Ins 22 - Personal Insurance

Front 1

Personal insurance

Back 1

Insurance that covers the financial consequences of losses to individuals and families caused by death, illness, injury, disability, and unemployment.

Front 2

Loss exposure

Back 2

Any condition or situation that presents the possibiliity of a financial loss, whether or not loss occurs.

Front 3

Cause of loss

Back 3

Means by which property is damaged or destroyed (e.g., fire and theft); also called perils.

Front 4

Property loss exposure

Back 4

Any condition or situation that presents the possibility of a property loss.

Front 5

Real property

Back 5

Land, as well as buildings and other structures attached to the land or embedded in it.

Front 6

Personal property

Back 6

Tangible or intangible property that is not real property.

Front 7

Liability loss exposure

Back 7

Any condition or situation that presents the possibility of a liability loss.

Front 8

Liability loss

Back 8

A claim for moeny damages because of injury to another party or damage to another party's property.

Front 9

Civil law

Back 9

Body of law that deals with the rights and duties of citizens regarding one another.

Front 10

Tort

Back 10

A wrongful act, other than a crime or breach of contract, committed by one party against another.

Front 11

Intentional tort

Back 11

A deliberate act that causes harm to another person.

Front 12

Absolute liability (strict liability)

Back 12

Legal liability that arises from inherently dangerous activities or dangerously defective products that harm another, regardless of the degree of care used; does not require proof of negligence.

Front 13

4 elements of negligence

Back 13

1. A duty to act
2. A breach of that duty
3. An injury or damage occurs
4. The breach of duty is the direct cause of the injury or damage

Front 14

1st element of negligence

Back 14

A duty to act. (i.e., homeowners have a duty to maintain their premises so as not to cause injury to a guest.)

Front 15

2nd element of negligence

Back 15

A breach of that duty (i.e., if a parent allows a kid to leave an object, such as a ball, on the front entry steps, they may have breached their duty to keep the premises safe)

Front 16

3rd element of negligence

Back 16

An injury or damage occurs (i.e., a guest trips on the ball left on the steps and breaks his leg)

Front 17

4th element of negligence

Back 17

The breach of duty is the direct cause of the injury or damage (in an unbroken chain of events). The direct cause of the guest's broken leg is the ball the kid left on the steps.

Front 18

Name 6 intentional torts

Back 18

Libel, slander, assault, battery, trespass, nuisance

Front 19

Libel

Back 19

A written or printed untrue statement that damages a person's reputation. For example, Ted prints an article in a local community newsletter claiming that his neighbor, Paul, has been convicted of drunken driving, which is not true. Libel is an intentional tort.

Front 20

Slander

Back 20

An oral untrue statement that damages a person's reputation. If, at a parent-teacher meeting, Susan publicly and wrongly accuses a local pharmacist of selling illegal drugs to teenagers, she may be guilty of slander. Slander is an intentional tort.

Front 21

Contractual liability

Back 21

Liability assumed under any contract or agreement.

Front 22

Statutory liability

Back 22

Liability imposed by a specific statute or law.

Front 23

Risk management

Back 23

The process of making and carrying out decisions that will decrease the adverse effects of potential losses.

Front 24

Personal risk management

Back 24

The risk management process applied to the loss exposures of individuals or families.

Front 25

Errors and omissions (E&O)

Back 25

Negligent acts (errors) committed by a person while conducting insurance business that give rise to legal liability for damages; can also involve a failure to act (omission) that creates legal liability.

Front 26

Assault

Back 26

The intentional and unlawful threat of bodily harm. If Mary threatens to hit Betty, and Betty believes that Mary is ready and willing to carry out her threat, Mary has committed an assault on Betty.

Front 27

Battery

Back 27

Unlawful physical contact with another person. If Mary carries out her threat and hits Betty, she has committed a battery. Betty may sue Mary for damages because of assault and battery.

Front 28

Trespass

Back 28

the unauthorized possession or use of land. If Jacob parks his car in Chris's yard without Chris's permission, Jacob may be guilty of trespass.

Front 29

Nuisance

Back 29

the violation of a person's right to enjoy use of property without disruption from outside sources. For instance, if Juliette persistently gives noisy parties that last late into the night, her neighbors may seek an injunction against such activities under civil law.

Front 30

Loss control

Back 30

Risk management technique to reduce the frequency or severity of losses.

Front 31

Avoidance

Back 31

Risk management technique by which an individual or a family avoids a loss exposure by choosing not to own a particular item of property or not to engage in a particular activity.

Front 32

Noninsurance transfer

Back 32

A risk management technique that transfers loss exposures from one party to another party that is not an insurer.

Front 33

Retention

Back 33

A risk management technique that draws on the financial resources of an individual or a family to apy for party or all of the consequences of a particular loss exposure. If individuals or families do not transfer their loss exposures to an insurance company or to anyone else, they retain their losses (either intentionally or unintentionally) an dmust pay for such losses themselves.

Front 34

Package policy

Back 34

Policy that includes two or more lines of insurance. In personal insurance, such as property and liability, examples of package policies are the homeowners policy and the personal auto policy.

Front 35

Name five problesm associated with automobile insurance.

Back 35

1) High frequency of auto accidents
2) High costs of auto accidents
3) Underwriting losses
4) Irresponsible drivers
5) Availability and affordability of auto insurance

Front 36

Underwriting loss

Back 36

An insurer's loss incurred when losses and expenses for a given period are greater than its premium income for the same period.

Front 37

Standard market

Back 37

Insurers who voluntarily offer insurance coverages at rates designed for customers with average or beter-than-average loss exposures.

Front 38

Tort

Back 38

a wrongful act, other than a crime or breach of contract, committed by one party against another

Front 39

Negligence

Back 39

Acting differently from the way a reasonably prudent person would act under similar circumstances. An individual is negligent when he or she fails to exercise the appropriate degree of care under given circumstances.

Front 40

Name the seven approaches to compensating auto accident victims:

Back 40

1) the tort liability system
2) financial responsibility laws
3) compulsory insurance laws
4) unsatisfied judgment funds
5) uninsured motorists coverage
6) underinsured motorists coverage
7) low-cost auto insurance

Front 41

Contributory negligence law

Back 41

Law that prevents a person from recovering damages if that person contributes in any way to his or her own injury.

Front 42

Comparative negligence law

Back 42

Law that requires both parties to a loss to share the financial burden of the injury according to their respective degrees of fault.

Front 43

Tort reform

Back 43

Proposed or actual legislation intended to reduce legal costs or settlement awards resulting from negligence lawsuits.

Front 44

Financial responsibility law

Back 44

Law that requires motorists, under certain circumstances, to provide proof that they have the ability to pay, up to certain minimum amounts, for damage or injury that theymight cause as a result of operating a vehicle.

Front 45

Compulsory auto insurance laws

Back 45

Law that requires the owners or operators of automobiles to carry automobile liability insurance at least equal to certain minimum limits before the vehicle can be licensed or registered.

Front 46

Unsatisfied judgment funds

Back 46

Funds established by some states to compensate auto accident victims who have obtained a court judgment that is uncollectible because the negligent party cannot pay.

Front 47

Uninsured motorists (UM) coverage

Back 47

Coverage that reimburses an insured auto accident victim who sustains bodily injury (and, in some states, property damage) caused by an uninsured motorist, a hit-and-run driver, or a driver whose insurer is insolvent.

Front 48

Underinsured motorists coverage

Back 48

Coverage that applies when a negligent driver has liability insurance at the time of the accident but has limits lower than those of the injured person's coverage.

Front 49

No-fault automobile insurance

Back 49

Insurance that covers automobile accident victims on a first-party basis, allowing them to collect damages from their own insurers regardless of who was at fault.

Front 50

Monetary threshold

Back 50

The level of monetary damages in a no-fault system at which one injured party can seek compensation from the at-fault party.

Front 51

Verbal threshold

Back 51

The level of severity of injury in a no-fault system, including death and certain specified injuries, such as disfigurement or dismemberment, at which the injured party can seek compensation from the at-fault

Front 52

Personal injury protection (PIP) endorsement

Back 52

Endorsement to an auto insurance policy describing the no-fault benefits that are provided.

Front 53

Pure no-fault system

Back 53

System that would prevent an injured person from seeking compensation for damages from the at-fault party, regardless of the injury's severity; the injured person would collect no-fault benefits directly from his or her own insurer.

Front 54

Add-on plan

Back 54

Endorsement that provides certain benefits to injured automobile victims regardless of fault; the injured person retains the right to seek compensation from the negligent party who caused the accident.

Front 55

Modified no-fault laws

Back 55

Laws that prevent an injured person from seeking compensation for damages from a negligent driver unless damages exceed the monetary or verbal threshold; if the claim is below the threshold, the injured person collects benefits from his or her own insurer.

