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Whata is the purpose for insurance? `
Anticipate catastrophic losses that could financially impair your future.
Transfer of financial responsability to insur company for a potential of a loss, which they in turn spread the cost of unexpected losses to policy holders
*to restore not profit
the uncertainty or chance of loss (basic reason for buying insurance)
What is the difference b/w speculative risk and pure risk?
- Speculative is you can take a gain or loss on it (not insurable)
- Ex. Gambling
- Pure is when there is a loss or no change
What are the 3 types of hazzards?
- 1. Physical - condition which creates or increases chance of loss
- (Ex. Structural, Occupancy, poor hous keeping, or loction)
2. Moral - dishonest prediposition increases loss (Ex. applicant prev. convicted of arson or isnur fraud)
3. Morale - applicant that demonstrates carless attitued thata could increase chance of loss.
How are indirect and direct loss related?
Because on indiret loss is considered from a result of a direct loss
What is proximate casuse?
the main cauase of the loss
What does indemnify mean?
In event of a aloss insured is only premited to collect only extent of financial loss and is not allowed to gain financially.
Explain actual cash value method of valuation.
Current replacement cost - Depreciation= ACV
What is the difference b/w an accident and an occurence?
Accident is sudden unplanned unexpected event resulting in injury or damage that is neither expected or intended
Occurrance caused by continuous or repeated exposure to conditions resulting in injury or damage that is neither intended or expected.
What is the diff. b/w cancellation and non renewal?
Cancellation is the termination of policy by insurer or insured before experation date.
Non-renewal is termination of policy by experation by not offering a continuation or replacement policy
When absolute liability is involved does the insjured party need to prove negligence?
What type of liability is applied to product liability cases?
What type of behavior constitiutes negligence?
Failure to use care that a rasonable, prudent person whould use under the same circumstances.
Forced entry w/ felonious intent.
What must be present for a policy to pay inthe case of burglary?
- Must be w/ felonious intent
- Must have visible signs of forced entry.
What is the differenc b/w a stock company anad a mutual company?
Stock companies are woned by stock holders
Mutual companies are owned by policy holders.
When studying groups, What happens to predictability when the size of the group increases? What does this tell us about any individual?
Law of large #'s states that larger the number of similar exposure units considered, the more closely the losses reported will equal prediction of loss upon which rates for insurance are calculated.
Who regularly publishes guides to insurance companies financial integrity?
Various independent rating services
- AM Best
- Standarad and Poors
What type of producer represents the life insurance company?
What is express authority?
The authority a principal intends to grant to ana agent by means of the agent's written contract.
Which type of authority is not expressed or written into the contract, but which the agent is assumed to have in order to transact the business?
What are the types of agent authority?
- 1. Express
- 2. Implied
- 3. Apparent
What is a fiducaiary?
- A producer who handles insurer funds in a turst capacity.
- They do not commingle premiums collected w/ his or her own personal funds`
Define a contract?
"An aggrement b/w 2 or more parties enforceable by law"
Whata is consideration?
- The binding force in any contract.
- The thing of value which each party gives to the other.
What is the purpose of the Fair Credit Reporting Act?
To protect consumers against the circulation of inaccurate or obsolete info, and ensure that consumer reporting agencies ar fair and equitabale in their treatment of consumers.
What is fraud in insurance? Give some Examples.
Any person engaged in the business of insurance to willfully, w/ the intent to deceive, make any oral or written statment that contains either false statement or omissions of material.
Ex. False info on statements, renewals, claims for payment or benefits, premiums paid, and / or financial condition of an insurer.
Can a person who has been found guilty of fraud work in insurance?
Not without written consent from and insurance regulatory official - a 1033 waiver
What is the punishment for fraud?
Fined or imprisoned for up to 10 years or both
What info is included in a policy's Declaration?
amount of coerage
description of insured location
- any supplemental representation by
***Usually 1st page of policy****
What is included in the Conditions section of policy?
The general rules or procedures that insurer and insured agree to follow under the terms of the policy
changes to policy
return of premium
What does Exclusions section of policy specify?
Details what perils are not isured against and what persons are not insursed
***this section can exclude people (except spouse) property, and perils****
Earth movement -earthquake , volcanic eruptions, mudslides
Water-sewer backup, underground
Define an insured
Person or persons named in an insurance policy thaat is protected under the contraact to whom the isurer reimburses losses, pays benefits or provides services.
Wjat are the duties of the insured?
They are required to cooperate withe the insurer in the investigation, settlement, or defense of a claim covered under the policy
What is proof of loss?
A sworn statement that must usually be furnished by insured to an insurer before any loss under a policy can be paid.
Includes date and description of the occurrence and amount of indemity claimed.
****typically used in settlement of first party losses
****Must be in writing
****Required near end of claim process.
When is an appraisal needed? How is it requested?
If there is a disagreement b/w insured and insurere on value of any property loss either party can make a written demand for it.
The insurer's legal right to seek damages from 3rd parties, after it has reimbursed the insured for the loss.
***baised on principle of indemnity by preventing insured to collect on loss twice (once fromm insurer & the second time from party that caused damage)
What is a contract?
An agreement b/w 2 or more paraties enforceable by law.
MUST have 4 elements to be legally binding
- 1. Offer and acceptance
- 2. consideration
- 3. Competent parties
- 4. Legal purpose
Describe the concept of consideration on the part of an insured and how it differs from consideration of the part of insurer.
It is something of value that each party gives to the other.
Insured-- payment of premium and the representation made on app
Insurer-- Promises to pay in event of loss.
What provision states that coverage can be voided if the insured commits fraud or intentionally conceals or misrepresents a fact?
Representation or Misrepresentation
What does representation mean and how does it differ from a warrenty?
- response to questions or statments made on an application for insurance upon which the underwriter relies inorder to issue a policy it is something you believe to be true to your best of knowledge
a statement to insurer by insured upon which validity of insurance policy depends statements
- **contracts are not binding unless warrenty statments are Literally true.
What is a binder?
Temp agreeemtne issued by an agent or insurere providing temp coverage until a policy can be issued.
- **usually in writing but may be oral
- **Exire when policy is issued
What is the purpose of the Fair Credit Reporting Act?
To protect consumers agaist circulationn of inaccurate or obsolete info and to ensure that consumer reporting agencies are fair and equitable in their treatment of consumers
Describe the loss settlement porvisions incuding consent to settle a loss provision.
When a claim is filed under a professional liablilty polcy, the insurer can only settle the claim by offering to pay the claimant w/ the consent of the insured.
What type of insurance provides coveage for multiple classes of porperty at one location?
**also provides coverage fro one or more classes of porperty at multiple locations
**all prop. insured are written for one total amount of insuranc e
**no single prop assigned a specifice amount
In which of the 2 types of damage -prop or bodily- is it mord difficult to determin he monetary value of the loss and why?
Bodily- May lead to cliams by injured party not only for medical expenses and lost wages, but also disfigurement, pain and suffering, mental anguish, and loss of consortium.
What is the reproduction cost and how is it diff from the replacement cost?
Reproduction is the replacement of damaged property w/ identical porpoerty in the same location.
Replacement is not identical
What is the difference b/w class, schedule, and Judgement rates?
- Class most common approach (used in life insur and most prop and casualty)
- practice of computing a price per unit of insurance that applies to aall applicants processing a given set of characteristics
advantage is it permits the insurer to apply a single rate to a large # of insureds.
- Scheduled Developed by applying a schedule of charges and credits to some base rate to determin the right rate for an exposure.
- Judgement used when credible statistics are lacking or when exposure units are so varried it is impossible to construct a class.
What is the difference b/w contributory and comparative negligence?
- Contributory injured part must be copletely free of fault in order to collect
if there is any ngligence on the part of the injured paarty that contributed to injury it will normally defeat claim.
- ComparativeContributory negligence will not necessarily defeat the claim, but wil be used to mitigate the damages payable to the other paarty.
Awards for damages are reduced by the precentage of negligence of each party.
