Property And Casualty Insurance Cram

Front 1

Peril:

Back 1

A cause of loss [md] for example, fire, collision, or flood.

Front 2

Hazard:

Back 2

Something that increases the chance of loss [md] for example, overloaded electrical outlets, worn brakes on a car, or building on a flood plain.

Front 3

Law of large numbers:

Back 3

Principle that helps insurers predict the number of losses that will occur and allows them to provide large amounts of insurance for relatively little money. It states that the more examples used to develop any statistic, the more reliable the statistic will be.

Front 4

Insurable risk:

Back 4

A risk must meet certain criteria to be a suitable subject for insurance. These criteria are: pure risk, definite as to time and place, not expected, large enough to create financial hardship for insured, affordable to insured, can be assigned a financial value, will not occur to large number of insureds at the same time, and large number of persons with similar potential loss.

Front 5

Indemnity:

Back 5

When a loss occurs an individual should be restored the approximate financial condition they were in before the loss no more and no less.

Front 6

Aleatory contract:

Back 6

Contract that is contingent on an uncertain event that provides for unequal transfer between the parties.

Front 7

Contract of adhesion:

Back 7

A contract in which only one party draws up the terms and the other party simply consents to them; ambiguities in the terms are interpreted by courts in favor of the party who did not write the terms.

Front 8

Unilateral contract:

Back 8

A contract in which only one party is legally bound to perform its part of the agreement.

Front 9

First named insured:

Back 9

Person whose name appears first in the declarations as an insured. Might be responsible for paying premiums, receiving cancellation notices, and agreeing to changes in the policy.

Front 10

Offer and acceptance:

Back 10

One party to a contract must make an offer, and the other party must accept it. With an insurance contract, the insured makes the offer by completing an application and the insurance company accepts the offer by issuing a policy.

Front 11

Consideration:

Back 11

A thing of value exchanged for the performance promised in the contract.

Front 12

Binder:

Back 12

Oral or written statement used to provide immediate insurance protection for a specified time period. Can be issued by the agent or the insurance company. Guarantees temporary coverage, but is not a guarantee that a policy will be issued.

Front 13

Material fact:

Back 13

A fact that would cause an insurer to decline a risk, charge a different premium, or change the provisions of a policy that was issued. The fact that an individual has caused three auto accidents in the past five years would be a material fact for a company issuing auto liability insurance

Front 14

Misrepresentation:

Back 14

Written or verbal misstatement of a material fact involved in the contract on which the insurer relies. Can be grounds for the insurer to void the policy. Might be intentional or unintentional.

Front 15

Fraud:

Back 15

A deliberate misrepresentation that causes harm. Unlike misrepresentation, which might be either intentional or unintentional, fraud is always intentional and involves an all-out effort by one party to deceive and cheat the other.

Front 16

Representations versus warranties:

Back 16

A representation is a statement in an application that the insured believes is true. A warranty is a specific agreement between the insured and insurer that certain conditions will be met. The key difference between the two is that a representation is not a part of the contract, but a warranty is. A policy cannot be voided on the basis of a representation, but it can be voided for breach of warranty.

Front 17

Waiver:

Back 17

Intentional relinquishment of a known right, such as not applying a policy condition that could be grounds to deny payment of a claim.

Front 18

Estoppel:

Back 18

Legal principle that prevents someone from asserting that something is not true after creating the impression that it is true. Under this principle, if a producer misinterprets a policy and tells an insured that a loss will be covered, the insurer cannot deny payment of the claim.

Front 19

Short rate versus pro rata cancellation:

Back 19

When an insurance policy is cancelled before its expiration date, any premium paid for insurance that will not be provided (unearned premium) must be returned to the insured. If the insured cancels the policy, the insurer is also allowed to keep a certain amount for expenses involved in issuing the policy (short rate cancellation). This is not permitted when the insurer cancels the policy (pro rata cancellation).

