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65 Cards in this Set
- Front
- Back
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Personal Property (2 distinctions) |
-Real property interest: land, building, and other structures -Personal property interest: homes, boats, cars, jewelry, furnishings, etc. |
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Declarations |
name the insured and property covered under contract, present facts about coverage, premiums, and insurer's limit of liability |
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Insuring Agreements |
-set forth coverage provided by ins contract. -states insurers obligations to provide coverage as stated in policy -in return, insured must comply with policy provisions and premiums |
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Deductibles |
-out of pocket cost insured must pay for insured loss -reduce moral hazard by having insured pay for a portion of every loss -affect insured premium payments, the higher the deductible, the lower the premiums |
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Definitions |
-important words may be found in glossary and throughout policy to avoid ambiguity or misinterpretations of coverage provisions |
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Exclusions |
-limit insurance coverage by identifying losses that are not covered by policy. Can apply to perils, hazards, people, property, locations, or time period that insured doesn't want to cover |
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Endorsements |
-riders change insurance contract by adding or limiting insurance coverage to meet insured's specific insurance needs. |
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Conditions |
-explain in detail relationship, rights, and duties of insurer and insured. Ex: payment of premiums, contract provisions for fraud and concealment, cancellation rights, vacancy or un-occupancy, increase in hazard, appraisal procedure and time of payment by insurer |
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Home Owner's insurance |
-HO combine property &casualty coverage ie fire, theft, personal liability into one contract. Protection for home & personal property & liability coverage for bodily injury and property damage caused by insured. -2 approached: named peril (listed specific perils covered) and open peril (insurers pays for all perils except for the ones excluded) |
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3 levels of HO coverage |
-Basic or standard coverage: Provides a min level of protection restricted to perils of fire, theft, vandalism and extended coverage. -Broad form coverage: Includes basic coverage plus 16 perils. -Special coverage: Provides coverage on an open-peril basis which also includes coverage for theft. |
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9 basic HO perils |
-Fire and lightning -Windstorm and hail -Explosion -Riot and civil commotion -Vehicles -Aircraft -Smoke -Vandalism and malicious mischief -Theft |
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7 add'l perils for broad form coverage |
-Falling objects -Weight of ice, snow or sleet -Accidental discharge or overflow of water or steam -Explosion of steam or hot water system -Freezing of plumbing, heating and air conditioning systems and domestic appliances -Damage from artificially generated electrical currents -volcanic eruption |
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2 sections of property coverage |
-Section 1 provides property insurance protection and is divided into four coverages - (or insuring agreements) A through D, each with a separate limit of liability. Section 2 provides personal liability coverage and is divided into two coverages (E and F). Coverage is identical for the entire series of homeowners policies. |
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ISO HO programs 6 forms |
HO 1, covers less than 2&3, disc'd in most states HO 2, broad, covers more than 1, dwelling and structures are named perils. Contents coverage up to 50% of dwelling coverage. HO 3, open peril, all losses covered unless specifically excluded. Contents coverage up to 50% of dwelling coverage. HO 4, contents broad, covers contents and personal liability of renters. No coverage on dwelling or other structures HO 6, Unit owners, covers property interest, content &personal property of ppl owning units in condo or co-op. HO 8, modified, for houses w/ replacement cost greater than market value. Ex: older houses |
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HO Sections 1&2 |
Section 1: A: Dwelling B: Other Structures C: Personal Property D: Loss of Use Additional Coverages Section 2: E: Personal Liability F: Medical Payments to others Additional Coverages |
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Dwelling |
Section 1 coverage A: dwelling and all attached structures ie carport, deck -applies to insured residence premise listed on declaration -limits of coverage listed in section 1 are determined as percentage of coverage A. If extra protection is needed, coverages B, C, &D may be increased. Coverages may not be reduced below a certain percentage. Insured must pay add'l premium for increased coverage. |
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Other structures |
coverage B, other structures on premise separated by a clear space i.e. shed, unattached garage, pool, patio, fence. If garage or tool shed is attached to house then covered under coverage A. -claims for losses under coverage B HO2, 3, 5, &8 does not reduce amt of dwelling coverage A. This coverage is in addition to A itself. -once insured chooses amount for coverage A, coverage B is 10% of that amt. |
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Unscheduled Personal Property |
Coverage C, contents found in home ie furniture, jewelry, appliances, & other personal property. Equals to 50% of Coverage A. |
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Loss of Use |
Coverage D, pays for extra expenses if loss prevents insured from living in home. Equals to 20% of coverage A. |