Front 56

Choice no-fault plan

Back 56

Plan that gives an insured the option, at the time an auto insurance policy is purchased or renewed, of choosing whether to be covered on a no-fault basis.

Front 57

Residual market (shared market)

Back 57

Term referring collectively to insurers and other organizations that make insurance available to those who cannot obtain coverage in the standard market.

Front 58

Automobile insurance plan

Back 58

Plan for insuring high-risk drivers in which all auto insureres doing business int he state are assigned their proportionate share of such drivers based ont he total volume of auto insurance written in the state. (i.e., if one insurer writes 10 percent of all the auto insurance int he state, it would be assigned 10 percent of the state's high-risk drivers.)

Front 59

Joint underwriting association (JUA)

Back 59

Organization created in a few states that designates servicing insurers to handle high-risk auto insurance business; all auto insureres in the state are assessed a proportionate share of the losses and expenses based ont heir percentage of the voluntary auto insurance premiums written in the state.

Front 60

Reinsurance facility

Back 60

A state-wide reinsurance pool to which insurers can assign premiums and losses for high-risk drivers; original insurers service the policies, but all insurers in the pool share the losses and expenses of the facility in proportion to the total auto insurance they write in that state.

Front 61

Underwriting

Back 61

the process by which insurers decide which potential customers to insure and the coverage that insureds will be offered. Underwriting activities include selecting insureds, pricing coverage, determining policy terms and conditions, and monitoring underwriting decisions.

Front 62

Cancellation

Back 62

a decision by the insurer or the insured to terminate coverage during hte policy period (before the expiration date of the policy).

Front 63

Material misrepresentation

Back 63

a false statement by an insured of an important (material) fact on which the insurer relies to make an underwriting decision.

Front 64

Nonrenewal

Back 64

an insurer's decision to terminate coverage on the expiration date of the policy; in other words, the insurer refuses to renew the policy when it expires

Front 65

Restrictions on cancellation do not apply for the first 60 days (for example) on a policy period. True or False?

Back 65

TRUE

Front 66

Cancellation is usually permitted for what reasons?

Back 66

- Nonpayment of premium
- Suspension or revocation of a driver's license
- Submission of a false or fraudulent claim
- Material misrepresentation of relevant underwriting information
- Conviction for certain offenses, such as driving under the influence of alcohol or drugs
- Violation of policy terms or conditions

Front 67

What are some restrictions on nonrenewal?

Back 67

- The insurer must give the insured written notice that the policy will not be renewed
- A certain number of days of advance notice is required
- Many states require the insurer to give the reason for the nonrenewal or to provide the reason on request.

Front 68

Unfair discrimination

Back 68

the application of different standards or methods of treatment to insureds that have the same basic characteristics and loss potential. Examples of unfair discrimination in auto insurance rating would include charging higher-than-normal rates for an applicant based solely on the applicant's race, religion, or ethnic background.

Front 69

What are the primary factors used in determining the cost of personal auto insurance?

Back 69

- Age
- Sex
- Marital status
- Territory
- Use of the auto
- Good student discount
- Driver education credit

Front 70

What are the important but non-primary rating factors used in rating personal automobile insurance?

Back 70

- Driving record
- Type of vehicle
- Number of vehicles
- Deductibles
- Liability limits

Front 71

PAP Coverages

Back 71

Part A: Liability Coverage
Part B: Medical Payments Coverage
Part C: Uninsured Motorists Coverage
Part D: Coverage for Damage to Your Auto
Part E: Duties After an Accident or Loss
Part F: General Provisions

Front 72

PAP Part A general info

Back 72

Liability coverage - provides coverage that protects the insured against a claim or suit for bodily injury or property damage arising out of the operation of an auto

Front 73

PAP Part B general info

Back 73

Medical Payments Coverage - provides coverage for reasonable and necessary medical expenses incurred by an insured because of bodily injury caused by an auto accident

Front 74

PAP Part C general info

Back 74

Uninsured Motorists Coverage - provides protection if an insured is injured by an uninsured motorist, a hit-and-run driver, or a driver whose insurer is insolvent

Front 75

PAP Part D general info

Back 75

Coverage for Damage to Your Auto - provides coverage for physical damage to a covered auto and to certain nonowned autos. Coverage for damage to your auto is also referred to as physical damage coverage

Front 76

PAP Part E general info

Back 76

Duties After an Accident or Loss - outlines the duties required of an insured after an accident or a loss

Front 77

PAP Part F general info

Back 77

General Provisions - contains certain general provisions, such as cancellation and termination of the policy and the policy period and territory

Front 78

Named insured (as used in the PAP)

Back 78

Policyholder whose name (or names) appears on the declarations page

Front 79

Policy Period (i.e., times)

Back 79

12:01am - 12:01 am

Front 80

Lienholder

Back 80

Organization that holds the title to the vehicle until the loan is paid off

Front 81

Bodily injury (BI) as used in the PAP

Back 81

Bodily harm, sickness, or disease, including death that results

Front 82

Property damage (PD) (as used in the PAP)

Back 82

Physical injury to or destruction of tangible property. It also includes loss of use of tangible property.

Front 83

Trailer (as used in the PAP)

Back 83

A vehicle designed to be pulled by a private passenger auto, a pickup, or a van; farm wagon or farm implement when towed by one of these vehicles

Front 84

Your covered auto (as used in the PAP)

Back 84

Any vehicle shown in the declarations; a trailer owned by the insured; a temporary substitute auto or trailer; a newly acquired auto (subject to certain restrictions)

Front 85

Temporary substitute vehicle (as used in the PAP)

Back 85

A nonowned auto or trailer that the insured is using because of the breakdown, repair, servicing, loss, or destruction of a covered vehicle

Front 86

Newly acquired auto (as used in the PAP)

Back 86

An eligible private passenger auto, pickup, or van of which the named insured becomes the owner or that the named insured leases during the policy period; it can be a replacement auto or an additional auto

Front 87

Damages

Back 87

Monetary award that one party is required to pay to another who has suffered loss or injury for which the first party is legally responsible

Front 88

Compensatory damages

Back 88

Damages, including both special damages and general damages, that are intended to compensate a victim for harm actually suffered.

Front 89

Special damages

Back 89

Compensatory damages allowed for specific out-of-pocket expenses, such as doctor and hospital bills.

Front 90

General damages

Back 90

Compensatory damages awarded for losses, such as pain and suffering, that do not have a specific economic loss

Front 91

Punitive damages

Back 91

Damages awarded by a court to punish wrongdoers who, through malicious or outrageous actions, cause injury or damage to others; some states do not permit insurers to award payment for punitive damages because such payment would not punish the insured

Front 92

Split limits (as used in the PAP)

Back 92

The maximum amounts a PAP insurer will pay for the insured's liability for bodily injury per person, bodily injury per person, bodily injury per accident, and property damage per accident

Front 93

Single limit

Back 93

Maximum amount an insurer will pay for the insured's liability for both bodily injury and property damage per accident

Front 94

Prejudgment interest

Back 94

Interest on damages that ccrues between the time the accident or suit occurs and when a judgment is rendered indicating that the insured is responsible for damages; subject to the policy limit of liability

Front 95

Structured settlement

Back 95

Periodic and guaranteed payments made for damages over a specified time period; an alternative to lump-sum payment

Front 96

What are the 4 categories of persons and organizations insured for liability coverage under the PAP?

Back 96

- The named insured and any family member (as defined)
- Any person using a covered auto
- Any person or organization, but only for legal liability arising out of an insured person's use of a covered auto on behalf of that person or organization

Front 97

Definition of "family members" (PAP)

Back 97

blood, marriage, or adoption, as well as a ward or a foster child, any of whom live int he insured's household. Children who are temporarily away from home, as when attending college, are still covered under their parents' policy

Front 98

Supplementary payments (as used in the PAP)

Back 98

Amounts paid in addition the liability limits for items such as premiums on bail bonds and appeal bonds, postjudgment interest, loss of earnings for attendance at trials, and other reasonable expenses incurred at the insurer's request

Front 99

Postjudgment interest

Back 99

Interest on damages that accrues after a judgment has been rendered and before the damages are paid; can be in addition to the liability limits and other legal defense costs.

Front 100

Liability coverage exclusions

Back 100

- Intentional injury
- Property owned or transported
- Property rented to , used by, or in the care of the insured
- bodily injury to an employee of an insured
- public or livery conveyance
- garage business
- other business use
- using a vehicle without reasonable belief of being entitled to do so
- nuclear energy liability losses
- vehicles that have fewer than four wheels or are designed primarily for off-road use
- other vehicles owned by the named insured or available for the named insured's regular use
- vehicles owned by or available for regular use of any family member
- racing

Front 101

What do the different limits mean in a split limit auto situation?

