Discrimination
Permitting individuals of the same class and hazard to be charged different premium rates for the same coverage
Not covered under NFIP
water main in street breaks & floods in home
builder's risk coverage form does not cover
trees, plants, outside antennas
building and personal property does not cover
windstorm damage that hurts outdoor signs not attached
when is abandonment allowed under building and personal property coverage form
never
what type of insurance idemnifies the legal liability of an insured for the actions of the insured subcontractors
contingent liability insurance
under moter carrier coverage, trailer interchange coverage would cover
joes company is legally liable for physical damage sustained by a non-owned trailer
larry's business auto policy: "insured" does not cover
ed's owned vehicle that larry borred
commercial crime policy securities include:
debt, tokens, revenue stamps.
not included: bank notes
purpose of an umbrella policy
cover large and catastophic losses
marine polices the term uncontrolled:
not standarized by any rating bureau
types of coverage provided under a farm liability policy
bodily & property damage, personal and advertising, medical payments
not included
professional liability
collision in ocean marine covers
collision damage to another vessel when the shipper is liable
business owner policy covers
the insured is sued for injury to competitor caused by one of their advertisements
business owner covers a new building for
30 days
under business income coverage under BOP
coverage is provided for up to 12 months with no limit of indemnification no limit of insurance
earthquake endorsement begins before policy expiration cover is
168 hours
extra expense coverage under a bop
12 months after the direct loss
employers liability insurance will not pay for
company picnic injury @ nearby park
most states provide workers comp medical benefits coverage up to the limit
unlimited
not a characteristic of employer-employer relation as it is related to workers compensation coverage
employer signs a contract with an employee
retention
amount of money insured is responible for a claim
retention risk
assumption of it, they absorb it themselves instead of transferring
retention examlpes
deductibles, non insurance, self insurance
boycott insurance
trade practice when someone refuses to have business dealing with another until he/she complises with certain conditions/concessions (peaceful persuasion)
coehesion
unfair trade pratice, not peaceful
works comp insurance schedule of benefits applies to
permanent partial disability
under basic dwelling form when damage is caused by VMM, is included as a covered?
VMM can be added; original covered = fire lightening internal explosion
Redlining
a practice in which banks refuse to make loans to people living in certain geographic locations
coverage c - dwelling covers who's personal property
guest
following conditions under building and personal property coverage form determines how loses will be pd
valuation loss
DP homeowners exclusions
WEPIN (G) NOW
water, earthquake, power failure, intentional loss, neglect (goverment), nuclear, ordinance or law, war
falsley testifies in an investigation/examination
misdemeanor
what is the limit of watercraft liability in the homeowners broad form
$1500 including trailers
pwer to administer the insurance laws of the state designed to protect
the public
which BAP policy covers auto medical payments
none, only by endorsement
valued policy
policy that states the value of property as the amount shown on the declarations page. will pay stated full face value in the event of a total loss, regardless of the ACV
replacement value
price @ current pricing without a deduction for depreciation
sidetrack agreement
contract between a railroad and a business the railroad may service.
morale hazard
indifference to loss/failure to take proper care to protect property from loss (neglect) (leaving vehicle unlocked)
workers comp
covers all work related injuries & occupational diseases
insurer (principal)
the insurer is the source of the authority in which the producer/agent must abide
direct loss
Damage to property in which the proximate cause of the loss is an insured peril.
Example: Fire damage to an insured residence, or water damage to the residence resulting from a ruptured water pipe.
agreement
one party must make and communicate an offer to the other party and the second must accept
hold harmless agreement
a contractual agreement removing the liability of one party from a second party
contracts equipment factor
contractors equipment coverage provides open perils coverage on the insured's equipment such as mobile tolls, equipment, and machinery
labor & materials bond
Guarantees bills for labor and materials will be paid to the contractor as they are due.
(can be written separately or as a performance bond)
actuarial department
gathers & interprets statistical information used in rate making. determines the probability of loss and sets premium rates
issue age
insured's original age on the policy
equipment breakdown
insurance for loss due to the equipment breakdown
employee theft or dishonesty (form A)
covers acts of theft by an employee that result in a loss of/damage to/money/secuirties/and other proerty
Mysterious Disappearance
the disappearance of property without an identifiable cause of loss
comprehensive form (HO-5)
a- dwelling b-other structures c-pp (open peril)
losses to the dwelling & other structures are valued on a RCV, loses to pp are valued at ACV
additional insured
a person/organization not ordinarily protected by a policy but which through addition of an endorsement to the policy is granted status
motor truck cargo carrier's legal liability form
truckers
shippers
owners
motor truck cargo carrier's legal liability form: truckers
insures public truckers for legal liability arising out of loss/damage to cargo belonging to others
motor truck cargo carrier's legal liability form: shippers
covers shippers own goods
motor truck cargo carrier's legal liability form: owners form
covers business that owns the trucks with which it transports
arbitration
the process whereby a disputed claim is decided by a neutral third party
judicial bonds
gurantees that certain parties fulfill their statutory (required) obligations in connection with court proceedings
jones act (1920)
works comp that applies to sailors injured by the negligence of others
compulsory vs. elective
compulsory employers provide workers compensation benefits to employees or demonstrate the ability to provide
elective employers have a choice to accept or reject works comp laws
particular average
a partial loss sustained by a specific vessel or cargo
valuable papers and records coverage provides
the destruction of valuable papers and records by a covered cause of loss
burglary
taking of property from inside the premises by a person unlawfully (visiable signs of forcible entry or exit)
loss cost rating
a rating organization provides insurers with the portion of a rate that does not include provisions for insurer expenses and profits (insurer adds to arrive at final rate)
installation floater
primary property insured is moveable property such as heating equipment installed
funeral expense benefit
a statutory max amount varying form state to state provided as burial allowance
time element coverage
covers actual loss of business income sustained during the period of restoration due to suspension of operations
competent parties
minors, mentally incompetent, persons under influence of drugs/alc do NOT have legal capacity
residence permises
a 1-4 family dwelling where the insured resides, including other structures and grounds at that location. if the dwelling is more than 1 unit the insured must reside in one of the units
waiver
the voluntary abandonment of a known/legal right or advantage
