Property And Casualty Insurance Basics

Front 1

An _______________ "classifies the applicant based upon the underwriting requirements of the insurer.

Back 1

Underwriter/Underwriting

Front 2

What is an economic interest in a property that must exist at the time of loss?

Back 2

Insurable Interest

Front 3

Insurers also keep track of their "__________," which is the percentage of claims paid in comparison to the total premiums collected during a particular period of time.

Back 3

Loss Ratios

Front 4

_________ are set by the insurer at a level sufficient to pay claims and company expenses.

Back 4

Rates

Front 5

What are the six different types of ratings?

Back 5

-Judgment Rating

-Manual Rating

-Merit Rating

-Retrospective Rating

-Experience Rating

-Loss Cost Rating

Front 6

The underwriter determines the individual rate using their intuition and experience instead of a rating manual.

Back 6

Judgement Rating

Front 7

The underwriter simply refers to rates as published in the insurer's rating manual, which have been developed by actuaries based on the law of large numbers.

Back 7

Manual Rating

Front 8

The underwriter starts with "manual" rate, which is then modified, based on past loss experience or other factors unique to the risk involved. Lower premiums are given to those clients who have fewer prior losses.

Back 8

Merit Rating

Front 9

A rating plan, subject to minimum and maximum premiums, where the final premium is not determined until the end of the policy period and is based on the insured's own prior loss experience. Often used in connection with Workers' Comp and Commercial General Liability insurance policies.

Back 9

Retrospective Rating

Front 10

Often used to calculate premiums on large group life or health insurance policies, this is a form of merit rating that modifies the manual premium based on the insured's own loss experience.

Back 10

Experience Rating

Front 11

Often used by insurers who utilize rating plans developed by the ISO (Insurance Services Office), who publishes rates based only on expected losses, leaving insurers free to add in their own factors relating to expenses and profit.

Back 11

Loss Cost Rating

Front 12

Failure to act as a reasonable person

Back 12

Negligence

Front 13

What are the three types of damages?

Back 13

Special, General, Punitive

Front 14

What type of damage is not covered by insurance?

Back 14

Punitive

Front 15

What is an Open Peril Policy

Back 15

Its an all risk policy

Example: HO-3 and HO-5

You will find it on the exclusions page

Front 16

Named perils or also know as specified peril policies. What page will you find what is covered?

Back 16

On the inuring agreement page.

Front 17

A ________ loss is one that happens suddenly due to a covered peril, such as a fire, lightening, wind, hail, etc.

Back 17

Direct

Front 18

An __________ loss is a loss that occurs as a consequence of the direct loss (also known as a consequential loss).

Back 18

Indirect loss

Front 19

Most property policies either provide some indirect coverage automatically or they can be purchased as an optional coverage, such as _______ ________ _______ on a Commercial Package Policy.

Back 19

Business Income Insurance

Front 20

___________ __________ insurance provides a single amount of insurance that may apply to different types of property or to different locations.

Back 20

Blanket Property

Front 21

Specific property insurance provides a specific amount of insurance for specific types of property at a specific location.

Back 21

Specific Coverage

Front 22

Property insurance rates are calculated per $100 of coverage based upon the fire protection class of the area where the property is located and the type of construction.

Back 22

Basic Type of Construction

Front 23

Real property may be constructed as frame (wood), masonry (brick) or block. In some areas, frame construction is now commonly steel and concrete, which is known as "_______________"

Back 23

Fire Resistive

Front 24

Actual Cash Value (ACV) is determined by finding the replacement cost of the property at today's prices (not counting the land) and subtracting out any depreciation, which is based upon the age of the property.

Back 24

Loss Valuation Techniques

Front 25

What is the formula for determining the ACV

Back 25

Replacement Cost (RC) minus Depreciation = ACV

Front 26

What all is in the policy structure?

Back 26

-Declarations.

-Definitions.

-Insuring Agreement or Clause.

-Additional/Supplementary Coverage.

-Conditions.

-Exclusions.

-Endorsements.

Front 27

Where would you find who is covered as an insured on the policy?

Back 27

On the definitions page

Front 28

While personal Auto policies usually have a policy of just ______ months.

Back 28

Six

Front 29

Most property policies are written for a period of _________ __________?

Back 29

One year

Front 30

Under the _____________ clause, the insurer is permitted to change the terms of the contract at any time as long as the change benefits the insured and no additional premium is charged.

Back 30

Liberalization