Front 20

Direct loss versus indirect loss:

Back 20

A direct loss is a financial loss resulting directly from a loss to property, such as tornado damage to a home. An indirect loss is a consequence of a direct loss, such as the expenses required to stay at a motel while tornado damage to a home is repaired.

Front 21

Actual cash value:

Back 21

Method of determining reimbursement for an insured loss; usually calculated by determining the property's replacement cost and subtracting an amount for depreciation. Depreciation is deducted because the insured has already had use of the property. Paying the full replacement cost would violate the principle of indemnity.

Front 22

Replacement cost:

Back 22

Losses may be reimbursed on a replacement cost basis, without deduction for depreciation, if the insured agrees to maintain insurance equal to a specified percentage of the property's value.

Front 23

Blanket insurance:

Back 23

Insurance that is written to cover more than one item of property at a single location or one or more items of property at multiple locations. Personal property coverage in Dwelling and homeowners policies is an example of blanket insurance.

Front 24

Valued policy:

Back 24

Certain hard-to-value items, such as art work, may be insured under a valued policy to avoid the difficulty involved in determining the property's value after it is damaged. The property is written for a specified amount that is used to value losses. Also called an agreed amount policy.

Front 25

Coinsurance:

Back 25

Policy condition that benefits insureds who insure property for its full value. If the insured maintains insurance equal to a specified percentage of the property's value, the insurer will fully reimburse losses (up to the policy limits). If the coinsurance requirement is not met, the amount paid for the loss will be reduced.

Front 26

Subrogation:

Back 26

The transfer of an insured's right to collect from a negligent third party to the insurance company. Under the subrogation condition, the insurance company will initially pay an insured's loss, and then attempt to recover that amount from the party who was responsible for the loss.

Front 27

Other insurance:

Back 27

Policy condition that stipulates how losses will be paid when more than one policy applies to a loss. If losses are paid on a primary/excess basis, the primary policy pays the entire loss (up to the policy limit) first, and the excess policy pays any amount not covered under the primary policy. When losses are paid on a pro rata basis, each policy pays a proportion of the loss based on the amount of coverage under its policy.

Front 28

Nonconcurrency:

Back 28

Occurs when property is insured by two or more policies that do not provide identical coverage. Nonconcurrency can result in coverage gaps or disputed claim payments.

Front 29

Negligence:

Back 29

Liability insurance policies cover certain losses arising out of an insured's negligence. Negligence is the lack of reasonable care that is required to protect others from the unreasonable chance of harm.

Front 30

Proximate cause:

Back 30

Action that establishes a link between a person's negligent actions and resulting damage to a third party.

Front 31

Intervening cause:

Back 31

A separate action that breaks the chain of causation between a person's negligent actions and resulting damage to a third party. The intervening cause then becomes the proximate cause of loss.

Front 32

Personal injury:

Back 32

In the insurance industry, this term does not have the same meaning as bodily injury. It refers to losses arising out of such things as slander, libel, and invasion of privacy.

Front 33

Absolute liability:

Back 33

Type of law imposed on those involved in activities considered especially hazardous, such as activities involving dangerous materials, hazardous operations, and dangerous animals. A person involved in these activities can be held liable for damages arising out of them, even though the individual was not negligent.

Front 34

Supplementary payments:

Back 34

Expenses included in a liability insurance policy that are paid in addition to the policy's regular limit of liability. Typically includes defense costs, claim investigation expenses, bond premiums, first aid expenses, expenses incurred by the insured at the insurer's request, loss of earnings, prejudgment interest, and postjudgment interest.

Front 35

Covered perils: (Dwelling and Homeowner Coverages)

Back 35

Dwelling forms can provide basic, broad, or special coverage. Homeowner forms can provide broad or special coverage for owner-occupied dwellings and broad form coverage for tenants or condominium unit owners.

Front 36

Removal coverage: (Dwelling and Homeowner Coverages)

Back 36

both cover property against loss from any peril while being removed from a premises endangered by a covered peril, and for a specified number of days while it is away from the premises.

Front 37

Debris removal: (Dwelling and Homeowner Coverages)

Back 37

both contain debris removal coverage, which pays for the expense of removing debris resulting from a covered loss.