transportation expenses
pays for the cost of transportation expenses incurred as a result of a covered collision or other than collision loss. (up to 20 a day, total 600)
bankruptcy clause
specifies the bankruptcy/insolvency of the insured does not relieve the insurer of any of its duties or obligations under the policy
short rate cancellation
the cancellation of a polocy for which the premium refund is calculated according to a short rate table whereby the insurer retains a portion of the unearned premium
legal action against us
specifies that the insured may not bring suit against the insurer until the insured has complied with all the terms of the policy
collapse
the abrupt falling down/caving in of a building or any portion of a building, but only if it cannot be occupied for it's current intended purpose
running down clause
coverage for legal liability of the shipper or carrier for claims arising out of collisions cause by the shipper/carrier
legal liability
the responsibility under law or contract for an act or failure to act
misrepresentation
making misleading representations/fraud descriptions of benefits or untrue statements about the financial condition of any insurer
disability income benefits
temporary total, permanent total, temp partial, perm partial, scheduled benefits
national association of insurance commissioners
association of all insurance commissioners, no legal authority over insurance regulations, promotes uniformity and recommendations for state policy
motor truck cargo owners coverage form
provies open perils for insured cargo. conditions:
property is the insured
covered property
is located in or on a land vehicle owned and operated by the insured and is in transit
intervening cause
a disrupted chain of events thus freeing the defendant from liability (provoking a dog causing it to bite)
causes of loss forms
basic, broad, special, earrthquake (only when used with one of the above)
a" rating or judgement rating
rates are based on the underwrites judgement & experience
financial anti-terrorism act (USA Patriot act)
imposes record keeping and gov reporting requirements on banks, financial institutions and non-financial businesses for specific financial transations and customer finncial records
personal and advertising injury
liability arising from false arrest, wrongful evicition, invasino of privacy, libel or slander, the use of another's idea in the insured's advertisement, infrindgement of copyright, or the use of another's slogan
reporting period
time during which claims must be reported in order to recieve a benefit
insured
the party to an insurance contract whom the insurer agrees to indemifiy for losses to provide benefits for or to render services to
fraud
the intentional misrepresentation, deceit, or concealmenet of a material fact known to a person with the intention of cuasing injury to another party
no fault liability
the injured party collects insurance benefits from his or her own insurance as if it were first party coverage, thus elminating the process of determining negligence or legal libaility
discovery form
provides coverage for losses that are discovered during the policy period but that did not necessarily occur during the policy period - requires the use of a retroactive date (like claims-made)
moral hazard
dishonesty (intentionally burning down your house0
pro rata liability
a clause designed to prevent the insured from collecting more than the actual extent of loss by allowing each policy to pay it's share of a loss
fair rental value
coverage d. policy pays the fair rental value of the part of the described location that is rented to others at the time of the loss if the rental unit is unfir for it's normal use because of a direct loss covered by the polocy
loss exposure
the extent to which one may be affected by a peril
umbrella policy
designed to provide coverage on a worldwide basis to third parties but does not pay benefits directly to an insured
aleatory contract
parties to a contract exchange unequal amounts of money. insured's premium paid is less than the potential benefit to be received in the event of loss
custodian
insured + insured partners/employees having care and custody of the property while insude (expluding janitor and watchperson)
residence employee
an employee whose duties are related to the maintenance or use of the residence premises including household and domestic services
tort law
pertains to injuries suffered by one party as a result of another's actions. a civil wrong other than a crime or breach of contract
loss valuation
property policy pays for losses to property based on the valuation method contained in the policy or chosen by the insured in an endorsement added to the policy
fiduciary bonds
guarantee the honest and faithful performance of executors trustees and other fiduciaries
surety (guarantor)
party who provides the bond and guarantee if obligor fails
joint underwriting association
Requires insurers writing specific coverage lines in a given state to assume the profits/losses accruing their share of the total voluntary market premiums written in that state.
Participating insurers accept every eligible risk, and then may choose to re
risk sharing/risk sharing plan
insurers agree to apportion among themselves those risks
optional coverage
agreed value, inflation guard, replacement cosst, extension of replacement cost to personal property of others
liberalization
specifies that if the insurer broadens coverage with no increase in premium the broadened coverage automatically applies to existing policies without the need for an endorsement
surplus lines insurance
protects against a financial risk that is too high for a regular insurance company to take on
surplus lines can be bought by
an insurer not licensed in the insured's state
insurable interest
possibility of economic loss.
life & health, property, casualty
insurable interest; life and health
interest must exist at time of application/purchase
insurable interest; property
interest must exist at time of loss/claim (ownership is evidence)
insurable interest; casualty
interest results from property rights, contract rights and potential legal liability
policy period
specifies that coverage applies only to a loss or losses that occur during the policy period stipulated on the declarations page
concurrent causation
a principle holding that when two perils simultaneously cause a loss, the insurer must pay the loss even if one of the perils is excluded by the policy
loss sustained form provides coverage
that took place and were discovered during the policy period or that took place within the policy period and were discovered within one year of the termination of the policy period
apparent authority
authority created when a producer exceeds expressed authority and the insurer does nothing to counter it
pure risk
situations where only the chance of loss and no chance of gain exists (fire, windstorm, explosion)
estoppel
a legal doctine that prevents the denial of a fact, if the fact was admitted to be true by a previous action
personal injury liability
legal liabilty arising from the wrongful conduct of the insured resulting in injury other than bodily injury (libel, slander, false arrest)
dp-3 (special form)
coverage for the dwelling and other structures is provided on an open perils basis, meaning coverage is provided for all causes of loss except for those perils specifically excluded
medical expense
reasonable charges for medical, xray, surgiical, dental, ambulance, hospital, professinoal nursing, and funeral services
right of salvage
the right of the insurer to take possession of damaged property after the loss to the property has been paid
maslicious mischief
vandalism
occupational disease
arising out of the couse of employement, and be caused by conditions that are particular to that employement