Back 101

Bodily injury per person/Bodily injury to all persons in each accident/Property damage in each accident

Front 102

Out of state coverage (as used in part A of the PAP)

Back 102

Provision that automatically provides any higher limits and types of coverage required by the state in which an auto accident occurs if such an accident occurs in a state other than the one in which the covered auto is principally garaged

Front 103

Persons insured by Part B of PAP

Back 103

- Named insured and resident family members while occupying a motor vehicle or if injured as a pedestrian by a motor vehicle designed for use mainly on public roads
- other persons while occupying a covered auto

Front 104

Insuring agreement for Part B of PAP

Back 104

Pays reasonable medical and funeral expenses incurred by an insured for services rendered within three years of the accident

Front 105

Exclusions to Part B of the PAP

Back 105

- Occupying a motorized vehicle with fewer than four wheels
- using a covered auto as a public or livery conveyance (exclusion does not apply to a share-the-expense car pool)
- using the vehicle as a residence or premises
- injury occurring during the course of employment if workers compensation benefits are required or available
- vehicle furnished or made available for the named insured's regular use
- vehicle furnished or made available for the regular use of any family member
- occupying a vehicle without a reasonable belief of being entitled to do so
- vehicle used in the businesss of an insured (exclusion does not apply to a private passenger auto, an owned pickup or van, or trailer used with any of the preceding vehicles), nuclear weapons, war, nuclear reaction or radiation
- occupying a vehicle located inside a racing facility for the purpose of competing in or preparing for a prearranged racing contest

Front 106

Occupying (as used in the PAP)

Back 106

in, upon, getting in, on, out or off

Front 107

PAP Part C insuring agreement

Back 107

Pays compensatory damages that na insured is legally entitled to recover from the owner or operator of an uninsured motor vehicle because of bodily injury sustained by an insured caused by an accident

Front 108

PAP Part C persons insured

Back 108

-named insured and resident family members
- any other person while occupying a covered auto
- any person legally entitled to recover damages because of bodily injury to a person described above

Front 109

PAP Part C exlusions

Back 109

- No uninsured motorists coverage on a motor vehicle owned by an insured
- no coverage for a family member who occupies, or is struck by, a motor vehicle owned by the named insured that is insured for uninsured motorists coverage on a primary basis by another policy
- Settling a claim without the insurer's consent
- using a covered auto as a public or livery conveyance (exclusion does not apply to a share-the-expense car pool)
- using a vehicle without a reasonable belief that the insured is entitled to do so
- no benefit to workers compensation insurer
- no punitive damages paid

Front 110

Uninsured motor vehicle

Back 110

Any type of land motor vehicle or trailer that is not insured for bodily injury liability, is insured for less than the financial responsibility limits, is a hit-and-run vehicle, or whose insurer denies coverage or becomes insolvent

Front 111

Arbitration (as used in the PAP)

Back 111

Process for settling disputes between the insured and the insurer concerning whether or for what amount uninsured motorists coverage applies

Front 112

Part D - PAP - insuring agreement

Back 112

Pays for direct and accidental loss to a covered auto or to a nonowned auto, including its equipment, minus any deductible, caused by a collision or other-than-collision. Declarations must indicate such coverage is provided for each vehicle.

Loss caused by the following is considered other-than-collision:
- Missiles or falling objects
- Fire
- Theft or larceny
- explosion or earthquake
- windstorm
- hail, water or flood
- malicious mischief or vandalism
- riot or civil commotion
- contact w/ a bird or animal
- breakage of glass

Transportation expenses (see other question)

Also pays expenses for which the insured is legally liable because of loss to a nonowned auto

Front 113

Transportation expenses, PAP Part D

Back 113

Pays up to $20 daily, to a max of $600, for transportation expenses because of loss to a covered auto caused by collision or other-than-collision.

Declarations must indicate that such coverage is provided for each vehicle.

Front 114

Persons insured by Part D, PAP

Back 114

Part D does not specifically mention the persons insured. However, coverage applies to the named insured and spouse, resident family members, and any person using a covered auto w/ permission

Front 115

PAP Part D exclusions, part 1

Back 115

- Loss to a covered auto or nonowned auto while being used as a public or livery conveyance (exclusion does not apply to a share-the-expense car pool)
- Damage from wear and tear , freezing, and mechanical or electrical breakdown
- radioactive contamination of war
- electronic equipment and accessories designed for the reproduction of sound - including radios, stereos, tape decks, or CD players - unless permanently installed in the auto. Certain other exceptions apply.
- Other electornic equipment, including citizen's band radios; telephones; two-way mobile radios; scanning monitor receivers; television monitor receivers; videocassette recorders; or personal computers (does not apply to electronic equipment for the normal operation of the auto, or to a permanently installed car telephone)

Front 116

PAP Part D exclusions, part 2

Back 116

-Tapes, records and discs used w/ the preceding equipment
- Government destruction or confiscation
- loss to a trailer, camper body, or motor home not shown in the declarations (except if newly acquired and reported w/in 14 days)
- loss to a nonowned auto used w/o reasonable belief of permission
- radar or laser detection equipment
-custom furnishings or equipment in a pickup or van
- nonowned auto maintained or used in the automobile business
- vehicle located inside a racing facility for the purpose of competing in or preparing for a prearranged racing contest
- loss to a rental car if a state law or rental agreement precludes the rental company from recovering the insured

Front 117

Collision (as used in the PAP)

Back 117

The upset of a covered auto or a nonowned auto or its impact w/ another vehicle or object

Front 118

OTC is short for what? It used to be called what?

Back 118

Other-than-collision coverage (PAP); Comprehensive coverage

Front 119

T or F: Physical damage coverages also apply to a nonowned auto?

Back 119

True

Front 120

Actual cash value

Back 120

Replacement cost of property minus an allowance for depreciation and obsolescence

Front 121

Diminution in value

Back 121

Actual or perceived loss in market or resale value resulting from a direct and accidental loss

Front 122

Bailee

Back 122

Person or business that has in its care, custody, or control, property belonging to another

Front 123

Appraisal (as used in Part D of the PAP)

Back 123

A provision that describes how the insured and insruer will settle disputes about the amount of loss. Each party selects a competent appraiser, and the two appraisers select an umpire. A decision by any two of the three is binding. Procedurally, the appraisal process resembles the arbitration process described under uninsured motorists coverage

Front 124

General duties under Part E of PAP

Back 124

- Prompt notice
- Cooperation w/ the insurer
- Submission of legal papers to the insurer
- Physical examination
- Examination under oath
- Authorization of medical records
- Proof of loss

Front 125

Additional duties for uninsured motorists coverage, under Part E of PAP

Back 125

- Notify police
- Submit legal papers

Front 126

Additional duties for physical damage coverage, under Part E of PAP

Back 126

- Prevent further loss
- Notify police
- Permit inspection and appraisal

Front 127

Part F of PAP is what?

Back 127

(General provisions)

Front 128

Bankruptcy of insured - provision under Part F (PAP)

Back 128

The insurer is not relieved of any obligation s under the policy if the insured declares bankruptcy or becomes insolvent

Front 129

Assignment

Back 129

The transfer of a policy from the named insured to another party; insurer's written consent is required

Front 130

If 2 or more auto policies issued to the named insured by the same insurer apply to the same accident, the insurer's maximum limit of liability is what?

Back 130

The highest applicable limit of liability under any one policy.

Front 131

Miscellaneous type vehicle endorsement to PAP

Back 131

Provides coverage for a motor home, a motorcycle or similar type of vehicle, an all-terrain vehicle, a dune buggy, or a golf cart.

Front 132

Snowmobile exclusions

Back 132

-snowmobile used in any business
- any person or organization other than the named insured, while renting or leasing a snowmobile
- racing, speed contest or in prep for race
- passengers liability excluded

Front 133

Limit Mexico coverage endorsement extends how far past the border?

Back 133

25 miles

Front 134

Towing and labor costs coverage endorsement

Back 134

The insurer pays for towing and labor costs when a covered auto or noonowned auto is disabled, up to some stated amount. i.e., an insured's car will not start and a repair truck is called to provide roadside assistance

Front 135

Unendorsed PAP includes what limit on sound reproduction equipment and accessories installed in locations not used for that purpose by the auto manufacturer?

Back 135

$1,000

Front 136

You can add an endorsement to the auto policy, up to what maximum limit, for tapes, records, discs and other media?

Back 136

$200

Front 137

Stated amount, relative to autos, would be appropriate to insure what?

Back 137

High-value antique cars or restored show cars, for example.

Front 138

Section I of the HO policy covers what?

Back 138

Property

Front 139

Section II of the HO policy covers what?