Front 38

Temporary substitute auto:

Back 38

An auto the insured rents or borrows while the insured's damaged auto is out of service because of its breakdown, repair, servicing, loss, or destruction. In both personal and commercial auto policies, temporary substitute autos are considered covered autos for liability coverage.

Front 39

Collision:

Back 39

One of two physical damage coverage options in personal and commercial auto policies. Covers damage caused by the impact of the auto with another object or vehicle or by the upset of the vehicle.

Front 40

Nonowned auto:

Back 40

In the personal auto policy, it is any private passenger auto, pickup truck, trailer, or van not owned by or available for the regular use of the named insured or a family member. Under the policy's physical damage coverage (but not liability coverage), a temporary substitute auto is considered a nonowned auto instead of a covered auto.

Front 41

Transportation expenses:

Back 41

Physical damage coverage in personal and commercial auto policies that covers transportation expenses incurred because of physical damage losses to the covered auto and loss of use expenses for which the insured is legally responsible because of loss to a nonowned auto.

Front 42

Extended nonowned coverage:

Back 42

Personal auto policy endorsement that eliminates most policy exclusions applicable to autos that are furnished or available for the regular use of the named insured or family members

Front 43

Named nonowner coverage:

Back 43

Personal auto policy endorsement that provides extended coverage for the use of nonowned autos to individuals who do not own a car.

Front 44

Interline endorsements:

(Commercial Package policy)

Back 44

They may be used with more than one line of insurance. A single interline endorsement can be included in a package policy to modify several lines of insurance.

Front 45

Eligible occupancies:(Businessowners Policy)

Back 45

Generally, the business may not exceed 25,000 square feet of floor area or have more than $3 million in annual gross sales. For some types of risks, the building may not exceed a specified number of stories. Only certain wholesale, processing and service, restaurant, convenience store, and contract risks are eligible.

Front 46

Ineligible risks: (Businessowners Policy)

Back 46

The following risks cannot be covered under a Businessowners policy: auto repair or service stations; auto, motor home, mobile home, and motorcycle dealers; banks, credit unions, stockbrokers, and similar financial institutions; bars and pubs; buildings with a manufacturing occupancy; condominium associations other than office or residential condominiums; household personal property; business operations that involve manufacturing; one- or two-family dwellings; parking lots or garages; and places of amusement.

Front 47

Covered causes of loss: (Businessowners Policy)

Back 47

Businessowners property coverage is written on an open peril basis.

Front 48

Coverage extensions: Businessowners Policy)

Back 48

In the Businessowners policy, they include newly acquired or constructed property, property off premises, outdoor property, personal effects, valuable papers and records, and accounts receivable.

Front 49

Optional coverages:(Businessowners Policy)

Back 49

In the Businessowners policy, they apply only if designated in the declarations and usually require an additional premium. Optional coverages are available for employee dishonesty, mechanical breakdown, outdoor signs, and money and securities.

Front 50

Business personal property: (Commercial Property Insurance)

Back 50

Commercial property insurance can be written to cover business personal property, such as furniture, fixtures, machinery, and inventory.

Front 51

Personal property of others:
(Commercial Property Insurance)

Back 51

Commercial property insurance can be written to cover damage to personal property of others in the insured's care, custody, or control, regardless of whether the insured is legally liable for that loss.

Front 52

Agreed value:
(Commercial Property Insurance)

Back 52

Optional commercial property coverage that suspends the coinsurance requirement and stipulates a certain value for designated property. If the policy limit equals or exceeds this amount, the insured will not be assessed a coinsurance penalty.

Front 53

Business Income From Dependent Properties Form:
(Commercial Property Insurance)

Back 53

Commercial Property form designed for insureds whose business income is dependent on the ongoing operations of other businesses they do not own. This includes businesses that: deliver materials or services to the insured (contributing locations), are the primary purchasers of the insured's products or services (recipient locations), manufacture products for delivery to the insured's customers (manufacturing locations), or attract customers to the insured's business (leader locations).

