent negotiators, forensic analysts, public relations consultants, and interpreters; costs of security guards hired on the recommendation of the security firm shown in the declarations; travel costs; salary and other financial benefits normally paid by the insured to an insured person; medical expenses (including psychiatric care and plastic surgery) of the kidnapped insured person; interest on loans taken by the insured to pay a ransom or extortion demand; reward money paid to an informant whose information leads to the arrest and conviction of the perpetrator; and personal financial losses of the kidnapping victim suffered as a result of being unable to attend to their own financial matters. exclusions: product recall expenses incurred as a result of a threat to contaminate the insured's product; and loss of earnings due to any interruption in the insured's business. detention or hijack-- pays for expenses resulting from the detention or hijack of an insured person. Detention refers to the holding of a person against his or her wishes by or with the tacit approval of a government, or by an insurgent group. Hijack refers to the holding of a person against his or her wishes while in transit via air, water, or land. exclusions: political or military activity travel documents (no coverage for expenses resulting from the failure of an insured person to maintain required travel documents, such as passports and visas) violation of laws or foreign countries (unless the detention results from false allegations) in-transit delivery of property-- pays for theft, disappearance, confiscation, or destruction of money, securities, or other property while in the custody of a messenger delivering it as a ransom or extortion payment

CGL Endorsements

-Limited Fungi or Bacteria Coverage (CG 24 25) Endorsement-- coverage subject to separate aggregate limit- states the max amount that will be paid for all bodily injury, property damage, and coverage C medical payments arising out of "fungi or bacteria" -Limited Pollution Liability Extension Endorsement (CG 24 15)-- involve pollution releases from owned, occupied, rented, or loaned premises and locations on which the insured is performing non-environmental operations; also applies to at or from a storage tank or other container, ducts or piping which is below or partially below the surface of the ground or water or which at any time has been buried under the surface of the ground or water and then subsequently exposed by erosion, excavation or any other means.. subject to aggregate limits -ISO Pollution Liability Coverage Forms (CG 00 39, CG 00 40)-- Pollution Liability Coverage Form Designated Sites (CG 00 39)—provides claims-made insurance for bodily injury and property damage liability that arises from covered "pollution incidents," and also for pollution cleanup costs the insured is required by law to pay. Pollution Liability Limited Coverage Form Designated Sites (CG 00 40)—sometimes referred to as the "limited form," provides the same bodily injury and property damage liability coverage as form CG 00 39, but provides no coverage for cleanup costs. Bodily Injury and Property Damage Liability Insuring Agreement: The bodily injury or property damage must be caused by a pollution incident, i.e., an "emission, discharge, release or escape of pollutants into or upon land, the atmosphere, or any watercourse or body of water." The term "pollutants" here is a defined term and has the same meaning as in the CGL coverage form: "any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste. Waste includes materials to be recycled, reconditioned or reclaimed." The emission, discharge, etc., of pollutants must occur in the "coverage territory"—the United States, its territories and possessions, Puerto Rico, Canada—and must be from either an "insured site" (the location identified in the policy declarations) or a "waste facility" (a licensed waste storage, disposal, processing. or treatment facility never owned by or rented or loaned to the named insured, where waste from operations of an "insured site" is legally consigned for delivery or delivered). Coverage is provided on a claims-made basis. The claim for bodily injury or property damage must be made against any insured, in writing, during the policy period or an applicable extended reporting period. Coverage is also governed by a retroactive date: the "pollution incident" out of which a claim arises must have commenced no earlier than the retroactive date specified in the policy declarations. This situation involves claims brought during the policy period for bodily injury that occurred after the policy's retroactive date. But there is no coverage under the pollution liability policy for such claims because the pollution incident that caused the bodily injury occurred two years before the retroactive date. Reimbursement of Mandated Off-Site "Cleanup Costs" Insuring Agreement (CG 00 39 Only): A separate insuring agreement of ISO's pollution liability coverage form CG 00 39 provides coverage for the statutorily required costs associated with cleaning up pollution away from the insured's premises Exclusions: -parallel to CGL exclusions Limits of Insurance: -2 limits: an aggregate limit representing the total amount payable for all bodily injury and property damage (and clean up under 00 39) losses that occur during the policy year; and an "each pollution incident" limit applicable to all bodily injury and property damage (and cleanup cost) losses arising from any one pollution incident. Conditions: 8 are identical to CGL policy conditions and one- notice of cancellation

Federal Workers Comp Laws

-Longshore and Harbor Workers Comp Act (LHWCA)-- provides no-fault workers comp benefits to employees other than masters or crew members of a vessel injured in maritime employment-generally, in loading, unloading, repairing, or building a vessel -Outer Continental Shelf Lands Act (OCSLA)-- extends LHWCA benefits to those other than masters or members of the crew of a vessel working on a continental shelf -Jones Act-- provides seamen with a negligence remedy for on-the-job injury without having to overcome employer defenses of assumption of the risk or fellow servant liability. -Federal Employers Liability Act (FELA)-- provides employees of interstate railroads with a negligence remedy for on-the-job injury without having to overcome employer defenses of assumption of the risk or fellow servant liability

Motor Carrier Regulations

-Motor Carrier Act (MCA) of 1980-- requires that certain motor vehicles carry minimum limits of insurance coverage to satisfy public liability and environmental restoration claims that may arise from accidents while those vehicles are transporting property. endorsement MCS-90 must be attached to the auto liability -MCS-90 Endorsement-- 30 day cancellation requirement

Post Assessment Insurance Guaranty Association (Guaranty Fund) (NCIGA)

-NCIGA- protects policyowners and claimants if an insurer fails to perform its contractual obligations -also helps the commissioner detect and prevent insurer insolvencies -divided into three separate accounts: auto, workers comp, and account for all other insurance covered -pays the lesser of the insurer's contractual obligation: if it had not become insolvent, or the amount of each covered claim that is more than $50, but less than 300K -powers and duties: The association may investigate claims brought against it and adjust, settle, or pay covered claims to the extent of the association's obligation and deny all other claims; handle claims through its employees or through one or more insurers or other persons designated as servicing facilities; reimburse each servicing facility for obligations of the association paid by the facility and for expenses incurred by the facility while handling claims on behalf of the association; and pay all other authorized association expenses. Duties of the association include, but are not limited to, the following: employ persons necessary to handle claims and perform other duties of the association; borrow funds necessary to allow the association to act in accord with its plan of operation; sue or be sued; negotiate and become a party to any contracts necessary to carry out its purposes; refund contributions to member insurers when necessary; and act as a servicing facility for any entity recommended by the association and approved by the Commissioner

CGL Occurrence and Claims-Made Coverage Triggers

-Occurrence: insured is covered for injury or damage that occurred during the policy period even if the policy has been expired for years when the actual claim is filed problem is the possibility that bodily injury/property damage during the policy period will not result in a claim until years later -Claims-Made: coverage applies only if the policy is in force when the claim is made, and even then it may place restrictions on coverage with respect to operations performed before a specific date problem is the possibility that a claim made during the policy period will arise from bodily injury/property damage that occurred years earlier To help avoid coverage gaps created by a discontinuity in the provisions of an insured's claims-made coverage, the claims-made CGL policy requires the insurer to make extended reporting period (ERP) coverage available in any of the following situations: The policy is canceled or not renewed by the insurer. The policy is canceled or not renewed by the insured. The insurer renews or replaces the policy with one specifying a later retroactive date. The insurer renews or replaces the policy with another policy that has an occurrence or other non-claims-made coverage trigger. When one of these situations arises, the insured is entitled to a basic extended reporting period (BERP), which applies automatically for no additional premium and lasts for up to five years. The insured may also buy a supplemental extended reporting period (SERP), which begins upon expiration of the automatic BERP and runs indefinitely.

BOP-Liability Endorsement

-Protective Safeguards (BP 04 30) -Utility Services-Direct Damage (BP 04 56) -Utility Services- Time Element (BP 04 57) -Hired Auto and Nonowned Auto (BP 04 04) -Identity Fraud Expense Coverage (BP 14 01)

Exclusions (indirectly restrict coverage)

-The requirement that bodily injury and property damage must arise out of an "occurrence" limits coverage to events that are fortuitous, that is, accidental. -The alternative coverage triggers that can be used in writing CGL insurance—claims-made or occurrence—define how a particular policy in a sequence of policies covering the same insured will respond to liability arising out of a particular occurrence or claim; in effect, the coverage trigger determines whether a given CGL policy will cover a given allegation of liability. -The concept of "insured" status defines which individuals and organizations will have coverage under the policy in a particular set of circumstances.

Truckers and Motor Carrier Coverage Forms

-The truckers policy was suitable for motor carriers that operate only on a "for-hire" basis, while the motor carrier policy is appropriate for either private motor carriers or motor carriers that operate in both arenas—private and for hire. -Liability-- identical to the liability of BAP -OI: The general rule that coverage is primary for owned autos and excess for all other autos is subject to a number of exceptions in these two policies, primarily having to do with who is actually responsible for the operation of the autos, either by statute or by written agreement. -Physical Damage Coverage- Physical damage coverage provisions under the truckers and motor carrier policies are essentially the same as under the BAP. The single difference is the exclusion for loss to a covered auto while it is in anyone else's possession under a written trailer interchange agreement.