What is the underwriter's function?
The operations of an insurance company where an employee called an underwriter, is responsible for evaluating applications submitted to the insurer and determining wheter a policy should be issued and if so the terms condtions, and rates for the policy.
What is the loss ration formula?
(Incurred loss+loss adjusting expenses) / earned premium= Loss ratio
What are additional or supplementary payments?
Provides an additional amount of coverage for specific loss expense, at no additional premium
- Claim related expneses
- reasonable expenses incurred by an insured to protaect damaged porperty form further loss, defense expense.
What is the term used to describe printed addendums to a contract that are used to change the policy's original terms, conditions, or coverages?
- *must be in wirtting
- *must be attached to policy
- *signed by executive officer of insurer
- *May be included at time policy is issued or added later on
- *May be used to add or delete coverage or correct items like name, address, etc.
What is salvage?
Amount of money realized from the sale of damaged merchandise
*insurerer can slavage damaged property to recover part of paid loss.
Why does an insurance company discourage abandonment?
Most insurance policies prohibit an insured from abandoning insurd prop following a loss and require that the insured protect the property from further loss.
What is the difference b/w vacancy and unoccupancy?
- Vacancyinsured structure no people have been living or working and no prop has been stored for the period of time required as stated in policy (usually 60 days)
- Unoccupancyinsured structure no people have been living or working w/ in the reequired period of time but some prop stored.
- If insured moved hosue is vacant
- IF isnured on vacation for 2 wks house is unoccupied.
What is indemnity?
In the event of a loss, an insured is permited to collect only to the extent of his/her financial loss and it is not allowed to geain financially b/c of the existent of an insurance contract.
***sometimes reffered to sas reimbursement***
What is a dwelling policy used to insure?
The dwelling only
1 to 4 unit residential dwelling not eligible under regular homeowners program b/c of age, location, value, or other factors
completed dwelling or under construction
MH but only for basic coverage nad only permanently on private lot
- certain business covered by endorsements if conducted by isured on dwelling premises
- **no more then 2 persons working at any time
- *** EX. small service operations (baker, beauty shops, tailor, etc)
Give sever examples of incidental business occupations.
Certain business coverd by endorsements if conducted by insured on dwelling premises.
no more than 2 persons working at any time
- Ex. Small service operations
- *barber and beauty shops
- *tailors anad dressmakers
- *shoe repair operations
- *telephone answering services
- *offices, music, or photographic studies
- *private schools.
What are extended coverage perils?
Can be added for an additional premium
- Windstorm or Hail
- damage to insured prop from windstorm or hail is covered
- Not covered:
- signs and antennas
Interior is covered only
if building first damaged by wind or hail.
- Explosion does not have to occur inside
steam boilers and steam pipes---not covered
- Smoke (loss or damage)
- is coverd from hostial fires.
- Not covered :
- Agricultural smudging
- Industrial operations
Fireplace (friendly fires)
- Aircraft and Vehicles direct physical contact w/ aircraft or vehicles-- covered
- Not covered: caused by aircraft or vehicle
- Damage to fences
- Riot or Civil CommotionStriking employees
- any assembly of individuals who commit a lawful act in a violent or tumultuous manner and looting
- Volcanic Eruption NO coverage-
- land shock waves
WHARVES or W.C. SHAVER
What is covered in burglary damage?
Vandlism and malicious
any covered property (not just building) caused by burglary
no coverage for property taken
no coverage if dwelling has been vacant for 60 or more days w/ a dwelling (02) policy before the loss.
What perils are insusred against in a special form policy?
Open perils are aanother name
all perils are insured agaist except those specifically excluded
only covers dwelling and other structures on an open peril basis
Theft of property that is a paart of the dwelling or other structure is covered in special form.
No exclusions for antennas, outdoor equipment, fences, or awnings
also includes coverage for lawns trees shrubs and plants breakage of glass anad collapses
What does fair rental value include?
property under coverage A, B, or C becomes damaged or destroyed and unfit for normal use due to damage or distruction.
Policy will pay fair rental value of described premises
Coverage continues until repairs are done and does not stop if policy expires first
What is the purpose of removal, and how long does coverage last in a dwelling policy?
Policy will pay for loss or damage to proerty removed from the insured premises when threatened by a peril insured against
Perils insured against is converted to open peril coverage during the process of removal
Basic form provides coverage for 5 days
broad and special forms porvide 30 days of coverage
When does world wide personal property coverage apply? What is not covered?
Insured may elect to apply 10% of pesonal prop limit to pay for losses to persoanl property away from the premises.
No coveragae for row boats or canoes or porperty of guest or servents are not coverd away from insured premises
If more than 1 person has an insurable interest in the property is the insurer liable for more than the insured's interest in the loss or damaged property/
The insurer will n ot be liable for more tan the insured's interest in the loss or damaged propetry.
What happens when the automatic increase in insurance endorsements is added to a policy?
May be added to dwelling policy to increase the amount of insurance by an annual precentage to off set the effects of inflation.
Requires additional premium
What is a sinkhole collapes?
A sudden settlement or collapse of earth supporting the property resulting from an underground hole caused by water or lime stone or other rock formations.
What are the 3 other coverages in personal liability supplement coverage?
- 1. Claims ExpenseSmilar to the supplementary payments found in other liability insuance4 overages.
Expenses the insurer incurres and costs taxed against the isured in any suit the insurer defends.
premiums on bonds required in a suit but not for more than the limit of liability the insurer will not apply for or furnish these bonds
Reasonable expenses incurred by the insured at the insurer's expense including up to $250 for DP(02) per day for loss of income incurred when assisting the insurer on a defense.
Interest on entire judgemnet (up to policy limit) that occures after judgement has not been entered aand before the insurer pays it.
- 2. First Aid to Othersexpenses the isnred incures to render first aid for bodily injury to third paries is also covered
- 3. Damage to proeprty of others up to 1k for DP (02) per occurence for damage insured causes to prop of others.
Damage to prop owned by insured, or to prop owned or rented to tenant or resident of insurds household.
damage arising out o any business of insured
damage caused intentionally (except less then 13 yr of age)
Damage caused by act or omission about another premises owned rented or controlled by the insured,
Damage caused by the use of ownership or aircraft watercraft or motorized land vehicles (other than non-owned, non registered ATV's)
What coveragae forms are available under the homeowners program?
- 1. HO-3 broad form
- 2. HO-3 Special Form
- 3. HO-4 contents broad form
- 4. HO-5 Comprehensive form
- 5. HO-6 condominium unit owners
- 6. HO-8 Modified coverage form
H0-2 through HO-5
may be written only for owner-occupant of a dwelling (owner must occupy dwelling)
Only for private residential purpose (not vacation homes)
Will cover office or professional occupancy (beauty shop, or privat school) as long as no retail sales or more than 2 people working at a time
Cannot contain more than 4 families or more than 2 boarders per family
HO-2, 3, and 5 provide building coverage on replacement cost basis if building is insured for 80% or more of replacement cost.
What is the purpose of a ome owners policy?
Similar to dwelling but includes liability coverage
What homeowners form provides protection for losses from named perils?
HO-2 (broad form )
What type of coverage is expanded upon from HO-2 to HO-3?
Unlike HO-2 vehical damage to fences driveways or walks is coverd even if caused by an insured or resident.
What type of coverage does the HO-r4 provide?
- HO-4 (contents broad Form)
- Insures personal property for broad perils.
What is covered under the HO-5?
Dwelling and other structures on an open peril basis also covers personal property on open peril basis
Under HO-6 where may business property be stored?
A structure that contains business peroperty solely owned by an insured or a tenant of the dwelling provided the business property does not include gasous or liquid fuel other than fuel in a permanently installed fuel tank of a vehicle or craft parked or stored in the structure.
When replacement coverage cost is not resonable what type of HO coverage is applicable?
- HO-8 (modified Homeowners)
- Most limited
- Intended when replacement cost is not practical
usually written for market value of prop
used to insure houses w/ replacement cost higher then market value or w/ irreplaceable materials (historic)
used when writing coverage at 80% of dwellin replacement cost or ACV could be a moral Hazard.