Front 54

Additional coverages:
(Commercial Property Insurance)

Back 54

The Commercial Property Building and Personal Property coverage form includes the following additional coverages: debris removal, preservation of property, fire department service charge, pollutant cleanup and removal, increased cost of construction, and electronic data.

Front 55

Coverage extensions:
(Commercial Property Insurance)

Back 55

The commercial property building and personal property coverage form includes the following coverage extensions, which apply only if the insured has agreed to meet an 80% or higher coinsurance requirement or has purchased a reporting form: newly acquired or constructed property, personal effects and property of others, valuable papers and records [md] other than electronic data, property off premises, outdoor property, and nonowned detached trailers.

Front 56

Optional coverages:
(Commercial Property Insurance)

Back 56

The commercial property building and personal property coverage form includes the following optional coverages, which apply only if designated in the declarations and require an additional premium: agreed value coverage, inflation guard coverage, and replacement cost coverage.

Front 57

Business personal property:

Back 57

Commercial property insurance can be written to cover business personal property, such as furniture, fixtures, machinery, and inventory.

Front 58

Personal property of others:

Back 58

Commercial property insurance can be written to cover damage to personal property of others in the insured's care, custody, or control, regardless of whether the insured is legally liable for that loss.

Front 59

Agreed value:

Back 59

Optional commercial property coverage that suspends the coinsurance requirement and stipulates a certain value for designated property. If the policy limit equals or exceeds this amount, the insured will not be assessed a coinsurance penalty.

Front 60

Business Income From Dependent Properties Form:

Back 60

Commercial Property form designed for insureds whose business income is dependent on the ongoing operations of other businesses they do not own. This includes businesses that: deliver materials or services to the insured (contributing locations), are the primary purchasers of the insured's products or services (recipient locations), manufacture products for delivery to the insured's customers (manufacturing locations), or attract customers to the insured's business (leader locations).

Front 61

Additional coverages:
(Commercial Property Insurance)

Back 61

The Commercial Property Building and Personal Property coverage form includes the following additional coverages: debris removal, preservation of property, fire department service charge, pollutant cleanup and removal, increased cost of construction, and electronic data.

Front 62

Coverage extensions:
(Commercial Property Insurance)

Back 62

The commercial property building and personal property coverage form includes the following coverage extensions, which apply only if the insured has agreed to meet an 80% or higher coinsurance requirement or has purchased a reporting form: newly acquired or constructed property, personal effects and property of others, valuable papers and records [md] other than electronic data, property off premises, outdoor property, and nonowned detached trailers.

Front 63

Optional coverages:
(Commercial Property Insurance)

Back 63

The commercial property building and personal property coverage form includes the following optional coverages, which apply only if designated in the declarations and require an additional premium: agreed value coverage, inflation guard coverage, and replacement cost coverage.

Front 64

Personal and advertising injury:
(Commercial General Liability Insurance)

Back 64

In the Commercial General Liability (CGL) forms, this is injury that results from false arrest or imprisonment, malicious prosecution, wrongful eviction or entry, slander, libel, violation of personal privacy, use of another's advertising idea, or copyright infringement.

Front 65

Occurrence versus claims made forms:
(Commercial General Liability Insurance)

Back 65

CGL coverage can be written on an occurrence or claims-made basis. The major difference between occurrence and claims-made forms is how coverage under the form is activated, or triggered. An occurrence form covers bodily injury (BI) or property damage (PD) that occurs during the policy period, regardless of when the claim is made. A claims-made form pays for BI or PD losses for which a claim was first made against the insured during the policy period.

Front 66

Supplementary payments:
(Commercial General Liability Insurance)

Back 66

The following supplementary payments are available under Coverage A and Coverage B of the CGL: expenses incurred by the insurance company; up to $250 for the cost of bail bonds; cost of bonds to release attachments; reasonable expenses incurred by insured to assist in investigation and defense of a claim, including up to $250 per day for loss of earnings; all costs taxed against the insured in a suit; prejudgment and postjudgment interest; and defense costs for an indemnitee.