Part C-UM/UIM Coverage

-UM vehicle? -A vehicle with a negligent driver who has no auto liability policy in force at the time of the accident is included. A hit-and-run vehicle is also included in the definition. The provision states that the "uninsured" vehicle must "hit" the named insured or family member, a vehicle they are occupying, or a covered auto for coverage to apply. Not all states, however, apply this physical contact rule strictly. Some states specify an exception to this rule if the facts of the case can be corroborated by independent parties. Also encompassed in the definition of "uninsured motor vehicle" is the situation in which there is an applicable liability policy at the time of the loss, but the insurer denies coverage or becomes insolvent. -Insuring Agreement--coverage does not apply when insured is at fault -Exclusions-- bodily injury sustained by an insured while occupying or struck by a vehicle owned by the insured which is not covered under his or her policy; bodily injury sustained by any insured while occupying the covered auto when it is used as a public or livery conveyance (e.g., a taxi); and bodily injury sustained by any insured using a vehicle without a reasonable belief that the insured is entitled to do so, with certain exceptions. -Limit of Liability--per person limit

Selected Endorsements WC&EL

-Voluntary Compensation and Employers Liability Coverage Endorsement (WC 00 03 11 A)-- when the insured wants to offer statutory benefits to exempt employees to whom workers comp benefits do not apply; group or class of employee to be covered must be described in the endorsement schedule along with the state -Sole Proprietors, Partners, Officers, and Other Coverage Endorsement (WC 00 03 10)-- used when the above has elected to become subject to the workers comp law of a state -Anniversary Rating Date Endorsement (WC 00 04 02)-- informs the insured that the premium, rates, and the experience rating modification factor may change on the anniversary rating date -Wavier of Our Right to Recover from Others Endorsement (WC 00 03 13)-- used to waive the right of subrogation against third parties named in the endorsement schedule -Longshore and Harbor Workers Comp Act Coverage Endorsement (WC 00 01 06 A)-- extends the definition of workers comp law to include LHWCA and by deleting LHWCA exclusion from EL -Outer Continental Shelf Lands Act Coverage Endorsement (WC 00 01 09 A)-- provides coverage for exposures under the law -Maritime Coverage Endorsement (WC 00 02 01 A)-- coverage is provided for insureds with true maritime exposures; The coverage territory is the continental United States, Alaska, Hawaii, and Canada, and while sailing directly between those ports. -Federal Employers Liability Act Coverage Endorsement (WC 00 01 04 A)-- used to provide separate limits of liability for FELA exposures; can be used to extend coverage to a state not listed on info page

Obligations of the insurer after a loss

-abandonment -salvage (refers to damaged property; the leftover value pretty much) -subrogation -appraisal -the insurer's settlement options

Underwriter's Risk Analysis

-an application -agency report -loss history data (loss run- a report the insured would request from its existing insurer listing each claim, date of claim, and description, and amount paid) -motor vehicle record (MVR) -inspection report and photos -loss control report -credit info

Physical Damage Coverage (Garage)

-applies to vehicles owned, hired, or held for sale by the insured -applies only to autos named insured owns outright (i.e. service vehicles), named insureds interest in vehicles that are financed, and named insured's and any creditor's interest in vehicles that are financed -The physical damage coverage insuring agreement states that the insurer will pay for direct and accidental loss or damage to a covered auto or its equipment under comprehensive, specified causes of loss, or collision coverage. -Exclusions: Losses caused by wear and tear, freezing, and mechanical or electrical breakdown are excluded, unless caused by another loss covered in the policy. Blowouts, punctures, and other road damage to tires are excluded, unless caused by a covered loss such as a collision. There is no coverage for loss to any covered auto leased or rented to others unless it is rented to one of the named insured's customers while the customer's auto is left for service or repair. (The garage policy is not intended to be used to cover an auto leasing business.) Coverage is precluded for loss to any covered auto while it is used in any organized racing, demolition, or stunting activity. Loss caused by declared or undeclared war, insurrection, or other military action is not covered. There is no coverage for loss caused by the explosion of a nuclear weapon or its consequences. Likewise excluded is loss caused by nuclear reaction or radiation, or radioactive contamination. Loss to radar or laser detectors or any jamming device intended to elude or disrupt such equipment is excluded. There is no coverage for loss to tapes, records, or other sound reproducing devices designed for use with sound-reproducing equipment. Loss to any electronic equipment (and accessories used with it) that receives or transmits audio, visual, or data signals and that is not designed solely for the reproduction of sound is excluded. Coverage is precluded for loss to a covered auto caused by or resulting from voluntarily parting with the auto by trick or under false pretenses. Loss to a covered auto due to diminution in value is excluded. Expected profit is not covered, including loss of market or resale value. Loss to a covered auto displayed at a location not shown in Item Three of the declarations is precluded if the loss occurs after more than 45 days after use of the location begins. Under collision coverage, loss to any covered auto while being driven or transported more than 50 miles is excluded. Under specified causes of loss coverage, there is no coverage for loss to any covered auto caused by or resulting from collision or upset of a vehicle transporting it. -Limit of Insurance-Physical Damage-- The most that will be paid for loss to any one covered auto is the actual cash value at the time of loss or the cost to repair or replace the property with like kind and quality.

when a loss involved more than one cause

-concurrent causation- if a given loss involves more than one peril, and at least one of the perils is covered by the policy, then the loss is covered

Conditions and Endorsements-PAP

-duties after an accident or loss- advise insurer of loss details and circumstances, cooperate with the insurer in the loss, notify police if struck by hit-and-run, take reasonable steps to protect property from further harm -general provisions- insurer's right to recover payment, policy territory, termination -amendment of policy provisions endorsements- modifies the policy to comply with legal and regulatory requirements in the named insured's state -Towing and Labor Costs Coverage (PP 03 03)- This endorsement pays up to the amount specified in its schedule for towing and labor charges if the covered auto becomes disabled. also includes nonowned. -Joint Ownership Coverage (PP 03 34)- vehicles jointly owned by two or more resident relatives other than married, resident individuals, or nonresident relatives (two or more persons related by blood, marriage, or adoption) -Miscellaneous Type Vehicle Endorsement (PP 03 23)- broadens the definition of covered auto to include miscellaneous type vehicles (motor homes, or similar type, all-terrain vehicle, dune buggies, or golf carts) has a passenger hazard exclusion? when motor home policy is written, the Miscellaneous Type Vehicle Amendment (Motor Homes) (PP 03 28) should also be attached -Extended Non-Owned Coverage-Vehicles Furnished or Available for Regular Use (PP 03 06)- often used for an insured who is provided with a company car, expands liability and medical payment coverage (coverage applies on a excess basis), only applies to insured listed (have to add names to get covered), no coverage for: a loss involving vehicle owned by named insured, vehicle owned by family member, or temp substitute vehicle for owned vehicle -Personal Injury Protection (PIP) Coverage- in states where no-fault auto insurance is available, offers first-party benefits (medical expenses, loss of income, funeral expenses, and similar expenses without regard to fault) -Limited Mexico Coverage (PP 03 21)- policy territory extends to Mexico, limitations: accident has to occur within 25 miles of U.S. Border, limited to 10 days, no physical damage coverage is provided for repairs made in Mexico, duty to defend applies if the original suit for damages is brought to the U.S., coverage exists only if there is primary Mexican insurance

Exclusions-BOP Liability

-expected or intended injury -contractual liability -liquor liability -workers comp -pollution -auto,watercraft,aircraft -transport of mobile equipment -professional liability -war -property damage (sold, given away, or abandoned, impaired property) -product recall -electronic data -nuclear energy -distributions of materials in violation of statutes

Compulsory Insurance Laws vs Financial Responsibility

-fin resp= require the motorist to furnish evidence of financial responsibility demonstrating that he or she has complied with the financial responsibility law (3 jurisdictions) -compul law= require motorists to furnish proof of financial responsibility as a condition of registering the auto or procuring state inspections (49 jurisdictions)-- designed to eliminate the problem of the "first bite" Weaknesses in these laws include the following: Because the law prescribes only a minimum amount of liability insurance, some accident victims may not receive full compensation. The number of uninsured motorists may not decline as the result of compulsory liability laws. Some drivers avoid licensing their vehicles due to the high cost of liability insurance. Other drivers purchase liability insurance only to register the vehicle and then allow coverage to lapse. Protection to accident victims may still not be provided due to accidents with hit-and-run drivers, drivers whose insurer is insolvent, and out-of-state drivers.

Commercial Crime Policy

-general definitions: provide coverage for named perils theft, burglary, robbery -coverage and forms: Commercial Crime Coverage Form (Loss Sustained Basis) (CR 00 21)-- include only one employee theft insuring agreement (per loss basis) Government Crime Coverage Form (Loss Sustained Basis) (CR 00 24) (CR 00 25)-- there are two employee theft insuring agreements (per loss and per employee basis) -crime coverage forms: The form includes eight insuring agreements, but all eight coverages do not necessarily apply. None of the coverages is mandatory. The insured chooses which coverage or coverages to purchase, and coverage applies only to the insuring agreements for which a limit of insurance is shown in the declarations. coverages: (going to list separate cards for these) employee theft forgery or alteration inside the premises-theft or money and securities inside the premises-robbery or safe burglary of other property outside the premises computer fraud funds transfer fraud money orders and counterfeit money -exclusions: (Commercial): dishonest acts of the named insured, partners, or members dishonest acts of employees learned of by you prior to the policy period acts of employees, managers, directors, trustees, or representatives confidential information indirect loss legal fees, costs, and expenses pollution, nuclear hazards, war, and governmental action (Government): loss caused by employees that are required by law to be individually bonded loss caused by treasurers or tax collectors dishonest acts of the insured acts of employees whose dishonesty was known to the insured prior to the inception of the policy applies to dishonest acts learned by the insured's officials dishonest acts of insured's officials, employees, or reps

Insurance Information and Privacy Protection Act

-governs how insurers and their producers treat personal health info and personal fin info from individuals -purpose: establish standards for collecting, using, and disclosing information gathered in an insurance transaction; maintain a balance between an insurer's need for information and the public's need for fairness in insurance information practices; help individuals determine what information is being collected about them and to verify or dispute its accuracy; limit the disclosure of information collected during an insurance transaction; and help individuals obtain the reasons for adverse underwriting decisions. -consumer report- provides info on a persons credit worthiness, credit standing, capacity, character, general reputation, personal characteristics, and lifestyle, and is used in connection with an insurance transaction -insurancesupport organization- any person or entity who regular collects and assembles information about individuals for the primary purpose of providing the info to an insurance institution or agent -investigative consumer report- contains info about a person's character, general reputation, personal characteristics, and lifestyle and is obtained through personal interviews with the person's neighbors, friends, associates, and acquaintances -pretext interview- interview whereby a person, in attempt to obtain info about another person pretends to be someone he or she is not; pretends to represent a person he or she is not in fact representing; misrepresents the true purpose of the interview; and/or refuses to identify him- or herself upon request.

