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110 Cards in this Set

  • Front
  • Back
BURGLARY
Taking property from inside the premises by a person unlawfully entering or leaving the premises as evidenced by marks of forcible entry or exit.
CLAIMS-MADE FORM
Covers liability claims that are first made during the policy period for an accident or occurrence that took place after a retroactive date and before the end of the policy period.
CONTRACTUAL LIABILITY
Liability for damages an insured has as a result of a contractual hold harmless agreement (wherein a person assumes liability for certain occurrences, relieving another of the liability).
CUSTODIAN
In crime insurance, this is the insured, or any of his partners or employees, while having care and custody of property inside the premises, except for a person while acting as a watchperson or guard.
EARTHQUAKE COVERAGE
Insurance that covers losses resulting from damage done by an earthquake. Can be purchased as a separate policy, as an endorsement to a homeowners or dwelling policy, or as a covered cause of loss
to most types of commercial policies. It can cover buildings and personal property.
FAIR CREDIT REPORTING ACT (FCRA)
A federal law designed to protect the privacy of consumer report information (i.e., information on an applicant’s credit history, medical condition, driving record, criminal activity, hazardous sports, etc.) and to guarantee that the information supplied by credit reporting agencies is as accurate as possible. The FCRA requires an insurer to get the applicant’s consent before obtaining medical information, provide the applicant with a written disclosure within three days after requesting an investigative consumer report, and
provide the applicant with a notice when they take an adverse action.
GARAGE COVERAGE FORM
Designed for the needs of auto dealers and other auto businesses, (such as repair shops, service stations, storage garages, public parking lots), that are excluded from the BAC, (Business Auto). Coverage applies to damages resulting from bodily injury or property damage caused by a covered accident and resulting from garage operations.
GARAGEKEEPERS COVERAGE
Liability for damage to property in the care, custody and control of the insured.
Businesses that service, repair, park, or store customers’ vehicles left in their care need this coverage to insure their legal liability.
GUARD (OR WATCHPERSON)
A person hired specifically to have care and custody of property inside the premises and who has no other duties.
LOSS SETTLEMENT PROVISIONS
Following an occurrence covered by a liability insurance policy, the insured is required to promptly give written notice describing the accident to the insurer or agent, promptly forward all notices or legal papers relating to the accident and cooperate with the insurer in the investigation of a claim or suit.
MATERIAL FACT
In insurance, a fact that would have caused the insurer to reject the application or charge a higher premium if it had known the truth.
MYSTERIOUS DISAPPEARANCE
The disappearance of property without any possibility of determining the cause of the disappearance.
NEGLIGENCE
The failure to act as an ordinary, reasonable and prudent person would in the same or similar circumstances.
OBLIGEE
The person in a surety bond for whom work is to be done. He is in effect the insured.
OBLIGOR
The person in a surety bond who has an obligation to perform. Also called the principal.
OCCURRENCE FORM
A general liability form providing coverage only if the loss or claim occurs during the policy period, as opposed to a claims-made form.
PER-OCCURRENCE LIMIT
The limit of liability for all damages, whether property damage or bodily injury, resulting from one occurrence.
PERSONAL INJURY LIABILITY
Liability for injury other than bodily injury caused by an offense arising out of the conduct of the insured’s business, such as false arrest, malicious prosecution, wrongful entry, slander or libel.
PERSONAL INJURY PROTECTION
Automobile medical coverage to individuals injured in an accident, regardless of fault.
PREMISES AND OPERATIONS
Liability for accidents occurring on the insured’s business premises or as a result of the insured’s business operations at someone else’s premises.
PRINCIPAL
The person in a surety bond who is supposed to do something. Also called an obligor.
PROXIMATE CAUSE
The actual event which starts an unbroken chain of events leading to a loss or further losses.
RETROACTIVE DATE
The earliest date a general liability occurrence could take place and be covered under a claims-made form.
ROBBERY
The taking of property from a person by causing or threatening to cause that person bodily harm.
SAFE BURGLARY
The unlawful taking of property from within a locked safe or vault by unlawfully entering it, as evidenced by marks of forcible entry.