Front 67

General aggregate limit:
(Commercial General Liability Insurance)

Back 67

Total limit of insurance coverage that will be paid in one policy for all coverages except the products-completed operations hazard.

Front 68

Medical expense limit:
(Commercial General Liability Insurance)

Back 68

Separate sublimit in the CGL for Coverage C [md] Medical Payments coverage. It is subject to both the per occurrence and the general aggregate limit.

Front 69

Loss sustained versus discovery forms:
(Commercial Crime Insurance)

Back 69

Commercial Crime coverage is written on a loss sustained or discovery basis. The major difference between the forms is how coverage under the form is activated. Coverage under a loss sustained form is triggered by a loss sustained during the policy period, but not necessarily discovered during the policy period. Coverage under the discovery form is triggered by a loss discovered during the policy period, but not necessarily sustained during the policy period.

Front 70

Common law defenses:
(Workers Compensation)

Back 70

Assumption of risk, contributory negligence, and the fellow servant rule.

Front 71

Compulsory compensation laws:
(Workers Compensation)

Back 71

A type of state workers compensation law requiring each employer to accept and comply with all the law's provisions. Most state workers compensation laws are compulsory.

Front 72

Elective compensation laws:
(Workers Compensation)

Back 72

A type of state workers compensation law under which employers have the option to accept or reject the law's provisions. If rejected, the employer cannot use the three common law defenses.

Front 73

Exclusive remedy:
(Workers Compensation)

Back 73

The benefits stipulated in workers compensation laws are the only means available to employees against employers for injuries covered by those laws. Employees cannot sue their employers in court to obtain additional compensation.

Front 74

Expediting expenses:

Back 74

Coverage under the Equipment Breakdown Protection coverage form that pays extra costs necessarily incurred by the insured to make temporary repairs and expedite permanent repairs or replacement of the damaged property.

Front 75

Errors and omissions insurance:

Back 75

Type of professional liability insurance written for nonmedical professionals, such as insurance agents, accountants, architects, stockbrokers, and attorneys.

Front 76

Difference in conditions insurance:

Back 76

Type of Commercial Property policy that covers most insurable perils but excludes basic fire and extended coverage perils. It is usually written on large risks with a high deductible.

Front 77

Surplus lines:

Back 77

Term used to describe highly specialized insurance coverages that are not available or cannot be procured from authorized insurers within a state.

Front 78

Risk

Back 78

The chance or uncertainty of loss.

Front 79

Hold Harmless Agreement

Back 79

shifts liability from an owner or contractor to a tenant or subcontractor.

Front 80

Insurance

Back 80

a contract or device for transferring risk from a person, business, or organization to an insurance company that agrees in exchange for a premium to pay for losses through an accumulation of premiums.

Front 81

Speculative Risk

Back 81

risks in which there exist both the possibility of gain and of loss.

Front 82

Pure Risk

Back 82

involve only the possibility of loss.

Front 83

Physical Hazard

Back 83

arises from the condition, occupancy, or use of the property itself.

Front 84

Morale Hazard

Back 84

through carelessness or by irresponsible actions can increase the possibility for a loss.

Front 85

Moral Hazrad

Back 85

When a loss or situation is created on purpose to collect from the insurance company.

Front 86

Contract

Back 86

legal agreement between two competent parties that promises certain performance in exchange for certain consideration.

Front 87

Contract Characteristics

Back 87

Competent Parties, Legal Purpose, and Offer and Acceptance(agreement)

Front 88

Contract of Utmost Good Faith

Back 88

Company relies on the truthfulness and integrity of the applicant. In return the insured relies on the companies promise and ability to provide coverage and pay claims.

Front 89

Conditional

Back 89

The Insured must notify the insurer about the loss. While the insurer must use the valuation method specified in the contract to settle the loss.

Front 90

Decleration

Back 90

Usually on the first page, contains information like the names of the insured their address, the amount of the coverage, descriptions of the property or item being insured, and the cost of the policy.