No-Fault Auto

-injured insured recovers damages resulting from auto accidents from his or her own insurer rather than from another party's insurer -only compensates for economic damages (not general) however must U.S. motorists forego that -intended to reduce auto liability coverage costs Personal injury protection (PIP)- general damages 1. compulsory no-fault- (9 states) most important variation is the manner in which an injured partys right to sue under tort law is restricted and the point at which the right is no longer restricted tort threshold- measure of minimum injury severity, once reached allows the insured to sue at-fault party for noneconomic damages 2 types: verbal (seriousness of injury) and monetary (medical costs) 2. add-on benefits- add on first party benefits (medical expenses, lost wages, funeral expenses, and other economic losses) are paid without regard to fault 3. choice no-fault- policyholders in the few states that offer choice no fault have the choice to covered on a no-fault basis or not (lower premium if chose no-fault)

Liquor Liability Coverage Forms (CG 00 33, CG 00 34)

-insuring agreement-- states that the insurer will pay those sums that the insured becomes legally obligated to pay as damages because of injury to which the insurance applies if liability for the injury is imposed by reason of selling, serving, or furnishing alcoholic beverages. The term "injury" means all damages, including bodily injury and property damage, and includes damages for care, loss of services, or loss of support -exclusions: Expected or intended injury; Risks covered by workers compensation insurance; Risks covered by employers' liability insurance; and War Liquor license not in effect; Injury arising from the product; and Any injury for which other insurance is or would be provided. -supplementary payments--specifies expenses for first aid administered at the time of the covered event -who is an insured--The named insured, executive officers, directors, stockholders, and employees are all insureds under this policy as are members and managers of a named insured limited liability company. If an individual is designated in the declarations as a named insured, both that individual and the individual's spouse are insureds -limits-- an aggregate limit and an each common cause limit. The aggregate limit is the most the insurer will pay for all claims for injuries as the result of the selling, serving, or furnishing of alcoholic beverages. The each common cause limit is the most the insurer will pay for all injury to any number of entities resulting from the selling, serving, or furnishing of any alcoholic beverage to any one person

Unfair Trade Practices

-misrepresentation -twisting (false or misleading statement or comparison about an insurance policy in order to induce someone to lapse, surrender, terminate, retain, or convert an insurance policy or buy a policy with another insurer) -false advertisement -defamation (no one can publish or circulate false, deceptive, or misleading statement about the financial condition of an insurer designed to injury) -boycott, coercion, and intimidation -false financial statements -stock operations -unfair discrimination -rebates and inducements -unfair claim settlement

Employee Theft- CR

-most important but also most complex blanket vs scheduled coverage (CR 04 08)-- blanket- means coverage applies to theft by any individual meeting the definition of "employee" without any need to list names of individuals (per loss basis) scheduled- available by endorsement (Employee Theft-Name or Position Schedule (CR 04 08)) (per employee basis) covered property-- money, securities, and other property (tangible property other than money and securities that has intrinsic value) (data/computer are excluded) covered cause of loss-- applies to loss of or damage to covered property resulting directly from theft committed by an employee; forgery caused by an employee is covered under here but not under the separate forgery agreement covered employees-- def of employee located in the def section at the end of each of the forms: an individual in the insureds service whom the insured has the right to direct and control while he or she is performing services for the insured,, leased workers, temp workers, interns, and guest students are also considered employees except when they have custody of property outside the insureds premises Former employees, partners, directors, trustees, and limited liability company (LLC) members and managers are considered employees while performing consulting services for the insured not considered: independent contractors, agents, brokers, etc. (persons who are paid by the insured to perform a service but are not under control of insured) prior dishonesty provisions-- all forms exclude employee theft loss caused by a dishonest employee once that dishonesty is known to the insured The termination as to any employee provision immediately terminates coverage under the employee theft acts of employees learned of by you prior to the policy period exclusion expressly eliminates coverage for loss provision applies to employee theft, dishonesty, and acts committed before or after the hire -exclusions: The inventory shortages exclusion precludes coverage for claims that are based solely on inventory computation or profit and loss figures. The reason for this exclusion is that inventory shortages can be the result of causes other than employee theft. However, inventory records can be used to support the amount of loss claimed if the insured establishes, without reliance on this information, that a loss has occurred. The trading exclusion eliminates coverage for "loss resulting directly or indirectly from trading, whether in your name or in a genuine or fictitious account." The warehouse receipts exclusion eliminates coverage for "loss resulting from fraudulent or dishonest signing, issuing, canceling or failing to cancel, a warehouse receipt or any papers connected with it."

Policy or service fees

-must display a sign in a prominent place (i.e., a place that allows the sign to be seen and read from any part of the office lobby) informing the applicant in large bold print that a policy or service fee will be charged and stating the amount of that fee; -obtains the applicant's written consent on a separate "Policy or Service Fee Consent" form each time a policy or service fee is charged, which includes the date and amount of each fee charged; and -issues a dated receipt for the payment of a policy or service fee either separately from the policy premium receipt or stated separately on the receipt issued for the policy premium.

Who is an insured

-named insured (type of business) -employees and volunteers -other insureds (insured status from specific legal relationships with the named insured; i.e real estate manager and temp custodians and legal reps)

Other Insurance

-noncurrency- when losses are not concurrent; slows the settlement process down -primary and excess (primary comes first until limits are exhausted then excess is used) -pro rata (proportional coverage between the two limits For example, if Policy A provides $100,000 of coverage and another concurrent policy, Policy B, provides $50,000 of coverage, the first policy will pay two-thirds of any loss. For a $75,000 loss, Policy A will pay $50,000, and Policy B will pay $25,000.) -contribution by equal shares ( If two concurrent policies cover the same loss, both policies pay the loss equally until one policy is exhausted. Past that point, the other policy pays the entire loss unless or until its limits are exhausted)

North Carolina Rate Bureau (NCRB)

-nonprofit, unincorporated rating bureau, created by statute to provide services and programs for the insurance industry in NC -The purpose of the Bureau is to establish and administer classifications, rules, rates, loss costs, rating plans, policy forms, and policy provisions for property insurance, automobile insurance, and workers' compensation insurance. -property, auto, and workers comp -each member pays an initial fee and annual fee for each category of insurance written -An insurer may deviate from the rates promulgated by the Bureau if the insurer has filed the proposed deviation with the Bureau and the Commissioner, the proposed deviation is based on sound actuarial principles, and the proposed deviation is approved by the Commissioner. An insurer may terminate a deviation only if the deviation has been in effect for a period of six months before the effective date of the termination and the insurer notifies the Commissioner of the termination no later than 15 days before the effective date of the termination. -notice of coverage or rate change- 15 days

How much coverage applies (limits)

-policy limits and sublimits (policy limit- max amount insurer will pay for covered loss; sublimit- max amount that insurer will pay for certain specific types of property i.e. jewelry or trees) -deductibles (part of covered loss the insurer does not pay) -coinsurance provisions (amount of loss * limit of insurance/ limit of insurance required - deductible= loss recovery; that is for partial loss, if total loss than the insured would pay the full 80% and the insured the remainder 20%) -restoration of limits provisions (when items have been lost or total loss, there is nothing left to insurer= coverage ceases and the insurer returns any unearned premium)

Forgery or Alteration- CR

-protects insured against loss due to the forgery or alteration of checks, bank drafts, promissory notes, and similar documents drawn on the insured's bank account defines forgery as "the signing of the name of another person or organization with intent to deceive; it does not mean a signature that consists in whole or in part of one's own name signed with or without authority, in any capacity, for any purpose." coverage also applies to legal expenses Signatures that are produced or reproduced electronically, mechanically, or by other means are considered the same as handwritten signatures. Coverage territory for this insuring agreement is anywhere in the world. No deductible applies to the coverage provided for legal expenses. The insured is required to include the covered instrument (check, note, etc.) involved in the loss when providing the insurer with proof of loss. If the actual instrument cannot be furnished, the insured must provide the insurer with an affidavit as to the amount and cause of the loss. -exclusions: dishonest acts of the named insured, partners, or members dishonest acts of employees learned of prior to the policy period acts of employees, managers, directors, trustees, or representatives confidential information indirect loss pollution, nuclear hazards, war, and governmental action]

Loss Valuation

-replacement -actual cash value (ACV) (replacement cost minus depreciation) -functional replacement cost ( Functional replacement cost is the amount that it would cost to repair or replace the damaged building with less costly common construction materials and methods that are functionally equivalent to the obsolete, antique, or custom construction materials and methods that were originally used.) -market value -stated amount -agreed value

3 Cancellations-Auto (PAP)

-the policy may be cancelled during the policy period by the named insured -the rights of the insurer to cancel the PAP (at least a 10 day notice, some to 15-20) -stipulates tighter restrictions on an insurer after the policy has been in effect for at least 60 days or if it is a renewal or continuation policy (insurer can cancel when: nonpayment of premium, driver's license has been suspended or revoked, or material misrepresentation of the policy)

Commercial General Liability (CGL) Policy

-typically provides business's core liability coverage -covers general liability exposures (4 groups): --premises and operations liability (liability arising out of conditions in and around the insured's premises as well as its current on- and off-premises business operations.) --products and completed operations liability (liability arising out of the insured's products or its completed work as defined in the definitions of "your product" and "your work.") --contractual liability (the voluntary assumption of obligations that do not exist under common law.) --independent contractor (liability imposed on the person who hires an independent contractor to perform work on its behalf.) -Policy components: common policy declarations CGL declarations CGL coverage form (core of policy; contains insuring agreements and limitations that define the policy's coverage. 3 coverages: A-bodily injury and property damage liability B-personal and advertising injury liability C-medical payments ) broad form nuclear exclusion common policy conditions -supplementary payments-- payments in any of these categories are made in addition to the policy's applicable limits of insurance: All expenses the insurance company incurs. This would encompass all necessary costs incurred by the insurer, such as attorney fees, private investigator fees, expert witness fees, and the like. The cost of bail bonds required to be furnished because of motor vehicle accidents or violations involving any vehicle to which coverage applies. Under the CGL policy, this usually involves mobile equipment. The insurer does not assume any responsibility to obtain these bonds but only agrees to pay up to $250 toward the cost of them. The cost of bonds for the release of attachments that have been made on the assets of the insured. The insurer is not obligated to pay that portion of the bond premium associated with a bond penalty in excess of the policy limit. In other words, under a policy with an occurrence limit of $1 million, the insurer is not obligated to pay the cost of a bond in an amount of more than $1 million. Again, the insurer does not assume any responsibility to furnish the bonds (i.e., to become a surety for the insured), but only to pay the premium on a required bond. Reasonable expenses incurred by the insured at the insurer's request to assist in the investigation or defense of any claim or suit. In the current CGL coverage forms, loss of earnings is covered up to $250 a day because of time off from work to assist the insurer in investigation or defense of a claim or "suit." All costs—such as court costs—assessed against the insured in a covered suit. Interest on judgments against the insured. Two types of interest on judgments can be imposed by the courts—prejudgment interest and post-judgment interest—and both are covered by supplementary payments. -Broad Form Nuclear Energy Exclusion -Limit of Insurance: 6 policies general aggregate limit—This limit is the most the insurer will pay for all bodily injury and property damage claims (other than those involving the products-completed operations hazard), and all personal and advertising injury claims during the policy period. Once the general aggregate limit has been used up by the cumulative payment of losses in these categories, no more losses in the same categories will be paid during the policy period. products-completed operations aggregate—This other aggregate limit represents the most the insurer will pay for all bodily injury and property damage claims that arise out of the products-completed operations hazard during the policy period. each-occurrence limit—This limit is the most the insurer will pay under Coverage A for the total of all bodily injury, property damage, and medical expenses incurred as a result of any one occurrence. Claims that are governed by the each occurrence limit also will, of course, reduce one of the policy's remaining aggregate limits, depending on whether the claims fall within the products-completed operations hazard or not. (If the claim does not fall within the products-completed operations hazard, its amount reduces the policy's general aggregate limit.) personal and advertising injury limit—This limit is the most the insurer will pay for the total of all personal and advertising injury sustained by any one person or organization. The rules that govern the rating of the CGL policy specify that the personal and advertising injury limit will equal the each occurrence limit. Losses paid subject to the personal and advertising injury limit are also deducted from the policy's general aggregate limit. damage to premises rented to you limit—The CGL property damage exclusion, which would otherwise eliminate coverage for damage to property the insured rents, specifically does not apply to damage by fire, or to damage to premises rented to the named insured for 7 days or less. The coverage that remains intact by virtue of this exception is subject to its own limit of insurance. That limit applies to damage to any one premises, and is set at $100,000. It is a subset of the each occurrence limit, which applies to all property damage in any one occurrence. medical expense limit—This is the Coverage C limit, applicable to all first aid and covered medical expenses for bodily injury to any one person resulting from any one accident. This limit is also governed by the each occurrence limit. The basic limit for medical expense is $5,000. The policy's limits of insurance apply regardless of the number of insureds against whom a claim is made; the number of claims or suits brought against the insured(s); or the number of persons making a claim or bringing suit.