Define insured and insured location
- Insruednamed insured and residents on premises who are relatives or other residents under 21 and in care of insured also full time students under 24
- Insured Locationres. premises or any other premisese at same location or part of it used by the insured as a home and described in declaration.
A premisese newly accquired for use as residence by the insured during the policy period.
A premises not owned by the insured but where the insured is temporarily living (a motel room)
Vacant land owned or rented by insrued where a residential dwelling is being constructed
individual family cemetar4y plots or burial valts
any part of premises occasionally rented to an insured (ex. renting hall for dau wedding )
***except business purposes***
What is the personal property special limitation for theft of firearams? Furs? Letters of credit?
LEtters of credit-$1500
What is the purpose of coverage D -loss of use?
Homeowners policy will pay for either additional living expenses related to maintaining normal standard of living of household or fair rental value if premises becomse uninhabitable due to a covered loss.
What does debris removal cover on a home owners policy?
It will pay reasonable expense for removal of debris of covered proerty if a "preil insrued against" causes loss or ash, dust or particles from volcanic eruptions that cusaed direct loss to building or prop in building.
If amount is more than limit it will pay an additional 5% of the limit
- It is provided up to 30 days of loss
- Will pay up to 1k for
- trees (no more than $500/tree)- windstorm, hail, ice, snow, sleet
- neighbors trees- as long as it blocks drive or handycap ramp
What must an insured do if a loss occurs?
Provide insurer w/ prompt notice of loss
Notify the policy if loss is caused by theft
Notify the credit card or fund transfer card company if the loss is covereed under the creit card and fund transfer coverage.
Protect the property from further damage and keep records of any repair expenses
Prepare and inventory of damaged and undamaged property including bills, receipts and related documentation.
Allow insrer to inspect property as often as reasonably necessary
IF requested submit to an examintation under oath
w/ in 60 days of the insurer's request send a signed sworn proof of loss.
What type of coverage is provided by coverage E- perosnal liablity?
If a claim is made or a suit is brought against an insured for damages because of bodily injury(BI) or property damage(PD) caused by an occureance to which the coverage applies and will:
100k basic limit but insrued can by more
pay up to the policies limit of liability for the damages for which an insured is legally liable.
Damages include prejudgemnt interest awarded against insured
Provide a defense at the insurer's expense by counsel of the insurer's choice even if the suit is ground less, false, or fraudulent.
--the insurer may investigate any claim or suit that the isnrer diecides is appropriate.
--the isnrere duty to settle and defend ends when the policy limit of liability for the occurance has been exausted by paymetn of a judgement or settlement
When does the insureres duty to settle and defend suits end?
When the limit of liablity for occurance has been exausted by payment of judgemnt or settlement
What endorsemtn should be used if the insred opperates a home day care business out of insued resident?
Home day care endorsement
May be added to cover liablity exposeru associated w/ business
- Coverage excludes
- --loss or damage form sexual molestation
- --corporal punishment
- --physical or mental abuse
- --draft and saddle animals (including vehicles used w/ animals motor vehicles, aircraft, or watercraft)
What does the personal injury coverage endorsenment provide?
Including injuries that result form false arrest, libel, slander, defamation of character, and invasion of privacy may be added by endorsementt.
How does the mobilehome endoresment change the homeowners policy?
It alters it to cover a MH and other structures on land owned or leased by the residnet of the mobile home.
- The limit of liability for ocverage B (other structures) is changed to $2k or 10% of coverage A limit, which ever is greater
- **this does not reduce the covearge a LImit.***
Additional ocveage of poroerty removed is chaged to add up to $500 for resonable expneses in removal and return of the mobile home when it is necessary to avoid damage or endanger by a peril insured against.
The additional coverage of ordance of laws is removed.
What are 4 ways that a motor vehicle can be classified as uninsured?
1. there is no liablity bond or insurance for the vehicle
2. The bond or isnurance is less than required by financila responsibilty laws of the state in which the accideint occured
3. The accident was a hit and run and driver cannot be identifed.
4. The bonding com or insurance company denies coverage or is insolvent.
What coverages are available in physical damage section of personal auto policy?
- 1. Payment of lossinsured can pay money, repairing or replacing damged or stolen property
stolen property is recoverd insurer may return prop to insured paying for any damage
Insurer may keep all or party of prop at an agreed or appraised amount.
- 2. No benefit to baileeinsurance will not directly or indirectlybenefit any carrier or bailee (if a vehicle is in the care of garage or service station for repairs and the vehicle is damaged while in their care.)
insured will need to seek recovery for damages from garage or sevice staion
- 3. Other sources of Recoveryphysical damage coverage for a non-owned vehicle is primary and the drive's physical damge coverage is excess
- 4. Appraisal insured and isuer cannot agree on settlement either party can demand an appraisal.
each will select own appraiser
appraisers will select umpire
decision reached by 2 of the appraisers will be binding.
How much will a physical damge policy pay for transportation expenses due to a theft of a coverd auto?
up to $20/ day or total of $600
Descirbe duties of and insured moterist in an accident?
prompt notificiation of loss
Cooperating w/ isurer
Fowarding any legal papers received
Submitting to a physical exam or exam under oath when requested.
Allowing insurer access to medical records
Submitting a proof of loss
Notifying police of hit and run accident or if vehical is stolen
Protecting prop from further loss
allowing insurer to inspesct and appraise damaged prop.
What does the extended nonowned coverage endorsement do?
It can broden the liabilty only or liabilty and medical payments cvoerage proided in the policy for individuals specifically named on the endorsement.
It provides coveage for nomowned autos that are available for the regulara use of the insurd, the use of covered vehicles to carry persons or proerty for a free use of coverd vehicles in other businesses
When would the joint ownership coverage endorsement be used?
When a vehicle is owned by 2 or moer persons (oterh than hsuband and wife) including non-related individuals
How does the miselaneous type vehicle endorsement modify the policy?
To include motorized vehicle like motercycles, motor homes, golf carts, dune buggies anad other recreational vehicles.
**Does not apply to borrowed or rented.
What are the specification for Mexico coverage?
If they plan on driving in mexico
Applies only to accidents which occur w/ in 25 miles of border
Only if insured is in mexico for 10 days or less.
Also required to purchase insurance through mexicna insurer and coverage will only apply as excess over other colletible insurance.
Suits must be brought in US by US citizen mexican citizen not covered.
Who would need the named nonowner endorsement added to the policy?
Individual who do not own a car but boarrow or rent cars as needed
What is the defination of an uninsured motorist?
Someone driving a car w/ no auto liabilty insurance
Someone with an auto liabiltiy policy issued by an insurer who has become insolvent
An unidentified hit-and-run driver
Someone w/ an auto liabilty policy w/ limits lower than those required by law.
What is the definition of an underinsured motorist?
A motorist w/ auto liability coverage at least at legally required minimums but too low to pay for all the damages done to another.
Who recieves the Uninsured motorist bodily injury benefits in an auto policy?
The insrued and/ or their passengers
What is the definition of an uninsured motorist according to the BAP?
Someone with an auto liabiltiy policy issued by an insurer who has become insolvent
An unidentified hit-and-run driver
Someone w/ an auto liabilty policy w/ limits lower than those required by law.
What is the defination of under insured motorist according to the BAP?
A motorist w/ auto liability coverage at least at legally required minimums but too low to pay for all the damages done to another
What is consturctive total loss?
When a partial loss has occured but it is determined that cost to repair would be equal to or greater than the value of he vehicle, so rather paying for the repair, it is treated as a total loss
Insurer hasa salvage rights.
How should aftermarket parts e used in repairing an auto compard to the manufaturer parts they are replacing?
aftermarket parts--parts not by original manufacture
They are required to be at least equal in kind and quality to original parts in terms of fit and preformance
All afermarket parts installed must be clearly identifable onthe repair estimate.