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Personal Property Coverage |
-real property, anything attaches to land i.e. buildin appliances, coverage A -personal property, anything not attached to land, area rugs/ furniture, coverage B -HO2, 3, 5, 8, amt is 50% of coverage A, can be increased but not decreased below 40% -HO4&6, min $6000 required to insure contents -protects contents anywhere in world except contents of second home. Amt is limited to great of $1000 or 10% of coverage C |
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Personal Property not covered under C |
Property that is separately insured under the homeowners policy -Animals, birds and fish -Motor vehicles subject to registration and their accessories and equipment -Aircraft and their parts -Property associated w/renting an apartment -Business property -Credit cards or fund transfer cards |
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Special Limits of Liability |
-est max $ amt that insured can recover when item is damaged or stolen -some types of property (jewelry -$1500 limit) can be covered on Scheduled Personal Property Endorsement -provides open peril coverage for specific items at higher amt of coverage. Ex: boats and trailer (covered up to $1500), needs to be insured separately if higher value needed. Silverware and guns each limited to $2500, coverage is only for theft not loss. |
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Personal Liability |
Section 2, coverage E, covers obligations of insured due to their negligence. Policy will pay up to stated limit for legal obligations due to personal injury or property damage. -covers legal defense cost as long as it is covered under policy -some exclusions: professional and vehicle must be insured elsewhere (malpractice or auto). Aircraft and watercraft (inboard and outboard motors) not covered. -standard $100K, most agents recommend $500K |
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Medical Payment to Others |
Coverage F, medical expenses of someone injured on your property or injured off property by someone in you or family member. Ex: hitting someone with golf ball at golf course. -pays for medical care regardless of whether policyholder is liable -doesn't apply to you or reg residents of household except for "residence employees: ie butler / nanny -basic limit $1K, can be increased to $5K |
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Add'l coverage |
Section 1: fire/ theft covers debris removal, trees ($500 limit or 5% of Coverage A) -$1K for loss assessment damage for obligations from condo / property owners assoc. -HO 3, covers $500 for unauthorized use of CC regardless of coverage through CC co. Deductibles do not reduce $500 amt. Section 2: covers for expense in providing first aid to injured. Pays for cost assoc w/ lawsuits, payments for interest due on judgement, also lost wages for insured during trial. |
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8 Exclusions apply to HO 2, section 1 |
Excluded regardless of any other cause or event contributing concurrently or in any sequence to the loss. 1. Ordinance or Law 2. Earth Movement 3. Water Damage 4. Power Failure 5. Neglect 6. War 7. Nuclear Hazard 8. Intentional Loss |
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Ordinance Exclusion |
-ordinance or law exclusion eliminates coverage for add'l expenses if current zoning laws or building codes prevent rebuilding a structure comparable to the damaged home. -for additional payment, this exclusion can be removed by endorsement. |
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Conditions |
Loss of following properties settled at cash value at time of loss but not more than amt required to repair or replace it based on depreciated value at time of loss. -Personal property -Awning, carpeting, household appliances, outdoor antennas and outdoor equipment, whether or not attached to buildings -Structures that are not buildings Replacement cost coverage can be purchased, usually 25% of base premium, so items replaced will be at current fair market replacement value vs depreciated value |
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Settlements under A or B, without deduction for depreciation must meet the following conditions: |
If, at time of loss, amt of ins on damaged building is 80% or more of full replacement cost of building immediately before the loss, then ISO will pay the cost to repair or replace the damaged building. ISO will apply policys deductible before paying insured the lesser of the following amounts: -limit of liability under the policy that applies to the building -replacement cost of that part of the building damaged for like construction and use on the same premises -necessary amount actually spent to repair or replace the damaged building. |
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Personal Auto Policy-PAP |
-provides protection against damage, theft, and personal liability -PAP begins with declarations page, insuring agreement, and definitions. coverage section follows and policy ends with insured duties after a loss and one section for general policy provisions -PAP vary from state to state. no fault state, insurer will process claim regardless of who's at fault to speed up claims process. In other states, fault must be established before claim is paid by insurer or at-fault party. |
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Limit of Liability |
-sets the limit for all types of damage the insured may cause in one occurrence equal to stated amt. ex $500,000, anything beyond that, insured will be responsible for. -single limit policy provides more compensation to single victim than any other types of liability coverage. -split limit breaks down coverage for bodily injury per person, per accident, property damage limit |
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Comprehensive (non-collision) coverage |