Uninsured/underinsured Motorists

-uninsured (UM) coverage- designed to protect individuals from financially irresponsible drivers who have not purcahsed auto liability ins and do not have the financial resources to compensate any people they injured through their negligence often coupled with UIM -underinsured (UIM) coverage- suffered by an insured when an accident is caused by a motorists who is not sufficiently insured UM applies when the negligent motorists has no liability coverage UIM applies when the negligent drivvers liability coverage is not enough to cover the damages most be provided (cannot be rejected) in 17 states in an additional 6 jurisdictions, UM coverage is mandatory but UIM is not Depending on the jurisdiction, uninsured motorists coverage may apply to accidents involving any of the following situations. No liability insurance applies to the auto driven by the at-fault motorist. There is liability insurance on the at-fault motorist's auto, but its limits are less than the amounts required by law. The motorist's insurer denies coverage. The motorist's insurer is or becomes insolvent. The motorist's insurer refuses to admit coverage except conditionally or with reservation. The accident involves a hit-and-run vehicle whose driver or owner cannot be identified.

Legal Concepts

-utmost good faith- both parties are completely honest and disclose all relevant facts; the insured relies on the insurer to fulfill its promises -representation- statement made at the time the contract was formed -misrepresentation- false statement of a material fact (info that would effect a insurer's underwriting or claim settlement decision) -concealment- deliberate withholding of material facts -warranty- guarantees that something is true and will remain true -waiver- takes place when the party to a contract voluntarily gives up a right that the party knows he or she holds -estoppel- exists when a party cannot enforce a right that it has voluntarily waived by its past conduct

Factors in computing premiums WCL

-workers comp rates apply per $100 of payroll - A preliminary unmodified premium is determined by multiplying the appropriate rates for the applicable job classification by the premium basis (covered payroll divided by $100) -job classification determines rates -payroll (exposure base for worker comp) estimated based on historical records and expectations for the current period -the premium shown on the policy's Information Page is merely an estimate. The final premium is determined when the policy period ends by using the actual premium basis. If the final premium is more than the deposit premium paid by the insured, the insured must pay the insurer the balance. If it is less, the insurer will refund the balance to the insured. -experience modification factor- rating method of premiums based on their own individual loss histories A modifier of 1.0 indicates average loss experience, and a 1.0 mod will consequently produce a modified premium that equals the unmodified premium. A debit modifier (greater than 1.0) indicates higher-than-average losses and produces a corresponding increase in the premium. Similarly, a credit modifier (less than 1.0) reduces the employer's premium. -premium discount -dividend plans-- may provide a return premium to the insured after policy expiration 2 types: flat dividends- apply regardless of loss experience sliding scale dividend plans- dividend becomes payable only if the losses incurred during the policy period are low A workers compensation participation or dividend plan allows qualified employers to share in their insurers' profitability. Dividends are paid from the insurer's divisible surplus, which is essentially premiums that exceed the insurer's expenses and liabilities. The employer receives a dividend from the insurer based on the favorable performance of its policy when claims are lower than anticipated and the insurer earns a profit. -retrospective rating-- optional rating program that uses a formula for factoring an insured's current loss experience into the final premium Workers compensation insurance rates apply per $100 of payroll. A preliminary unmodified premium is set by multiplying the appropriate rates for the applicable job classification by the premium basis (the covered payroll divided by $100). Classifications categorize employers who have common types of exposures. The classification is used to rate the entire business of the employer, not the individual occupations of employees. The exposure base for workers compensation insurance is payroll. An estimated payroll is used to determine an estimated premium at the start of the policy period. The unmodified premium may be adjusted by an experience modifier and a premium discount.

Auto Dealers Form

2013 ISO introduced this form to replace the garage coverage form this form accomplishes: restructured provisions of the garage policy to clarify some coverage provisions; separated auto coverages from non-auto coverages under policy sections titled "Covered Autos Coverages" and "General Liability Coverages"; provided the separate auto coverages and non-auto coverage sections with their own definition of an insured and their own set of exclusions; made it possible to describe the auto coverages and non-auto coverages sections using existing standard language: business auto policy terms and conditions for auto coverages; and terms and conditions of the commercial general liability policy for non-auto coverages; and brought personal and advertising injury coverage and medical payments coverage (provided by endorsement in the garage policy) under general liability coverage. The form also added a section for "acts, errors or omissions liability coverage" to insure against the insured's: failure to comply with required disclosures related to credit or lease terms failure to comply with required disclosures related to odometer readings in the sale or lease of autos; errors or omissions committed by the insured as a licensed insurance agent or broker transacting insurance connected with the sale or lease of an auto; and liability for defective title arising from the sale or lease of an auto. endorsements: endorsements for adding persons and organizations as insureds optional exclusions that can be used for underwriting purposes (such as an exclusion for communicable diseases); optional enhancements to coverage (such as employee benefits liability and product withdrawal expense).

State Regulation of Auto Insurance Policies

3 branches: -legislative (pass laws that control the content and structure of insurance policies that are sold in the state) -judicial (interprets the law--courts) -executive (state insurance departments; administer and enforce insurance laws)

Covered Auto-PAP

4 types: -vehicles shown in the declarations (must be owned or leased for 6 months) -newly acquired autos (insured becomes owner of during the policy, GVM must be notified, if additional vehicle then 14 days to notify, if replacement then no notify) -owned trailers (vehicle designed to be pulled by a private passenger auto or pickup or van) -temporary substitute autos (vehicle the insured rents/borrows while their car is undergoing repairs or maintenance is covered)

Employees of businesses in North Carolina complying with the Workers' Compensation Act are permitted to sue their employers for work-related injuries under which circumstance?

A co-worker intentionally assaulted the employee. Businesses in North Carolina complying with the Workers' Compensation Act and their employees may not be sued by employees for work-related injuries, except for intentional assaults and conditions so grossly unsafe as to make injury substantially certain.

Trailer Interchange Coverage (CA 23 98)

A trailer interchange agreement is a contract under which a motor carrier agrees to exchange trailers with another carrier -a type of liability coverage that responds when the insured is legally obligated because of a covered loss to a trailer in the insured's possession -Coverage is subject to only a few exclusions, such as nuclear hazard, war or military action, wear and tear, and loss of use.

All of the following are treated as uninsured motor vehicles for purposes of the personal auto policy EXCEPT:

A vehicle that does not carry uninsured motorist coverage

An insurer must notify its current customers of its privacy policies or practices at least once every how often?

An insurer or agent must notify its current customers of its privacy policies or practices at least once every year.

To obtain workers' compensation coverage in North Carolina, an employer has three options. Which of the following is NOT one of those options?

Applying to an industrial insurance fund Employers can comply by maintaining workers' compensation insurance, self-insuring, or becoming a member of or contributing to a self-insured fund.

Anna discovered that a clerk in her leather goods shop accepted twelve $100 counterfeit bills. Will any of this $1,200 loss be covered by Anna's business owners policy (BOP)?

Coverage of $1,000 is provided for loss due to the insured having accepted counterfeit money or money orders that are not paid on presentation to the issuer.

Tuholski Real Estate submitted a vandalism claim under its BOP. If the insurer reduced its claim payment by 15 percent because the insured building was vacant at the time of loss, which of the following perils caused the loss?

Fire If the building is vacant for more than 60 days at the time of loss, the BOP excludes coverage for the perils of vandalism, theft and attempted theft, building glass breakage, and sprinkler leakage. Recovery for losses caused by all other perils is reduced by 15 percent if the building is vacant at the time of loss

Naples Pizza is eligible for a BOP based on its operations and the square footage of its 4 locations. For which of the following reasons is Naples Pizza not eligible for coverage on a BOP?

Its gross sales are too high

Jonathan runs a shoe repair business as a sole proprietor, and his wife Laura keeps the books for the business. Jonathan is the only named insured listed under the shoe shop's commercial general liability (CGL) insurance policy, and he has no other business activities. Laura and her sister Amy also operate a fish restaurant as a partnership. Who is an insured under the shoe shop's CGL policy?

Jonathan and Laura are insureds, but only with respect to the shoe business. When a sole proprietor is listed as a named insured, that individual and his or her spouse are automatically insured with respect to the business the named insured is conducting as a sole proprietor.

Josiah runs a luggage repair business as a sole proprietor, and his wife Bonnie keeps the books. Josiah is the only named insured listed under the shop's commercial general liability (CGL) insurance policy. Bonnie's sister Ruth is a part-time employee of Josiah's business. Who is covered as an insured under the luggage repair shop's CGL policy?

Josiah, Bonnie, and Ruth with respect to any business activities When a sole proprietor is listed as a named insured, that individual and his or her spouse are automatically insured with respect to that business; employees are also considered to be insureds.