underwriting
process of evaulating a risk for the purpose of ussuing insurance. could include, nature of the risk, what hazards are present, outside factors might affect the risk, what past losses have occurred
watch person
any person the insured retains to have care and custody of property inside the premises. has no other duties
extended coverage
add permium is pd, those perils are. windstorm or gail, explosion, riot or cival commotion, aircraft, vehciles, smoke, volcanic eruption
product
any goods/products that are maufactured, sold, handled distributed or disposed by the insured and others conducting business under the insureds name
dp-1 basic form
perils: fire lightening and interal explosion
earthquake endorsement
eq is excluded on all polices. endorsment includes, eq, land shock waves, mudslide, mudflow, sinking
pollution extension endorsement
deletes the pollution exclusion for bodily injury and property damage liability but continues to exclude clean up costs
exclusive or captive agency system
agent represents solely one company or group of companies having common ownership, insurer retains ownership rights to the business written by the agent, the agent is an employee or a commissioned independent contractor, insurer may or may not provide off
broker
person that negotiates insurance contracts on behalf of the insured thereby representing the client's interest not the insurer
vicarious liability
the imposition of liability on one person for the actionable conduct of another, based solely on a relationship between 2 person. employer for acts of its employees
first named insured
the person, firm, or organization whose name appears in the first position of the declarations page of the policy when several names are listed
specific limit
insures a single item of property for a single limit of insurance
products exposure
exposure leave a business vulnerable to legal libaility for defects in product design or manufacture, also leaves a business exposed to liability for the failure to warm or explain with respect to its products
contract bonds
guaranee that contracts perform according to a construction contract
types:
bid bond, performance, labor and material
mutual insurance company
owned by policy holders, they recieve non-taxible dividends as a return of unused premium when declared
non-admitted
an insurer that has not sought approval (or) has not been able to obtain approval to transact business from the insurance regulator in this state
annual transit coverage form
used to protect all property/shipments being shipped or received from other shippers during the year via common carrier
duty to defend
the insurer promises to defend any law suit brought against the insured for damages caused by an occurrence to which coverage applies, whether or not any damages are paid
bodily injury
legal liability arising from physical injury to a person including sickness, disease, and death
imports
may be insured at any location and must remain segregated from other property so it can be easily identified
basic extended reporting period
provision in claims made form after policy expiration/cancellation. mini (60 day after policy term)
midi (5 year period after)
mobile home insurance
an owner occupied mobile home may be covered under an ho-2 or ho3 by endorsement or a separate policy
unilateral contract
only one party is legally bound to contractual obligations after the premium is paid. only the insurer has made a promise of future performance
motor carrier act of 1980
dept of transportation requires
motor carrier must carry an insurance policy of certain min limits or
post a surety bond representing certain finaancial stability criteria when transporting passengers or cargo
yacht policy
ocean marine form, designed for larger vessels
yacht policy coverage
property and liability, bodily injury and damage to property of others, coverage for fuel spills, commercial towing, and dinghies
personal producing general agent
does not recruit career agents, sells insurance for carriers it is contracted with, maintains it's own office and staff
common policy conditions
cancellation, changes, examination of your books and records, inspections and surveys, premiums
supplemental extended reporting periods
an optional reporting period of unlimited duration, SERP cocers claims arising from occurrences that took place after the retroactive date and before the end of the policy term, regardless of WHEN the claim was made
robbery
the taking of property from the care and custody of a person by one who has caused or threatened bodily harm or committed an unlawful act witnessed by that person
indirect loss or consequential loss
a second or financial loss occurring as the result of a direct loss
completed operations exposure
applies to occurrences that occur after the insured's operations have been completed and result form improper or defective workmanship, installation, construction or repair
inside the premises - robbery or safe burglary - of other property
covers most types of tangible property including jewelry firearms, computers, form loss or damage resulting from an actual or attempted robbery of a custodian
common carries (trucker and motor coverage)
truckers, shippers, owners
common carries (trucker and motor coverage); truckers
insures public truckers for legal libaility arising out of loss/damage to cargo belonging to others
common carries (trucker and motor coverage); shippers
covers shippers own good
common carries (trucker and motor coverage); owners form
covers business that owns the trucks with which it transports its own goods
agreed value
the insurer and insured agree at the time of insuring on an amount of insurance to be paid in the event of a loss (used when valuation is difficult to determine)
non-personal contract
owner may transfer or assign ownership of a life or health insurance policy to another person
bill of landing
required to be issued to the shipper of the goods being transported.
straight (regular): carrier is responsibile for the invoice cost of the goods
released: carrier is only responsible for the value of the goods declared on the bill of landing
case reserve method
a loss reserve established for each claim when reported
implied
authority that the public assumes a producer has
endorsement
a form changing the provisions of a policy. attached as a rider
motor carrier act of 1980
motor carriers and private that transport property are required to establish evidence of financial responsibility in the form of insurance a bond a guarantee or qualififcation as a self-insurer
nationwide marine definition
six broad classes of property that may be insured
imports, exports, domestic shipments, instrumentalities of transportation or communication (bridges, tunnels, towers), personal property floater risks, commercial property floater risks
speculative risk
instances where there is a chance of loss or gain (gambling)
occurence form
provides for the defense and payment of claims for which the insured is legally liable that occur during the policy period regardless of when a claim is made even if the claim is made after the policy has expired
mortgage holder
policy will pay to each mortgage holder showin the declarations its share of a covered loss or damage in order of precedence as its interests may appear
uninsured motorists coverage
provides insurance to insured persons injured in accidents that are caused by another party
bailor
an individual who retains the ownership of property that has been taken into the care, custody, and control of a bailee
excess insurance
property coverage above the primary amount of insurance. excess does not pay until primary is exhausted
directors and officers liability
written to protect the directors and officers of a corporation or other legal entity for wrongful acts committed while acting in their capacity as directors and officers for the organization
