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58 Cards in this Set
- Front
- Back
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4 Elements of a Valid Contract
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Competent Parties
Legal Purpose Offer & Acceptance Consideration |
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Indemnity
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Insurer will only pay an individual to restore the approxamate financial condition before the loss--no gain on a claim.
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Aleatory
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contract is contingent on an uncertain event (loss)
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Adhesion
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one party has greater power over the other party in drafting the contract.
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Unilateral
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One sided--insured is legally bound to perform its part of the agreement.
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Parts of the Insurance Contract
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Declarations
Insuring Agreements Conditions Exclusions Definitions |
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Risk
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the chance or uncertainty of loss --An Exposure presents the opportunity of loss
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Elements of Insurability
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Pure Risk
Insurable Intrest definate (time & place) Unexpected Must Create Financial Hardship Must be calculable--able to value Affordable Loss must not become predictable Must not happen to large #'s at once |
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Peril
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Cause of loss
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Hazard
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Increases the chance of loss
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loss ratio
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Incurred Losses
_______________ Earned Premiums |
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Expense ratio
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Underwriting Expenses
_____________________ Written Premium |
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Combined Ratio
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Loss Ratio + Expense Ratio
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Fiduciary
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A person who stands in a special relationship of trust with another--as an insurance agent has with a client.
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Misrepresentation
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Agents may not misrepresent or falsely advertise the terms or benefits of a policy of th financial condition of a company.
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A Form of misrepresentation where the agent convinces the client to cancel exisition insurance and buy another policy from him at the detriment of the insured.
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Twisting
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Giving or offering some benefit other than those specified in the policy--cash, gifts, securities--to induce a customer.
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Rebating
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A _____ often works with or for an agent and has more limited authority than an agent. cannot issue or countersign policies.
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solicitor
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Prior Approval States
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Insurers must obtain official approval from the state before using forms or rates.
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File and Use States
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Insureres begin using rates and forms as soon as they are filed with the state.
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Use and File States
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Insurers must file rates and forms for approval within a certain time period after they are first used.
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Open Competition
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Insureres compete with one another with the forms and rates they select subject only to requirements of adequacy and nondiscrimination.
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Why do Insurance Departments regulate the industry? (3)
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Preserve solvency
Detect financial problems protect insureds if insolvency |
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A(n)______ is an insured's offer of contract to a prospective insurance company.
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Application
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Valued or Agreed Amount Contract
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Used for certain hard to value items--written for a specified amountas agreed upon prior to policy.
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Standard Exclusions
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Non-Accidental Losses
Concurrent Causation Losses Controllable by Insured Extra-Hazardous Perils Catastrophic Losses Property Better Covered Elsewh |
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Actual Cash Value
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Is RC minus Depreciation--used when the principle of indemnity will be violated.
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Liberalization
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if the insurer broadens coverage under a policy without increasing premium--then all exisiting similar polices or endorsements willb e construed to contain the broadened coverage.
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Assignement Condition
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specifies that a policy may not be transfered to anyone else--except in event of death.
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No Benefit to Bailee
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Bailee is not covered under the insured policy while in possession of the insured's property.
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4 Conditions of Negligence
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Legal Duty Owed
Breach of Legal Duty Proximate Cause Damages |
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Those participating in certain activities that are considered especially hazardous may be held liable under this principle
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Absolute Liability
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Vicarious or Imputed Liability
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When a person is held responsible fo rthe negligence of another person--as when an employer is held responsible for the actions of an employee.
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Eligible Coverages for CPP
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Commercial Property
Commercial GL Commercial Auto Commercial Crime Commercial Inland Marine Boiler and Machinery Professional Liability ERPL Farm Coverage |
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CPP policy includes these 3 parts
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Common Policy Dec
Common Policy Conditions 2 or more coverage parts |
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In a BOP--What are Coverage A and Coverage B
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`A--Buildings
B--Business Personal Property |
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What is the largest building risk eligible for a BOP?
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6 stories and 100,000 sq. ft.
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What is the other eligibility rule besides building size for a BOP--what is the Max
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Recipts--annual sales cannot exceed $3 million
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Under the additional coverages part of the BOP, property removed to protect it from loss will be covered at another location for up to ___-
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30 days
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Standard Deductable on BOP
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500
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Mechanical Breakdown Coverage is a) not avail w/ BOP
b) automatic w? BOP c)optional w/ BOP on Dec pg |
C
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Which of these is not included coverage in a BOP
a)BI b)PD c)Med Expense d)Professional Liab. e)Personal and Advertise Inj L |
D
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Which of the following would be covered under the Building Coverage of the BOP?
a)Restroom fixtures b)Photography machines c)Furnishings in private office d)Carpets and Tile |
A and D--only things that are perminate and cannot be removed by the lessie.
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What tow conditions must be met for a loss to be covered under the Utility Services_-Direct Damage endorsement
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property is covered by endorsement
caused by covered cause of loss |
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Under Commercial Property coverage part--if a building is vacant for more than 60 days there are certain perils that are automatically excluded. All other perils would be covered at what %
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15%
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List all of the components required in a Commercial Property coverage part. (7)
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Common Policy Dec
Common Policy Conditions Comm. Property Dec. Comm. Property Conditions 1 or more Comm. Prop. coverage forms Causes of Loss form Endorsements |
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Coverage Part for Comm. Property--Covers buildings, the insured business personal property and the personal property of others located at the business premesis.
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Building and Personal Property
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Comm. Prop. coverage part--Covers buildings under construction
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Builders Risk
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Comm. Prop. coverage part--
Insures condo association against direct physical loss or damage to buildings, business personal property and personal property of others in the care, custody or control of the assoc. while on location. |
Condo Association
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Comm. Prop. coverage part--Reimburses the insured for extra expenses required to avoid a suspension of business and to continue operations
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Extra Expense
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Comm. Prop. coverage part--
Covers the insured for liability arision out of negligent damage to the property of others in the care custody or control of the insured |
Legal Liability
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What is the time period under the Earthquake and Volcanic Eruption endorsement that consitute a single earthquake or eruptions
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168 hours
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Which cause of loss form provides open peril coverage?
basic, broad, or special |
special
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Which Commercial Property cause of loss forms cover collapse? basic, broad, special
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broad and special
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Which Comm. Prop. endorsement would be appropriate for an insured whose values fluctuate regularly?
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Value Reporting Endorsement
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Which Comm. Property endorsement would be appropriate for an insured that needs coverage for its perishable stock?
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Spoilage endorsement
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Which Comm. Property endorsement would be appropriate for an insured that wants coverage for increased costs due to building regulations or demolition laws?
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Ordinance Coverage Endorsement
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What three types of coverages are provided by the Building and Personal Property Coverage form in Commercial Property
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Building, Business Personal Property, Personal Property of Others.
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