Mary Jane's husband died from a compensable work-related injury. She delayed filing a claim immediately for death benefits due to her grieving, but did so six months after her husband's death, which was seven months after the injury occurred. Did she wait too long to file her workers' compensation claim?

No, her claim had to be filed within two years after the employee's death

Which of the following statements BEST describes the transfer of risk via an insurance contract?

Not all risks are transferrable via insurance contracts

CGL Coverage B-Personal and Adv Injury Liability

Personal and advertising injury comprises the following seven types of offenses: false arrest, detention, or imprisonment; malicious prosecution; wrongful eviction from, wrongful entry into, or invasion of the right of private occupancy of a room, dwelling, or premises that a person occupies, committed by or on behalf of its owner, landlord, or lessor; oral or written publication of material that slanders or libels a person or organization or disparages a person's or organization's goods, products, or service; oral or written publication of material that violates a person's right of privacy; the use of another's advertising idea in the named insured's advertisement; and infringing on another's copyright, trade dress, or slogan in the named insured's advertisement. Exclusions: -knowing violation of rights of another -material published with knowledge of falsity -material published before the policy period -criminal acts -contractual liability ? -breach of contract (breach of contract claim that arises out of a specifically defined offense—misappropriation of someone else's advertising idea in the named insured's advertisement.) -quality of performance of goods-failure to conform to statements (keeps advertising injury coverage from becoming a product or service guarantee.) -wrong description of prices -infringement of copyright, patent, trademark, or trade secret -insureds in media and internet-type business -electronic chat rooms or bulletin boards -unauthorized use of another's name or product -pollution -pollution-related -war

Derek takes his car to an auto dealership that loans him a car while his own is being repaired. Derek checks his personal auto policy to see what coverages apply to temporary substitute autos. He learns that a temporary substitute is not considered a covered auto for purposes of

Physical damage (collision and other-than-collision) coverage

Colleen's business does not own an auto, but an endorsement to her businessowners policy (BOP) provides nonowned auto liability coverage. Daily business-related trips to the post office are made by employees who use their own cars. En route to the post office, Bernice, one of Colleen's employees, has an accident. The injured party sues Bernice and Colleen. How will the BOP address this claim?

The BOP covers Colleen but not Bernice. The nonowned auto coverage of the BOP's hired auto and nonowned auto liability endorsement protects the insured business for claims involving a nonowned auto but does not cover an employee owns the nonowned auto.

For the past four years, Cheryl's business has been insured by four different insurers under commercial general liability (CGL) insurance policies with an occurrence trigger. For a claim to be covered by Cheryl's current policy:

The injury or damage must have occurred during the current policy period.

During the night, a mechanical breakdown in the Clair Building's heating system filled the building with smoke. Clair had to hire a cleaning service to remove the resulting soot. Does the causes of loss—basic form coverage of Clair's building and personal property cover this damage and, if so, why or why not?

There is coverage under the smoke peril. An exception to the mechanical breakdown exclusion applies to a resulting loss from any covered cause, and smoke is a covered cause of loss.

Computer Fraud- CR

This insuring agreement covers the loss of money, securities, and other property caused by the use of a computer to fraudulently transfer covered property from inside the insured's premises or a banking premises to a person or place outside those premises. A fraudulent transfer of money from the insured's bank account to a thief's bank account is an example of computer fraud. no coverage applies to a frad transfer to a "messenger" -exclusions: dishonest acts of the named insured, partners, or members dishonest acts of employees learned of prior to the policy period acts of employees, managers, directors, trustees, or representatives confidential information indirect loss legal fees, costs, and expenses pollution, nuclear hazards, war, and governmental action credit card transactions inventory shortages funds transfer fraud computer vandalism

underwriting

Underwriting determines whether a particular risk should be insured and at what rate. An important function of the underwriting process is to avoid adverse selection.

information and disclosure notice

When collecting or using nonpublic personal financial or health information, an insurer or agent is required to: -notify individuals about the insurer's or agent's privacy policies and practices; -describe conditions under which an insurer or agent may disclose this information to affiliated companies and nonaffiliated third parties; and -provide methods for individuals to prevent an insurer or agent from disclosing this information. An insurer or agent must notify current customers of its privacy policies or practices at least once every year. The notice must inform customers about the insurer's or agent's practices with respect to: -disclosing nonpublic personal information to affiliates and nonaffiliated third parties, including the categories of information that may be disclosed; -disclosing nonpublic personal information about persons who are no longer customers; and protecting the nonpublic personal information of consumers.

Extended Reporting Period (ERP)

a designated time period after a claims-made policy has expired during which a claim may be made and coverage triggered as if the claim had been made during the policy period The insured may request an extended reporting period if the insurer cancels or chooses not to renew the policy for any reason other than nonpayment of premium, or if the insurer renews or replaces the insured's pollution liability coverage with policy provisions specifying a later retroactive date. must be requested in writing 30 days after the end of the policy period premium may not be more than 50% of annual premium cancelled/nonrenewd/replaced

Certificates of insurance

a document, issued by or on behalf of an insurance company, as evidence that a certain type of insurance coverage, with specified limits, has been purchased by the party required to provide the certificate

If the courts find an ambiguity in Ophelia's insurance policy, they will interpret it in her favor because her insurance contract what kind of contract?

adhesion

Inside the Premises-Theft of Money and Securities- CR

applies only to theft committed by a person who is physically present inside the insured's premises or a banking premises. This is intended to prevent duplicate coverage for theft losses for which coverage is available under the computer fraud insuring agreement. covers not only theft but the also the disappearance or destruction of money and securities within the premises also covers two other types of loss: loss of or damage to a locked safe, vault, cash register, cash box, or cash drawer inside the premises caused by the actual or attempted theft of the container or unlawful entry into it; and damage to the premises or to the exterior of the premises resulting from actual or attempted theft of covered property, provided that the named insured is the owner of the premises or is liable for such damage. -exclusions: dishonest acts of the named insured, partners, or members dishonest acts of employees learned of by you prior to the policy period acts of employees, managers, directors, trustees, or representatives confidential information indirect loss legal fees, costs, and expenses pollution, nuclear hazards, war, and governmental action accounting or arithmetical errors or omissions exchange or purchases fire (but does not exclude loss to money/sec, or to safe/vault motor vehicles and their equipment or accessories money-operated devices transfer or surrender of property voluntary parting of title to or possession of property ( "induced by any dishonest act to voluntarily part with title to or possession of any property.") vandalism

Fiduciary Bonds

are a class of judicial bonds (Judicial bonds guarantee that a person or organization involved in judicial proceedings will fulfill certain duties required by the court) guarantees that the individuals or legal entities appointed by the court to oversee the property of others will perform their duties in good faith and be accountable for any deficits that may occur For example, guardians and trustees might be appointed by a court to manage, control, or dispose of others' property. The bond guarantees that the person in whose care the property has been entrusted will exercise his or her duties faithfully, account for all property, and make good for any deficiency for which the court might hold the person responsible.

In an Insurance Services Office, Inc. (ISO), businessowners policy, where do the definitions appear?

at the end of the property section and at the end of the liability section

Grace Period-PAP

common in life and health allows insured 30 or 31 days after the premium date to make payment if the insurance is to stay in force BUT the PAP makes no provision for this but sometimes they do for mail bills or state law

Hazard

condition that increases the likely/severity of losses -moral -morale -physical

Money Orders and Counterfeit Money- CR

coverage for loss caused by acceptance of counterfeit money and money orders issued by a post office, express company, or bank that are not paid on presentation. Counterfeit money is an imitation of money that is intended to deceive and to be taken as genuine. -exclusions: dishonest acts of the named insured, partners, or members dishonest acts of employees learned of prior to the policy period acts of employees, managers, directors, trustees, or representatives confidential information indirect loss legal fees, costs, and expenses pollution, nuclear hazards, war, and governmental action

Funds Transfer Fraud- CR

coverage for loss of money and securities resulting from the payment or transfer of funds from the insured's financial accounts on the basis of fraudulent instructions to a bank or other financial institution. The fraudulent instructions can be given in writing, over the telephone, or by electronic communication -exclusions: dishonest acts of the named insured, partners, or members dishonest acts of employees learned of prior to the policy period acts of employees, managers, directors, trustees, or representatives confidential information indirect loss legal fees, costs, and expenses pollution, nuclear hazards, war, and governmental action loss resulting from the use of a computer to fraudulently cause a transfer of money, securities, or other property

Common Features of Executive and Professional Liability Policy Forms`

coverage triggers- the provision defining the nature and sequence of events that must take place for the policy to cover a claim against an insured. The coverage trigger determines which policy, often in a series of policies spanning a number of years, will respond to a particular liability claim. covered persons or organizations- cover professionals while they are acting within the scope of their professional duties. The definition of "covered persons" extends to employees, directors, officers, managers, supervisors, stockholders, owners, principals, volunteers, and interns. Executive and professional liability insurance policies may also cover former employees, spouses, and personal representatives. also covers org majority owner of subsidiary covered services and acts-Professional liability policies indicate the specific scope of covered services and acts in the policy's definitions section, the insuring agreement, the declarations page, or by means of an endorsement to the policy covered damages and losses- cover damages and losses for which the insured is legally liable and when such damages result from the delivery of professional services or during the course of business operations. Covered damages and losses consist of the costs to investigate and defend a claim against the insured and the cost of a legal judgment against the insured or the amount of a settlement between the insurer and the claimant. cover the costs required to investigate, defend, and settle claims settlement procedures- written with a settlement procedure known as a hammer clause, which applies as follows: settlement amounts—The insurer must get the insured's consent before settling a claim for an amount proposed by the insurer and agreed to by the claimant. However, if the insured rejects a settlement figure that has been offered by the insurer and agreed to by the claimant, and the claim is later closed for a larger amount, the insurer is liable only for the settlement amount initially agreed upon with the claimant. defense costs—If an insured rejects a settlement recommended by the insurer, any additional defense costs and expenses accrued from that point on are not covered by the policy. limits-use one of three methods in providing policy limits: single, annual aggregate limit—A policy contains only a single, annual aggregate limit (also called a "combined single limit"). Such limits indicate the maximum amount that can be paid out on the insured's behalf during a given policy year. The aggregate can be applied to both indemnity payments and defense costs—in any proportion and irrespective of the number of different claims or claimants. An example of this is a policy with a $1 million annual aggregate limit. equal per claim and annual aggregate limits—A policy contains both a per claim and an annual aggregate limit that are equal to each other. In actual practice, however, such policies operate in a manner identical to those using the language described above. An example of this is a policy with a $1 million annual aggregate limit and a $1 million per claim limit. unequal per claim and annual aggregate limits—A policy contains both a per claim limit and an annual aggregate limit where the limits are not identical (with the aggregate typically being two to three times the per claim limit). An example of this is a policy with a $1 million per claim limit and a $3 million annual aggregate limit. deductibles and retentions- almost all executive and professional liability policies contain either deductible or self-insured retention (SIR) provisions. Under a policy written with a deductible provision, the insurer pays the defense and indemnity costs associated with a claim—including the deductible amount—and then seeks reimbursement of the deductible payment from the insured. Under a policy written with an SIR provision, the insured pays defense and indemnity costs associated with a claim until the retention amount is reached. After that point, the insurer makes any additional payments for defense and indemnity that are covered by the policy. exclusions: uninsurable exposure exclusions (exposures within an insureds control, insurance against public policy, economic or business risk) notary claims (precludes coverage for claims in which, while the insured is acting as a notary, the signatory to a document did not sign the document in the presence of the notary-insured) trademark and copyright infringement previously reported claims and known incidents antitrust violations return of professional fees illegal personal profit nonpecuniary relief (nonmonetary damages) bankruptcy of insured intentional, criminal, fraud, willful, or dishonest acts losses from professional guarantees losses from commingling and accounting practices