Insurers specifying use of after maarket parts must consider cost of any modifications which may become necessary when making repair.
Define Newly acquired auto.
Any of the following types of vehicles that arae acquired by insured during policy period.
Private passenger auto
- Pickup or van which no other insureance provides coveage
- --gross weight of 10k lbs or less (GVW is max recomended weight)
- --not used in delivery or transportation of goods and materials
- **(Exception unless such use is incidental to a business of installing, maintaining, or repairing furnishings or equipment or farming or ranching.
A non-owned temporary substitute vehicle or trailer while an insured vehical is out of service b/c of breakdown, loss, destruction, service or repair.
Any owned trailer designed to be pulled by a private passenger vehicle, pickup, van, including farm wagon or farm equipment while being towed.
How is a newly acquired auto treated in comparison w/ a covered in a personal Auto policy?
?Not having to ask company to insure it. ?
Give an example of a nonowned auto?
A private passenger auto pickup, van or trailor which is operated or in custoday of but not owned or furnished for regulara use of named insured or a family member.
Ex. Temp vehicle when the insureds vehicle is repaired
What types of vehicles are coverd under a personaal Auto Policy?
1. Any vehicle listed on declaraations page
2. Newly acquired vehicles for 30 days
3. Trailers owned by the insured
4. Temp substitute vehicles.
What does the liabity section of the PAP protect the insured against?
Loss arising from legal liabilty when an automobile that the insured owns, operates or maintains, is involved in an accident.
What happens if an insured hasa an auto acident in a state other than his/her resident state?
the policy will provide higher limits or other requied types of coverage in cause state requires limits higher then ones on policy.
What supplementaray payment are provided in the PAP?
Bail bonds required of insured b/c of of a coverd loss are covered up to $250
Premiums on appeal bonds and and bonds to releasae attachments in suits covered under the policy are coverd in full.
Interest on a judgement is coverd after judgement has been entered.
Other reasonable expenses incurred at the request of the insurer are covered, including up to $200 per day for loss of earing for existing in legal proceedings
What losses are excluded from verage in liability section of the PAP?
International injury or damge
Damage to property owned or being transported by a covered person
- Damage to property rented used or in care of covered person
- **except a home or private garge
- Bodily injury to employee during employment
- **except domestic employees not reqired to be covered by work mans comp.
Use of a vehicle as a public or livery conveyanace, except car pools
Damage caused by any person while engaged in the business of selling reparing servicing storing or parking vehicles coverage is provided for the named inusred family members, partners or employees while operating a covered auto.
Use of commercial- type vehicles in any business
Persons using a coverd auto w/ out permission
Persons unsured under a nuclear energy policy, including persons that would have been insured except for they exhaustion of the poolicy limits.
- The ownership maintence or use of
- --any motorized vehicle with less then 4 wheels.
- ---Any vehicle designed mainly for use off public roads
- --any other vehicle owned or available for regular use by the insured other then a covered auto
- --Any vehicle owned by or furnished for regular use by family member, other than a covered auto, the named insured is covered while maintaining or occupyig such a vehicle
- --any vehicle located inside a racing facility for purpose of racing.
What benefits does medical payments coverage provide?
All necessary medical and funeral expense incurred and services rendered to the insured or passengers in the insured's vehicle b/c of an accident for up to 3 yrs.
When is underinsured motorist coverage applicable?
Helps an insred w/ bodily injury damage cuased by another motroist when that motorist hasa insufficiant coveage.
Will pay diff b/w insured's UIM limits anad the at fault drivers bodily injury limits
Insured's UIM limits --Driver's BI limits =amount paid by UIM coverage
What is coverd in a Commercial Building and Personal property policy?
**Can only be covered if policy has 80% or more coinsurance % or a value reporting period.
- Newly acruired or construceted property
- --for 30 days
- --extention will pay to 25% max limit $250k
- --10% or max 100k on personal property
- Personal effects and property of others
- --up to $2500 for perosanl effects of insured or employees.
- Valuable papers and records
- --up to $2500 for cost to research , replace, or restore lost info.
- Property OFF premises
- --coverage is for up to 10k
- **excluding stock, which is temp at a premises the insured does not own, lease or operate.
- Outdoor property
- --coverage is for up to 1k for fencces, radio and tv antennas, or $250 for trees , shrubs, and plants.
- Nonowned Deached Trailers
- --5k coverage only if loss occures when trailer is insured's custody and only if insured is contractually obligated to pay for the loss or damage.
- --considered excess over other insurance
How much coverage is available on outdoor property under a Building and personal property coverage form?
- Up to 1k fenses radio and tv antennas
- or $250 for trees, shrubs, and plants.
What is the purpose of Business Incomes insurance?
It covers the consequential loss of business incomes when a business must shut down because of a direct loss.
Also called time elemet forms
What coverages does the Extra Expenses coverage form insurance?
It will reimburse insured for extra expenses related to keeping the business open following a diret loss to the business property
Cost to avoid or minimize suspension of business and to continue operation at the descreibed premises or at a replacement or temp location including relocation expreses and cost to equip and operate at replacement location
Cost to minimize the suspension of business if the insured's unable to continue operations.
Cost to repair or replace prop or to research or restore lost info on damaged valuable papers and records
Advertising to alert customers of a temp business location.
How is gross leasehold interest defined?
Diff b/w monthly value of leased premises and actual rent the insured pays, including taxes, insurance, janitorial or other services.
What pieces make up a commercial Policy?
- 1. Commerical Property
- 2. General Liability
- 3. Crime
- 4. Equipment Breakdown
- 5. Auto
- 6. Inland Marine
- 7. Furs
- Policy cover
- common policy declarations
- Interlines Endorsements
- Line(s) of Insur. Declaration Page
- Line(s) of Insur coverage form
- Common policy conditions
- Causes of loss forms
Who has the responsiblity for payment of premium in a commercial package policy?
The first named insured.
What are interline endorsements?
Are those that apply or could apply to more than one coverage part.
They are designed to eliminate redundancy and minimize the number of endorsements in the policy.
What does a coverage part consist of?
The Declaration and Conditions
All coverage forms
Other attachments applicable to a single line insurer
In addition to common policy declaration common policy conditions, interline endorsements.
What coverages are included in the Equipment breakdown coverage from?
Loss to property owned by insured
Loss or damaged to prop of others in insureds care.
Up to 25k for expediting expenses from temp repairs or speed up perminate repairs
Automatic coverage for newly required locations if coverage is same as current.
- Insurer will pay supplementory paymentts
- --Aall expneses incurred dby insurer to defend any suit
- --cost of bonds to release attachaments
- --reasonable expenses incurred by insured at insurer's request including up to $250 per day
- --costs taxed against insured in a suit
- --Pre-judgement interest
- --interst on judgements that accures before judgement is made.
What is excluded from coveragae under the Equipment Breakdown Coverage form?
Ordance or law - except for use and opperataions of supply and emergency equipment of hospital.
War or Military Action
Explosion- steam boilers, electric steam generators, steam piping, steam turbines, steam engines, or gas turbines.
Fire or Combustion Explosion
Explosion w/ in the furnace
Damage to covered equiment undergoing a pressure or electrical test.
Water or other means to extinguish a fire even when unsucessful
Depletion, deterioration, corrosion, erosion, or wear and tear.
Breakdown caused by aircraft or vehicles, freezing, lightning, sinkhole collapse, smoke, riot, civil, commotion or vandalism, weight of snow ice sleet
Break down caused by windsotrm or hail
delay in or interuption of any business manufacturing or processing activity
lack or excess of power light heat, steam, or refrigeration
Any indirect result of a breakdown to covered equipment
Insureds neglect to use all reasonable means to save and preserve covered property from further damage at and after the time of loss.
What does the term "accident" NOT include in Equipment breakdown coverage?
