Property and Casualty Unit 3 Kaplan

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.