Garagekeepers Coverage

covers customers cars -Insuring Agreement-- insurer pays damages for the insured's legal obligations for loss, including loss of use, to a customer's auto or equipment -Who is an Insured-- named insured, named insureds partners, members, employees, directors, or shareholders while acting in the scope of their duties -Garagekeepers Exclusions: contractually assumed liability for loss loss due to theft or conversion caused by the named insured, employees, or shareholders defective parts or materials faulty work loss to various types of electronic and sound receiving equipment. -Limit of Insurance and Deductible-- dollar amount per location

Inside the Premises-Robbery or Safe Burglary of Other Property- CR

covers loss to property other than money and securities from actual or attempted robbery of a custodian inside the premises and actual or attempted safe burglary. Coverage also applies to resulting damage to the premises or the exterior of the premises and resulting loss of or damage to a locked safe or vault inside the premises other property-- tangible property (other than money and securities, electronic data, computer programs, or specifically excluded property) with intrinsic value. (5,000 limit per occurrence) robbery custodian; watchperson-- custodian is defined as the named insured, any of the named insured's partners or limited liability company members, or any employee while having custody of covered property inside the premises. Watchpersons and janitors do not qualify as custodians, so there is no coverage for robbery of these individuals. "Watchperson" is a person retained by the named insured specifically and exclusively to have care and custody of the property inside the premises; the watchperson must have no other duties. safe burglary-- either the taking of covered property from within a locked safe or vault inside the premises or removal of the safe or vault itself from inside the premises. -exclusions: dishonest acts of the named insured, partners, or members dishonest acts of employees learned of prior to the policy period acts of employees, managers, directors, trustees, or representatives confidential information indirect loss legal fees, costs, and expenses pollution, nuclear hazards, war, and governmental action accounting or arithmetical errors or omissions exchanges or purchases fire motor vehicles and their equipment or accessories money-operated devices transfer or surrender of property voluntary parting of title to or possession of property vandalism

A businessowners policy combines coverages that might otherwise be written on all the following types of forms EXCEPT:

crime

Lila was rushed to the emergency room from her office at the Robin Company when she choked on a jelly bean manufactured by Candy Company. The following week, she asked Candy Company to pay her medical bills. Candy Company has a commercial general liability (CGL) insurance policy with medical payments coverage that

excludes coverage for Lila's claim from ingesting a Candy Company product away from Candy Company's premises. The medical payments coverage excludes bodily injury that occurs away from the insured's premises and arises out of the insured's product.

exclusions vs limitations

exclusions- broadly eliminate coverage for nearly any loss limitations- narrow exclusions- exclusions that apply only to certain situations

What factor applied to a workers compensation policy's unmodified premium is designed to cover administrative expenses that are common to all workers compensation policies?

expense constant The expense constant is designed to cover administrative expenses that are common to all workers compensation policies, regardless of the premium.

Basic Types of Construction

four basic types: -frame (exterior wall of wood, stucco on wood or plaster, and aluminum or plastic siding over frame) -masonry veneer (interior walls of combustible construction with outside veneer (layer) of brick or stone; does not support the building, the frame structure behind does) -masonry (exterior walls are constructed of masonry: adobe, brick, concrete, gypsum block, hollow concrete block, stone, tile or similar materials; supports the house -superior (noncombustible or fire-resistive)

Negligence

four elements: -duty of care ("standard of care") -breach of the duty of care -causation (proximate causation) -damages (compensatory and punitive) compensatory- sum of money required to pay (special- tangible losses; doctor bills, prescriptions, and loss of income. general- pain and suffering) 3 defenses: -assumption of risk -contributory negligence -comparative negligence

Fidelity Bonds

guarantee the honesty of a person who is in a trusted position nature and purpose-- indemnifies an employer for loss caused by the dishonest and fraudulent acts of its covered employees. more often used in connection with financial institutions or public entities (governmental bodies) financial institution bonds-- provide a combination of crime coverages designed to meet the special needs of banks, savings and loans, credit unions, and other financial institutions. Essentially, they cover loss from employee dishonesty, forgery, and counterfeit currency, plus loss of money and securities from almost any cause. Damage to personal property in connection with a burglary or robbery is also covered. has 7 separate insuring agreements: fidelity- (key coverage of the bond; covers loss resulting from certain types of dishonest acts of an employee; For coverage to apply, the employee must have intended to cause the insured financial institution a loss. For loss resulting from trading, the employee also must have received an improper financial benefit. For loss resulting from loans, the employee also must have been in collusion with a party to the loan transactions and must have received an improper financial benefit with a value of at least $2,500. salaries, bonuses, commissions, etc. do not qualify on-premises- (covers loss of or damage to covered property within officers or premises; this is the portion that would respond in the event of a bank robbery, only source of recovery for money and securities lost in fire/windstorm/explosion) in-transit- (covers loss of or damage to covered property while in transit in the custody of an employee or in a transportation company) counterfeit money- forgery or alteration- securities- (covers loss resulting from the insured having acquired, sold, delivered, given value, extended credit or assumed liability in reliance on written original of specified types of securities) fraudulent mortgages- public official bonds--guarantees the honesty and faithful performance of a public official's duties as prescribed by law or regulation, including the honest account of all monies entrusted to the official according to the law. The purpose of public official bonds is to protect taxpayers. Offices that typically require a public official bond include: court clerks judges mayors sheriffs tax collectors treasurers township managers or directors Public official bonds may be individual bonds written for a specific amount on a single official or employee; name schedule bonds written on employees or officials named in a list; and position schedule bonds that cover employees or officials who occupy listed positions. bond agreement- (bond will only pay when official is financially unable; agrees to indemnify the government entity against any loss the employee causes, while holding the public position or office and performing related duties, by failing to perform his or her duties faithfully and impartially, without fraud or deceit, or failing to turn over funds and property that come into the employee's possession by virtue of the office.) bond period- (cannot be cancelled while official is in office; terminates only when successors have been elected or appointed) discovery period- ( the insured is given some time after the bond terminates in which to discover whether a loss was sustained that would have been recoverable had the contract remained in force; varies from 6 months to 3 yrs) limits- (specific amount; may apply per loss or on aggregate basis to all loses) termination of coverage- (Coverage under a public officials bond with respect to an individual employee terminates upon payment of a loss under the bond involving that employee)

Contract Bonds

guarantees the performance of obligations assumed under contract 3 types: bid bond- commonly required of a general contractor in a competitive bid situation; guarantees that, if the contractor is awarded the job, it will agree to perform the work at the price quoted and will provide additional bonds as required by the construction contract. written as a % of the amount bid (5-20%) performance bonds- required on most federal projects and are common on many private projects as well; guarantees that the contractor will perform the work in accordance with the construction contract and related documents, thus protecting the owner from financial loss up to the bond limit in the event the contractor fails to fulfill its contractual obligations payment bonds- required on most federal projects and are common on many private projects as well; guarantees that suppliers and subcontractors will in fact be paid for materials and labor furnished to the contractor. The ultimate purpose of the payment bond is to guarantee the owner delivery of a project that is free of liens. also protects subcontractors and suppliers from attempts by general contractors to improve their own cash flow by delaying payments to suppliers and subcontractors carry a penal sum (bond limit) that ranges from 50-100% of the contract value mechanics liens: are legal claims placed on property by suppliers and contractors for materials or labor provided in the contractor's performance of work on the property. guarantee the subcontractor or supplier payment for work approved by the property owner

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hired autos only

The Terrorism Risk Insurance Act (TRIA) requires insurance companies to make coverage for certified acts of terrorism available for all the following lines of insurance EXCEPT:

homeowners

Umbrella and Excess Liability Policies

huge liability loss examples: The insured is driving under the influence of alcohol and flips the car, killing his friend The insured loses sight of the neighbor's toddler, who drowns in the insured's backyard pool A defective food product manufactured and sold by a business injures a large number of persons who consume it -Personal Umbrella Liability Policy (DL 98 01)--provides high limits of liability coverage to protect an insured against a catastrophic liability loss. This policy covers bodily injury, property damage, and personal injury, which includes offenses such as libel, slander, false arrest, invasion of privacy, and others. It grants liability coverage that stacks on top of the primary liability coverage provided by the insured's homeowners, personal auto, watercraft, and any other scheduled underlying liability policy. Thus, it is activated once the underlying limits of the primary policy are exhausted. -Commercial Liability Umbrella Coverage Form (CU 00 01)-- Typically written with limits such as $1 million, $2 million, $5 million, or more, an umbrella liability policy provides excess limits of coverage over and above the limits provided in various basic underlying liability policies. Specifically, most umbrella liability policies provide excess coverage over the business's general liability, auto liability, and employers liability insurance. provides protection for catastrophic liability losses. a properly written umbrella policy will both: provide excess limits above the underlying policies; and "drop down" to provide bodily injury, personal and advertising injury, and property damage coverage for some claims not covered by underlying insurance. -Contingent and Contractual Liability Coverage-- Contingent liability insurance fills a gap in coverage. It is contingent on the absence of other insurance. Contractual liability (or assumed liability) insurance is almost always included in commercial general liability, auto liability, and umbrella liability insurance policies, though these policies have restriction on the coverage provided.