Breakage of glass, loss caused by missile, falling objects, fire, theft or larceny, explosion, earthquake, windstorm, hail, water, flood, malicious mischief or vandalism, riot or civil commotion, or colliding with a bird or animal. |
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PAP 4 categories of coverage |
1. names insured and resident family members are covered for ownership, maintenance, and use of any auto whether owned or borrowed, unless exclusions apply 2. any persons using the named insured's auto. Car owner's ins would pay not the driver's ins. 3&4, driving for an org (fraternity), difference is b/t whether vehicle is owned or not owned |
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Types of coverage |
-primary coverage-coverage on the auto involved in the accident. Primary coverage pays first. -excess coverage- kicks in after the primary coverage has been exhausted |
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Exclusions (2 types) Part A |
-no liability coverage for any person intentionally causing bodily injury or property damage. B/c intentional injuries are not accidental losses, they are not insurable. -no liability coverage for property owned, transported by, rented to, used by, or in the care of a covered person. 2 considerations: 1. A provides liability protection, not property protection &people logically cannot be liable to themselves. We cannot sue ourselves b/c we destroyed our own property. 2. homeowners policy provides insurance for the insured's personal property. -generally no coverage if an employee of the insured sustains injury b/c it is expected that workers' compensation ins covers this event. -no coverage if the auto can be hired by the public to carry persons or property for a fee (although car-pooling is covered). Excludes coverage for some circumstances involving the automobile &other non-farming biz. -no coverage when a person uses an auto w/o a reasonable belief s/he is entitled to do so. Issue of reasonable belief can be a question of fact to be tried in court. |
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Exclusions Part B |
-Vehicles w/ fewer than 4 wheels (meaning motorcycles, mopeds, and so forth). -Vehicles, other than covered auto, owned by insured or furnished for reg use, ie leased cars, cars furnished by a business, or cars owned but not listed on the declarations page. This exclusion causes insureds having vehicles in the excluded categories to declare them &pay a premium for them if they want insurance on these vehicles. -Any vehicle located inside a facility designed for racing. This exclusion removes coverage from insureds engaging in car racing. Race car drivers need to purchase separate ins policies & should not rely on PAP for coverage of their racing activities. |
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Uninsured Motorist Coverage |
-protect ppl from financially irresponsible drivers (neither purchased ins /have sufficient assets) to pay for damage they incur. -also applies to ppl who bought ins but insurer is insolvent -UM is fault based -insured must show they are legally entitled to receive benefits for bodily injury not property damage -drivers w/o ins. -hit and run drivers |
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Underinsured Motorist Coverage |
-helps cover shortfall when insured is injured by motorist w/o adequate coverage. -remaining amt of damage would be covered by insured's policy -subrogation takes effect here, insurer has right to sue the negligent party to make up for their loss. However, this doesn't prevent injured party from suing for damages not covered by policy. |
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Contact Rules |
-some jurisdiction will require contact b/t insured's vehicle and hit-and-run vehicle. |
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Financial responsibility law |
-require drivers to show their financial responsibility by carrying DL and registration, proof of liability insurance, or surety bond. -must est fin responsibility after they've been involved in accident or serious traffic violation |
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Compulsory Insurance law |
AK, IN, MA, LA, NY, NC require their drivers to show adequate ins coverage before that state's DMV will issue license plates. |
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Unsatisfied Judgement Funds |
-proceeds from sale of license plates and ins premium taxes used to make payments to injured drivers from uninsured motorists few states use this rule |
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Umbrella policy |
covers anywhere from $1M-10M -sits on top of underlying policies -offers broader coverage, Ex: driving anywhere in the world, not just US & Canada -beneficial for high net worth clients, households with young drivers, trampoline / pool owners, & ppl who travel & drive internationally |
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Commercial package policy |
-prior to 1987, firms had to purchase multiple policies to weave together for enough coverage. Since then, a package or combo of policy allowed many biz to purchase one insurance purchase to cover all their needs. CPP contains common declarations and common conditions. the following can be purchased separately: commercial property, commercial gen liability, crime, inland marine, commercial auto, boiler/farm, etc. |
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Declarations |
-first page of ins policy -establish the insured's identity and location of biz -shows different components of coverage that has been purchased for different premiums charged. |
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Conditions |
-cover policy cancellation, assignment of policy, and other legal rights and duties. In addition to common declarations and conditions, each component has its own specific declarations page and condition. |
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Property covered |
