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58 Cards in this Set

  • Front
  • Back
4 Elements of a Valid Contract
Competent Parties
Legal Purpose
Offer & Acceptance
Insurer will only pay an individual to restore the approxamate financial condition before the loss--no gain on a claim.
contract is contingent on an uncertain event (loss)
one party has greater power over the other party in drafting the contract.
One sided--insured is legally bound to perform its part of the agreement.
Parts of the Insurance Contract
Insuring Agreements
the chance or uncertainty of loss --An Exposure presents the opportunity of loss
Elements of Insurability
Pure Risk
Insurable Intrest
definate (time & place)
Must Create Financial Hardship
Must be calculable--able to value
Loss must not become predictable
Must not happen to large #'s at once
Cause of loss
Increases the chance of loss
loss ratio
Incurred Losses
Earned Premiums
Expense ratio
Underwriting Expenses
Written Premium
Combined Ratio
Loss Ratio + Expense Ratio
A person who stands in a special relationship of trust with another--as an insurance agent has with a client.
Agents may not misrepresent or falsely advertise the terms or benefits of a policy of th financial condition of a company.
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.
Giving or offering some benefit other than those specified in the policy--cash, gifts, securities--to induce a customer.
A _____ often works with or for an agent and has more limited authority than an agent. cannot issue or countersign policies.
Prior Approval States
Insurers must obtain official approval from the state before using forms or rates.
File and Use States
Insureres begin using rates and forms as soon as they are filed with the state.
Use and File States
Insurers must file rates and forms for approval within a certain time period after they are first used.
Open Competition
Insureres compete with one another with the forms and rates they select subject only to requirements of adequacy and nondiscrimination.
Why do Insurance Departments regulate the industry? (3)
Preserve solvency
Detect financial problems
protect insureds if insolvency
A(n)______ is an insured's offer of contract to a prospective insurance company.
Valued or Agreed Amount Contract
Used for certain hard to value items--written for a specified amountas agreed upon prior to policy.
Standard Exclusions
Non-Accidental Losses
Concurrent Causation
Losses Controllable by Insured
Extra-Hazardous Perils
Catastrophic Losses
Property Better Covered Elsewh
Actual Cash Value
Is RC minus Depreciation--used when the principle of indemnity will be violated.
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.
Assignement Condition
specifies that a policy may not be transfered to anyone else--except in event of death.
No Benefit to Bailee
Bailee is not covered under the insured policy while in possession of the insured's property.
4 Conditions of Negligence
Legal Duty Owed
Breach of Legal Duty
Proximate Cause
Those participating in certain activities that are considered especially hazardous may be held liable under this principle
Absolute Liability
Vicarious or Imputed Liability
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.
Eligible Coverages for CPP
Commercial Property
Commercial GL
Commercial Auto
Commercial Crime
Commercial Inland Marine
Boiler and Machinery
Professional Liability
Farm Coverage
CPP policy includes these 3 parts
Common Policy Dec
Common Policy Conditions
2 or more coverage parts
In a BOP--What are Coverage A and Coverage B
B--Business Personal Property
What is the largest building risk eligible for a BOP?
6 stories and 100,000 sq. ft.
What is the other eligibility rule besides building size for a BOP--what is the Max
Recipts--annual sales cannot exceed $3 million
Under the additional coverages part of the BOP, property removed to protect it from loss will be covered at another location for up to ___-
30 days
Standard Deductable on BOP
Mechanical Breakdown Coverage is a) not avail w/ BOP
b) automatic w? BOP
c)optional w/ BOP on Dec pg
Which of these is not included coverage in a BOP
c)Med Expense
d)Professional Liab.
e)Personal and Advertise Inj L
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.
What tow conditions must be met for a loss to be covered under the Utility Services_-Direct Damage endorsement
property is covered by endorsement

caused by covered cause of loss
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 %
List all of the components required in a Commercial Property coverage part. (7)
Common Policy Dec
Common Policy Conditions
Comm. Property Dec.
Comm. Property Conditions
1 or more Comm. Prop. coverage forms
Causes of Loss form
Coverage Part for Comm. Property--Covers buildings, the insured business personal property and the personal property of others located at the business premesis.
Building and Personal Property
Comm. Prop. coverage part--Covers buildings under construction
Builders Risk
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
Comm. Prop. coverage part--Reimburses the insured for extra expenses required to avoid a suspension of business and to continue operations
Extra Expense
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
What is the time period under the Earthquake and Volcanic Eruption endorsement that consitute a single earthquake or eruptions
168 hours
Which cause of loss form provides open peril coverage?
basic, broad, or special
Which Commercial Property cause of loss forms cover collapse? basic, broad, special
broad and special
Which Comm. Prop. endorsement would be appropriate for an insured whose values fluctuate regularly?
Value Reporting Endorsement
Which Comm. Property endorsement would be appropriate for an insured that needs coverage for its perishable stock?
Spoilage endorsement
Which Comm. Property endorsement would be appropriate for an insured that wants coverage for increased costs due to building regulations or demolition laws?
Ordinance Coverage Endorsement
What three types of coverages are provided by the Building and Personal Property Coverage form in Commercial Property
Building, Business Personal Property, Personal Property of Others.