Front 91

Insurance Agreement

Back 91

States in general what is to be covered, the losses for which the insured will be indemnified, the type of property covered and the perils against which it is insured.

Front 92

Conditions

Back 92

Describe the responsibilities and obligations of both the insurer and the insured.

Front 93

Exclusion

Back 93

The losses for which the insured is not covered.

Front 94

Definitions

Back 94

Clarifies the meaning of certain terms used in the policy.

Front 95

Endorsements

Back 95

Modifications or changes to the original policy.

Front 96

Stock Companies

Back 96

Stockholders receive the profits.

Front 97

Mutual Companies

Back 97

The insured's are also members of the company. They can vote to elect the management and receive the profits in in forms of dividends or reductions in future premiums.

Front 98

Advance Premium Companies

Back 98

Charge non assessable premiums and are required to set money aside in case their claims experience is higher then expected.

Front 99

Assessment Companies

Back 99

Charge members a pro rata share of losses at the end of each policy period.

Front 100

Reciprocal Companies

Back 100

Members share the insurance responsibilities with all the other members. Managed by an Attorney in Fact who handles the business of the reciprocal.

Front 101

Lloyd's Assosiation

Back 101

A voluntary association of individuals, or groups of individuals who agree to share in insurance contracts. Each individual or syndicate is individually responsible for the amount of insurance they write.

Front 102

Fraternal Benefit Society

Back 102

an incorporated society without capital stock, operated on the lodge system and conducted solely for the benefit of is members.

Front 103

Risk Retention Groups

Back 103

Group self insurance program formed by product manufactures to insure against product liability.

Front 104

Purchasing Groups

Back 104

Used to purchase liability insurance on a group bassis.

Front 105

Liability Risk Retention Act

Back 105

Amended in 1986

Front 106

Self Insuarnace

Back 106

part of all the risk comes back.

Front 107

Lines of insurance

Back 107

Property, Casualty, Life, Health and Disability

Front 108

Property Insurance

Back 108

Dwelling, Homeowners, Commercial Property, Inland Marine, Ocean Marine, and Crime.

Front 109

Casualty Insurance

Back 109

Liability, Aviation, Auto, Workers Comp, and Surety Bonds.

Front 110

Life Insurance

Back 110

Designed to handle the risk of premature death or the risk that an individual may outlive their financial resources.

Front 111

Health and Disability Insurance

Back 111

Handles the risk of medical bills and loss of income resulting from injury or sickness.

Front 112

Agent

Back 112

Represents the insurance company, is the link between the company and the insured. Sells insurance, issues and counter signs policies, collects premiums.

Front 113

Countersign

Back 113

The agent signs each new policy prepared by the company before delivering it to the insured.

Front 114

Field Uderwriting

Back 114

Using pre established criteria to seek out the type of business that is likely to be acceptable to the company.

Front 115

Application

Back 115

The insured's offer.

Front 116

Suspense (Diary System)

Back 116

A way to keep track of when a policy will need to be renewed.

Front 117

Service Needs

Back 117

Name changes, change in method of payment, and accurate record of such changes must be documented.

Front 118

Agency Relationship

Back 118

When one party (the agent) is authorized to act on behalf of another (the principal).

Front 119

Express Authority

Back 119

The authority specifically given to an agent, either orally or written by the principal.

Front 120

Implied Authority

Back 120

Authority given by the insurance company to the agent that is not formally expressed.

Front 121

Apparent Authority

Back 121

A doctrine that holds that an agent may have whatever authority a reasonable person would assume that they have.

Front 122

Solicitor

Back 122

Can sell insurance collect premiums but cannot issue or counter sign policies.

Front 123

Broker

Back 123

Represents the insured. Cannot bind an insurer to an insurance contract.

Front 124

Producer

Back 124

General term used to describe someone who sells insurance such as an agent broker or solicitor.

Front 125

Consultant

Back 125

Does NOT sell insurance sells advice on insurance.