Back 139

Liability

Front 140

T or F: the HO policy is NOT a self-contained policy

Back 140

F. It IS self-contained, and is a single document that forms a complete contract

Front 141

T or F: residence premises and insured location are the same thing

Back 141

False

Front 142

Residence premises

Back 142

The one-family dwelling where the named insured resides; the two-, three-, or four-family dwelling where the named insured resides in at least one of the units; that part of any other building where the named insured resides; and other structures and grounds; all at the location shown in the declarations

Front 143

Insured location

Back 143

Includes the residence premises and also:
- An unlisted residence acquired by the named insured during the policy period
- A nonowned premises where any insured is temporarily residing (such as a hotel room)
- vacant land, other than farm land, owned by or rented to any insured
- an insured's land on which a one- to four-family residence is being constructed
- individual or family cemetery plots
- any part of a premises occasionally rented to an insured for nonbusiness use (i.e., a hall rented for a wedding reception)

Front 144

Coverages in an HO policy:

Back 144

A: Dwelling
B: Other structures
C: Personal property
D: Loss of use
Section I - Additional coverages
E: Personal Liability
F; Medical Payments to Others
Section II - Additional coverages

Front 145

Special HO sublimit on money and precious metals

Back 145

$200. Also applies to bank notes, bullion, coins, medals, scrip, stored value cards, and smart cards, as well as silver, gold and platinum (other than silverware, goldware and platinumware)

Front 146

Special HO sublimit on securities, documents, records and stamps

Back 146

$1,500 (includes evidences of debt, letters of credit, manuscripts, personal records, passports, tickets and stamps)

Front 147

Special HO submlimit on watercraft

Back 147

$1,500 (includes trailers, equipment and motors)

Front 148

Special HO sublimit on trailers

Back 148

$1,500 (i.e., trailers NOT used for watercraft)

Front 149

Special HO sublimit on theft of jewelry and furs

Back 149

$1,500 (does not apply to other covered perils)

Front 150

Special HO sublimit on theft of firearms and related items

Back 150

$2,500 (includes gun accessories)

Front 151

Special HO sublimit on theft of silverware, goldware, platinumware and pewterware

Back 151

$2,500 (includes tea sets, trophies, etc.)

Front 152

Special HO sublimit on property on the residence premises used primarily for any business purpose

Back 152

$2,500

Front 153

Special HO sublimit for property away from residence premises used for business purposes

Back 153

$500

Front 154

Limit of HO-3 Coverage B

Back 154

10% of Coverage A

Front 155

Limit of HO-3 Coverage C

Back 155

50% of Coverage A (only 10% of this is provided for property usually located at a residence other than the residence listed on the Decs page)

Front 156

Exclusions to Part B (HO-3)

Back 156

- rented to anyone who is not a resident of the dwelling (unless it is rented as a garage)
- from which any "business" is conducted
- used to store "business" property

Front 157

Special HO sublimit for electronic apparatus and accessories equipped to be operated by power from a motor vehicle, while in or upon a motor vehicle

Back 157

$1,500

Front 158

Special HO sublimit for electronic apparatus equipped to be operated by power from a motor vehicle, used primarily for business while away from the residence premises but not in or upon a motor vehicle

Back 158

$1,500

Front 159

Property not covered under HO-3 Coverage C

Back 159

- articles insured elsewhere
- animals, birds or fish
- motor vehicles
- aircraft
- hovercraft
- property of roomers or boarders unrelated to an insured
- property in an apartment rented to others
- property rented or held for rental to others off the residence premises
- business data
- credit card or electronic fund transfer card
- water or steam

Front 160

Coverages grouped under coverage D of HO-3

Back 160

-additional living expense
- fair rental value
- loss of use due to civil authority

NOTE: only pays for "necessary and increased" expenses caused by temporary loss of use

Front 161

Additional HO-3 coverage:
Debris removal

Back 161

Creates additonal limit? Yes (an additonal 5%)
Deductible applies? Yes
Coverage dependent on another covered loss? Yes, damage from a covered peril of volcanic ash must occur for this coverage to apply

Front 162

Additonal HO-3 coverage:
Reasonable repairs

Back 162

Creates additional limit? No
Deductible applies? Yes
Coverage dependent on another covered loss? Yes, a loss from a covered peril must occur for this coverage to apply

Front 163

Additional HO-3 coverage:
Trees, shrubs, and other plants

Back 163

Creates additional limit? Yes, up to $500 is provided for each item up to a total of 5% of the Coverage A limit
Deductible applies? Yes
Coverage dependent on another covered loss? No

Front 164

Additional HO-3 coverage:
Fire Dept. service charge

Back 164

Creates additional limit? Yes, payment up to $500 is an additional limit
Deductible applies? No
Coverage dependent on another covered loss? No, there must be a threat of a covered peril, but there is no requirement that the peril actually occur

Front 165

Additional HO-3 coverage:
Property removed

Back 165

Creates additional limit? No
Deductible applies? Yes (only one deductible is subtracted from the total loss of a covered event - this goes for ALL sec. 1 HO add. coverages)
Coverage dependent on anotehr covered loss? No, there must be a threat of a covered peril, but there is no requirement that the peril actually occur

Front 166

Additional HO-3 coverage:
Credit card, electronic fund transfer card or access device, forgery, and counterfeit money

Back 166

Coverage creates additional limit? Yes, an additional total of $500 is available for any series of acts committed by any one person. Defense coverage is also provided for the insured if needed.
Deductible applies? No
Coverage dependent on another covered loss? No

Front 167

Additional HO-3 coverage:
Loss assessment

Back 167

Coverage creates additional limit? Yes, for an additional $1,000
Deductible applies? No
Coverage dependent on another covered loss? No, not to property of the insured, but there must first be a loss from a covered peril to association property

Front 168

Additional HO-3 coverage:
Collapse

Back 168

Coverage creates an additional limit? No
Deductible applies? Yes
Coverage dependent on another covered loss? No, other property need not be damaged, but the collapse must result from a covered peril

Front 169

Additional HO-3 coverage: Glass or safety glazing material

Back 169

Creates additional limit? No
Deductible applies? Yes
Coverage dependent on another covered loss? No, other property need not be damaged, but the glass breakage must result from a covered peril

Front 170

Additional HO-3 coverage: Landlord's furnishings

Back 170

Coverage creates additional limit? No
Deductible applies? Yes
Coverage dependent on another covered loss? No

Front 171

Additional HO-3 coverage:
ordinance or law

Back 171

Coverage creates additional limit? Yes, an additional limit of 10% of Coverage A is available
Deductible applies? Yes
Coverage dependent on another covered loss? Yes, this coverage is dependent on a covered loss occurring

Front 172

Additional HO-3 coverage:
Grave markers

Back 172

Coverage creates additional limit? No
Deductible applies? Yes
Coverage dependent on another covered loss? No

Front 173

Special-form coverage

Back 173

Coverage for any direct physical loss to proerty unless the loss is caused by a peril specifically excluded by the policy; also called "all-risks" or open perils coverage

Front 174

Perils excluded in Coverages A and B of HO-3

Back 174

- Perils listed in the Section I exclusions
- Collapse
- Freezing of a plumbing, heating, air conditioning or sprinkler system, or a household appliance
- Freezing, thawing, pressure or weight of water or ice
- theft of construction materials
- vandalism and malicious mischief to vacant dwellings
- mold, fungus or wet rot
- natural deterioration
- smoke from agricultural smudging or industrial operations
- pollutants
- settling of the dwelling
- animals

Front 175

Vacant dwelling

Back 175

Unfurnished and has no occupants

Front 176

Unoccupied dwelling

Back 176

Furnished but has no occupants

Front 177

Inherent vice

Back 177

type of deterioration that is characteristic of a material; e.g., the tendency of metal to rust

Front 178

Exception to excluded perils - water damage coverage

Back 178

Unless otherwise excluded, the HO-3 covers water damage to buildings or other structures that results from an accidental discharge or overflow of water or steam

Front 179

Ensuing losses covered

Back 179

Loss caused by a peril that occurs after or as a result of an initial peril; e.g., fire damage following an earthquake

Front 180

Named perils for Coverage C of HO-3

Back 180

- fire or lightning
- windstorm or hail
- explosion
- riot or civil commotion
- aircraft
- vehicles
- smoke
- vandalism or malicious mischief
- theft (w/ some exclusions)
- falling objects
- weight of ice, snow or sleet
- accidental discharge or overflow of water or steam
- sudden and accidental tearing apart, cracking, burning or bulging
- freezing
- sudden and accidental damage from artificially generated electrical current
- volcanic eruption

Front 181

Types of theft excluded for personal property

Back 181

- theft committed by an insured
- theft from a building under construction; theft of construction materials not covered under Cov. C
- Theft from that part of the insured premises rented to someone other than another insured
- Theft from another residence the insured owns, rents, or occupies where the insured is not temporarily living
- Theft to an insured who is a student at a residence away from home if the student has not been there for more than 60 days
- Theft for watercraft away from the residence premises
- Theft of trailers, semi-trailers, campers