exports
may be insured at any location, acquires its character when being prepared for export, must retain that character unless diverted for domestic trade
financial rating services
producers are responsible for placing business with insurers that are financially sound
stock insurance companies
owned by stockholders. dividends if declared are taxable as profits
instrumentalitiies of transportation of communications
covers items that are often at a fixed location because they play an important role in transportation and communication industries
commercial property floater risks
insure property pertaining to a business, profession, or occupation
fraud and false statements
an act committed by an individual who knowingly gives or conceals false material infomration to an insurer agent or broker with the intent to obtain insurance an inccurate rating or undue claim payments
parol evidence rule
written contract is the final expression of agreement and may not be altered or simultaneous oral or written negotiations without the written consent of both parties
boatowners policy
similar to ho, provides bodily injury and property damage, liability coverage for an occurence arising out of the use of maintenance of covered property or a non-owned boat
tort
a civil or private committed by one person against another for which the law provides a remedy
intentional tort
deliberate act
unintentional rot
failure to act (negligence)
coverage territory
specifies the geographic area in which the property must be damaged in order for coverage to apply
obligee
party for those whose beenfit the bond is written
concealment
the witholding of known material facts so important that the disclosure of them would change the decision of an insurer with respect to underwriting settling a loss or determining premium
named peril
coverage applies only to losses caused by perils that are specifically stated in the policy
loss of use
inability to use damaged property
false statement
a false statement in the application that can render the contract void if material to acceptance of the risk
independent agency
an agent or agency that enters into agency agreements with more than one insurer
blanket limit
this method of writing coverage is used when you are insuring more than one property in one policy by only an amount of insurance that applies to all properties covered under the policy
federal employees compensation act
workers' compensation that applies to all us civilian employees
named insured
any person, firm, or organization specifically designated by name on the declatations page of the policy
individual rating
a rate used for a policyholder because a large enough pool of similar risks is not available to any other type of rate, primarily used for commercial and specifialty risks because of the number of unique variables involved
contractual libaility
liability assumed by the insured under a contract a business may be held legally liable for the actions of or failures to act of parties per the language of a contract of a legal agreement
theft
the broadest of the crime coverages includes any act of stealing, burglary or robbery
assumption of risk
retention. the plaintiff who consciously exposes himself to danger assumes some risk of possible injury
motor carrier
engaged in transporting property or passengers
stated value
a valuation method that states the value of a particular property on the declarations page, but provides for the insurer to pay the lesser of the stated value or ACV of the property following a loss
accounts receivable coverage form
coverage provides insurance when the insured's business records are destroyed in a loss caused by a covered peril, and the business is unable to collect money it's owed
earth movement
earthquake, including land shock waves or tremors before, during or after a volcanic eruption
landslide; mudslide or mudflow; subsidence or sinkhole, earth sinking, rising, or shifting
remuneration
the premium for each work classification is determined by multiplying a rate and a premium basis. The premium basis is employee remuneration
tabular method
a loss reserve based upon the estimated length of an insured's or claimant's life or expected disability
modified form HO-8
used when insuring older homes where replacement value and market value are disprportionate or when a moral hazard would be created if insurance were written in an amount equal to 100% of a dwelling's replacement value
absolute liability
a doctrine that applies only in particular circumstances. employers are absolutely liable for employee work-related injuries. responsibility without fault or negligence
broad form HO-2
dwelling and homeowners policy.
fire, lightening, internal explosion, wind, hail, aircraft, riot, vehicles, volcanic eruption, explosion, smoke, VMM
plus: damage by burglars, falling objects, weight of snow/ice/sleet, accidental discharge/overflow of stea
binder
a document that temporarily provides insurance coverage until a policy is issued
adverse selection
the insuring of risks that are more prone to losses than the average (standard) or above average (perferred) risk
VMM endorsement
the peril of VMM may also be included with the payment of an add premium. EC and VMM coverages if purchased must appaear on the declarations
fair access to insurance requirements (FAIR plan)
established by states to provide basics property insurance to property owners who are unable to secure coverage in the standard property marketplace
loss reserves
the net premiums plus interest reflects possible future contract obligations
an accounting measurement of an insurer's future obligation to it's policyholders
internet liability and network protection policy
provides liability coverage on a claims-made basis for risks that are specific to bsuiness use of the internet, such as network security, electronic publishing liability and loss of data
violent crime control and law enforcement act of 1994
the act made it a felony for a person to engage in the business of insurance after being convicted of a state of federal felony crime involving dishonesty or breach of trust
defense base act
workers' compensation that applies to workers on military bases outside the united states
truckers coverage form
covers business exposures of motor carriers for hire who transport the goods of others
penalty/penalties
fines and possible prison time
average value method
a loss reserve established based on average settlements of particular claim types
foreign insurer
incorporated in any other state
personal contract
insurance policies cover the insurable interest of the insured. the insured cannot transfer or assign a policy to someone else (except life insurance)
conditional contract
both parties to a contract must perform certain duties and follow rules of conduct to make the contract enforceable
money orders and counterfeit money
covers the insured's acceptance in good faith of money orders and counterfeit money received in exchange for merchandise or services during the course of conducting regular business activities
loss payment
specifies the time frame within which the insurer must pay a loss to the insured after the insurer has received the insured's proof of loss and reached an agreement
mass marketing
used to target a specific type of insurance to a large group of individuals
lloyds of london
not considered a company but a grouping of syndicates. members assume portions of risks underwritten by syndicate manager. limitations on liability not permitted.
premium assumptions
must charge an adequate premium for the risk based on the same factors used in evaluating the risk. premium rates are considered inadequate when they do not cover projected losses and expenses. rates must not be excessive or unfairly discriminatory.