Depletion deterioration erosion or corrosion
wear and tear
leakage at valves joints or fittings
breakdown of any vacuum tube gas tube or bursh
breakdown of any computer or electronic data processing equipment
breakdown of a foundation supporting the object
the functioning of any safty or protective device
What businesses qualfiy for coveage under a BOP?
office buildings not exceeding 6 stories high or 100k sq ft
apts and condos not exceeding 6 stores or 60 dwellings
Merchantile processing and service establishment if total floor area does not excede 25k sq ft or annual gross sales 3 million
contractors carpenters electricins, plumbers etc.
restaurants limited to fast food types up to 7500 sq ft (beer anad wine sales premited subject to limit of 25% of gross sales)
- Convenience stores w/ gas pumps gas sales are limited to 50% gross sales
- (no auto service, auto washing, propane/kerosene filling)
What are the advantages of prepackaging?
Prop and liabilty coverage is included in a single, predesigned package
the options most frequently needed by small business owners are included or abailable for a small additional premium
The rates for the entire package are extremely faavorable, since the eligable potential for loss.
What prop coverages are available under the BOP?
- Debris Removal up to 25% of direct loss + deductable if reported w/ in 180 days of loss or end of polcy periord which ever is earliest.
- Preservation of property removeal coverage
- 30 days of coverae for prop temp removed
- Fire dept service charge $2500 (1k under DP 02)
- Collapse caused by 1 specified cause of loss
- -- hidden decay
- --insect vermin
- --weight of people or prop
- -- use of defective materials (occurs during consturctin)
- Water damage other liquids powder or molten material damage
- Business income limited to 12 months following loss
- 60 days following diret loss of payroll
- Extended business income necesasry suspension of business expenses
- Extra expense up to 12 months
- Pollutant Clean up and removal up to 10k in 12 month period
- Civil Authority loss of income or extra expense that result from civil action that prevents access to premisses due to direct loss elsewhere.
- money orders and counter fit paper currency pay up to 1k
- Forgery and alteration up to $2500
- Increased cost of constructin
- Glass expenses
- Business income from dependent properties
- Fire Extinguisher System Recharge expense up to 5k
- Electronic data up to 10 k
- Interruption of computer operation up to 10 k
- Limited coverage for Fungi, wet rot and dry rot up to 15k
How long is extra expense coverage applicable under BOP?
Up to 12 months following diret loss to covered property
Name at lest 5 types of prop that would be excluded from covereagae under a BOP?
Loss or damage cuaased by or resulting from alteration, falseification, concealment, or destruction of records of accounts receivable done to conceal the wrongful giving takeing or withholding of money securities or other prop
Loss or damage cuaed by or resulting from book keeping accounting or billing errors or omission
Any loss or damage thata requires any and it of records of any inventory complication to prove its factual existence.
Aircraft and vehicles
money and secruities
contraband or prop in cours of illegal trade
land water crops lawn
outdoors fences, radio and tv antennas, sattellte dishes, detached signs, trees, plants and shrubs
water craft while afloat
accounts bills and other evidence of debt
computers permanently installed in any aircraft watercraft or vehicle
What coveage limits are in the BOP coveage form?
Ordinance of law
Utility Service (power failure)
War and military actions
Certain computer relaated losses
Fungi, wet rot, and dry rot except as coverd in the additonal coverage for fungi, and wet or dry rot.
virus and bacteria
Smoke, vapor gas
Explosion fo steam apparatius
Exposed prop damaged by rain snow or ice or sleet
Error or ommissions
Installation Testing repair
continuous or repeted leakage or scepage
acts or decisions
Loss or damge to products
Business income and extra expense that resuls from deloys or cancellatio of a lease.
Rupture or bursting water pipes
Leakage or discharge of water or steam from the breaking or cracking of any part of a system or appliance tahat containes water or steam.
How much insurance must be in place for losses to be settled on aa replacement cost basis?
At least 80% of replacment cost
How does the BOP coveage form protect mortgageholders?
insured will pay covered loss or damage to each mortgage holder shown on declaration
Mortgageholder has right to receive loss paayment even in start of forecloser
- If insurer denies claim to insured mortgage holder will still have right to receive loss payment if they do any of folllowing
- ---pays any premium due under policy at the insurers
- --submit a signed, sworn proof of loss w/ in 60 days of notice
- --Has notified the insurer of any cange in ownership occupancy
what optional coverages are built into the BOP property coverage form?
- Outdoor signs
- --limit is 1k under BOP
Money and sercurites
What coveages are provided by a business liabilty coverage form?
products/ completed operations
Fire legal liabilty
What services are coverd by the medical expenses of a business liablity coverage form?
Accidental bodily injury only
Including abulance services
x ray services
first aid whe accident occured
Medical, dental, hospital, funeral services incurred w/ in one yr.
What is excluded from BL coverage.
Expected or intended liability
Workers compensation and similer laws
Aircraft, Auto, or Watercraft
Property Damage to property the insured owns or in the insured's care, custody or control
damage to the insured's product or work
Damage to impaired property or property not physically injured
Recall of products, work or insured prop
Personal and advertising Injury
criminal acts of the insured
distribution of material in violation of statues
medical expenses exclusion
nuclear energy liability exclusion.
What are the coverage limits in the Liabilty section of a BOP?
Combined single limit of insurance is appliable for bodily injury and propety damage losses from single occurance
Medical are limited to per person limit shown
Seperate aggregate limit of insurance also applies to the products/ completed
What conditions in a BOP apply to liability sections?
duties in event of occuracnce, claim or suit
legal action against the insurer
Separations of insured.
When may the insured cancel a business policy?
At anay time by mailing a written notice of cancellation to insurance company
What coverage is provided by the hired and nonowned auto liabilty endorsement?
Coverage for liability arising out of use or maintence of a hired or nonowned auto
How does the protective safeguards endorsement modify the policy/
the add a policy condition requiring insured to maintain protective safeguards as a condition per coverage
Whata do utility services include?
- time element
- --loss of business income or extra expenses
How is terrorism defined in war, military act, and terrorism exclusion?
The use, release or escape of nuclear, materials, radiation, or radio active combo, that is carried out by means of dispersol or app or pathogenic or ponious bio. or chemical materuals, and it appers that purpose of the terrorism wasa to release such minerals.
Why is farm coverge unlike other commercial coverage?
B/c it insures not only property and liability exposures of business of farm operation, but also may include personal exposures of property and liability of a family living on the form premises.
What are some eligible risks under farm coverage?
Growing and marketing of feild crops, fruits, mushrooms, veg, flowers, greenhouse, or nursery stock or sod.
raising or keeping of livestock (other than a commercial feed lot operations) poultry, fur bearing animals , bees, etc.
aquiculture operations (fish farm)
What special limitation is under coverage B- other private sturctures?
This coverage excuudes coverage for any detached structure used principlly for farming purposes
1k for loss of antennas or sattelites
What is the Main Diff b/w coverage E and F?
F has a 80% coinsurance clause
What does Coverage H under Farm Coverage Provide?
Provides protection for bodily injury and property damage claims from liabilty arising out of the business of farming and the personal acts of the insured.
When would the live stock coverage form be necessary?
it covers basic loss (except vehicles)
- can be extended to include
- --accidential shooting
- --attack by dogs or wild animals unless owned by insurer
- --loading or unloading accidents
- --building collapse.
In what ways can Mobile Agricultural Machinery and Equipment Coverage be written?
Written on a separate or stand-alone policy
What farm liablity exclusion are specified to the nature of farm operations?
Use of any animal w/ or w/ out accessory vehicle to provide rides for a free or in connection w/ a fair charitable event or a similar function
Use of any animal in a racing, speed or strength contest or a prearagned stunting activity at the site designated for the contest or activity
rental or holding for rental of an insured location
Loss out of any premises where a building or sturcture is being constructed other than a dwelling to be occupied by the insured or a farm structure for the insureds use.
Bodily injury to any insured.
What is the purpose of Terrorism Risk Insurance Act of 2002?
- It wasa to create a temp fed program that would share the risk of loss from future terrorist attacks w/ insurance industry.
- --fed gov requires commerical insurer offer it.
Whiat symbols are used in the business auto coverage form?