Front 182

Concurrent causation

Back 182

A loss involving 2 or more perils, occurring either simultaneously or sequentially

Front 183

Perils excluded under HO-3 section I

Back 183

- Ordinance or law
- earth movement
- water damage
- power failure
- neglect
- war
- nuclear hazard
- intentional loss
- governmental action
(the next 3 apply only to A & B)
- weather conditions
- acts or decisions of other people, organizations, or governmental bodies that cause property damage
- faulty workmanship

Front 184

Insurable interest

Back 184

Interest in property that exists if a person could suffer a financial loss if the property is damaged or destroyed or cannot be used

Front 185

Duties after HO loss (Section I - Conditions)

Back 185

- give prompt notice
- notify the police
- notify the credit card, electronic fund transfer card company, or access device company
- protect the property from further damage
- cooperate w/ the insurer
- prepare an inventory
- verify the loss
- sign a sworn proof of loss

Front 186

Proof of loss

Back 186

Document that describes the details of the loss, property values, and interst(s) in the property

Front 187

Methods for determining the loss settlement for a building: the limit of insurance is 80% or more of the replacement cost

Back 187

The insurer pays for the replacement cost of the damage up to the limit of coverage

Front 188

Methods for determining the loss settlement for a building: if the limit of insurance is less than 80% of the replacement cost:

Back 188

The insurer will pay the greater of the ACV of the damage or this formula: ((Limit of insurance/(Replacement cost x .8)) x Replacement cost of the loss)

Front 189

T or F: If the insured abandons the property after it is damaged or destroyed, the insurer need not take over the responsibility for it.

Back 189

True

Front 190

Difference between HO-3 sections I and II

Back 190

Section I includes first party insurance that provides coverage for loss to property owned or used by an insured. Section II provides third party coverages; the insurance company pays a claimant who is injured or whose property is damaged by an insured (damages for claims covered under Section II are not payable to an insured, but rather on behalf of insured)

Front 191

Bodily injury (BI) (as used in HO policies)

Back 191

Bodily harm, sickness, or disease, including required care, loss of services, and death that result

Front 192

Property damage (PD) (as used in HO policies)

Back 192

Physical injury to, destruction of, or loss of use of tangible property

Front 193

T or F: The insurer does not pay defense costs if an insured is presented w/ a lawsuit that involves a claim that is covered under the policy.

Back 193

False. Defense costs are paid, and are done so in addition to paying up to the limit of liability

Front 194

Medical payments to others

Back 194

Coverage F of HO policies. A homeowners coverage for necessary medical expenses incurred by others (not an insured) w/in 3 years of an injury. (Does not require determination of liability)

Front 195

Coverage F applies to people who are injured in these situations:

Back 195

- person is on an "insured location" w/ the permission of the insured
- person off the insured location is injured because of conditions on the insured location (i.e., smoke)
- person off the insured location is injured by an insured's activities (hit by golf ball)
- person off the insured location is injured by a residence employee of the insured during the course of employment
- person off the insured location is injured by an animal owned by or in the care of an insured

Front 196

Residence employees

Back 196

Domestic workers whose duties include maintaining or using the household premises or performing domestic or household services

Front 197

Employee (as used in HO policies)

Back 197

An employee of insured who is not a residence employee

Front 198

No Section II liability coverages can arise out of:

Back 198

(applying to motor vehicles, watercraft, aircraft, hovercraft)

- the ownership, maintenance, occupancy, operation, use, loading, and unloading of a motor vehicle or craft by any person unless it appears in a specific exception the exclusion.
- negligent entrustment, by an insured, of an excluded motor vehicle or craft
- an insured's failure to supervise, or negligently supervising, a person
- an insured's "vicarious liability" for the actions of a child or minor

Front 199

Examples of motor vehicle exposures covered by section II of the HO-3 policy:

Back 199

- an unlicensed antique auto is stored in the insured's garage
- a riding lawn mower is used to maintain the insured's yard
- a motorized wheelchair, or a three- or four-wheeled power scooter, is used by a handicapped person
- an insured borrows an unlicensed dune buggy for a ride through the sand dunes
- an insured owns an unlicensed dirt bike used by the insured's grandchild ont he insured's property
- the insured lives in a gated retirement community and owns a golf cart used for visiting and running errands w/in the community and also for playing golf on the community's golf course
- an insured has parked the family's travel trailer at a campsite for use on a two-week vacation. Once the trailer is unhitched, the liability exposure is covered under the HO policy because it is no longer a "motor vehicle," as defined , and therefore is not subject to the motor vehicle exclusion

Front 200

Other exclusions that apply to both Coverage E and Coverage F

Back 200

- expected or intended injury or damage
- business
- professional services
- locations that are not insured locations
- war
- communicable disease
- sexual molestation and physical or mental abuse
- controlled substances

Front 201

Watercraft exposures covered by Section II of the HO-3 policy

Back 201

1. watercraft that are stored
2. sailboats shorter than 26 feet
3. sailboats longer than 26 feet not owned by or rented to an insured
4. inboard or inboard-outdrive watercraft w/ engines of 50 horsepower or less that are not owned by an insured
5. inboard or inboard-outdrive watercraft of more than 50 horsepower not owned by or rented to an insured
6. watercraft w/ one or more outboard engines or motors w/ 25 total horsepower or less
7. watercraft w/ one or more outboard engines or motors w/ more than 25 total horsepower that are not owned by an insured
8. watercraft w/ outboard engines or motors of more than 25 total horsepower owned by an insured if acquired during the policy period. (reporting must be w/in 45 days)

Front 202

Exclusions that apply only to HO Coverage E

Back 202

Coverage E(being Personal Liability)-only exclusions:

- loss assesment
- liability assumed under contract
- damage to the insured's property
- property in the insured's care
- bodily injury to persons eligible for workers compensation benefits
- nuclear liability
- bodily injury to an insured

Front 203

Exclusions that apply only to HO Coverage F

Back 203

- residence employee off premises
- bodily injury eligible for workers compensation benefits
- nuclear reaction
- injury to residents

Front 204

T or F: the insurer will pay the premiums on bonds required in the defense of a suit

Back 204

True. (but no more than the premium for a bond int he amount of the Coverage E limit)

Front 205

Reasonable expenses (Section II - additional coverages)

Back 205

Insurer pays reasonable expenses including actual loss of earnings up to $250/day (includes parking costs, meals and mileage)

Front 206

T or F: if a guest is injured int he insured's home and the insured uses supplies from her first-aid kit to bandage the wound, the insured could collect reimbursement from her insurer for the supplies used.

Back 206

True. She could collect.

Front 207

Severability of insurance condition

Back 207

Policy condition that applies insurance separately to each insured; does not increase the insurer's limit of liability for any one occurance

Front 208

Duties after loss for HO Section II:

Back 208

- give written notice
- cooperate w/ the insurer
- forward legal documents
- provide claims assistance
- submit evidence for damage to property of others
- not make voluntary payments

Front 209

Duties of an injured person under HO Coverage F:

Back 209

- give the insurer written proof of the claim as soon as possible; the proof must be given under oath if required
- authorize the insurer to obtain copies of medical reports and records

Front 210

Liberalization cause

Back 210

If the insurer, during the policy period (or w/in 60 days before policy period), adopts a revision that broadens the coverage w/o an additional premium charge, the increased coverage will automatically apply to all existing policies ont he date it is implemented w/in the state.

Front 211

General differences b/w HO-3, HO-2 and HO-5

Back 211

HO-3 provides "special form coverage" for the dwelling and other structures, and "named perils" coverage for the personal property

HO-2 provides "named perils" coverage for coverages A, B and C

HO-5 provides "special-form coverage" for A, B and C

Front 212

HO-2 is used mainly for what purpose?

Back 212

To minimize premiums

Front 213

HO-2 is known as what type of form?

Back 213

"Broad form." It has named perils coverage for A, B and C

Front 214

HO-5 is known as what type of form?

Back 214

"Comprehensive form." It has special-form coverage for A, B and C

Front 215

HO-4 is similar to HO-3 but lacks what coverage(s)?

Back 215

A and B.

Front 216

Differences b/w HO-3 and HO-4

Back 216

- HO-4 has no A & B
- additional coverage for "Building Additions and Alterations" is included in the HO-4
- The additional coverage "Landlord's furnishings" is NOT provided in the HO-4
- "ordinance or law" is an additional coverage under the HO-3 (up to 10% of Coverage A). The additional coverage is provided int he HO-4 for an amount up to 10% of the "building additions and alterations" limit

Front 217

T or F: Section II is the same on all ISO HO forms

Back 217

True.