war
war includes undeclared war, civil war, insurrection, rebellion, revolution or any warlike act by a military force
deductible
a specified dollar amount of each covered property loss that an insured must pay
market value
a property policy provision that changes the valuation method otherwise applicable (ACV or RC) to a valuation method that allows reimbusement to the insured, according to the price a willing buyer would pay for the property pruchased from a willing seller
open competition
insurance regulator allows competition between insurers to produce rates
abandonment of property
specifies that the insured may not abandon or relinquish ownership of damaged property to the insurer for disposal or repair
Personal Umbrella Policy
a policy covering (BI and PD) and personal injury liability in excess of the insured's underlying policy limits. this provides excess coverage over the limits of an underlying policy
functional replacement value
a property policy provision that changes the valuation method otherwise applicable (ACV or RC) to valuation that allows replacement with less costly property that is functionally equivalent
law or large numbers
the larger the number of exposures (homogeneous groups) considered, the more closely the losses reported will equal the probability of loss
replacement cost
the policy pays the full cost to replace or repair the damaged property (not exceeding policy limits) at the time of the loss without an adjustment for depreciation
employment practices liability
provides coverage for employment discrimination, sexual harassment, and wrongful termination
outside the premises
insured money and securities in the hands of a messenger or armored car service for loss resulting directly from theft, disappearance, or destruction
fund transer fraud
covers loss of funds resulting from a fraudulent instruction that directs a financial institution to transfer, pay or deliver funds from the insured's transfer account
uncontrolled lines of coverage
inland marine forms not filed with or through any rating bureau developed by individual insurers
forgery
signing of the name of another person or organization with intent to deceive
indemnity
to restore individual to the same financial or economic condition that existed prior to a loss
electronic data processing coverage
form insurers computers, component parts, associated peripheral equiment including printers and faxes, and systems used exclusively in the insured's computer operations, such as air conditioning, fire suppression, and electrical equipment
claims-made form
provides for the defense and payment of claims, for which the insured is legally liable
offers same coverage as occurrence form but is of particular significance to risks that have the potential to generate claims years after an occurrence injury or damag
governmental action
the destruction, confiscation, or seizure of covered property by order of the government and is excluded in the homeowner policy
liquor liability
covers liability arising out of the business of manufacturing selling or serving alc beverages
falling objects
damage to exterior of the building must take place for coverage to apply to contents inside the building
trip transit coverage form
used for irregular shipments, wish to insure a single shipment
consequential loss
a second or financial loss occurring as the result of a direct loss
federal emergency management agency
government agency that administers the national flood insurance program
common policy declarations page
shows the who what when where and how much that applies to the insurance provided by the policy. it defines each of the coverage parts included in the policy
pro rata cancellation
the cancellation of a policy for which a refund is made of unearned premium calculated in proportion to the time the policy was in force
warranties
statements made in an application for insurance or material stipulations int he policy that are guaranteed as true in all respects
performance bond
guarantee that the contractor will perform, as agreed in the contract
executives
oversee the operation of the business
commercial umbrella insurance
blanket catastophe excess liability coverage. excess, broad, automatic replacement
commercial umbrella insurance; excess
pays when loss exceeds underlying primary insurance
commercial umbrella insurance; broad
pays when there is no underlying primary
commercial umbrella insurance; automatic replacement
replaces coverage for underlying policies when aggregate limits are impaired or exhausted
risk management
the determination of what types of protection are required to meet an insured's needs. survey of an insured's operations, assets, exposures that could give rise to losses
per occurrence limit
the most the coverage will pay for a loss arising out of any 1 occurrence, regardless of overall policy limits
applicant
the person making application for insurance coverage
libel
the dissemination of any written or printed matter tending to unjustly injure a person's reputation
marketing/sales department
responsible for advertising and selling
difference in conditions (DIC) insurance
a special form used to fill in the gaps of property policy. there is no standard policy form, no coinsurance, no pro rata clause
motor vehicle dealer bonds
guarantees that the dealer performs according to the law
fellow servant rule
removes the employer's negligence if a fellow employee contributed in any way to the loss
computer fraud
covers losses when a computer is fraudulently used to transfer money, securities, and other property from the insured premises, banking premises, or to a person or place outside the insured premises
inherent vice
a condition or defect that exists within property itself that causes the property to spoil, break, become defective, or destroy itself
certificate of insurance
a document evidencing the fact that an insurance policy has been written
limited pollution liability coverage form (designated sites)
three options to adding pollution coverage back to cgl policy
-pollution liability coverage form
-limited pollution liability: identical to above but does not include clean up costs
pollution extension endorsement: deletes pollution exclusion, but continu
appraisal
specifies that if the insured and insurer cannot agree on the amount of a loss either may demand an appraisal
domestic shipments and property in transit
involves shipments while in transit while in the custody of others, and while being returned
domestic shipments and property in transit; annual
used to protect all property/shipments being shipped or received from other shippers during the year via any common carrier
domestic shipments and property in transit; trip
used for irregular shipments, wish to insure a single shipment
loss
a reduction in, decrease, or disappearance of value
effective or issue date
the date when insurance coverage begins (aka inception date)
write your own (WYO)
a cooperative effort involving FEMA and the private sector that allows existing property and casualty insurance companies to write, issue, and service flood insurance under their own names
assigned risk plan
a state required plan where all insurers must participate, providing workers' compensation insurance for those persons not able to obtain insurance through the voluntary market
producer (agent)
a person appointed by an insurance company to represent the company and to present policies on its behalf
extra expense coverage form
time element coverage: coverage additional expenses that are incurred during the period of restoration, which the insured would not have incurred if there had been no direct physical loss (such as relocation expenses and costs to equip a temporary locatio
improvements and betterments
Fixtures, alterations, installations, or additions made a part of the building or structure that the tenant occupies but does not own.
Includes structures that the tenant acquired or made at their expense, but cannot legally remove.
terrorism risk insurance extension act of 2005-2007
passed by congress in response to the 9/11 attacks. provides a temporary program that in the event of a major terrorist attack, allows the insurance industry and federal government to share losses according to a specific formula
mandatory rates
rates set by state rating bureaus
bodily injury liability
legal liability arising from physical injury to a person, including sickness, disease, and death caused by the negligent or purposeful acts or omissions of an insured
equipment dealers floater
provides insurance for property consisting primarily of mobile agricultural and construction equipment, including property of others in the dealer's care, custody, or control
definitions
words, terms, and phrases that are clearly described and used in an insurance policy for the purpose of clarifying the intent of the insurer with respect to the extent of coverage provided by the policy