Front 126

Earned Premium

Back 126

The premium the company actually earned by providing insurance protection for the designated period.

Front 127

Incurred Loss

Back 127

Include amount paid on claims for covered losses and various expenses related to handling claims.

Front 128

Underwriting Expenses

Back 128

The costs required to acquire and maintain a book.

Front 129

Written Premium

Back 129

The gross amount of premium income on the companies book.

Front 130

Combined Ratio

Back 130

Loss Ratio + Expense Ratio

Front 131

Underwriting

Back 131

the process of selecting certain types of risks and rejecting others so the company can have the book that it wants.

Front 132

Reinsurance

Back 132

When insurance companies purchase insurance to cover their own exposure and loss.

Front 133

State Insurance Department Area of Responsibilities

Back 133

Companies, Agents, Ratification, and Enforcement

Front 134

Admitted (Authorized) Insurance Companies

Back 134

Meets the states standards and is allowed in the state.

Front 135

Non Admitted (Unauthorized) Insurance Company

Back 135

May only do business in the state under special circumstances.

Front 136

Insolvent

Back 136

When an insure does not have the funds to meet all of the financial obligations it is contracted to meet.

Front 137

Insurance guarantee Association

Back 137

Provides funds for payment of unpaid claims when an insurer becomes insolvent.

Front 138

Fiduciary

Back 138

A person who stands in a special relationship of trust to another person.

Front 139

Twisting

Back 139

A form of misrepresentation in which the agent convinces the client to cancel already existing insurance and buy another policy from the agent.

Front 140

Rebating

Back 140

Giving or offering benefits other then those specified in the policy, such as cash, gifts or securities to induce a customer to buy insurance.

Front 141

Unfair Discrimination

Back 141

Giving a lower or higher rate then another insured in identical circumstances.

Front 142

Ratification

Back 142

the approval by state insurance department of the policy forms, endorsements, and rates used by companies in their state.

Front 143

Prior Approval

Back 143

Companies must obtain official approval before using new forms and rates.

Front 144

File and Use

Back 144

Companies may use forms and rates as soon as they are filed. But after states review they can still be rejected.

Front 145

Open Competition

Back 145

Companies compete openly with forms and rates as long as they meet adequacy and nondiscrimination requirements.

Front 146

Rates

Back 146

The basic charges an insurance company sets for various types of insurance.

Front 147

Adverse Selection

Back 147

The tendency for people with a greater then average exposure to loss to purchase insurance.

Front 148

Class 1 Frame

Back 148

Structures have outside support

Front 149

Class 2 Frame

Back 149

Joisted Masonry

Front 150

Class 3 Frame

Back 150

Non Combustible

Front 151

Class 4 Frame

Back 151

Masonry Non Combustible

Front 152

Class 5 Frame

Back 152

Modified Fire Resistive

Front 153

Class 6 Frame

Back 153

Fire Resistive

Front 154

Judgment Rating

Back 154

Considers the individual risk.

Front 155

Manuel Rating

Back 155

Rate per unit * # of units = premium

Front 156

Merit Rating

Back 156

Starts with manual rating and are then modified to reflect unique characteristics of the risk that are not reflected in the manual rate.

Front 157

Experience Rating

Back 157

Modifies the manual premium on the basis of the insureds loss experience.

Front 158

Retrospective Rating

Back 158

Bases the insured's premium on losses incurred during the policy period.

Front 159

Schedule Rating

Back 159

Applies a system of debits or credits to reflect characteristics of a particular insured.

Front 160

Certificate of Insurance

Back 160

proof that the policy has been written.

Front 161

Concealment

Back 161

Withholding rather then misstating a material fact.

Front 162

Representations

Back 162

Statements that the applicant believes to be true.

Front 163

Short Rate Basis

Back 163

The company keeps the premium for services already provided and an allowance for expenses.

Front 164

Pro Rata Basis

Back 164

The company retains only the earned premium.

Front 165

Flat Cancellation

Back 165

When a policy is cancelled on its effective date.