SOURCES OF INSURABILITY INFORMATION
Sources include the application filled out by the applicant; reports, opinions, and recommendations of the agent; inspection or engineering reports on the applicants property; insurance reporting and rating organizations and reports of consumer credit agencies and other financial reference services.
SURETY BOND
A guarantee that a specific obligation will be fulfilled. A three-party contract, as it involves a principal (obligor), an obligee (the insured) and the surety (the insurance company).
SURETY
The insurance company issuing a surety bond. It guarantees that the work will be done or the obligee will
be indemnified for his loss.
UMBRELLA LIABILITY INSURANCE
A broad type of liability insurance policy that provides coverage for losses
payable that exceed the underlying insurance contract. Written on both commercial and personal policies.
UNOCCUPANCY
The term applying to a building that has no people but has contents (e.g., the owner is away for the
weekend).
VACANCY
The term applying to a building that has no people or contents (e.g., the tenants have moved out and the
building is bare until is re-rented).
Absolute liability
(liability without fault)
Is imposed in certain circumstances by law. It is liability for injury to another person or damage to their property, regardless of negligence or willful wrongdoing. It is imposed on persons who are involved in extremely dangerous activities or who use hazardous materials, as well as employers with regard to injury suffered by their employees.
Intervening cause defense
Is that another cause of injury interrupted the chain of events resulting from the negligent person’s original action, so that the original action was not the cause.
Contributory negligence defense
Is that an injured party who through his own negligence, contributed to the injury (even just 5% at fault) and is unable to recover any damages from the person causing the injury.
Comparative negligence defense
Was created by state statutes to replace the contributory negligence concept. It allows an injured person partly at fault to collect damages but allows his negligence to be used as a defense to reduce the damages he can collect.
Doctrine of last clear chance
Allows an injured party to recover damages even if he was negligent, if the defendant had an opportunity immediately prior to the accident to prevent the accident but failed to do so.
Assumption of risk defense
Is that a person who understands the danger involved in an activity and voluntarily engages in the activity (e.g., ignores posted signs warning of danger) assumes the risk and may be unable to recover for an injury.
Statute of limitations
A state law that limits the period of time a person has in which to take legal action.
Compensatory damages
Payments to compensate an injured party for the actual loss suffered.
Special damages
Compensation to reimburse a person for specific expenses or loss of income.
Punitive damages
Additional amounts awarded to an injured person to punish a negligent party for gross negligence (failure to use even a slight degree of care), willful intent, or outrageous behavior.
An insurer has a number of options for settling losses. The insurer typically has 30 days after receipt of proof of loss to inform the insured of its choice. The options are:
• pay the agreed or appraised value of the damaged property and assume ownership of the item.
• pay the current value of the lost or damaged property.
• pay the cost of repairing or replacing the lost or damaged property.
• repair or replace the item, instead of paying cash (when it believes it can repair or replace the item at less cost than the insured).
Coverage for supplementary payments generally includes such expenses as:
• all expenses incurred by the insurer.
• premiums for bonds required in a suit being defended.
• reasonable expenses incurred by the insured at the insurer’s request to assist in investigation or defense of a claim or suit, including actual loss of earnings up to specified policy limits.
• costs taxed against the insured in a suit.
• interest that accrues after entry of a judgment.
Loss valuation provisions
Specify how the insurer will value insured property at the time of a loss, when determining the amount to pay on a claim.
Replacement cost
The cost to repair or replace a damaged item with new materials of like kind and quality, regardless of the amount of depreciation (wear and tear) the item had suffered.
Actual cash value (ACV)
Is equal to its replacement cost minus depreciation.
A deductible (co-insurance) is a:
• Specified dollar amount or percentage of a covered loss the insured must pay,
or
• A period of time that must elapse before the insurer is liable for payment for a loss.
Arbitration
An arbitration provision is used to deal with disputes over certain casualty losses. It provides that an insured and the insurer may arbitrate a disagreement as to whether that insured is entitled to recover damages or as to the amount of damages that are recoverable by that insured, if both agree to arbitration.
Abandonment provision
States the insured cannot leave damaged property in the hands of the insurer and demand payment of the full value of the property as a total loss.