fair credit reporting act
protects a consumers right to privacy, making certain data is confidential, accurate, relevant, and properly used
salvage value
the amount for which property ca be sold at the end of its useful life. in property insurance the salvage value is the scrap value of damaged property
coinsurance
applies to commercial property
-encourages the insured to purchase insurance to value
-establishes the basis of payment if the insured fails to maintain a specified percentage of that value
-applies only in the event of a partial loss
(had/should have had
indirect loss
a second or financial loss occurring as the result of a direct loss
volunteer worker
person who is not an employee of the insured and who donates his/her work and acts at the direction of the insured, but is not paid a fee, salary, or other compensation
aggregate limit
the max amount payable for loss (per location and/or per person) from all occurrences within a policy period regardless of the number of separate accidents
medical malpractice insurance
written for medical professionals such as doctors whose negligent acts or omissions may injure or harm patients
transit coverage forms; annual
used to protect all property/shipments being shipped or received from other shippers during the year via any common carrier
transit coverage forms; trip transit
used for irregular shipments wish to insure a single shipment
risk
a condition in which a chance, likelihood, probability or potential for a loss exists
direct response company
sells insurance polices directly to the public with licensed employees or contractors utilizing direct mail, newspapers, magazines, radio, television, internet, web sites, call centers and vending machines
admitted
authorized insurer is authorized to do business in this state
a non-admitted
insurer is not authorized to transact in this state
common carrier cargo liability
bill of lading - required to be issued to the shipper of the goods being transported
- straight
-released
common carrier cargo liability; straight (regular)
carrier is responsible for the invoice cost of the goods
common carrier cargo liability; released
carrier is only responsible for the value of the goods declared on the bill of lading
stated amount
an amendment to the valuation method of a property policy insuring an unusual or valuable piece of property that establishes, at the time of insuring, max amount of insurance to be pd in the event of a loss
insured premises
the interior of that portion of a building occupied by the insured to conduct business
expense ratio
determined by dividing an insurer's total operating expenses by written premiums
total operating expenses/written premiums
contractor's license bonds
guarantee that a contractor complies with laws pertaining to his or her trade
certificate of authority
authorization granted by the department of insurance to an agency or insurer to transact insurance in this state
alien insurer
an insurer organized under the laws of any jurisdiction outside of the usa, whether or not it is admitted to do business in this state
consideration
insured pays premium, insurer promises to pay claims
limit of liability/limits of insurance
the restriction a liability policy places on the dollar amount of coverage
property damage liability
legal liabilty arising from damage to tangible property, including lose of use of that property caused by the insured's negligence
subrogation
the legal process by which an insurer seeks recovery of the amount paid to the insured from a third party responsible for having caused the loss
merchant marine act (jones act)
allows insured seamen to make claims for injuries suffered during the course of employment. it regulates maritime commerce in us waters transportation of cargo and the rights of seamen
offer
the application submitted by the applicant
loss of consortium
compensation to husband or wife for the loss of companion ship of a spouse
bailee
an individual or organization who has taken into it's care custody and/or control the property of another for servicing repair, or storage
attractive nuisance
an important 'exception' to the usual liability for injuries to trespassers is in cases of injuries to children. (swimming pools)
commercial ocean marine insurance
coverage is called protection and indemnity. covers legal liability imposed on the insured for damages arising out of the operation of the insured vessel
extended reporting period (tail coverage)
if a claims-made policy isn't renewed or replaced, the claims-made form contains a provision for the extension of time during which claims must be reported
primary insurance
property coverage that provides benefits up to the limits of a policy, regardless of other policies in effect
residual markets
a market designed for those risks unable to find coverage in the ordinary market
residual markets; joint underwriting (reinsurance) pool
participating insurers accept every eligible risk, and then may choose to reinsure some risks
residual markets; risk sharing plan
insurers agree to apportion among themselves those risks
insurance contact
contract of adhesion. one party (the insurer) prepares the contract and presents it to the second party (the insured) who must accept it on a "take it or leave it" basis
vacancy
a property that has neither occupants nor personal property is described as vacant
combined ratio
sum of the loss ratio and expense ratio
motor coverage form (variation of the truckers coverage form); trucker
engaged in the business of transporting property for hire
motor coverage form (variation of the truckers coverage form); motor carrier
engaged in transporting property or passengers
broker's bonds
bonds such as insurance, mortgage, or title agency guarantee that the broker performs according to law
lapse date
the date when insurance coverage ends
combined single limit
the limit of the polocy may be applied to either the bodily injury (BI) or property damage (PD) wherever needed, or in any combination
defense cost
settle any lawsuit or claim based on a loss in which an insured is legally liable
non-renewal
when an insurer determines not to renew a policy at the end of a policy period
surety bonds (performance bonds)
contract
court
license and permit bonds
surety bonds (performance bonds); contract
bid bond
performance
labor and material bond
surety bonds (performance bonds); court
judicial bond
fiduciary bond
surety bonds (performance bonds); license and permit
contractors license, tax, broker's, motor vehicle dealer
statue of limitations
the length of time in which a person may file suit. statues of limitations can vary by line, type of liability and state
direct writing system
an insurer deals directly with the insured through an employee agent
reciprocal insurance company
a group owned insurer. each subscriber assumes a part of the risk of all other subscriber. pro rata sharing of risk (assessment is possible), managed by attorney in fact
fidelity bonds (honesty)
cover employers from direct loss due to fraudulent or dishonest acts (theft) by their employees)
jewelers block coverage
-provides insurance for jewels, watches, gold, silver, platinum, pearls, and precious and semi-precious stones
-provide insurance for both business personal property and goods for sale during the normal course of the insured's business
-open perils basis
nuclear hazard
any nuclear reaction, radiation, or radioactive contamination - whether controlled or uncontrolled - except that fire resulting from the nuclear hazard is covered
cancellation
the termination of an insurance policy before its expiration date. insured or insurer may cancel
extra expense
the necessary expenses incurred by the insured during the "period of restoration" that would not have been incurred had the covered loss not occurred
impaired property
tangible property, other than an insured's product or work, which cannot be used because it is thought or known to be defective, inadequate, definicient, or dangerous
bid bond
guarantee that the contractor making the bid will, upon acceptance of the bid by the contractor's customer (the obligee) proceed with the contract and replace the big bond with a performance bond
errors and omissions
protects against daamges arising out of negligent acts when performing professional duties for another
class rating
a group of insureds who have similar exposures and experience are charged the same rate
assignment
specifies that the insured may not transfer rights of ownership or interest in an insurance policy to another party without the insurer's written consent
businessowners policy
designed for small to medium sized business firms that do not require extensive underwriting
file and use
filed with insurance regulator, in use immediately
scheduled limit
insurers one or more items of property on a single policy. the amount of insurance applying to each item is shown on a scheduled
