Property & Casualty Basics (Ohio)
Split Limit 25/50/25
25k for max Bodily Injury (BI) to any ONE person / 50k for max BI for two or more people / 25k max for Property Damage (PD)
Combined Single Limit
A single dollar amount limit of liability applying to the total of damages for bodily injury (BI) and property damage combined, resulting from one accident or occurence
Deductible
Agreed amount insured pays on a claim before insurer pays for the loss.
Market Value
Amount willing buyer would pay willing seller
Insurable Intereste
Applicant or another party (ex. Mortgagee) must have legitimate interest in preservation of life or property.
Named Peril Form
Basic and Broad form covers only the perils named in the form
Insured Cancellation
Cancel anytime. If cancelled a short rate refund issued
Special (All Risk or Open Perils) Form
Covers all Perils except those excluded in the policy
Strict Liability
Damages caused by defective products even though manufacturer negligence cannot be proven
Direct Loss
Damages to dwelling or its contents.
Absolute Liability
Due to extremely dangerous operations.
Comparative Negligence
Each party has fault
Cancellation
Either insured or insurer can cancel a policy. Insured cancel at anytime. Insurer can only cancel for non-pay or policy violations.
Negligence
Failure to behave in the same manner as a reasonable and prudent person would behave in the same situation
Other insurance
If more than one insurer on same risk they will share loss proportionately and total payment not to exceed loss.
Coinsurance
Insure property closer to full value.
Duty to Defend
Insured limit for legal defense costs
Primary elements of a negligent act
Legal duty (did a standard of care exist) Breach of duty (was that duty violated) Proximate cause of loss (unbroken chain of events starting with negligent act) Actual Damages (injury or property damage to a 3rd party as a result)
Limits
Liability and Property policies are on an occurrence basis, meaning the most a policy will pay for that single event is the declared limit.
Indirect Loss
Losses resulting from a peril but not directly caused by it.
Limit of Liability
Maximum amount for which insurer is liable
Per Person Limit
Maximum payment for bodily injury to any one person.
Insurer Non-Pay Cancellation
Must give at least 10 days notice and pro rata refund issued
Insurer Other Reasons Cancellation
Must give at least 30 days notice and pro rata refund issued
Cause of Loss (Perils) Forms
Named Peril and Special Form
Vicarious Liability
One person is responsible for the acts of another person.
Special Damages
Out of pocket cost of medical bills, loss of income, rehab expenses directly associated with event.
Assumption of Risk
Person assumes risk after being warned of potential danger
Valued Policy
Policy pays full limit for total loss, used when value is hard to establish
Agreed/State Value
Pre-agree to fair value of property, no coinsurance
Primary & Excess
Primary insurer pays first until limit is exhausted then Excess insurer pays remaining until exhausted.
Underwriting
Process of reviewing, accepting or rejecting applications for insurance
Gross Negligence
Reckless Behavior that shoes disregard for the safety or lives of others
Actual Cash Value (ACV)
Replacement cost minus depreciation
Damages
Special, General, Punitive
Non-renewal
Termination of policy by insurer on the anniversary or renewal date. No refund given
Equal Shares
Two or more companies at same level pay loss in equal shares until loss is paid or limits exhausted.
Policy Territory
USA, territories, possessions, Puerto Rico & Canada
Short rate refund
Unearned premium minus an administrative fee refunded to insured
Pro Rata refund
Unearned premium refunded to insured
Loss Ratio
calculation used to relate income from loss expenses
Aggregate Limit
caps the maximum payment in any one policy period. Usually found in Commercial Liability policies.
Combined Split Limit (CSL)
combined Bodily Injury and Property Damage limit using the maximum limits for both BI and PD (75k in 25/50/25)
Specific Insurance
covers a specific property at a set limit amount
Replacement Cost
current cost without depreciation
Punitive Damages
financial payment
Functional Replacement Cost
items replaced with less expensive materials that provide the same function.
Liability
legal obligation to pay for damages one may have participated in causing
Protection Class
numerical rating system for community rating
General Damages
pay over and above for longer term care, disfigurement, pain and suffering
Blanket Insurance
provides coverage for multiple classes of property & locations; one limit for all locations
Split Limit
separately stated limit of liability for different coverages, which may be state on a per person, per occurrence, per policy period basis or can be divided between bodily injury (BI) and property damage (PD).
Policy Term
starts 12:01am one year from inception to expiration
Insurance Rate
unit cost for a particular amount of coverage
Liability Limits
written on Split Limit or Combined Single Limit