Salvage (rights of)
If the insurer pays the insured in full for damaged property, the insurer has the right to take possession of the property and try to salvage it to recover as much of its loss as it can.
Concurrent
When a policyholder holds more than one policy covering the same property, and the policies are written on the same basis (they have the same plan, terms, conditions and
provisions), the policies are concurrent.
Nonconcurrent
When a policyholder holds more than one policy covering the same property, and the plan, terms, conditions and provisions are different, the policies are nonconcurrent.
Pro-Rata - A pro rata refund is based on the portion of the policy period the insured will not have coverage A short-rate refund, usually applied when the insured cancels the policy, is about 90% of the pro rata amount, to allow the insurer to recover added administrative expense.
Loss payable clause
Provides that a creditor with a financial interest in personal property covered by the policy will be named as joint payee on any check issued to pay a claim for a loss to that property.
Strict liability
Liability that manufacturers and sellers of products have for injuries caused by defective conditions in their products, even if they were not negligent in manufacturing or selling the product.
Functional replacement cost
The cost of replacing property with property that is similar functionally, but not identical.
Coverage A (Dwelling)
Coverage A covers the following:
• The dwelling on the location shown in the declarations, including structures
attached to the dwelling, such as an attached garage
• Materials and supplies on or next to the location used to construct or repair the
dwelling or other structures on the location
• Building equipment and outdoor equipment (e.g., ladders, lawnmower, etc.) on the
location, used to service the location, if not covered elsewhere in the policy (that
is, covered as personal property under Coverage C)
Coverage B
(Other Structures at the
Same Location as the Dwelling)
Coverage B applies to appurtenant structures.
These are other structures used with the dwelling, such as a detached garage, storage shed, pool, well, or gazebo, that are:
• separated from the dwelling by a clear space;
or
• connected to the dwelling by only a fence, utility line or similar connection.
Coverage does not apply to:
• land.
• structures used for commercial, manufacturing or farming purposes.
• structures rented or held for rental to anyone who is not a tenant of the dwelling,
except for those rented for use solely as a private garage.
Coverage C (Personal Property) (Both DP & HO)
Coverage C covers the following:
• Personal property (not the land or buildings) usual to the occupancy of a dwelling,
and owned or used by the insured or members of his family residing in the
dwelling, while on the insured location
• Personal property owned by guests or servants while on the insured location, if
coverage is requested by the insured
Dwelling
Does not have to be occupied by insured,
up to 5 roomers/boarders,
poor to good condition okay,
pick and choose any or all coverages,
unless endorsed property is covered only.
Homeowners
must be home of insured,
up to 2 roomers/boarders,
average to good condition required,
must take all coverages,
both property and liability coverage included.
Dwelling Policy
Eligible:
1 to 4 units/apartments,
under construction/rental/vacation home okay,
1 unit mobile home on permanent location,
residence incidental occupancy okay.
Not eligible:
5 or more units/apartments,
farm dwelling,
mobile home on wheels,
residence with retail business.
The Basic Form (DP 00 01) automatically covers direct physical loss to covered property caused by the following perils:
• Fire
• Lightning
• Internal explosion
These extended coverage perils can be added to Basic Form for an additional premium:
• Windstorm
• Aircraft
• Riot or civil commotion
• Vehicles
• Volcanic eruption
• Explosion
• Smoke
Automatic removal provision
Maintains coverage for personal property moved to a
newly acquired principal residence for up to 30 days immediately after the insured begins
to move property there but not beyond the policy’s termination date. Coverage does not
apply to losses to the property while it is in transit. Under Coverage C, coverage for
property while off the premises is limited to 10% of the limit of Coverage C.
To remember extended coverage perils, remember WHARVVES:
Wind
Hail
Aircraft
Riot
Vehicles
Volcano
Explosion
Smoke
The Broad Form (DP 00 02) provides broad (named peril) coverage. It includes the basic perils (fire, lightning, WHARVVES, V&MM) and the following additional Broad Form perils:
• Damage by burglars-Coverage does not apply if the dwelling has been vacant more than 30 days or to theft of property.