per person limit
the max amount the coverage will pay for loss to any 1 person, regardless of the overall policy limits
contingent liability exposure
applies when the liability of others causes the insured to be legally liable for the actions of, or failures to act, of other partiies such as sub-contractors or independent contractors
us longshoremen and harbor workers' compensation act
workers' compensation that applies to workers who load, unload, build, or repair ships (but not to the crew of the ship)
premises and operations exposure
applies to an insured business that conducts its operations both at its own premises and elsewhere
experience rating
rates based upon employers prior loss experience
valued contract
a contract that pays a stated amount in event of a total loss
pollution liability
bodily injury or property damage arising out of the actual, alleged, or threatened discharge, dispersal, seepage, migration, release, or escape of pollutants
retrospective rating
initial premium is chraged then adjusted at end of policy period to reflect actual loss experience
collision
the upset of the covered vehicle or non-owned auto, or their impact with another vehicle or object
void contract
an agreement without legal effect. either it was made illegally or it was declared void by the courts because it doesn't contain all the elements of a legal contract
reasonable expectations doctrine
expectations of policyowners and beneficiaries will be honored even though the strict terms of the policy do not support those expectations; what a reasonable and prudent buyer can expect
four elements of a legal contract
competent parties, legal purpose, agreement, consideration
four elements of a legal contract; competent parties
minors, mentally incompetent, persons under influence of drugs or alcohol do not have legal capacity
four elements of a legal contract; legal purpose
illegal activity voids contact
four elements of a legal contract; agreement
offer is application, acceptance is issuance of policy
four elements of a legal contract; consideration
insured pays premium, insurer promises to pay claims
neglect
not using all reasonable means to save and preserve property at and after the time of a loss
reinsurance
a device used by insurers to transfer or share in a risk. Consists of the originating application (ceding company) and the insurer who share in the risk (reinsurance insurer)
monopolistic vs competitive
mono: workers' comp insurance only available through state fund
comp: workers' comp insurance available through private insurers
contract law
law that pertains to the formation and enforcement of contracts
national flood insurance program
- enables property owners to purchase federal floor insurance
-administered by federal emergency management agency
career agency system
agents are recruited, trained and supervised by either a managing employee or general agent who is contracted with the insurance company
retroactive date
-date specified in the declarations, after which an occurrence must take place to be covered
- date may be the policy's effective date or any date in the past that the insurer agrees to, such as the effective date of the first claims-made issued to the in
risk retention groups
- a group owned insurer that primarily assumes and spreads the liability related risks of its members
-owned by it's policy holders
-membership is limited to risks with similar liability exposures such as theme parks, go cart tracks, or water slides
contributory negligence
prevents recovery for damages caused by a negligent party if the claimant was also negligent
flat cancellation
the cancellation of a policy on the date the policy becomes effective
actual cash value
the policy pays for the cost to repair or replace the damaged property at the time of loss, less depreciation
power failure
if it takes place off the described location is not covered. is covered if it is occurring on the described location
HO-4 contents broad form
designed to insure those who are tenants. insures personal property under coverage c against loss from the 16 named broad form perils found in the ho-2 and ho-3 forms
negligence
determine the tort of negligence:
legal duty, standard of care, proximate cause, actual loss or damage
statutory law
enactment of laws by legislatures
controlled lines of coverage
policy forms, endorsements, and rates that are filed by insurers with the departments of insurance in each of the states where they write insurance
representation
statements made on an application by applicant that are believed to be true, but are not guaranteed (warranted)
principle of indemnity
the principle of restoring the insured to the same financial condition as before the loss, with no intent of loss or gain
reinsurance companies
insurers (ceding company) transfer of risk to other insurers (reinsurance insurer)
unoccupancy
a property that contains personal property or contents but has no occupants is described as unoccupied
ho-3 special form
int he special form (ho-3) the dwelling and others structures (a + b) are insured on an open basis
medical payments coverage
- coverage for the bodily injury of third parties sustained on an insured location or as a result of the insured's activities
- coverage provided for the payment of necessary medical, surgical, x-ray, dental, ambulance, hospital, professional nursing, and
treaty agreements
reinsurance agreement that covers all risks contained in the subject line of business automatically
tax bonds
guarantee a business complies with law pertaining to payment of taxes
facultative agreements
a reinsurance agreement allowing the ceding company and the reinsurance company an opportunity to exchange advice about the underwriting of each case
express
written in a producer contract (binding authority)
peril
a cause of a potential loss
inflation guard
- the limit of insurance for property subject to this additional coverage automatically increases by the annual percentage shown in the declarations
-this percentage of increase is applied to the policy at the rate of 1/365 of each year
prior approval
filed with insurance regulator, not used until approved (or until specific time passes without being disapproved)
voidable contract
a valid contract that may be set aside by one of the parties for reasons satisfactory to a court
(ex: insurer may void or revoke coverage for misrepresentation or fraud)
manual rating
rates based upon job (work) classification
friendly fire
a fire that way intentionally set and stays within its intended boundaries (e.g., fireplace)
physical hazard
a physical condition that increases the probability of loss (flammable material stored near a furnace)
dwelling coverages
a - dwelling
b- other structures
c- personal property
d- fair rental value
e- additional living expense
condominium association form
used in place of the building and personal property coverage form when insuring buildings and fixtures that are a part of the building insured by a condominium association. includes coverage for building items such as refrigerators, air conditioners, and
business pursuits
extends liability coverage for involvement in business not owned or controlled
domestic insurer
an insurer organized under the laws of this state, whether or not it is admitted to do business in this state
open perils
coverage applies to all losses caused by all perils except fro those specifically excluded (aka all risk)
contract carrier (trucker and motor coverage)
- business, individual, or organization that carries persons or property for a fee from one place to another
- persons or property being transported are only those of certain customers and NOT the general public
additional coverage(s)
automatically included in property policies without an additional premium, depending upon the type of policy
they are paid in addition to those stated in the insuring agreement and include debris removal, collapse, and fire department service charges
acceptance
the acceptance of an insurance contract takes place when the insurance company agrees to issue insurance
hostile fire
a fire produces a visible spark, flame, or glow and leaves the area in which it was intended to be kept
coverage extensions
- newly acquired or constructed property
-personal property off premises
-outdoor property
-personal effects
-valuable papers and records
-accounts receivable
dp-2 broad form
- dp-1 perils, ec perils, and vmm
-damage by burglars
-falling objects
-weight of ice, snow, sleet
-accidental discharge or overflow of water or steam
-sudden and accidental tearing apart, cracking burning, or bulging
-freezing
-sudden and accidental dama
underinsured motorists coverage
protects the insured against drivers who do have auto liability insurance, but whose coverage limits are inadequate or insufficient to respond to claims.