1= any auto including owned, leased, hired, or borrowed
2=owned autos only
- 3=owned private passenger autos only
- 4=onwed autos, other than private passenger autos only
5=owned autos subject to no fault
6=owned autos sub to a compulsory uninsured motorist law
7= sepcifically described autos only
8= hired autos only
9=nonowned autos only
19= mobile equipment subject to compulsory financial responsibility, or other motor vaehicle insurance law only .
What coverage is provided in the liability section of the business auto coverage?
Bodily injury or prop damage to 3rd parties
Pollution Expenses resulting in an accident caused by ownership
- --all expenses the insurer inccures
- --Up to 2k bail bonds
- --cost of bonds to release attachments --reasonable expenses incurred by the insured at the insurer's request up to $250 aa day for time off work
- --costs taxed against the insured in any suit
- --accured interest on any judgement
- --provides out of state coverage
What are the diff. b/w combined limits and split limits?
- Split limit
- --uses 3 dollaare amounts
- --will pay for
- ------bodily injury of each person
- ------bodily injury for entire accident regardless of how many
- ----property damages
- Ex. 25/50/25
- -----25k eaach person
- -----Max of 50k for all bodily injuries
- -----25k for pproperty damage per accident
- Combine Single
- uses one dollar amount indicateing max coverage for all losses regarlsess of # of people or amount of prop damage.
What Aauto designation symbols are used in the garage coverage form?
21= any auto (liability and medical paymetn coverage only)
22= owned autos only (non dealers only )
23= Owned private passenger autos only (nondealers only )
24= Onwed autos other than private passenger auto only (non dealers only )
25= owned autos subject to no fault
26= owned autos subject to compulsory uninsured motorist law
27= specifically descirbed autos
28= hired autos only
29= non owned autos used in your garage business (non dealers onl for liability, dealers, nonowned covered w/ 21)
30= autos left w/ you for sevrvice, storage, or safekeeping
31= dealers auto (physical damage coverage)
Explain the 2 parts of the Garage coverage form liability section?
Section I: symbols
Section II: liability coverage
- 2 parts
- 1. carage operations- other than covered autos
- --lost or damage must be result of garage operations
- 2. Garage operations- covered autos
- --usnred protection from losses that result from covered autos.
How is insured defined for the garage coverage form?
For coverd autos insured means:
1. individual organization named in the declaration.
2. Individuals who operate a covered auto w/ the insured's permission.
3. Any person liable for the contact of the insured
4. An employee of the insured using a non-owned covered auto in the insureds business and personal affairs.
For other than covered autos
1. the indvidiual or organization named in the declaration
2. Partners, employees, directors, officers and share holders, while acting w/ in the scope of their duties.
Why and for whom wasa the Truckers Coverage Form created?
why- Developed to handle the special insuance needs of these business
whom- businesses that use their vehicles to haul goods for others required specialized coverage that is not available through the business auto or garage coverage forms.
What is the 1 additional condition included in Tuckers that is not included in Business Auto?
- Other Insurance (primary and excess insurance provision)
- --the Truckers Liability Coverage will be considered primary when.
- ------a covered auto is an owned auto
- ------a coverd auto is borrowed or hired by the insured for used according to opperating rights granted by a public authority
- ------a coverd trailer is attached to a covered auto for which this insuance is primary
- ------a non owned trailer is not connected to a power unit and is being used by he isured in the business as aa trucker
- ------if liabilty for damage has been assumed under an insured contract
How does the auto medical paayements endorsements modify the policy?
Commercial auto coverage forms do not automaticlly include medical coverage
It would add this coverage to a commercial auto policy.
What kind of coverage does the Drive other car endorsement provide?
Coverage for personal or non owned vehicles for named individuals who do not own an auto.
- Ex. company officer has company ride.
- ----may be endorsed on policy
- ---this provides liability coverage to named individual and spouse while using non owned vehicles for either business or personal
- -----changes the physical damge coverage to cover nononwed private passenger vehicles.
Who would use the individual named insured endorsement?
Used by individual business owners who use company vehicles for personal use rather than purchasing a personal vehicle .
What is a "personal floater"?
Provides coverage to personal property on an all-risk basis anywhere in the world, as long as prop is not specifically excluded by policy.
Usually written on unscheduled asis
certain catagories are sub. to special limits
How is valuation determined in an inland marine policy ?
Valuation- the insurere will determne the value of an item following a loss based on lesser of
The ACV of item
- The reasonable costs to restore the
The cost of replacing the prop w/ like kind.
What is a "Commercial Floater" ?
Inland marine designed to cover movable commercial property, whereever it may be located.
What is arguable one of the most important and popular forms under inland marinee coverage?
- Account receivable
- --provide covereage for prop infixed location
--losses on accounts due to customers that become uncollectable b/c of a loss to the insured accounts receivable records.
What are the ways that Commercial Inland Marine Coverage can be written?
- Monoline policy or as part of a CPP
- (comercial package policy )
Explain the purpose of Bailee's Customer Coverage Forums?
Are used to cover losses to a customer's propo in the care, custody , or contro of the insured
each coverage form is unfiled
What Inland Maraine coverage form is used to cover fine arts?
Commercial Fine Art
The Nationwide Marine Defianation is a statment about what?
The tpyes of coverage that may properly be written on Inland Marine and Ocean Marine Insurance Forms.
What type of propety can be written on Inland Marine Coverage?
Almost any type that is portable
Located on land
Why wasa the NFIP created?
it was created by the fed gov to fillthe gap left by th private insuranc industry and is administered by the fed insur. admin.
What is a WYO insurance company? How is it used?
It is a write your own
The private isurers who participate in a wyo program write and servie policies on a no risk-bearing basis through a special arrangement w/ fed inusur admin and retain paart of the flood insur. premium paya for commissions and admin costs.
The remaining premiums plus investment are used to cover losses
If not enought to cover losses insurers will be reimbursed for excess cost by NFIP.
In a Commercial crime policy what does "employee theft" cover?
- Losses resulting from theft of covered prop by employees
- prop other than money or securities
Where must the loss occur in order for money or securties to be covered under the inside the premises- Theft of Money and Securities Coverage?
On the premisies
Under a commercial crime policy, what specific protections does outside the premises provide?
Coverage for the loss resulting diretly from theft, disappearance or distruction of money and securities outside the premises, in the care and custody of a messenger or an armored motor vehicle company.
It also provides covereage for actual or attempted robbery of otehr prop outsde the premises in the care and custody of a messenger or an armored motor vehicle company
What limits apply to the covereage of Computer Fraud?
$5k limit per occurrence applies to loss of manuscript, drawings, or records.
When would an umbrella policy be effective, and whata kind of coverage does it provide?
After the limit of another policy hasa been reached
It can provide excess protection in Personal Liability, Auto Liability, and many other types of liability programs.
There is usually a minimum limit of liability insured must carry and maintain basic policies such asa 30k on Personal Liabilty Risk
There are usually some retained limits that insured must satisfy before the policy will respond to certain kinds of losses, similar to a deductible.
Self insured retention only comes into play for losses that are not covered by an underying insurance.
What is another name for "umbrella liability"?
How are umbrella policies relevant to today's litigious society?
They help protect insured from having to pay out of pocket if sued a substantial amount of money.
Umberlla policies can provide excess protection over what types of coverage?
Personal, auto, liability etc.
What is a standarized Personal umbrella Liability policy?
coverage is provided in increments of 1 million and is designed to provide excess coverage over underlying personal policies world wide basis.
Name several types of coverage that do not apply under an umbrella policy?
Intentional injury or damage
Personal injury arising out of the publication of mataerial, if done by or at the direction of a insured w/ knowledge of its falsity.
Bodily injury or property damage from the ownership, maintence, use, loanding or unloanding of any recreational vehicle owned by any insured
loss from the use of any motor vehicle w/ out the reasonable belief that that person is entitled to do so
loss from the use of any motor vehicle or watercraft while being operated or preparing for a prearranged race or speed contest.