• Weight of ice, snow or sleet
• Falling objects
• Accidental discharge or overflow of water or steam
• Freezing of a household appliance or the plumbing, heating, air conditioning or automatic
fire protective sprinkler system, except when the dwelling is vacant or unoccupied or being
constructed and when the insured did not maintain heat in the building or shut off the water supply and drain the system and appliances of water.
• Sudden and accidental damage from artificially generated electrical current,
• Sudden and accidental tearing apart, cracking, burning or bulging
The Special Form (DP 00 03) provides special (open peril) coverage. It states perils excluded, rather than perils covered. It covers direct physical loss to the covered dwelling and other structures, except for those risks that are specifically excluded.
Special Form exclusions include damage caused by the following:
• Wind, hail, ice, snow or sleet
• Collapse
• Freezing of a plumbing
• Freezing, thawing, pressure or weight of water
• Theft
• Vandalism and malicious mischief, breakage of glass
• Constant or repeated seepage or leakage of water or steam
• Wear and tear
Coverage D (Fair Rental Value) (DP)
Coverage D provides coverage for indirect losses. It is used by landlords to cover the
loss of fair rental value of the dwelling or another structure made unfit for normal use
because of a loss caused by a peril insured against. It applies if the property was rented to
others or even just held for rental. Coverage D is reduced by the amount of expenses that
cease while the property is unrentable.
Coverage E (Additional Living Expense) (DP)
Coverage E is in the Broad and Special Forms, but not in the Basic Form. It covers any
necessary increase in living expenses incurred by the insured when loss to covered
property by a peril insured against makes the dwelling unfit for normal use. This
coverage only applies if the insured is a resident of the dwelling.
Other Coverages
-Dwelling Forms automatically provide the following Other Coverages at no additional cost. For some of these, use of the coverage would reduce the amount the insurer would pay for other losses. For others, the amount paid for these losses would be in addition to
the amount available for other losses.
• Other Structures.
• Debris Removal.
• Improvements, Alterations and Additions.
• Worldwide Coverage.
• Reasonable Repairs.
• Property Removed. This insures covered property against direct loss from any
cause while being removed from premises endangered by perils insured against,
for up to:
o 30 days in the Broad and Special Forms.
o five days in the Basic Form while removed.
• Fire Department Service Charge.
• Rental Value (in the Basic Form).
• Rental Value and Additional Living Expense (in the Broad and Special
Forms).
• Trees, Shrubs and Other Plants (in the Broad and Special
Forms).
• Collapse (in the Broad and Special Forms).
• Glass or Safety Glazing Material (in the Broad and Special Forms).
All dwelling policies have general exclusions:
• Ordinance or law.
• Earth movement.
• Water damage.
• Power failure.
• Neglect.
• War.
• Nuclear hazard.
• Intentional loss.
• Loss to lawns, plants, shrubs or trees.
Broad Theft Coverage (DP 04 72)
This endorsement adds theft coverage, provided the named insured occupies the dwelling. Coverage applies to theft, attempted theft and vandalism and malicious
mischief directly resulting from theft or attempted theft.
Dwelling under Construction (DP 11 43)
This endorsement is available to a named insured who intends to occupy a dwelling after construction is completed. By endorsement, contractors may be named as additional insureds. The dwelling under construction endorsement sets a provisional limit of
coverage, and will pay a percentage of the provisional limit based on the proportion of actual property value at the time of a loss. The benefit is the premium is only 65% of the completed value premium, until construction is completed.
Coverage L
Provides coverage in the event a claim or suit is brought against an insured by a third party for damages because of bodily injury or property damage caused by an occurrence.
HO 00 02 (Broad Form)
Provides Broad Form named peril coverage for owner-occupants
HO 00 03 (Special Form)
Provides Special Form coverage for the dwelling and
other structures on the premises and Broad Form coverage on the personal property for owner-occupants
HO 00 04 (Tenants Form)
Provides Broad Form named peril coverage for tenants
HO 00 05 (Comprehensive Form)
Provides Special Form coverage for the dwelling, other structures on the premises and personal property for owner/occupants (not used in Washington)
HO 00 06 (Unit Owners Form)
Provides Broad Form named peril coverage for
owner/occupants of condominium units
HO 00 08 (Modified Form)
Provides modified named peril coverage to owner/occupants (generally of older homes)
Coverage M
Provides for payment of all necessary medical expenses incurred within three years of an accident causing bodily injury to a person other than the insured or a family member of the insured.