Business Auto Policy (BAP)

includes: -business auto declarations- includes six items: 1-named insured, form of business 2-schedule of coverages and covered autos (auto coverage symbols: symbol one--liability any auto, symbol two-owned autos only medical payments, UM/UIM, and physical damage collision coverages, symbols three-four- owned private passenger autos and owned autos other than private--- applies only to owned autos: symbol three applies to owned private where four applies to all other owned- medical payments, symbol five and six-owned autos subject to no-fault and owned autos subject to a compulsory uninsured motorists law--- five for no fault and six for UM, can only be used in a few states, symbol seven-specifically descried autos--- provides coverage only for scheduled autos in item 3 of declarations..a newly acquired auto will be included for that coverage only if: the insurer already provides that coverage on all autos the named insured owns, or the auto replaces one that previously was owned and insured for the same coverage; and the insured informs the insurer within 30 days after acquiring the new auto that coverage is desired on it.,, symbol eight-hired autos only--- hired auto is an auto the insured leases, hires, rents, or borrows, liability and physical damage coverage,, symbol nine-nonowned autos only--- nonowned autos are autos used in connection with the insured's business that are not owned, leased, hired, rented, or borrowed by the insured includes autos owned by insured employees, partners, member of limited liability companies, liability only,, symbol nineteen-mobile equipment subject to compulsory or financial responsibility or other motor vehicle insurance law only--- liability coverage for land vehicles . 3-schedule of owned autos (records rating and underwriting information) 4-schedule of hired or borrowed auto coverage and premiums (provides space for entering the estimated exposure and premium for hired or borrowed autos) 5-schedule for nonownership liability (should indicate how many employees the named insured has) 6-schedule for gross receipts of mileage rating (used for rating) -business auto coverage form -the common policy conditions form -the nuclear energy liability exclusion endorsement can also be written as commercial package policy

A commercial umbrella liability policy issued to a small business provides excess limits of coverage over and above the liability limits provided by all the following policies EXCEPT:

inland marine A commercial umbrella policy provides excess limits of liability coverage over a firm's general liability, auto liability, and employers liability insurance. Inland marine policies provide property coverage.

CGL Coverage A-Bodily Injury and Property Damage Liability

insurer promises to pay: -sums that the insured -becomes legally obligated to pay -as damages -because of bodily injury or property damage -covered by the policy bodily injury property damage (includes loss of use) defense coverage- insurer has right and duty to defend insured (this ends when policy limits have been used up; to be relieved of duty insurer must have paid to full extent of applicable limits) right to investigate and settle coverage territory- only applies to injury or damage arising out of an occurrence that takes place in the coverage territory "Coverage territory" is a defined term within the policy, including all land, air, or water space within the United States, its territories and possessions, Puerto Rico, or Canada. It also includes the international air or water space between any of these areas, such as the airspace between the United States and one of its possessions. A third portion of the definition applies to products of the insured that have been manufactured or sold within the coverage territory and transported to another part of the world. There is coverage for liability arising from these products no matter where the injury or damage occurs, as long as the suit for damages is brought within the coverage territory The CGL coverage territory specifically applies to "personal and advertising injury offenses that take place through the Internet or similar electronic means of communication." This provision of the coverage territory definition makes it unnecessary to establish "where" an instance of libel, for example, takes place when it is committed over the Internet. Exclusions: -expected or intended injury -contractual liability (the assumption of liability in a contract or agreement, but with two exceptions: liability that would exist even without the contract, and liability assumed under an insured contract---The following are examples of insured contracts: a lease of premises a railroad sidetrack agreement any easement or license agreement, except in connection with construction or demolition operations on or within 50 feet of a railroad an obligation, as required by ordinance, to indemnify a municipality, except in connection with work for a municipality an elevator maintenance agreement that part of any other contract or agreement pertaining to the insured's business (including an indemnification of a municipality in connection with work performed for a municipality) under which the insured assumes the tort liability of another party to pay for "bodily injury" or "property damage" to a third person or organization) category f most important?) -liquor liability (does not include host liquor liability) -workers comp/ employers liability -pollution (In general, coverage applies with respect to bodily injury or property damage liability (but not cleanup costs) arising from: fumes from water heaters or building heating equipment, or from materials used by the insured in off-site work smoke, heat, or fumes released by a hostile fire most types of products or completed operations some types of off-premises pollution releases (when the insured did not bring the pollutants to the site) accidental discharge of operating fuels or lubricants from a piece of mobile equipment) ) -aircraft, auto, watercraft (There are several exceptions to the exclusion, so that the following are covered: Watercraft ashore on premises that the named insured owns or rents are covered. Nonowned watercraft shorter than 26 feet long and not being used to carry paying passengers or cargo are covered. Parking of an auto on or adjacent to the named insured's premises is covered, as long as the auto is not owned by or rented or loaned to the named insured or the insured who is doing the parking. This exception preserves coverage for the named insured's valet parking operations. Note, however, that the liability coverage preserved by this exception is only for bodily injury or property damage to property other than the auto itself. A separate CGL exclusion, pertaining to personal property in the care, custody, or control of the insured, rules out coverage for the damage to the customer's auto while being driven by the named insured or an insured employee. Contractually assumed liability in connection with the ownership, maintenance, or use of an aircraft or watercraft is covered. The "aircraft, auto, watercraft" exclusion does not apply with respect to the operation of certain types of equipment—air compressors, welding equipment, drilling equipment, devices used to raise or lower workers—that are permanently mounted to self-propelled vehicles. Similarly, the exclusion does not apply to machinery or equipment attached to or part of a vehicle that would be considered "mobile equipment" under the policy except for the fact that it is subject to state insurance laws. Such vehicles are defined as "autos" under the CGL, even if they meet all the other criteria for mobile equipment.) ) -mobile equipment -war -damage to property (Section (1) of the exclusion eliminates coverage with respect to property the named insured owns, rents, or occupies. Most such losses can be covered by first-party property insurance. CGL insureds often face liability exposures in connection with short-term rental of premises (a hotel room, for example, or convention facilities) when arranging first-party property insurance on the rented premises is not feasible. An exception to the "owned, rented, or occupied" portion of the property damage exclusion preserves coverage for such short-term rentals. The coverage applies both to the premises themselves and to their contents, when the named insured rents the premises for seven or fewer consecutive days. The exception applies as well to the portions of the exclusion that pertain to loaned property and to personal property in the insured's care, custody, or control. Section (2) of this exclusion—the alienated premises exclusion—eliminates coverage for property damage to premises the insured sells, gives away, or abandons, if the damage arises out of the premises themselves. Section (3) of the damage to property exclusion eliminates coverage for damage to property lent to the named insured. Section (4) applies to personal property in the care, custody, or control of the insured. To some degree, this care, custody, or control exclusion—like other sections of the "damage to property" exclusion—pertain to a business risk. One is expected to exercise a high degree of care in avoiding damage to borrowed property or property of others held temporarily in connection with business activities (a customer's property on the insured's premises to be worked on, for instance). The workmanship exclusions—parts (5) and (6) of exclusion (j)—eliminate coverage with respect to "that particular part" of real property on which the insured is performing operations when the damage occurs, and that particular part of any property that must be restored, repaired, or replaced because the insured's work on it is incorrectly performed.) ) -damage to your product -damage to your work (the insured is covered for the following situations: property damage to the insured's work that results from the work of the insured's subcontractor property damage to the work of the insured's subcontractor that results from that subcontractor's work property damage to the work of the insured's subcontractor that results from the insured's work property damage to the work of the insured's subcontractor that results from the work of another contractor or subcontractor) ) -damage to impaired property -recall of products -personal and adv injury -electronic data

Difference in Conditions (DIC)

is a property insurance policy that is purchased in addition to a commercial property policy to obtain coverage for perils, such as flood or earthquake also used to fill other coverage gaps

proximate cause

is the cause that sets in motion an unbroken chain of events leading to the loss

The building that houses Margarita's business has an insurable value of $500,000. Margarita insures this building for $300,000 under a property insurance policy with an 80 percent coinsurance clause. Ignoring any deductible that might apply, if the building sustains exactly $20,000 in damage due to a covered peril, how much will the insurer pay Margarita?

less than $20,000 Because her property is underinsured, the coinsurance clause in Margarita's insurance policy reduces the amount that the insurer will pay for a covered loss. To recover $20,000 for this loss, she should have purchased limits of at least $400,000 (that is, 80 percent of the $500,000 building's insurable value).

The commercial general liability (CGL) policy's limited fungi or bacteria coverage endorsement is usually used when an insurer wants to

limit its exposure to mold-related bodily injury liability claims.

Russell fell from the roof where he was working, leaving him in a coma. As a result, he was unable to assist his wife Althea with household duties and unable to continue normal sexual relations with her. Workers compensation benefits paid only for Russell's medical expenses and lost income. To recover for her loss, Althea could sue Russell's employer on what basis?

loss of consortium Loss of consortium refers to the loss of a spouse's services to which one is entitled.

Workers Comp Insurance Markets

may be available from: -monopolistic state fund (the state fund is the only workers comp insurer in these states: ND, OH, Washington, WY) -voluntary private market (all but the 4 mono states can buy work comp from insurance companies licensed in that state) -competitive state fund org (These are insurance facilities established and (initially at least) funded by the state that compete with insurance companies for workers compensation business in that state only; 20 states) -state residual market plan (In these states, the state fund must offer coverage to all eligible employers who apply, and there is no separate residual market facility) -individual self-insurance (permitted in all states except ND and WY, requires employer to provide regulators with satisfactory proof of its ability to directly pay benefits to injured workers) -group self-insurance (where individual employers combine to insure the workers compensation exposures of all of the group members; allowed in many states; eligibility varies by state: many require group members to be in the same or related industry)

Functional replacement

means to replace insured property with property that performs the same function with equal efficiency even though it is not exactly the same as the property being replaced

Symbol 19

mobile equipment subject to compulsory or financial responsibility or other motor vehicle insurance law only

Because his job requires local travel, Cody's employer furnishes a company car for both business and personal use. Cody's wife Deanne has her own car, but she sometimes drives the company car, and Cody sometimes drives her car. Adding the extended nonowned coverage endorsement to the PAP on Deanne's car

modifies the liability and medical payments coverages to apply when Cody is driving the company car. The Extended Non-Owned Coverage—Vehicles Furnished or Available for Regular Use Endorsement (PP 03 06) modifies the liability and medical payments coverages to protect Cody. If an option in the endorsement is activated, it will also protect Deanne.