Bodily injury or property damage from an act or omission of an insured as an officer or member of a board of director of a corp.
What is self-insured retention and when is it applicable?
Must be satisfied before an umbrella policy kicks in.
In aircreft Hull coverage, what dose the term hull refer to?
Fuselage, wings, tail, rudders, and other major structural features of an aircraft
What are the most common types of coverage sold to cover the operations or use of aircraft?
- Bodily injury liability
- property damage liability
- medical paymetns
- hull coverage
What is the purpose of Diff in conditions, aand for whaat does it provide?
Written to supplement a named perils property policy.
It provides all- risk coverage
Uninsured watercraft is coverd under what type of coverage?
Liability coverage of Boatowners Policy
What does the all-risk coverage ofthe FCIC (Federal crop insurance corp) protect against?
all natural hazards
What type of crpos are eligible for coveragae under the basic/ catastrophic crop insurance?
All ommercial crops in all agricultural countries.
When is the app deadline for crop insurance?
One month before the normal planting date for crop.
What arae the diff parties to a bond?
- Principal or obligorperson who promises to fulfill obligeation and who purchases the bond
- Obligee or Insured This is the person to whom the promise has been made and to whom the bond is payable in the event the principle defaults.
this is the party who requires a bond in return for entering intoan agreement w/ the principle.
- Guarantor or suretysurety or bonding company provides the financial backing for the guarantee known as a bond penalty. if the principle defaults on its obligation, the surety will pay the amont specified in the bond to the obligee as damages.
What is the difference B/w contract and judicial Bonds?
- contract Bonds--used to guarantee performance of a written contract
- --primarily used in consturction contracts.
are required b/c of legal or fiducary obligation.
What is the purpose of license and permit bonds?
usually required by state and local gov. guaranteee that the laws and regualtion of a particular profession are followed
a license and permit bond guarantees that the recipient of a permit will comply w/ the laws, regulation and ordinance associated w/ the use of the permit.
What is the diff b/w appeal bonds and bail bonds?
- Appeal bondsif a person appeals to a higher court after a judgemetn has been entered, these bonds may b e required to guarantee that the judgement will be paid as well as the cost of the appeal.
- Bail bondsissued to secure the release of a person from jail pending a court room appearance.
They guarantee that the person will appear when so specifed.
What is the purpose of a fudiciory bond? What are the duties of a fiduciary?
Issued for executors or administrators of an estatae guardians, or trustees, guarantee that the fidiciary will preform anad act inthe best interest of the paarty they represent.
Fudiciary- someone that handles property or money for another, and hasa a duty to do so in a reasoable manner.
Who are the 3 parties involved in a 3 paarty contract?
- 1. Principal owes the obligation to preform or to refrain from doing certain acts
- 2. Surety or Obligor guarantees that the principle will preform the obligation or refrain from doing the acts.
- 3.Obligee to whom the principal and the surety owe the obligation
When can insurance be sold through a surplus lines insurer?
After effort to find an authoruized carrier was unsucessful
The prupoes of writing insurance though an excess or surplus lines insurer must not be to obtain a etter price or better terms
The coverage must be written through a state licensed excess or surplus lines broker
The national Flood insurance Program is comprised of what 3 forms?
1. Dwelling policy form
2. General property policy form
3. Residiential condominium building association policy form.
The general prop policy from provides 4 coverages? What are they?
1. Coverage A building property
2. Coverage B personal prop
3. Coverage C other coverages
4. Coverage D Increased cost of compliance.
Descirbe the binding autohroity of agents for NFIP policies?
They have no binding authourity.
Name the most common types of Ocean Marine Insurance?
Protection anad indemnity
Explain the diff b/w excess liability insur and umbrella policies?
- Excess liability insurancewritten in excess of primary insurance to increase limits of liabilty, thereby providing catastrophe coverage
Does not respond to loss until amount of loss exceeds coveraage limits of primary insurance.
Does not broaden coverage only responds over the limits of a primary policy
- Umbrella policy Preformes 2 sepearate functions the net effect of which is to super impose a blanket of protection over the individuals other liability coveerage.
First Benefit- establishes excess coverage when liablity exceeds limits of policies
Second benefit-establishes broader coverage than which is porvided under basic coverage.
Explain availability of standardized umbrella policies?
The insurance service office effective 1998 hasa filed approved umbrella policies for both perosanal lines and commercial lines.
while the form is standarized there is still flexibilty that allows insurers to tailor a policy to meet their requirements in terms of underlying limits and eligibilty.
There is no standard umbrella policies
What does Coverage A of the CGL provide coverage for?
- Bodily injury
- -suffered by 3rd party
- -b/c of business activities
- Property damage
- -loss of use of others
- -b/c of business production
Whata is the most common form of GL coverage written?
??Bodily injury and Property damage?
What does an occurrence form pay for?
Bodily Injury or Prop Damage that occures during policy period even if loss is not discoverd months or years later.
What is the purpose of claims-made form?
It covers BI and PD during policy period
It will cover if loss occured on or after retroactive date.
It will not cover if reported after policy expired
Why is a retro active date used?
to avoid paying losses that occured before the effective date of a claim-made policy coverage does not apply to any losses before date.
What is diff b/w perosnal injury anad advertising injury?
- -mental anguish
- -false arrest or imprissonment
- -wrongful or unlawful eviction or detention
- -malacious prosecution
- -slander or libel
- -Invasion of privacy
- Advertising covers
- -violation of privacy of others
- -Misapprociation of advertising ideas
- -infringment of copyright, title or slogan
advertising occurs when the insured inadvertently injures another perso durig the course of advertising their product or service.
what does coverage C- Medical payemnts provide?
- Provides for 3rd parties
- -professional nursing
- -funeral expenses
Name 3 types of legal entites.
- 1. Sole proprietor-
- individual is sole owner of business
- --owner and sps isureds
- 2. Partnership 2 or more persons agree to share profits and losses
- -- partners and spouses are insured
- 3. Corporation legal entity of its own.
- --corp shields liability of its owners, the stock holders
- --stockholders sole risk is loss of investment
- -------executive directors and officer
What is the diff b/w per occurece and aggregate limit?
- Per occurancemax amount of payable per occurance or accident despite # of claimants involved
same for premises/ operatin and product/ completed operations.
- Aggregate LimitMost insurers will pay for all losses during policy period for coverage A B and C
- --seperate limits applies to products/ competed operations.
In a commercial crime policy what does "employee theft" cover?
- Covers lsoses resulting from the theft of covered property by employees
- -prop other than money and securties
polciy has extention thaat applies to employees outside coverage territory for up to 90 days
policy is automatically canceld on employee when insured discovers employee has been involved in a dishonest act. (wheter or not act happend before employment)
- --loss coaused by employee whose coveragae wasa canceled under similar insurance and never reinstated.
--Loss that can only be proven though inventory shortage or an accounting of profit and loss
--loss resulting from trading
--loss resulting in fraudulent signing , issuing, canceling, or failing to cancel a warehouse receipt.
Where must the loss occur in order for moey or securites to be covered under the inside the premises-- hteft and oney securites coveage?
On the premises
Coveragae also applies to damage to premises or its exterior
also covers loss or damage to a locked safe, vault, cash register, cash drqawer, or cash box inside the premises resulting from actual attempt theft or mone and securties.
- -accounting or arithmetic
-loss resulting from surrendering of property in exchange or purchase
-loss result from fire
-loss of money from a money operated machine has a continuous deposit recording device.
-loss of damage to motor vehiclese, trailers, or semi-trailers.
-Inducement or voluntaraily parting w/ and property
-loss of property afer it has been transfered to another person or palce outsid the premises or banking facility caused by unautohrized insutructions or the threat of bodily haram.
-Damage to the premises caused by vandalizm or malicious mischief
What are the 5 coverage forms used for commercial auto insurance?
- 1. business auto coverage form-
- covers most auto coverage
- -Motor carriers
- 2. Business Auto Phsyical damage coverage formProveides physical damge protection only for the insured's owned or hired business autos.