Front 218

Coverage D limit in HO-2 and HO-3

Back 218

30% of Coverage A

(for HO-4, it is 30% of Coverage C)

Front 219

Condominium

Back 219

A building or complex for which the unit owner has a separate title and exclusive ownership of a specific unit as well as the joint ownership of the common areas and facilities

Front 220

Cooperative

Back 220

Housing unit in a complex owned by a corporation, the stockholders of which are the building's residents; corporation owns the real estate title; each unit owner owns corporation stock and has the right to occupy a specific unit

Front 221

HO-6 applies to what types of units?

Back 221

Condominiums and cooperatives

Front 222

Differences b/w HO-3 and HO-6

Back 222

- Definition of "residence premises" is changed from the HO-3's "one- to four-family dwelling" to the HO-6's "unit where you reside"
- Coverage A is changed in the HO-6 to provide a limit of $5,000 to cover the alterations, fixtures, and improvements that the insured owns or is responsible for within the residence premises
- Coverage B is not provided by the HO-6
- "Landlord's Furnishings" are NOT included in the HO-6
-Coverages A and C under the HO-6 cover "named perils" similar to the Coverage C "named perils" provided by the HO-3
- All HO-6 Coverage A losses are settled for replacement cost if the repairs are made (ACV if the insured does not make repairs)

Front 223

Market value

Back 223

price at which a particular property item could be sold

Front 224

HO-8 policies are designed for use where what is the case?

Back 224

The replacement cost of an owner-occupied dwelling significantly exceeds its market value (i.e., a large, older house w/ obsolete construction or features, such as hand-carved wooden moldings, that would be expensive to replace)

Front 225

Moral hazard

Back 225

Condition that might lead a person to intentionally cause or exaggerate a loss

Front 226

Differences b/w HO-3 and HO-8 in Section I - Property Coverages

Back 226

- Coverage C under HO-8: only 10 percent of the C limit (or $1,000, whichever is greater) is provided worldwide (the HO-3 allows 100 percent); no special limits for the theft of jewelry, firearms, or silver in the HO-8, but any one theft loss is limited to $1,000. Theft is covered only at the residence premises.

Additional Coverages:
- Debris removal is included w/in the limit of liability applying to the damaged property (the HO-3 allows and additional 5% of the applicable limit)
- Collapse is not provided in the HO-8
- Ordinance or law, grav emarkers, and landlord's furnishings additional coverages are not provided in the HO-8

Front 227

Differences b/w HO-3 and HO-8 in Section I - Perils Insured Against

Back 227

A, B and C are covered under HO-8 for an abbreviated list of named perils: fire, lightning, windstorm or hail, explosion, riot or civil commotion, aircraft, vehicles, smoke, vandalism and malicious mischief, volcanic eruption, and theft (theft is only covered from the residence premises and up to a limit of $1,000)

Front 228

Differences b/w HO-3 and HO-8 in Section I - Conditions

Back 228

The Loss Settlement condition for Coverages A and B under the HO-8 differs significantly from that under the HO-3. Under the HO-8, if the insured makes repairs after a loss, the insurer will not pay more than the cost of "common construction materials and methods" that are functionally equivalent to and less costly than obsolete, antique, or customer construction. If the insured does not make repairs, the insurer will not pay more than "market value at the time of loss."

Front 229

AAIS has higher limits than ISO concerning Coverage C property when it comes to:

Back 229

- money, bank notes, bullion, gold other than goldware and gold-plated ware, silver other than... etc. ($250 instead of $200)
- theft loss to jewelry, watches, precious and semiprecious stones, gems and furs ($2,500 to ISO's $1,500)
- (AAIS is less than ISO when it comes to business property away from premises ($250 to ISO's $500))

Front 230

Schedule

Back 230

List of insured property items that are covered, with each item specifically described and having its own coverage limit

Front 231

Items that can be scheduled by endorsement:

Back 231

- jewelry
- furs
- cameras
- musical instruments
- silverware
- golfer's equipment
- fine arts
- postage stamps
- rare and current coins

Front 232

Inflation guard endorsement

Back 232

gradually increases limits throughout the policy period for Coverages A, B, C and D

Front 233

Special computer coverage endorsement

Back 233

Provides special-form coverage for computers and computer equipment (coverage against risks of direct physical loss subject to specified exclusions)

- computer hardware, software, operating systems or networks
- other electronic parts, equipment or systems solely designed for use with or connected to equipment in the above group

Front 234

Minimum deductible for any earthquake loss, assuming the Earth Movement endorsement has been added

Back 234

$250

Front 235

water back-up and sump discharge or overflow endorsement

What is its limit?

Back 235

$5,000 for property covered under Section I

Front 236

Personal injury endorsement adds an additional liability insuring agreement expanding HO policy to cover not only bodily injury but also personal injury. This includes:

Back 236

- false arrest, detention or imprisonment
- malicious prosecution
- publishing oral or written material involving libel, slander, or invasion of privacy
- wrongful eviction, wrongful entry, or invasion of privacy involving improper occupancy of a room, dwelling, or premises

Front 237

Coverage provided by the personal injury endorsement does not apply to:

Back 237

-acts intended to cause personal injury
- publishing material known to be false
- material published before the policy period began
- contractual liability that does not relate to the insured's premises
- a criminal act committed by or at the direction of an insured
- contractual liability, except realted to lease agreements
- business activities (except as landlord)
- civic activities
- personal injury to an insured
- pollution claims

Front 238

Additional insured - residence premises endorsement

Back 238

includes persons or organizations named on the endorsement as insureds with respect to coverages A, B , E and F

Front 239

Residence held in trust endorsement

Back 239

can be used to insure a home owned by a trust

Front 240

Public protection class

Back 240

A ranking of the fire protection (including available water and water pressure) provided in the area. Each protection class is assigned a number according to its protection ranking

Front 241

2 broad classifications of construction used to determine the HO base premium:

Back 241

frame and masonry

Front 242

3 different dwelling policies:

Back 242

DP-1: Basic Form
DP-2: Broad Form
DP-3: Special Form

Front 243

coverages for a Dwelling form:

Back 243

A: Dwelling
B: Other Structures
C: Personal Property
D: Fair rental value
E: Additional living expense

Front 244

Which DP form does not include Coverage E?

Back 244

DP-1

Front 245

Comparison of DP-3 and HO-3: Coverage C

Back 245

HO-3 limit: 50% of coverage A
DP-3 limit: included only if limit selected and shown on declarations page; whereas HO-3 pays for worldwide coverage up to C limit, DP-3 pays only up to 10% of C limit.

Front 246

Comparison of DP-3 and HO-3:
Coverage D

Back 246

HO-3: 30% of Coverage A limit
DP-3: 10% of Coverage A limit

Front 247

Coverages found in HO-3 but not found in DP-3

Back 247

loss assessment, credit card, landlord's furnishings, money;

also, Section II liabilities are not present in DP-3

Front 248

T or F: you need a mobilehome endorsement to insure a mobilehome

Back 248

True. You need a mobilehome endorsement(MH 04 01)

Front 249

T or F: additional coverage does NOT provide up to $500 (with no deductible) for reasonable expenses incurred by the insured for removal and return of the entire mobilehome if it is endangered by an insured peril

Back 249

False. This IS provided.

Front 250

T or F: the AAIS mobilehomeowners program covers the mobilehome on an ACV basis

Back 250

True.

Front 251

AgOP is what?

Back 251

Agricultural Output Program (AgOP), developed by AAIS in response to the growth of agribusiness

Front 252

3 forms for AAIS farmowners program:

Back 252

Dwelling Coverage - Basic Form (FO-1)
Dwelling Coverage - Broad Form (FO-2)
Dwelling Coverage - Special Form (FO-3)

Front 253

Principal coverages of the AAIS farmowners program:

Back 253

- the farm dwelling
- related private structures (other than barns and other structures used in the farming operation)
- household additional property
- additional living expenses and loss of rent

Front 254

Coverage under AAIS Personal Liability Coverage (Farm) form (GL-2) is provided when receipts for custom farm work do not exceed __________ annually and when the custom farm work does not involve the application of pesticides and herbicides

Back 254

$5,000

Front 255

National Flood Insurance Program

Back 255

(NFIP) Federal program that makes flood insurance available on buildings, both commercial and residential, and their contents in communities that have been approved by the Federal Emergency Management Agency (FEMA).

Front 256

Emergency program

Back 256

Initial phase of a community's participation in the National Flood Insurance Program n which property owners in flood areas can purchase limited amounts of insurance at subsidized rates

Front 257

Regular program

Back 257

Second phase of the National Flood Insurance Program in which the community agrees to adopt flood-control and land-use restrictions and in which property owners purchase higher amounts of flood insurance than under the emergency program

Front 258

Adverse selection

Back 258

The tendency for people with the greatest probability of loss to be the ones most likely to purchase insurance

Front 259

An exception to the 30-day NFIP waiting period is?

