What are the four main sections of an insurance policy?
D-I-C-E
1. Declarations
2. Insuring Agreement
3. Conditions
4. Exclusions
What is a declaration?
1. Name of the insurance company
2. Name of the insured, Individual or business (WHO)
3. Address of the insured (WHERE)
4. Property that is insured and its location (WHAT/WHERE)
5. Policy period, Includes the effective date and time and end date and time
Insuring agreement
That portion of the insurance policy in which the insurer promises to make payment to or on behalf of the insured
What are the two types of perils?
1. Named peril
2. Open peril
Named peril
Perils that are covered by the insurance policy are specifically named in the insuring agreement
Open peril
- All perils are covered except those that are specifically excluded in the exclusions section of the policy
- Aka. all-risk policy
Liability insurance
Agree to pay on behalf of the insured sums of which the insured becomes legally liable to pay as damages
What do most liability insurance cover?
1. Bodily injury liability
2. Property damage liability
3. Personal injury
4. Advertising injury
5. Cyber liability (option)
Conditions
- Lists the duties and rights of the insured and the insurer
- Includes: cancellation and nonrenewal of the policy, changes to the policy, representations and misrepresentations, duties in the event of a loss, how valuation will be determined in the event
Exclusions
- Lists hazards, perils, circumstances, or property not covered by the policy
- Named peril form: there may be some exclusions specifically mentioned
- Open peril form: all perils are covered except those that are specifically excluded in the exclusions s
What are the five common exclusions in property insurance?
1. Non-accidental or intentional losses
2. Losses that can be controlled by the insured
3. Catastrophic losses such as war or nuclear hazard
4. Extra-hazardous perils such as flood or earthquake
5. Property covered by another insurance policy
What are the five common exclusions in liability insurance?
1. Non-accident or intentional injuries or damages
2. Damage to property owned by the insured
3. Damage to property in the care, custody or control of the insured
4. Bodily injured to the insured
5. Losses covered under workers' compensation laws
Named insured
- The person or organization named in the Declarations section of the policy
- the property owner and has responsibility to meet the conditions of the policy
First named insured
- The first person listed in the Declarations section where there are more than one named
- The first named insured has specific responsibilities
Additional Insureds
- People or organizations that are specifically added to a policy
What are the duties of the insured?
1. Act in utmost good faith, presenting all information accurately and honestly
2. Pay the premiums
3. Notify the insurer or agent of a change of address or any other changes relevant to the coverage
4. To follow specific procedures in the event of a loss
What are the obligations of the insurance company?
Insuring agreement includes the property and perils covered and any other losses that will be covered
Cancellation
- The termination of an insurance policy before its expiration or the policy end date
- Can be cancelled by either the insured or the insurer
- The insurer are required to notify the insured in advance, usually 30 days, of canceling a policy and stipulate
Nonrenewal
- When the insurer does not renew an insured's policy
- The insurer is required to provide the insured with written notice that they do not intent to renew the policy
Mortgagee rights
1. The mortgagee has the right of notice of cancellation
2. The mortgagee may pay the premium to ensure coverage continues
3. The insurer fails to provide the mortgagee with a notice of cancellation
Additional coverages
Extended or other coverages
- Debris removal
- Fire department service charges
- Trees, shrubs, and plants
Supplementary payments
Paid in addition to the policy's limits of liability
- Defense costs
- Expenses related to the investigation of a claim
- Premiums for certain types of bonds, such as bail bonds
- First aid to others at the time of an accident
- Loss of earnings of the in
Notice of claim
The insured is required to notify the insurance company of a loss and their intention to claim
Appraisal
A provision in property insurance allowing either the insurer or the insured to demand a binding appraisal of damaged property in the even of a dispute as to its value
Arbitration
The process used to settle a dispute related to liability insurance
Assignment
The transfer of the legal rights under, or interest in, an insurance policy to another party
Subrogation
The transfer of the rights of recovery from the insured to the insurer
What are the two main liability claim forms?
1. Occurrence form
2. Claims made form
Claims made form
Provides coverage that is triggered when a claim is made against the insured during the policy period, regardless of when the act that gave rise to the claim took place include a retroactive date
Salvage
The insurance company has the right to take the damaged goods as salvage
Abandonment
A condition that states that the insured may not abandon the damaged property to the insurer and request a full reimbursement
What are the four elements of a contract?
1. Offer - A definite, clearly stated offer to do something
2. Acceptance - Only what is offered can be accepted
3. Consideration - An exchange of value between the insured and the insurer for the contract to be valid
4. Intention of legal consequences -
Warranty
A guarantee that the information provided is correct
Representation
Statement made to the best of the applicant's knowledge
Misrepresentation
If the information on an application is incorrect
Concealment
Purposefully not reporting or omitting information that would affect the insurance or rate of an insurance contract
Binder
A legal agreement issued by an insurer or agent that provides temporary evidence of insurance until a policy can be issued
What are some sources underwriting uses?
1. The application
2. An agent's report
3. An inspection report based on the inspection of the property to be insured
4. Consumer or investigative reports
- Includes a credit report
Fair Credit Reporting Act
Federal law that protects an individual's privacy related to information obtained as part of a consumer report
Additional Insureds
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