- 3. Garage Coverage formuse for business that regularly havae autos of otehrs in thir care, custody, or control
- -auto dealerships,
- -auto repair
- -service garagaes
- -businesses that park vehicles for others
- 4. Truckers Coverage formcover truckers that haul good for others
- 5. Motor carrier coverage form-
- alternative to truckers coverage
- -covers business who transport prop either owned or nonowned by auto.
What types of physical damage coverage may be insured against uner business Auto physical Damage coverage.
- 1. Comprehensive coverage-
- pays for lsos or damage to a coverd auto by any cause, except collision or overturn
- 2. Specified Cause of loss coverage-
- Will pay for loss if cuased by fire, lightning, explosion, theft, windstorm, hail, earthquake, flood, vandalism, or derailment of any conveyance transporting the vehicle.
- 3.Collision coverage-
- losses to a coverd auto which results fro a collision w/ another object or overturn
- 4. Towing coverage-
- insurer will pay for labor costs incurred b/c of disabled auto, aat place of disablement up to the towing limit of insuance.
- only provided for passenger type auto.
What coveragae is provided in the liabilty section fo the business auto coverage form?
Bodily injury and prop damage to third parties caused by an accident resulting from insureds ownership maintance or use of any covered auto.
Trailers w/ load capacity of 2k lbs or less, mobile equipment while being carried by a covered auto and temp substitute nonowned vehicles used while a covered auto is out of service and pollution expenses resulting from accident.
How is garagaekeepers coverage actived?
By the designation fo symbol 30 on plcy declaration
What coveage does Trailer interchange covereagae provide and who would need it?
It would provide the same supplemental paymetns as business auto policy except the cost of bailbonds
- 3 exclusions
- 1. nuclear hazard
- 2. war
- 3. wear and tear, frezing, brekdown, road damage to tires
- Most insurer will pay for any one trailer is lesser of following minus deductible.
- 1. ACV
- 2. cost to repair or replace w/ like kind and quality
- 3. the limit of insurance shown in delcaration
Truckers who frequently hire or borrow trailers from other w/ a writen trailer interchange agreement
it will cover a nonowned trailer in the care or custody of insured
What is main diff b/w motor carrier coverage form, and the Truckeres coverage form?
Trucker only civers contract and common carriers
Motor cover anyone who transports goods, including private carriers (those who transport their own goods)
Whata is assumption of risk defense?
This asserted that the employee know in advance the risks associated w/ the job and had been paid for those risks through their salary.
What is the purpose of OSHA?
(Occupational Safety and Health Act)
sets minimum standards for work safety
individual states could retain jursisdiction over work safety, as long as minimum standards are met.
Who would want professional Liability coverage and why?
- -malpractice- professional in medical field
- Errors and omissions- other fields
- -insurance agents
- -insurance adjusters
- -Many more (they would want it in case of poss PD or BI w/ business)
Describe the consent to settle a loss provision.
- In an umbrella policy
- the insurere ma settle any claim w/ out consent of the insureds.
What is the purpose of examining insurers authoruized to transact insuace in this state?
The commisioner may examin and investigeate the affairs of all parties engaged in the business to determine whether they are particiapting in any deceptive practice or unfair method of competition.
He must also conduct investigation when ever a citizen of MS files a complaint charging that an insuer has violated any provisions of insurance code.
Must be examined at least once every 3 yrs. and insurers arae liable for expenses of exam.
Commissioner annual report due may 1st of each year.
What is the diff b/w an admitted and nonadmitted insurer?
- Authorized (admitted)
- hasa quialifed and received certificate of authority from dept of insuance.
- Unauthorized (nonadmitted)
- has not applie or haas applied and been denied certificate
Diff b/w foregin, domestic, and alien isurers.
- incorporated in another state, territorial possessions (such as puerto rico guam or american samoa) or washingto d.c
- incorporated in this state
- incorporated outside the US
What arae the main functions of the MS state Rating bureau?
It is Non profit corp.
opperates states raating public protection, audit adn accounting dept
oversees MS windstorm underwriting assoc. and MS residnetial insuarance under writing assoc.
each insurer licensed to write fire anad allied lines insurance is required to be a member of the bureau
Funded through annual assessment of its members based on the premiums for policies written in the state
It is responsible for preperation and filing of various coverages and rating plans w/ the dept of insur.
it compiles publishes and distributes fire and allied lines isure rates and loss costs, and farms and manuals for agents and companies.
What is the Purpose of the MS windstorm underwriting assoc?
Consist of all insurere autohrized to write and engagae in writing prop insuance w/ in the state on a direct basis
Every such insurer must be and remain in a member of teh association (called an "assessable insurer" ) as a condition of their certificate of authority.
- Was established to provide
- -adequate market of windstorm and hail coverage
- adquate insurance upon prop in coast area.
-an equitable method where by every licensed insurer writing windstorm and hail damge is required to meet its public responsibility.
-Mandatory plan to assure an adequate market for windstorm anad hail coveragae in coast area of MS and to fulfill the purpose provided by MS Legislature.
What is licensing requirements for a nonresident producer?
Currently licensed asa a resident, and good standing in home state
Submitted proper request for licensure, and has paaid the requied fees
Submitted app for licensure from home statae or haas compleded a uniform app.
persons home state awards a nonresident licenses to resident of MS on some basis
How often must a producer renew their license?
Once a year
What are the continuing education requirments for MS?
Min 12 hr. is primaary lines of authority encourged to complete additonal 12 hr in any seconday line of authority
must be completed every 12 months
- starting dec 31 2009
- - life, accident and health, proeprty and casualty
- -must complete 24 hr of cont. edu
- -including 3 hr of ethics
- -for a license period of more than 18 months
- -less than 18 months need what was prev stated.
Have to have certificate for 5 yrs
If a producer moves how long do they have to notify commissioner?
What constitutes as unfair claims settlement practice?
misrepresenting to insureds pertinent facts or policy provisions relating to coverage of issue
failing to acknowledge and act reasonable proptly upon communications w/ respect to an insurance claim.
failing to adapt and implement reasonable standards for propt investigation and processing of insured's claims
Failing to affirm or deny coverage of claims w/ in a reasonable time afer proof of loss statements are completed and submitted by insureds.
not attempting in good faith to effet prompt, fair and eqquitable settlements of claims on which liability has become reasonably clear
compelling insureds to initiate suits to recover amounts due under an insurance policy by offering substantially less than the amount ultimatly recovered in those suits.
Under what circumstaince (if any) is rebating legal?
under no circumstances
Explain a scenario in which "twisting" would be utilized to persuade an applicant to cancel a policy?
Twisting is a misrepresnetation, or incomplete or fraudulent comparison of insurance policies that persuades an insured/ owner to his or her detriment to cancel lapse or switch polices from one to another.
Under what circumstances would it be legal to publish false info if it enefits the agency? whata term refers to this practice?
called defamation or false advertising
Explain the concept of "adverse selection".
An imbalance of risks or the selection of poor risks--to many substandard compard to preferred and standard risks
If the underwriting dept approvees to manu por risks, the staatistical predictions of the actuaries maay not hold up, and the company willnot have the level of profit it expected, or could even suffer a loss
When does an insurance policy go into force if there is premium w/ the application? if there is no premium w/ the app?
When premium is collected - if premium is collected whn policy is delievered
when app date is --if premium submitted w/ app
no premium when policy delivered--statement of good health signed saying customer as not been sick or injured since app submitted
At what point does coverage begin whn an agent issues a conditional receipt?
At time of receipt only if they prove to be insurable and passes the medical exam if required
When is a policy considered delievered?
When the insurer relinqquishes controlof the policy by mailing it to t he policyowner or placing it in the policy owners hands.
Whata is the purpose of having the insred sign a statement of good health?
Verifies that the insured has not suffered injury or illness since app date
Define "controled business" .
Coverage written on a producers own life, health or prop and/ or that of the porducer's immediate family or business associates.