Front 166

Specific Insurance

Back 166

Designates a particular item to be insured.

Front 167

Blanket Insurance

Back 167

Coverage may mean that the insured's covered property is insured at any location rather then only at a particular location.

Front 168

Policy Period

Back 168

Specific date, time, and in what time zone coverage begins and ends in.

Front 169

Policy Limit (Limit of Coverage)

Back 169

Represents the maximum amount the insurance company will pay for loss.

Front 170

Valued (Agreed) Amount Contract

Back 170

Written for a specified amount.

Front 171

Direct Loss

Back 171

Resulting directly from a loss to property.

Front 172

Indirect Loss (Consequential Loss)

Back 172

Comes as a result of the original loss.

Front 173

Concurrent Causation

Back 173

Two or more perils act concurrently to cause a loss.

Front 174

Limitaions

Back 174

Eliminate or reduce coverage but only under certain circumstances or when specific conditions apply.

Front 175

Loss Provisions

Back 175

Conditions that specify what the insured and insurer must do when a loss occurs.

Front 176

Duties Following a Loss

Back 176

Prompt Notice of Claim

Protecting the Property From Further Damage

Detailed Proof of Loss

Making the property Available for Inspection

Submiting to an Examination Under Oath

Assisting the Insurer

Front 177

Salvage

Back 177

Insurance company can take possession of damaged property after payment of loss.

Front 178

Abandonment

Back 178

The Insured may NOT abandon property to the company and ask to be reimbursed for its full value.

Front 179

Subrogation

Back 179

Transfer of rights of recovery against others to use.

Front 180

Liberalization

Back 180

If the insurer broadens coverage under a policy form or endorsement without requiring an additional premium then all future policies or endorsements will contain broadened coverage.

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Assignment

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Policy may not be transferred to anyone else without the written consent of the insurer unless the named insured dies.

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No Benefit to Bailee

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The Bailee is not covered while in possession of the insured's property.

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Vacant

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No People No Property

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Unoccupied

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An absence of people.

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Non-Reporting

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A flat premium is charged every time the policy is renewed.

Front 186

Reporting

Back 186

Pays a deposit premium, submits reports, premiums are calculated based on the factors in the reports.

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Liability

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When a person is determined to have been responsible for loss to another person or to another persons property and is required to make financial restitutions.

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Surety Bonds

Back 188

emphasize that certain things will happen.

someone will faithfully perform whatever he agrees to do.

someone will make a payment as agreed upon by that person and another party.

Front 189

Contract Bonds

Back 189

Guarantees the fulfillment of contractual obligations.

Front 190

Bid Bonds

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Guarantee that if a contractors bid is accepted, the contractor will enter into a contract and provide the required Performance bond.

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Performance Bonds

Back 191

Guarantee that jobs will be completed by the contractor according to contract specifications.

Front 192

Payment Bonds

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Guarantees that bills for labor and materials will be paid by the contractor as they are due.

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Supply Bonds

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Guarantee that a supplier will furnish supplies products or equipment at an agreed upon price and time.

Front 194

Completion Bond

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Guarantee that when contractors borrow money to fund construction projects, the project will be carried out and the work will be delivered free and clear of liens and encumbrances.

Front 195

Judicial Bonds

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Guarantee that the principal will fulfill certain obligations set forth by law.

Front 196

Fiduciary Bonds

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Commonly used to bond guardians, administrators, trustees, and executors, all of whom are fiduciaries, or persons appointed by a court of law to manage the property of others.

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Court Bonds

Back 197

Are used to settle legal arguments that do not involve monetary damages. Their primary purpose is to protect obliges against loss in case principals are not able to prove that they are legally entitled to the legal remedy they sought against the oblige.

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Public Officials Bond

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Which are required by law guarantee that public officials will handle public money correctly and otherwise perform their duties faithfully and honestly.

Front 199

License and Permit Bonds

Back 199

Are sometimes required in connection with the issuance of license by government agencies. They guarantee that the person who posts the bond will comply with all the applicable laws pertaining to their activities.