the coverage pays only up to the amount that exceeds the limit of liability of the at-fault party
proof of loss
a document that verifies how and when a loss happened and includes the cost of damages
property damage
legal liability arising from damage to tangible property, including loss of use of that property caused by the insured's negligence
compensatory damages
awarded to the injured party for the actual loss sustained
compensatory damages; special damages
award for actual expenses such as bills, loss of earnings, and the costs of repairing or replacing damaged property
compensatory damages; general damages
award for pain, suffering, disfigurement, and similar types of losses
accident
a sudden, unforeseen, unintended, and unplanned event
inchmaree clause
covers direct damage caused by the bursting of boilers, breaking of propeller shafts, or loss due to faults or errors in navigation by the crew
non-concurrency/non-concurrent policies
a situation where liability policies that are in layered program (such as primary and excess policies) do not agree as to their policy effective dates or provisions, creating a gap in coverage
legal purpose
illegal activity voids contract
occurrence
an accident. includes continuous or repeated exposure to the same general harmful conditions
direct mail
- marketing system utilizing direct mail, newspapers, magazines, radio, television, internet, web sites, call centers, and vending machines
- sells insurance policies directly to the public with licensed employees or contractors
self - insurer
- assumes the financial risk one's self
- generally an option only for large companies
notice of loss
insured's duties in the event of loss
-give prompt notice
-call police if law is broken
- cooperate with investigation
- forwarding demands to insurer
-protect the damaged property
-inventory damaged property
-submit proof of loss to insurer
surety
assumption of liability for the obligations of another
multi-peril crop insurance
- written by private insurers, reinsured by federal crop insurance corporation
-covered causes of loss; adverse weather, fire, insects, plant disease, wildlife, earthquake, volcanic eruption
gross negligence
a willful, wanton, or reckless disregard for the consequences affecting the life or property of another
principal (obligor)
party who has agreed to fulfill the obligation
punitive damages
damages assessed in addition to specific and general damages as a punishment for extreme, objectionable conduct by a negligent party, as in the case of gross negligence
merit rating
a rating approach that rewards an insured who takes measures to decrease the probability of loss occurring by the implementation of loss control or safety programs
rehabilitation benefits
physical therapy and vocational training are utilized with the objective of returning the injured employee to work as soon as possible
professional liability
exposure of loss to businesses or professionals that have a higher than average exposure for being legally liable for damages other bodily injury or property damage
water damage
floor, surface water waves, tidal water, overflow of a body of water, water or waterborne material that backs up through sewers or drains or overflows from a sump or sump pump, water or waterborne material below the surface on the ground
proximate cause
the cause that sets other causes in motion when multiple causes combine to produce loss or damage. the cause without which a given result would not have occurred
hazard
something that increases the chance or likelihood of loss occurring (physical or moral or morale)
insurable events
any event, whether past or present, that may cause loss or damage to person having an insurable interest or create a liability against him/her
electronic data
- includes information, facts, computer programs and the cost to replace or restore such information
- pays up to 2500 aggregate in any one policy year for the cost to replace or restore electronic data that has been destroyed or corrupted by a covered ca
contract of adhesion
one party prepares a contract (insurer) and submits it to the other party on a take-it-leave-it basis (insured)
license and permit bond
required by municipalities or other public bodies as a condition for granting a license or permit to engage in a specified activity. the bond guarantees that the party seeking the license or permit will comply with applicable laws or regulations
pollution liability coverage form (designed sites)
- provides coverage on a claims-made basis with its own limit of liability
- provides coverage for clean up imposed by governmental direction if the cost is incurred because of environmental damage caused by a pollution incident
intentional loss
loss arising out of any act committed by or at the direction of the name insured or any additional insured, with the intent to cause a loss
contract of utmost good faith
both parties bargain in good faith in forming the contract and rely upon the statements and promises of each other
fraternal benefit societies
non profit organizations that generally sell insurance only to members
federal employers liability act
workers' compensation that applies to interstate railroad workers
second injury fund
pays compensation on behalf of an employer to an employee who has already suffered a prior disabling injury and now sustains a subsequent injury and the combination of the 2 injuries creates a greater disability than the second injury would have created b
crop hail insurance actuarial association
provides named peril coverage (such as hail fire lightening wind freezing frost)
- coverage begins at 12:01 am following date application is signed if crop is visible above ground
-coverage ends when crop is harvested
law of agency
a relationship between two parties where one (producer/agent) may act on behalf of the other (the insurer/principal) and bind the actions or words of the principal
attained age
insured's age at any point in time at issuance, renewal, or conversion
concurrency/concurrent policies
a situation under which at least 2 policies provide identical coverage for the same risk
insured location
any location described in the declarations
loss ratio
determined by dividing paid losses plus loss reserves by total earned premiums
paid losses + loss reserves/total earned premiums
flood insurance
flood policies provide protection for direct loss to insured property
flood is defined as a general and temporary condition of partial or complete inundation of land as a result of
-overflow of inland or tidal waters
-rapid accumulation or runoff of surface waters
-mudflow caused by accumulation of water
-collapse or destabilization of land along a shoreline
court bonds
judicial bond
fiduciary bond
court bonds; judicial bond
guarantee that certain parties fulfill their statutory obligations in connection with court proceedings
court bonds; fiduciary bond
guarantee the honest and faithful performance of executors, trustees, and other fiduciaries (trust)
business income
time element coverage
covers actual loss os business income sustained during the period of restoration due to suspension of operations such as a result of direct physical loss caused by a covered loss
insuring agreement
the insurer's promise of protection to the insured
ordinance or law
increased costs due to the enforcement of any ordinance or law regulating the use, construction, demolition, remodeling, renovation, or repair of property
excess coverage
property coverage above the primary amount of insurance. excess does not pay until primary is exhausted
split limit
the amount of coverage is divided between bi and pd
signs floater
provides coverage for insurance for neon, automatic or mechanical signs, and street clocks, as well as billboards ordinary fixed or plastic-faced signs
easement
liability assumed under the right to use someone's land or license agreement, except in connection with construction or demolition operations on or within 50 feet of a railroad
employee dishonesty
coverage provides insurane for business personal property, including money and securities resulting from dishonest acts committed by any of the insured's employees acting alone or in collusion with other persons
general average
a partial loss sustained voluntarily but done so to save a vessel or cargo from a total loss
personal articles floater (scheduled)
used to insure "individual" personal property on an itemized or scheduled basis. coverage is worldwide.
loss of consortium
compensation to husband or wife fro the loss of companionship of a spouse
slander
the oral dissemination of a flasehood that damages another's reputation
deductible
a specfiied dollar amount of each covered property loss that an insured must pay