Hawaii Casualty

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3 types of Hazard classifications

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Physical, Moral, and Morale

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Physical Hazards

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hazards arising from the material, structural, or operational features of the risk, apart, apart from the persons owning or managing it.

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Moral Hazards

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applicants that may lie on an application for insurance, or in the past, have submitted fraudulent claims against an insurer.

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Morale Hazards

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increase in the hazard presented by a risk, arising from the insured's indifference to loss because of the existence of insurance. (e.g. I'm not going to bother fixing this. If it breaks my insurance will pay to replace it.)

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Indemnity (sometimes referred to as reimbursement)

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a provision in an insurance policy that states that in the event of loss, an insured is permitted to collect only to the extent of his/her financial loss and is not allowed to gain financially because of the existence of an insurance contract. The purpose of insurance is to restore, but not profit from the loss.

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Insurable interest

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the financial interest in property

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3 requirements to prove insurable interest

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1. Legitimate financial interest in preserving the property to be insured

2. There must be no potential for gain

3. There must be a potential for loss.

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actual cash value (ACV)

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method of valuation reinforces the principle of indemnity because it recognizes the reduction of value of property as it ages and becomes subject to wear and tear and obsolescence.

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calculation for actual cash value (ACV)

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Current Replacement Cost - Depreciation = Actual Cash Value

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Negligence

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the failure to use the care that a reasonable, prudent person would have taken under the same of similar circumstances

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Absolute Liability

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A type of liability that occurs due to extremely dangerous operations, such as the use of explosives or working at extreme heights.

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Accident

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An unplanned, unforeseen event which occurs suddenly and at a specific place

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Additional Coverage

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A provision in an insurance policy that allows for more coverage for specific loss expense without increase in premium

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Additional Insured

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Individuals or businesses that are not named as insured on the declaration page, but are protected by the policy, usually in regard to a specific interest.

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Adhesion

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a contract offered on a "take-it-or-leave-it" basis by an insurer, in which the insured's only option is to accept or reject the contract. Any ambiguities in the contract be settled in favor of the insured.

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admitted insurer

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an insurance company authorized and licensed to transact business in a particular state

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adverse selection

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the tendency of risks with higher probability of loss to purchase and maintain insurance more often than the risks who present lower probability

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Agent

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an individual who is licensed to sell, negotiate, or effect insurance contracts on behalf of an insurer

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Aggregate limit

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the maximum limit of coverage available under a liability policy during a policy year regardless of the number of claims that may be made or the number of accidents that may occur

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Aleatory

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a contract in which the participating parties agree to exchange unequal amounts. Insurance contracts are aleatory in that the amount the insured will pay in the premiums is unequal to the amount the insurer will pay in the event of a loss.

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Alien Insurer

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An insurance company that is incorporated outside the United States

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Apparent Authority

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The appearance or the assumption of authority based on the actions, words, or deeds of the principle or because of circumstances the principle created.

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Appraisal

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An assessment of property to determine either the correct amount of insurance to be written or the amount of loss to be paid.

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Arbitration

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method of claim settlement used when the insured and insurer cannot agree upon the amount of the loss.

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Assignment

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the transfer of a legal right or interest in an insurance policy. In property and casualty insurance, assignments of policies are usually valid only with he prior written consent of the insurer.

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Authorized insurer

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An insurance company that has qualified and received a Certificate of Authority from the Department of Insurance to transact insurance in the state.

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Auto

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A land motor vehicle, trailer or semi-trailer designed for use on public roads, including attached machinery or equipment; auto does not include mobile equipment

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avoidance

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a method of dealing with risk by deliberately keeping away from it (e.g. if a person wanted to avoid the risk of being killed in an airplane crash, he/she might choose never to fly in a plane).

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Bailee

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a person or entity that has possession of personal property entrusted to hum/her by the owner. For example, a television repaid person that has possession of a customer's television would be a bailee

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Beneficiary

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The person who receives the proceeds from the insurance policy`

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Binder

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A temporary contract that puts an insurance policy into force before the premium has been paid

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Blanket Bond

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A type of bond that covers losses caused by dishonest employees

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Blanket Insurance

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A single property insurance policy that provides coverage for multiple classes of property at one location, or provides coverage for one or more classes of property at multiple locations.

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Bodily Injury Liability

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Legal liability arising from death or physical trauma to a person as a result of a negligent or purposeful act and omissions by an insured.