Back 259

If the flood insurance is initially purchased in connection with the purchase of property, or the making or increasing of a mortgage on property

Front 260

The "Write-your-own flood insurance program" is whose undertaking?

Back 260

the insurance industry and the Federal Insurance Administration

Front 261

WYO refers to what?

Back 261

Write-you-own flood insurance; it allows private insurers participating in the program to sell and service flood insurance under their own names

Front 262

FAIR stands for what?

Back 262

Fair Access to Insurance Requirements plans; state-run programs that provide basic property insurance coverage on buildings, dwellings, and their contents for property owners who are unable to obtain coverage in the standard insurance market

Front 263

What types of exposures are considered uninsurable under FAIR?

Back 263

- vacant property
- property poorly maintained
- property subject to unacceptable physical hazards, such as storage of flammable materials
- property in violation of law or public policy, such as a 'condemned building' (one that is considered unfit for human habitation)
- (in some states) property not built in accordance w/ building and safety codes

Front 264

Beachfront and windstorm plans

Back 264

State-regulated insurance pools that provide property insurance, both personal and commercial, in coastal areas exposed to the risk of heavy windstorm losses

Front 265

Inland marine insurance

Back 265

Insurance that covers miscellaneous types of property, such as movable property, goods in domestic transit, and property used in transportation and communication

Front 266

Floater

Back 266

Inland marine policy that provides coverage for property that "floats" or moves (such as jewelry, furs, or cameras) rather than providing coverage at a fixed location

Front 267

What are the special characteristics of inland marine floaters?

Back 267

- coverage tailored to specific type of property (camera floater)
- insured can select property limits
- floaters provide extensive coverage w/ respect to the perils covered (special form)
- most floaters provide coverage anywhere in the world
- inland marine floaters are usually written w/o a deductible

Front 268

Perils excluded in inland marine

Back 268

- wear and tear, gradual deterioration, or inherent vice
- insects or vermin
- mechanical or electrical breakdown or failure
- war and warlike actions
- nuclear hazard

Front 269

Types of personal inland marine floaters

Back 269

PAF (Personal Articles Floater)
PPF (Personal Property Floater)
PEF (Personal Effects Floater)

Front 270

Why choose PAF to HO scheduled property endorsement?

Back 270

essentially, if no access to HO policy

Front 271

PPF - 13 classes of coverage

Back 271

silverware, goldware, pewterware; clothing; rugs and draperies; musical instruments and electronic equipment; paintings and other art objects; china and glassware; cameras and photographic equipment; guns and other sports equipment; major appliances; bedding and linens; furniture; all other personal property, and professional books and equipment while in the residence; building additions and alterations

Front 272

PEF

Back 272

Covers property only while the property is away from the residence premises

Front 273

Common exclusions to small boat policies

Back 273

General risks of direct loss (i.e., wear and tear, vermin and marine life, rust and corrosion, etc.)

Repair or service (loss or damage from refinishing, renovating, or repair is not covered)

Business pursuits (coverage does not exist if the boat is used to carry passengers for compensation)

Front 274

Warranties

Back 274

Promises made by an insured that guarantee compliance with the insurer's conditions

Front 275

Yacht/boatowner warranties

Back 275

- Yacht/boat has to be used only for pleasure use
- Boat has to be in seaworthy condition
- Boat has to NOT be in operation during winter months
- Boat has to stay w/in navigation area

Front 276

Hull insurance

Back 276

Physical damage insurance on a boat, including its sails, machinery, furniture, and other equipment

Front 277

Hull

Back 277

The boat. A vessel's structure, including machinery, spars, sails, tackles, fittings, and other equipment and furnishings that are normally required for the vessel's operation and seaworthy maintenance

Front 278

T or F: Freezing & thawing of ice is usually excluded as a peril on a boatowners policy

Back 278

True

Front 279

Medium to large boats usually carry a deductible equal to what amount or higher of the insured value?

Back 279

1%

Front 280

Protection and indemnity (P&I) insurance

Back 280

Insurance that covers the insured for bodily injury or property damage liability arising form the ownership, maintenance, or use of the insured boat

Front 281

T or F: Liability arising out of water-skiing, parasailing, or other airborne devices is covered under P&I (boatowners liability) insurance

Back 281

False

Front 282

How many years are allotted for medical payments coverage?

Back 282

3 years

Front 283

Uninsured boaters coverage

Back 283

Coverage for the insured's bodily injury incurred in a boating accident caused by another boat's owner or operator who is uninsured and who is legally responsible for the injury; similar to the PAP's uninsured motorists coverage

Front 284

United States Longshore and Harbor Workers' Compensation Act

Back 284

Act that specifies the required benefits to maritime employees (except crew members) who are injured or disabled or who die while working on U.S. navigable waters

Front 285

Underlying insurance

Back 285

The basic policies, such as homeowners, personal auto, and watercraft (if the insured owns a boat), that provide primary liability coverages and that the insured is required by a personal umbrella policy to have and maintain

Front 286

Maintenance of underlying insurance condition

Back 286

Condition in personal umbrella policies that requires the insured to keep all required underlying coverages in force during the policy period; also requires the insured to notify the insurer promptly if any underlying policy is changed or replaced by another policy

Front 287

Drop down coverage

Back 287

Coverage provided by an umbrella policy for a loss that is not excluded by the umbrella policy and that is not covered by underlying policies. The loss is paid by the umbrella insurer in excess of a self-insured retention that the insured must pay.

Front 288

Self-Insured Retention (SIR)

Back 288

Amount of loss the insured must pay if the loss covered by an umbrella policy is not covered by any underlying insurance

Front 289

Coverages of Personal Umbrella

Back 289

- Personal Injury Liability
- Property damage liability
- defense costs
- uninsured and underinsured motorists coverage

Front 290

Defined contribution plan (money purchase pension plan)

Back 290

Pension plan in which the contribution rate or amount is specified, but the retirement benefit is variable

Front 291

Defined benefit plan

Back 291

Pension plan in which the retirement benefit is specified and the employer's contributions vary depending on the amount needed to fund the benefit; typically requires no employee contributions

Front 292

Vesting

Back 292

Employee's right to part or all of the pension contributions made by the employer if employment terminates before retirement

Front 293

Traditional individual retirement account (IRA)

Back 293

Retirement plan that allows workers w/ taxable compensation below certain thresholds to make limited annual contributions and receive favorable income-tax treatment. Not employer sponsored.

Front 294

Roth IRA

Back 294

Individual retirement plan that allows (1) investment earnings to accumulate free of fedral income taxes and (2) tax-free withdrawals at age 59 1/2 or later; does not allow federal income-tax deduction of annual contributions

Front 295

Thrift plan

Back 295

i.e., you pay $2, your employer pays $1 (similar to my current plan at WN); a savings plan

Front 296

Keogh plan

Back 296

also known as an HR-10 plan: a qualified retirement plan that allows self-employed individuals to make tax-deductible contributions to a defined contribution plan or a defined benefit plan.

Front 297

SEP

Back 297

Simplified employee pension (SEP): a retirement plan in which the employer contributes to an IRA established for each eligible employee

Front 298

SIMPLE plan

Back 298

Savings Incentive Match Plan for Employees: established in 1996; limited to employers who employ 100 or fewer employees.

Simplifies pension rules

Front 299

Section 403(b) plans

Back 299

aka Tax-sheltered annuities; tax-deferred retirement plans for qualified tax-exempt employers and public schools. Includes churches, charities, etc.

Front 300

Annuity

Back 300

Provides periodic payments for a fixed period or for the duration of a designated life or lives.

Front 301

OASDHI stands for what?