-CPP provides coverage in building and personal property coverage form. Identified bldg covered as those listed on the declarations page. -CPP covers biz personal property ie. machinery, furniture, inventory (raw material, work in process, and finished goods. Est limit of recovery and associated premium -third category, personal property not belonging to biz but in its care, custody, or control. Esp useful for biz who borrow display units or special tools. |
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3 main alternatives for causes of loss forms |
The Basic Form The Broad Form The Special Form |
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Basic form covers the following (11) |
Fire Lightning Explosion Windstorm or hail Smoke Aircraft or vehicles (striking the property) Riot or civil commotion Vandalism Sprinkler leakage Sinkhole collapse (in Fl and elsewhere) Volcanic action |
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Broad form |
adds more perils ie water damage and falling objects |
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Special form |
-provides open end perils coverage, insured is covered unless specifically excluded. -burden falls on the insurer to show that exclusion applies. -insured has the burden of showing the approximate cause of the loss was covered. |
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Indirect Losses (3 categories) |
-loss of income, decrease of revenue while you repair damage. Ex: restaurant has fire in kitchen, restaurant would be closed for several weeks for repair. -continuing expenses, expenses that continue even though property has been damaged. Ex: fire from above, mortgage and real estate taxes due would still be due -extra expenses, other expenses needed to keep your biz going. Ex: rent out an empty restaurant to keep biz going while damaged kitchen is being rebuilt. |
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Transportation insurance |
-perils facing mobile property is broader than real property. In addition to perils like fire, lightning, sunk, confiscated, hijacked, mobile property is more prone to be stolen and collided with than property attached to land. -broader scope of peril, difference in how loss is investigated, and differing potential for savage operations have resulted in marine ins that are very diff from property ins. -mobile property to be transported is covered under transportation ins. |
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Aviation Insurance |
-Purchased by owners, operators of aircraft, cos building and supplying parts to aircraft ie navigational systems. -private& commercial planes. Applies to helicopters, hot air balloons, hang gliders, and space satellites. -aircraft owners buy both ins to cover loss/damage and liability aircraft may cause. Airplane itself incl all electrical components is called a hull. An aircraft hull policy provides either open peril or specified perils basis. -cost of ins is function of perils covered. Ex: open peril is more expensive than specified perils. Ground and in flight coverage is more expensive than not-in-motion coverage. Latter provides property loss coverage not liability coverage. |
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Business Automobile Insurance |
-most large firms will self-insure property damage. -generally seek coverage for most or all of liability |
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Cause of Loss |
accident is caused by collision or it is not. When providing physical damage coverage, insurers make an important distinction based on the cause of the loss. |
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Collision |
means collision of an automobile w/ another object (a car, a tree, or even standing water). Automobile policies providing collision &non-collision coverage deal w/questions related to whether a particular event is a collision or not by including wording such as the following: For the purpose of this coverage, breakage of glass and loss caused by missile, falling objects, fire, theft or larceny, explosion, earthquake, windstorm, hail, water, flood, malicious mischief or vandalism, riot or civil commotion, or colliding with a bird or animal shall not be deemed to be loss caused by collision. |
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Problem faced by the aviation insurance industry |
small number of exposure units weakens the application of the law of large numbers, while any single exposure unit is capable of causing a catastrophic loss. The nature of the aviation insurance market results in a small number of insurers, each using considerable judgment in their rate-making and underwriting decisions, and no standard aviation insurance policy. |
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Personal articles floater |
Covers valuable assets such as cameras, jewelry, furs, guns, stamp and coin collections, and silverware |
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Blanket floaters |
Used when the property as a whole is valuable, but no one item is of outstanding value |
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Scheduled floaters |
Cover items of significant individual value that may be transported easily |
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Annual transit policy |
Protects the interest of the shipper (bailor) |
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Motor truck cargo insurance |
A form of bailee's liability coverage. |
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Inland marine insurance 5 types of properties |
-Property designated for export -Imported property until it reaches its destination. -Domestic property in process of shipment. -Property used to facilitate transportation, such as bridges, tunnels, pipelines, and electrical transmission towers. -Personal property that is easily moved and typically of significant value, such as jewelry, furs, cameras, and some types of electronic data processing property. |
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Add'l inland marine coverages |
Bailees' Customers' Policies Annual Transit Policies Instrumentalities Of Transportation Policies Floater Policies |