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boycott

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an unfair trade practice in which one person refuses to do business with another until he or she agrees to certain conditions

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Burglary

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the forced entry into another's premises with felonious intent

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Cancellation

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the termination of an in-force insurance policy by either the insured or the insurer prior to the expiration date shown on the policy

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Casualty Insurance

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A type of insurance that covers losses caused by injury to persons or damage to the property of others

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Cease and Desist Order

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a demand of a person to stop committing an action that is in violation of a provision.

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certificate of authority

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a document that authorizes a company to start conducting business and specifies the kind(s) of insurance a company can transact. It is illegal for an insurance company to transact insurance without this certificate

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certificate of insurance

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a legal document that indicates than an insurance policy has been issued and that states both the amounts and types of insurance provided.

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claim

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a demand made by the insured to cover a loss protected by the insurance policy

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class rating

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the practice of computing a price per unit of insurance that applies to the applicants possessing a given set of characteristics

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coercion

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an unfair trade practice in which an insurer uses physical or mental force to persuade an applicant to buy insurance

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Liability Risk

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pays amounts for which insured judged legally liable when negligent acts occur; every individual or organization may be held legally responsible for any actions that leads to bodily injury or property damage of others; pays for legal defense costs above limit of liability; usually no deductible

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Commercial General Liability (CGL)

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business policy; written to cover two major risk exposures: premises & operation, and products & completed operations

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Premises and Operations

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provides protection for bodily injury (BI) to others occurring on premises; covers BI and property damage (PD) to others arising out of operations of business; no coverage provided for BI or PD to insured or employees

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Coverage A is for ______

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Bodily Injury and property damage

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Coverage B is for _______

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Personal and Advertising Injury Liability

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Coverage C is for _______

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Medical Payments Coverage

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Malpractice Insurance

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protects physicians, surgeons, dentists whose negligent acts may cause direct injury or harm to patients

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Errors and Omissions Insurance

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protect insurance agent or broker when he/she found legally liable for failure to carry out promised insurance services

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Directors and Officers Liability Insurance

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provides coverage for directors and officers of corporations who commit "wrongful" acts such as error, neglect, breach of duty

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Druggists Liability

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protects pharmacists

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Fellow Servant Rule

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If the injury was caused by the negligence of a fellow employee, it was not considered the negligence of the employer

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Contributory Negligence

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If the injured employee was even partially responsible for the injury, the employee was barred from any right to collect for the damages

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Assumption of Risk

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This asserted that the employee knew in advance the risks associated with the job and had paid for these risks through their salary

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In all states, _______ are unlimited

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medical payments

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what is FELA?

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Federal Employer's Liability Act

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Coinsurance

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An agreement between an insurer and insured in which both parties are expected to pay a certain of the potential loss and other expenses

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combined single

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a single dollar limit of liability applying to the total of damages for bodily injury and property damage combined, resulting from one accident or occurrence.

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commercial lines

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type of insurance that pertains to business, mercantile or manufacturing establishments

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commissioner (superintendent, Director)

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The chief executive and administrative officer of a state insurance department

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Common Law

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An unwritten body of law based on past judicial decisions as well as usages and customs

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complaint

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a written statement of a liability claim given by the claimant; a reason for a lawsuit

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components

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factors that determine rates, including loss reserves, loss adjusting expense, operating expenses, and profits.

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comprehensive coverage

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also known as Other Than Collision coverage, it covers losses by fire, theft, vandalism, falling objects, etc.

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concealment

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the withholding of known facts which, if material, can void a contract

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conditional contract

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a type of an agreement in which both parties must preform certain duties and follow rules of conduct to make the contract enforceable

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conditions

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the section of an insurance policy that indicates the general rules or procedures that the insurer and insured agree to follow under the terms of the policy

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considerations

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the binding force in a contract that requires something of value to be exchanged for the transfer of risk. The consideration on the part of the insured is the representations made in the application and the payment of premium; the consideration on the part of the insurer is the promise to pay in the event of loss

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consultant

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a person, who for a fee, offers any advice, counsel, opinion, or service regarding the benefits, advantages, or disadvantages promised under a policy of insurance

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Consumer reports

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written and /or oral statements regarding a consumer's credit, character, reputation, or habits collected by a reporting agency from employment records, credit reports, and other public sources.

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Contract

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an agreement between two or more parties enforceable by law

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Controlled Buisness

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an entity that obtains and possesses a license solely for the purpose of writing business on the owner, immediate family, relatives, employer and employees.

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Death Benefit

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The amount payable upon the death of the person whose life is insured.