Back 301

Old-Age, Survivors, Disability and Health Insurance program

Front 302

Fully insured (OASDHI)

Back 302

40 credits or 10 full-time years

Front 303

Currently insured (OASDHI)

Back 303

at least 6 credits at the time that death, disability or entitlement to retirement benefits occurs

Front 304

Monthly OASDI benefits can be paid to:

Back 304

- retired workers age 62 or older
- a retired worker's spouse if he or she is at least age 62 (an unmarried divorced spouse is also eligible for benefits if he or she is at least age 62, the marriage has lasted at least 10 years, and the divorce has been in effect for at least 2 years)
- a retired worker's unmarried children under age 18
- a retired worker's unmarried disabled children age 18 or older (if severely disabled before age 22)
- retired worker's spouse at any age if caring for dependent children under age 16 or for disabled children

Front 305

Needs approach

Back 305

Method used to determine an adequate amount of life insurance based on the survivors' needs and the amount of existing life insurance, financial assets, and expected Social Security benefits

Front 306

Term insurance

Back 306

Insurance that provides temporary protection (for a certain period of time) with no cash value; usually renewable and convertible

Front 307

Cash value

Back 307

Fund that accumulates in a whole life insurance policy and that the policyholder can access in several ways, including borrowing, purchasing paid-up life insurance, and surrendering the policy in exchange for the cash value

Front 308

Renewable

Back 308

Characteristic of a term life insurance policy that permits the policyholder to renew it for additional periods w/o evidence of insurability

Front 309

Convertible

Back 309

Characteristic of a term insurance policy that allows the policy to be exchanged for some type of permanent life insurance policy with no evidence of insurability

Front 310

Mortality rates

Back 310

Probabilities of death at specific ages. Life insurers have been able to predict mortality rates with a high degree of accuracy for large groups of people

Front 311

Whole life insurance

Back 311

Level-premium insurance that provides lifetime protection and builds cash values

Front 312

Ordinary life insurance

Back 312

Whole life insurance that requires periodic premiums until the insured dies or reaches age 100 (also called 'straight life insurance')

Front 313

Paid-up policy

Back 313

Life insurance that does not require additional premium payments to remain in force

Front 314

Limited-payment life insurance

Back 314

Whole life insurance in which the premiums are level but are paid only for a certain number of years. After that time, the policy is paid-up

Front 315

Universal life insurance

Back 315

Flexible-premium life insurance that separates the protection, savings, and expense components

Front 316

Basic characteristics of universal life insurance

Back 316

- separation of protection, savings, and expense components
- stated rate of interest
- considerable flexibility
- partial cash withdrawals option

Front 317

Endowment insurance

Back 317

pays the face amount of insurance to the designated beneficiary if the insured dies w/in a certain period; if the insured survives to the end of the period, the face amount is paid to the policyholder

Front 318

variable life insurance

Back 318

a life insurance policy in which the face amount of insurance and cash value vary according to the investment experience of a separate account maintained by the insurer

Front 319

incontestable clause

Back 319

clause that states that the insurer cannot contest the policy after it has been in force for a specified period, such as two years, during the insured's lifetime

Front 320

suicide clause

Back 320

clause that states the insurer will not pay the death benefit if the insured commits suicide w/in a certain period (usually 2 years) after policy inception; instead, the premiums are refunded to the beneficiary

Front 321

Grace period

Back 321

provision that continues a life insurance policy in force for a certain number of days (usually thirty or thirty-one) after the premium due date, during which time the policyowner can pay the overdue premium w/o penalty

Front 322

Reinstatement clause

Back 322

Clause that gives the policyowner the right to reinstate a lapsed life insurance policy if certain requirements are met (i.e., is w/in 5 years, all unpaid premiums are paid up, policy is surrendered for its cash value, etc.)

Front 323

Misstatement of age or sex provision

Back 323

Clause stating that if the insured's age or sex is misstated in a life insurance policy application, the amount of death benefit the insurer will pay is the amount that the premium would have purchased at the insured's correct age and sex

Front 324

Beneficiary

Back 324

Person(s) designated in a life insurance policy to receive the death benefit

Front 325

Absolute assignment

Back 325

transfers all ownership rights in the policy to a new owner

Front 326

Collateral assignment

Back 326

assigns the life insurance policy to another party as collateral for a loan

Front 327

Participating policies

Back 327

Life insurance policies that pay dividends to policyowners

Front 328

Nonparticipating (guaranteed cost) policies

Back 328

Life insurance policies that do NOT pay dividends to policyowners

Front 329

Nonforfeiture options

Back 329

cash, reduced paid-up insurance and extended term insurance;

definition: provisions in a life insurance policy that give the policyowner a choice of ways to use the cash value if the policy is terminated and that protect the policyowner from forfeiting the cash value

Front 330

Rider

Back 330

similar to an endorsement; modifies a life insurance policy

Front 331

waiver of premium

Back 331

clause stating that the insurer will waive premiums due during the period of disability if the insured becomes totally disabled before a certain age

Front 332

accidental death benefit

Back 332

provision in a life insurance policy that doubles (or triples) the face amount of insurance payable if the insured dies as a result of an accident

Front 333

guaranteed insurability rider

Back 333

aka "guaranteed purchase option"

Rider that permits the policyowner to buy additional amounts of life insurance at standard rates without evidence of insurability

Front 334

Cost-of-living rider

Back 334

allows the policyowner to purchase, w/o evidence of insurability, one-year term insurance equal to the face amount of the policy times the percent change in the CPI.

Front 335

accelerated death benefits: terminal illness rider

Back 335

allows insureds w/ a life expectancy of 6 months or one year to collect part or all of the available proceeds

Front 336

accelerated death benefits:
catastrophic illness rider

Back 336

certain catastrophic diseases (life-threatening cancer, coronary artery disease, or AIDS) can warrant receipt of part of the face amount of insurance

Front 337

accelerated death benefits:
long-term care rider

Back 337

insureds who require long-term care can receive part of the face amount to help pay for the cost of care.

Front 338

Life insurance UW factors:

Back 338

age
sex
build
physical condition
personal healthy history
family health history
smoking
hazardous sports and hobbies
habits and morals
residence
occupation

Front 339

Noncontributory plan

Back 339

Group plan in which the employer pays the entire cost

Front 340

Contributory plan

Back 340

Group plan in which employees pay part or all of the cost

Front 341

4 major problems of modern healthcare

Back 341

-rising healthcare expenditures
-inadequate access to medical care
- uneven quality of medical care
- considerable waste, inefficiency and fraud

Front 342

Blue Cross

Back 342

hospital expenses and other related medical expenses (service rather than cash benefits)

Front 343

Blue Shield

Back 343

service expenses of physicians and surgeons, and related medical expenses

Front 344

TPA

Back 344

third-party administrator (commonly used by self-insurers)

Front 345

Basic medical expense coverage

Back 345

coverage for medical expenses, such as hospital and surgical expenses, physicians' visits, and miscellaneous medical services

Front 346

URC charges

Back 346

usual, reasonable and customary (URC) charges; charges for which physicians are reimbursed on the basis of their usual fee as long as the fee is reasonable and customary

Front 347

corridor deductible

Back 347

Medical insurance deductible amount an insured must pay under a supplemental major medical insurance plan after the insured's medical expenses exceed the limits of the underlying basic medical expense plan

Front 348

stop-loss provision

Back 348

insurance provision that limits the amount the insured must pay by reimbursing 100 percent of covered expenses in excess of this limit for the rest of the calendar year

Front 349

preexisting conditions clause

Back 349

a health insurance provision that excludes coverage for any preexisting medical condition (one that existed before the policy effective date) for a limited period after an insured enters the plan

Front 350

portability

Back 350

characteristic of a health plan that requires a new employer or health plan to give credit for prior, continuous health insurance coverage

Front 351

coordination-of-benefits provision

Back 351

Provision that indicates the order of payment when an insured is covered under two or more group health insurance plans; limits the insured's total recovery under all applicable policies to 100 percent of covered expenses

Front 352

COBRA

Back 352

allows a terminated employee/covered dependent to retain group health insurance for a limited period by electing to remain in the employer's plan under COBRA

Front 353

Elimination period

Back 353

Initial time period in a health insurance or disability income policy during which benefits are not paid

Front 354

Managed care

Back 354

Medical insurance plans that provide coverage for cost-effective medical services provided to plan members

Front 355

Health maintenance organization (HMO)

Back 355

managed care plan that provides a range of comprehensive health-care services to its members for a fixed, prepaid fee; members' choice of healthcare providesr is usually restricted to those in the HMO network

Front 356

Preferred provider organization

Back 356

PPO is a managed care plan that contracts with healthcare providers for medical services provided to plan members at discounted fees; members' choice of healthcare providers is not restricted, but members have a financial incentive to choose contracted providers

Front 357

Exclusive provider organization (EPO)

Back 357

Managed care plan that pays only for medical care received w/in a network of preferred providers

Front 358

conditionally renewable policy

Back 358

policy that guarantees renewal to a specified time, provided the insured meets certain qualifications

Front 359

Medicare

Back 359

Social insurance program that covers the medical expenses of most individuals age 65 and older

Front 360

Medicare Part A includes what benefits:

Back 360

- inpatient hospital care
- skilled nursing facility care
- home healthcare services
- hospice care
- blood transfusions (after the first 3 pints)

Front 361

Medicare Part B is what?

Back 361

Supplementary Medical Insurance (Part B)

Front 362

Original medicare plan

Back 362

beneficiaries can elect coverage under the original fee-for-service Medicare plan and can use any provider that accepts Medicare patients

Front 363

Medicare medical savings amount (MSA)

Back 363

Beneficiaries can elect to be covered by a medical savings account, which is a health insurance policy w/ a high annual deductible.

Front 364

Medicaid

Back 364

federal-state welfare program that coves the medical expenses of low-income persons, including those who are aged, blind, or disabled; members of families w/ dependent children; and pregnant women as well as certain children