Coverage A (DP)
Covers property losses to the dwelling.
Coverage B (DP)
Covers property losses to other structures on the premises.
Coverage C (DP)
Covers property losses to personal property.
Coverage D (DP)
Covers indirect losses caused by loss of use when the dwelling is damaged, and includes the coverages found in Coverages D (rental value) and E (additional living expense) of the Dwelling forms.
Business Personal Property
&
Personal Property of Others
Personal property (furniture, fixtures, machinery, equipment, stock, etc.) and Personal Property of Others located in or on buildings at the described premises or in the open (or in a vehicle) within 100' of the described premises.
Newly acquired or constructed property
This provides, for up to 30 days from
acquisition or construction, up to:
• $250,000 of building coverage to each building:
o being built on the premises.
o acquired at other locations and intended for similar use as the building described in the declarations or for use as a warehouse.
• $100,000 of coverage for business personal property at each location the
insured acquires.
Property off-premises
This provides coverage for damage caused by a covered cause of loss to covered property (other than stock) temporarily at a location the insured does not own, lease or operate. It does not apply to property:
• in or on a vehicle.
• in the care, custody or control of the insured’s salespersons.
• at any fair or exhibition.
Outdoor property
This provides coverage to outdoor fences, antennas, signs (other than signs attached to buildings), trees, shrubs and plants, for a loss, including debris removal expense,
resulting from fire, lightning, explosion, riot or civil commotion, or aircraft. Coverage is limited to $1,000 per occurrence and not more than $250 for any one tree, shrub or plant.
Business Income Coverage Form
Pays for actual loss of business income during the period of restoration. Business income includes net profit before income tax and continuing normal operating expenses, including payroll, while operations are suspended due to a direct physical loss or damage caused by a covered cause of loss to:
• property at the insured premises.
• personal property in the open or in a vehicle within 100 feet.
The period of restoration
Begins 72 hours after the physical loss or damage and ends on the date the property should have been repaired, rebuilt or replaced with reasonable speed and similar quality, even if this extends beyond the policy expiration date.
Equipment Breakdown Form (CPP Coverage Part)
Provides boiler and machinery insurance. It covers losses caused by breakdown of covered equipment. Covered equipment is:
• equipment built to operate under internal pressure or vacuum.
• electrical or mechanical equipment used to generate, transmit or use energy.
• communication equipment and computer equipment.
Builder’s Risk Coverage Form
Used to provide the same coverage to commercial, residential or farm buildings as provided by the Business and Personal Property Form, except it provides the coverage while the building is under construction. It covers a building in the course of construction, from the time construction begins to the time:
• the policy expires or is canceled;
• the property is accepted by a purchaser;
• the insured’s interest in the property ceases;
• the insured abandons construction with no
intention to complete it;
• 90 days after construction is complete; or
• 60 days after the building is occupied in whole or
in part or put to its intended use.
Coverage is for up to 100% of the value of the completed building
The NAIC has approved definitions for six classes of
property that may be insured under marine policies:
1. Imports
2. Exports
3. Domestic shipments
4. Means of transportation or communication
5. Personal property floater risks
6. Commercial property floater risks
Ocean marine insurance
Covers imports and exports against hazards involved in shipping transportation on navigable waters. Exports are covered from the time they are prepared for export, and imports are covered until they reach their destination. Although there is no standard marine insurance form, marine insurance is generally written to provide any or all of the following major coverages:
• Hull
• Cargo
• Freight
• Protection and indemnity
Hull insurance - insures the shipowner against direct loss or damage to the ship and its machinery and equipment, but does not cover damage to cargo or baggage on the ship.
Cargo insurance
Insures owners of goods (cargo) against loss due to cargo lost or destroyed while being transported on water.
Freight insurance - insures the owner of a ship or the owner of cargo for lost income
from lost shipping charges (freight) if the trip is interrupted.
Inland marine insurance - covers the other four classes of property:
• Transportation forms insure domestic shipments of property of a movable nature carried or transported overland, on coastwise vessels or on inland waters, as well as goods temporarily stored in the process of transportation.