Surety Bonds

nature and purpose--Suretyship is the pledge of one party (the surety) guaranteeing to another party (the obligee) that a third party (the principal) will faithfully perform its obligations. oldest methods of guaranteeing performance today most sureties are corporations difference b/w surety and insurance-- surety often based on underlying contract rather than independent surety is a 3-party contract rather than a 2-party surety covers all default without regard to cause surety underwriter expects no losses surety allows subrogation against the principal surety may require principal shareholders to pledge personal assets as collateral for claims surety bonds are noncancellable underlying contract-- based on; determines surety's obligations 3 parties involved: principal- party whose performance is guaranteed obligee- party to whom the guarantee is made (i.e employer) surety- the org that provides the guarantee (i.e insurance comp) coverage for all defaults: surety will respond even when the contractor deliberately breaches its contract underwriter expects no losses: surety losses are viewed as being largely preventable because often the events that produce a breach of contract are within the contractors control the underwriters job is assess the contractors ability to fulfill its obligations in the time period promised noncancellable: For the obligee to have confidence in the protection provided by the bond, it needs to know that the surety cannot back out of the bond contract if the contractor's financial condition worsens. subrogation against principal: The surety is then subrogated to the owner's rights to recover expenses incurred in obtaining performance of the contract from the defaulting contractor, just as a bank has the right to recover from a borrower who has defaulted on a loan. personal assets as collateral: require principals to pledge their personal assets to indemnify the surety for costs incurred in obtaining performance after a default

Nonrenewal- PAP

notify at least 20 days contains 3-time frame requirements: -If the policy period is less than six months, the insurer has the right to nonrenew only after the first six months are completed. Thus, if John Smith is issued a policy effective on January 1, the insurer has the option of nonrenewing effective July 1, provided it gives 20 days' notice. -If the policy has been in force for six months or longer, but less than one year, the insurer has the right to nonrenew at the end of the first 12 months. Thus, if John's initial January 1 policy renews on July 1 and, right after this, the insurer decides to nonrenew, it can do so effective January 1 of the following year. -If the policy has been in force for one year or longer, the insurer has the right to nonrenew at each anniversary of its original effective date. Thus, on the initial January 1 policy, if the insurer decides next year on March 1 to nonrenew, the nonrenewal cannot take effect until the following January 1.

Antoinette's business is the named insured under an Insurance Services Office, Inc. (ISO), pollution liability form. This form includes an extended reporting period option that permits Antoinette to

obtain an endorsement providing coverage for claims reported within one year after the policy period ends. The extended reporting period option provides that a claim first made during the extended reporting period will be regarded as having been made on the last day of the policy period.

Physical Damage Coverage-BAP

of the nine symbols only five are designed for use in conjunction with physical damage coverage (symbol 2,3,4,7, &8) -Insuring Agreement: comprehensive coverage-- insurer will pay for loss to covered auto from any cause except overturn or collision. applies to glass breakage, falling objects or missiles, or collision with bird and animal specified causes of loss coverage-- losses caused by these perils: fire/lightning/explosion, theft, windstorm/hail/earthquake, flood, vandalism, or sinking/burning/collision/derailment of any conveyance transporting the covered auto collision coverage-- overturn or collision with another object towing and labor-- may also purchase this transportation expense-- extension under BAP physical damage coverage provides up to $20 a day with $600 total limit -Exclusions: Losses due and confined to wear and tear, freezing, and mechanical or electrical breakdown are excluded, unless the loss results because the vehicle has been stolen. (The purpose of this exclusion is to avoid paying losses for events that either are not accidental or are due to neglect.) Blowouts, punctures, and other road damage to tires are excluded, unless caused by a covered loss, such as a collision. Loss to any covered auto while it is used in any organized racing, demolition, or stunting activity is excluded. Also excluded is loss caused by declared or undeclared war, insurrection, or other military action. Loss caused by the explosion of a nuclear weapon or its consequences is excluded. Loss caused by nuclear reaction or radiation, or radioactive contamination is also excluded. Loss to radar or laser detectors or any device intended to elude or disrupt equipment used by law enforcement to monitor vehicles is excluded. Loss to tapes, records, or other data storage devices designed for use with audio or video equipment is excluded. Also excluded is loss to any electronic equipment (and accessories used with it) that receives or transmits audio, visual, or data. (In the 2010 edition, this exclusion does not apply to permanently installed equipment.) Loss to a covered auto due to diminution in value is excluded. -Limits of Insurance- insurer will pay for the lesser of two: ACV or the cost of repair/replacement -Deductible -Conditions- insured has contractual duty to notify the policy if stolen,, take reasonable steps to protect covered property from further damage,, keep record of expenses,, permit insurer to inspect and appraise damaged property,, agree to examinations under oath

Insurance Commissioner

powers and duties: -adopt rules and regulations to administer the insurance laws; -create forms that companies, associations, and insurers must use when filing reports and statements; -examine insurers' financial statements; -report violations concerning the insurance business to the state Attorney General or other law enforcement officials; -administer oaths; and -make lists of rates available to the public. notification of change of address or criminal convictions must notify in 10 days Class H felony- person who knowingly presents a false insurance claim embezzlement and misappropriation: if amount is less than 100K= Class H felony; if amount is 100K or more= Class C felony penalty for false statement= Class I felony first offense= suspend/revoke for 1-6 months second offense= one year

Rates vs Premiums

premium- periodic payment that the insured pays to the insurance company in exchange for coverage rate- price of insurance for each unit of exposure (class and individual rating) (includes loss costs, expenses, and a margin for profits and contingencies)

Conditions

provide rules for the relationship between the insurer and the insured -who, when, and where who- named insureds, secured creditors (mortgage holders/ mortgage clause and loss payees/ loss payee clause) no benefit to bailee, assignment provision (transfer of rights from the policyholder to some other party) when- policy period (annually are most common), cancellation and nonrenewal, liberalization clause where- policy territory

Outside the Premises- CR

provides coverage for: theft, disappearance, or destruction of money and securities while outside the premises in the custody of a messenger or an armored motor vehicle company; and loss or damage to property other than money and securities in the custody of a messenger or an armored motor vehicle company resulting from actual or attempted robbery. messenger-- refers to the named insured, a relative of the named insured, a partner, a limited liability company (LLC) member, or an employee having custody of the property outside the premises. -exclusions: dishonest acts of the named insured, partners, or members dishonest acts of employees learned of before the policy period acts of employees, managers, directors, trustees, or representatives confidential information indirect loss legal fees, costs, and expenses pollution, nuclear hazards, war, and governmental action accounting or arithmetical errors or omissions exchanges or purchases fire motor vehicles and their equipment or accessories money-operated devices transfer or surrender of property voluntary parting of title to or possession of property vandalism

License and Permit Bonds

required by a municipality or other public body as a condition to granting a license or permit to engage in a specified activity. This bond guarantees that the party seeking the license or permit (the obligor) will comply with applicable laws or regulations. can also provide indemnity guarantees to third parties who sustain injury or damage as a result of the obligor's activities as described in the license or permit when such a guarantee is required. For example, businesses that hang signs over public sidewalks may be required to provide indemnity guarantees for injuries to pedestrians.

Symbol 7

specifically described autos

USA PATRIOT Act

strengthens many arms of federal enforcement in the fight on terror. Among the various issues addressed in the act is money laundering. The USA PATRIOT Act requires that all financial institutions create, execute, and maintain anti-money laundering (AML) programs.

Audit

survey of financial records of a person or organization conducted annually to determine exposures, limits, premiums, etc

Maryellen's personal auto policy (PAP) includes uninsured motorists coverage that does not apply to injuries suffered by

the friend in whose car Maryellen is a passenger when it is struck by an uninsured motorist.

The owner of the Marlon Corporation is surprised when Ed, an employee of ABS Insurance Company (Marlon's insurer), insists on inspecting Marlon's workplace. Ed points out that

the insurance policy gives ABS the right to inspect Marlon's workplace.

When she is about to retire, Cindy learns that she will not collect the pension she had been expecting because her employer's corporate pension plan has become insolvent. All the following might be held liable for the plan's insolvency EXCEPT

the trustees at the corporation that sponsored the plan.

BAP Endorsements

unlike the PAP, the BAP does not include medical payment and UM but are available through endorsement -Auto Medical Payments Coverage (CA 99 03)-- designed to pay reasonable and necessary medical expenses for auto accident injuries (persons insured: named insured and family members while occupying any auto of when struck by an auto as a pedestrian and occupants of a covered auto -UM/UIM Coverage-- protects insured who suffers bodily injury in an accident caused by a motorist who does not have liability insurance or by a hit-and-run driver who cannot be identified and for UIM who do not have the sufficient amount -Lessor-Additional Insured and Loss Payee (CA 20 01)-- states that the leased autos will be covered owned autos and names the lessor as an additional insured -Hired Autos Specified as Covered Autos You Own (CA 99 16)-- serves similar function as the lessor endorsement but has less specific provisions (you dont need to notify the lessor and there are no specific reference as to what coverages and limits apply) -Mobile Equipment (CA 20 15)-- refers to equipment such as earthmovers, tractors, diggers, farm machinery, forklifts,etc. -Individual Named Insured (CA 99 17)-- provides the individual named insured and family members residing in his or her household with auto liability coverage while using a covered private passenger auto owned by the named insured. it also provides such persons with auto liability while using any auto not owned by the named insured -Drive Other Car Coverage-Broadened Coverage for Named Individuals (CA 99 10)-- should be considered for individuals who have a company car as their only car,, covers employee and his or her spouse when driving autos that are borrowed or hired for personal use -Employees as Insureds (CA 99 33)-- used to extend nonowner liability coverage to cover the individual liability of employees while they are using their own autos in the employer business -Pollution Liability-Broadened Coverage (CA 99 48)(CA 99 55)-- The Pollution Liability—Broadened Coverage for Covered Autos—Business Auto, Motor Carrier and Truckers Coverage Forms (CA 99 48) endorsement deletes the portion of the pollution exclusion dealing with the discharge of pollutants that are being transported by or on behalf of the insured, so that portion of the exclusion applies only to liability assumed by contract. The endorsement deletes the care, custody, or control exclusion; otherwise, the exclusion would effectively eliminate the coverage the endorsement is designed to provide. The Pollution Liability—Broadened Coverage for Covered Autos—Garage Coverage Form (CA 99 55) endorsement deletes the portion of the pollution exclusion dealing with the discharge of pollutants being transported by or on behalf of the insured, so that portion of the exclusion applies only to liability assumed by contract.