Property Insurance
Line of insurance that includes many types of coverages designed to handle the risk that a person will suffer financial loss because something she owns is damaged or destroyed. Covers my stuff.
Casualty Insurance
Line of insurance that includes a wide variety of unrelated coverages, including Liability, Auto, Workers Compensation, Aviation, Crime, and Surety bonds. Covers other guys stuff.
Parts of a Policy (DICEE)
Declarations; Insuring Agreement; Conditions; Endorsements; and Exclusions.
Declarations
Section of an insurance contract that shows who is insured, what property or risk is covered, when and where the coverage is effective, and how much coverage applies
Insuring Agreement
Section of an insurance policy that describes what is covered and the perils the policy insures against
Conditions
Portion of an insurance policy that describes the rights and duties of the insured and the insurance company under the policy
Endorsements
Document attached to an insurance policy that changes the policy in some way
Exclusions
Section of an insurance policy that lists property, perils, persons, or situations that are not covered under the policy.
Additional/Supplementary Coverage
Supplemental insurance coverage's that apply only in certain circumstances, have reduced or separate limits of liability, or require the insured to meet certain requirements before they are applicable; also called coverage extensions, other coverage's, an
Named Insured
A person, corporation, partnership, or other entity identified as an insured party in an insurance policy's declarations page.
First Named Insured
First person listed in the declarations as an insured; the first-named insured may have a higher level of duties or rights under the policy
Additional Insured
An individual or company, in addition to the insured, who is listed in the declarations; an example is a mortgage company that has an insurable interest in the property insured.
Definition
Section of an insurance policy that clarifies the meaning of certain terms used in the policy.
Policy Period
The date and time specified in the declarations for when coverage begins and ends.
Policy Territory
Place where coverage under a policy applies.
Cancellation
o Termination of an insurance policy by the insured or the insurance company during the policy period.
o Insurer Cancellation requires advanced notice. Full refund of unearned premium-PRO RATA
o Insured cancellation-no advanced notice. Partial refund of u
Non-renewal
o Decision made by an insured or insurance company to not continue coverage for another policy period after the current policy period expires.
o Insurer must give advanced notice.
o No advanced notice required by the insured.
Deductible
Dollar amount the insured must pay on each loss to which the deductible applies; the insurance company pays the remainder of each covered loss, up to the policy limits
Nonconcurrency
Situation that exists when the same property is covered by more than one policy, but the policies are not identical as to the extent of coverage provided.
Primary Insurance
When two or more coverage's or policies apply to the same loss, the one that pays first, up to its limit of liability or the amount of the loss, whichever is less
Excess Insurance
When two or more policies or coverage's apply to the same loss, the one that applies only after the limits of the primary coverage have been exhausted
Pro Rata other Insurance
Prevents over payment of a claim, each company pays part of the loss.
Policy limit of one company � Policy Limit of all Companies x Loss.
contribution by equal shares
Type of other insurance condition found in liability policies; contribution by equal shares- each policy pays the same up to the smallest policy limit. Prevents gain (indemnity).
Provisions
Duties and rights of both the named insured and the insurer.
Duties after Loss
PROMPT notice of claim to the insurer or agent
PROTECT the property from further damage
COMPLETE detailed proof of loss (official inventory of damages)
MAKE the property available for inspection by the company
SUBMIT to examination under oath if required
Assignment Condition
Condition in insurance policies that specifies that the policy cannot be transferred to another unless the company consents to the transfer in writing.
Abandonment
A Condition often contained in property insurance policies that states that the insured a insured cannot leave a property and expect full indeminty.
Abandonment
A Condition often contained in property insurance policies that states that the insured cannot leave a property and expect full indeminty.
Abandonment
A Condition often contained in property insurance policies that states that the insured a insured cannot leave a property and expect full indeminty.
Liberalization
Extended coverage to insured. No additional premium charged. No action required by insured.
Subrogation
Insurer has the right to sue an at-fault party for damages the insurer had to pay to the insured. Common when at-fault party does not have insurance.
Insurable Interest
Any financial interest in life or property such that, if the life or property were lost or harmed, the insured would suffer financially.
Underwriting
Process of evaluating risk. Field underwriting is performed by the agent or producer. Company underwriters decide if a policy is to be issued.
Application
primary source of underwriting information
Binders
Temporary insurance; usually given by the agent-verbal or in writing. Can be canceled by the company. Does not guarantee a policy will be issued. Automatically ends if a policy is issued by the underwriter.
Loss Ratio
Compares company's operations year over year. Loss Ratio= Incured Losses�Earned Premiums.
Expense Ratio
The cost of doing business. Expense Ratio= Underwriting expenses � Written Premium.
Underwriting Expenses
are the costs to acquire and to keep certain policies.
Written Premium
the gross amount of premium income received from insureds.
Combined Ratio
The sum of the loss ratio and the expense ratio. Combined Ratio= Loss Ratio + Expense Ratio.
Judgement Rating
premium is determined by considering the individual risk. Rate per unit x number of units=premium.
Manual Rating
uses company rates for a particular state or area that are contained in a manual.
rate per unit x number of units=premium
Experience Rating
is most commonly associated with workers' compensation.
Retrospective Rating
Bases the insureds' premium on losses incurred during policy period.
Schedule Rating
applies a system of debits or credits to reflect characteristics of a particular insured
Loss Costs
Factor used in figuring insurance rates that represents how much an insurance company needs to collect to cover expected Losses.
Rate Components
Loss costs (estimate of claim costs); Claims handling costs; Operating; Expenses; Profit.
Fair Credit Reporting Act (FCRA)
o All insurers and producers must comply.
o Notice to the applicant withing three days after report was requested.
o Maximum penalty-$5,000, 1 year in prison, or both
Terrorism Risk Insurance Program Reathorization Act of 2015 (TRIPPA)
o Result of 9/11 attacks on US.
o Congress enacted in 2002.
o Limits exposure of insurers in case of another catastrophic event.
o Triggering event- $100 million (increases to $200 million from 2015-2020 in $20 million increments).
o Federal Liability is
Gramm-Leach-Bliley Act
o A Consumer is anyone about whom information is collected.
o A customer is someone who has an ongoing relationship with financial Instituion.
o The opportunity to opt out must be offered by financial institutions when an account is established and annual
Fraud and False Statements
o It is illegal to make false statements.
o If guilty:
o Fine, up to 10 years in prison, or both.
o Up to 15 years in prison if false statements jeopardize insurer.