• Means of Transportation forms insure certain types of fixed property considered to be means of communication or transportation (such as, bridges, tunnels, docks, piers, loading docks, and radio-TV towers).
• Personal property floaters insure personal articles in any location and worldwide.
• Commercial property floaters insure property used in business in any location and worldwide. These include business floater forms, dealers forms, bailees forms, and miscellaneous policies.
Motor Truck Cargo Policy
- Trucker’s Form insures contract carriers for their liability for loss or damage to all shipments of described goods (cargo).
- Shipper’s Form provides property insurance for loss to cargo being transported by common carriers.
Motor Truck Cargo Liability-Owner’s Form
Provides property insurance for loss to cargo being shipped on trucks owned by the business that owns the cargo.
National Flood Insurance Program
A federally subsidized program available to individuals and business firms. It is administered by the Federal Insurance Administration (FIA), which sets rates, coverage limits, and eligibility requirements.
Terrorism Risk Insurance Act (the TRIA)
Created a federal government reinsurance mechanism to provide reinsurance coverage to insurers following a declared terror event. The result was the establishment of the Federal Terrorism Insurance Program.
Premises and operations
Refers to liability for accidents occurring:
• on the insured’s business premises.
• as a result of the insured’s business operations at someone else’s premises.
Products and completed operations
Refers to liability for bodily injury and property
damage arising out of the insured’s product or work when:
• the product is out of the insured’s possession and the occurrence takes place away from any premises owned or rented by the insured.
• the work is completed or abandoned.
Supplementary Payments
The insurer will also provide the following supplementary payments in addition to the limit of liability:
• up to $250 for the cost of any bail bonds required because of an accident, including
related traffic law violations, if the accident results in bodily injury or property damage covered under the policy.
• premiums on appeal bonds and bonds to release attachments in any suit they defend.
• interest accruing after a judgment has been entered in any suit they defend.
• up to $200 a day for loss of earnings because of attendance at hearings or trials at their request.
other reasonable expenses incurred at the insurer’s request.
Motor Carrier Act of 1980
Under this law, the Department of Transportation requires commercial motor carriers to have proof of financial responsibility by having insurance, a bond, or qualified self-insurance. Required limits of liability are:
• $750,000 for a truck operated for hire and not carrying hazardous materials.
• $1,000,000 for a truck carrying specified substances other than designated hazardous
substances (e.g., oil and hazardous waste).
• $5,000,000 for a truck (private or operated for hire) carrying designated hazardous materials (e.g., poison gas, explosives, radioactive materials).
Work-Related vs. Non-Work-Related
Coverage applies to injuries to employees on the premises or a jobsite:
• conducting work on the premises when not on a break.
• while on a break.
• while going to or from a jobsite (but not to or from work).
The Longshore Harbor Worker’s Compensation Act (USL&H Act)
The Longshore Harbor Worker's Compensation Act, more commonly referred to as USL&H, is a federal act which provides employee benefits similar to State Act Workers Compensation to an employee engaged in maritime employment if any injury or death occurs upon navigable waters of the United States including any adjoining pier, wharf, dry dock, terminal, building way, marine railway, or other
adjoining area customarily used by an employer in loading, unloading, repairing, dismantling or building a vessel.
The Jones Act
(Merchant Marine Act)
is a federal law passed in 1920 that allows any seaman incurring bodily injury as the result of the performance of one or more functions of the job to bring suit for damages against the employer. The employer’s exposures under the Act consist of negligence, unseaworthiness of the vessel and disability income for the injured man or woman.
Examination of your books and records
The insurer may examine and audit the insured’s books and records relating to the policy any time during up to three years after the policy period.
Home daycare
Homeowners policy covers for property and liability for business run on residence premises as an endorsement (HO 04 97)
Financial Responsibility (PAC)
Drivers must have one of the following to comply with OR law:
-Maintain $60,000 bond, minimum
-Make a $60,000 deposit, minimum, in cash or securities
-Become self-insured
-Have a liability policy with at least 25/50/20
}$25,00-bodily injury or death of 1 person
}$50,000-bodily injury or death of 2 or more persons
}$20,000-injury or destruction of others property.