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Insured must have a financial interest in the subject. (must exist at the time of the loss)
insurable interest
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% of premiums used to pay claims
loss ratio
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can't be excessive to consumers, inadequate to insurers, or unfairly discriminatory to consumers
rates
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types of rates
- class (apply to all members of a wide group of consumers)
- judgment (rates that are partially or exclusively based on judgment)
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something seen, touched or felt that increases the probability or severity of loss
physical hazard
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subjective characteristic; usually based on past actions that may tend to increase the probability or severity of loss
moral hazard
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present actions that display an indifferent on an "I don't care attitude"
morale hazard
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protects the insured for direct losses to the property they own
property portion
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land, buildings, and other property attached to it
real property
-
contents of a dwelling or an auto
personal property
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protects policyholder for injuries or damages the policyholder is legally liable for
casualty portion
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wrongful act committed by one party against another, other than a crime or breach of contract
tort
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The failure to exercise the standard of care required by law to protect others from harm
negligence
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the four elements of negligence
- - existence of a legal duty to act or a standard of care
- - failure to perform a legal duty
- - actual damages or injuries are sustained
- - a proximate cause relationship b/w the negligent act and the resulting damages
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unbroken connection b/w the peril and the loss w/o the intervention of a new and independent cause
proximate cause
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caused by a peril after, or as a result of an initial peril
ensuing loss
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a doctrine; person may not recover for an injury received when he/she voluntarily exposes him/herself to a known and present danger
assumption of risk
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permit the injured person to recover damages even though he/she contributed in anyway to the accident (only 49% or less negligent)
comparative negligence
-
person cannot recover from the other party if that person contributed in anyway to the accident
contributory negligence
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an independent cause of injury or damage that intervenes b/w the original wrongful act or omission
intervening cause
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any legal action must be brought against an insurer within this time frame
statute of limitations
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combination of special and general damages
compensatory damages
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compensate the victim for itemized losses
(medical bills, loss of earnings, and property damage
special damages
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damages that cannot be specifically itemized
(pain and suffering)
general damages
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intended to punish the wrongdoer for their reckless disregard for the safety of others
punitive damages
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certain activities that impose liability without regard to fault or negligence
Absolute Liability
-
imposed on one party as a result of the actions of another
vicarious liability
-
separate limits apply to bodily injury (BI) and property damage (PD)
split limits
-
minimum allowable limits on a personal auto policy
Bodily Injury Liability: 30,000 per person & 60,000 per occurrence
Property Damage Liability: 25,000 per occurrence
-
the difference b/w an accident and an occurrence
duration of the event
-
single limit applies to both bodily and property damage arising from a single accident
(usually found in commercial auto insurance; homeowners)
combined single limits
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maximum amount that would be paid during a policy term for all damages arising out of one or more occurrences (usually found in commercial lines of insurance)
aggregate limit
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what are the extended coverage perils
- Riot, Explosion, Vehicle, Civil Commotion, Hail, Smoke, Hurricane, Airplane,Windstorm
- (REV.C.H.SHAW)
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list of perils that the company will protect the property against
named or specific perils policy
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covers the insured property against all causes of loss, unless the cause of loss is specifically excluded
open or all risk policy
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damage to property caused as a direct result of the peril
direct loss
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losses that occur after direct damages of a peril
indirect or consequential loss
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