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320 Cards in this Set

  • Front
  • Back
4 elements of a legal contract
Legal Purpose, Consideration,
Offer and Acceptance
Competent Parties
Contracts -

Adhesion
Prepapred with 1 party, little or no opportunity for bargaining by the other party. Insurance contract
Contracts -

Utmost Good Faith
Insurer relies on Insured's statements and insured relies on insurer's ability to fulfill its promises
Contracts -

Aleatory
Dependent on an uncertain event
Contracts -

Personal
Insures a Person
Contracts -

Indemnity
After a loss occurs, an individual is restored to the approximate financial condition she was in before the loss
Contracts -

Unilateral
One sided contract; only the insurance company is legally bound to perform under the contract
Contracts -

Conditional
Includes conditions that boith the insured and the insurer must comply with
Insurance Policy -

Declaration
The insured, What property or risk is covered, When and where coverage is effective, how much coverage applies
Insurance Policy -

Insuring Agreements
Describe what is covered and the preils the policy insures against
Insurance Policy -

Conditions
Rightsd and duties of the insured and the insurer under the policy
Insurance Policy -

Exclusions
Propert, perils, persons, or situations that are not covered by the policy
Insurance Policy -

Definitions
Clarify the meaning of certain terms used in the policy
Insurance Policy -

Endorsements
Documents attached to the policy that change the policy in some way
Risk
Chance of Loss
Insurance
Transferring the risk of loss
Peril
The cause of the loss
Hazard
Increases the chance of loss
Pure Risk
Involves only the possibility of loss
The Law of Large Numbers
The more examples used to develop a statistic, the more reliable the statistic will be
Insurable Interest
Exists when there is an actual economic interest in the safety or preservation of the subject from loss, impairment or destruction
Criteria a Risk must meet to be insurable
Any of the following; Insurable interest, Pure Risk, Loss is definite, loss is calcuable, insurance is affordable, large number with similar potential for loss, Loss can not happen to large number at the same time,
Reduction
Cabn reduce the severity but cannot prevent or reduce the number that occur
Avoidance
Avoids all risk by avoiding the risky circumstance
Retention
Insured (Non) retains the risk of loss
Peril
Cause of loss
Hazard
Increases the chance of loss
Mutual Insurance Company
Owned by the insured
Multi Line Company
Writes more than one line insurance
Personal
P&C that cover an individual or family
Casualty Insurance - Important Risk Covered
You will become liable for damage to others
Non Exclusive Agent
Represents more than one company
Solicitor
Limited authority, sells insurance and collects premiums. Cannot sign issue or countersign policies
Direct Writer System
Agents are employees - draw salary, commission, or both
Law of Agency
Agent represents the company
Broker reperesents the insured
Actuarial Department
Determines rate to be charged for insurance
Loss Control Department
Performs Inspections and Certifications
Audit Department
Examines financial and bookkeeping of insureds to detemine after the fact premiums
Marketing Department
Comapny's overall marketing startegy
Underwriting
Accepts or Rejects based on company standards
Claims
pays insureds covered losses
State Insurance Department
Responsible for licensing agents
Rebating
Offering a reduction of gift - illegal in most states
State Regulation Department -

Prior Approval
Offical approval before using new forms and rates
State Regulation Department -

File and Use
Use forms anbd rates as soon as they have been filed
State Regulation Department -

Use and File
Must file rates and forms within a time period after using them
State Regulation Department -

Open Competition
Compete openly with forms and rates selected by the company. Subject to adequacy and non-discrimination
Federal Government Insurance
Flood and Crop Insurance as examples
State Government Insurance
Unemployment or Workman's Comp Insurance as examples
Who Regulates Insurance?
State
Why Does State Regulate Insurance?
Preserve Solvency, detect financial problems, if insolvency occurs protect insured
Who Issues the Binder?
Agent or Insurance Company
Judgment Rating
Oldest form of rating, premium determined by considering individual risk.
Merit Rating
Experience Rating, Retrospective Rating, Schedule Rating
Misrepresentation
written or verbal
misstatement of a material fact. It may be
either intentional or unintentional.
Warranty
part of the policy. If it is breached, the insurer can void the policy.
Representations
statements that the
applicant believes are true o a
policy cannot be voided on the basis of a representation
Estoppel
This means the insurer can keep an allowance for expenses
How does an Underwriter evaluate a risk?
nspection services,
government bureaus, insurance industry bureaus, financial information services, previous insurers, and the company's own claim files.
FAIR Credit Report
Prenotification is required for investigative reports but not regular reports.
What is Adverse Selection?
High Risk. The tendency for people with a greaterthan-average exposure to loss to purchase
insurance
Retrospective Rating
Retrospective rating is a type
of merit rating that bases the insured's premium on losses incurred during the policy period.
Certificate of Insurance
general summary of the policy's coverage.
Fraud
always intentional and involves an all-out effect by one party to deceive and cheat the other.
Estoppel
egal principle that states that
if one intentionally or unintentionally creates the impression that a certain fact
exists, and an innocent party relies on that impression and is injured as a result, the
guilty party may be legally prohibited from asserting that the fact does not exist.
Nonrenewal
occurs when the insured
or the insurer decides to not continue coverage for another policy period after the current policy period expires.
Open Peril Policy
An open peril policy covers any
loss that is not specifically excluded by the policy.
Named Peril Policy
A named peril policy insures 8.
property against the perils specifically listed in the policy.
Named Insured
named insured is the person,
business, or other entity named in the declarations to whom the policy is issued.
First Named Insured
When there is more than one named insured listed on a policy, the policy may assign a higher level of duties or rights to the first named insured, the person listed first on the declarations page.
Additional Insured
In some circumstances, another individual or business may be listed on the declarations as an additional insured. An example is a mortgage company that has
an outstanding loan on the property.
Direct Loss
direct loss is financial loss resulting directly from a loss to property
Indirect Loss
comes as a result, or
consequence, of the original loss.
Subrogation
transfers the insured's right to collect from a responsible third party to the insurance company.
Assignment Condition
pecifies that a policy may not be transferred to anyone else without the written consent of the insurer, except in the event of the death of the named insured
Inurance Policy Conditions
conditions that specify what the insured and insurer
must do when a loss occurs.
Specific Coverage
property is specifically listed in the declarations and covered for a specific
amount.
Blanket Coverage
Blanket coverage insures more
than one item of property at a single location or one or more items of property at multiple locations.
Policy Period
Insurance policies specify the date and time, including where and in what time zone, coverage begins and ends.
Coinsurance Condition
requires an insured to carry a certain amount of insurance, which is expressed as a
percentage of the property's value.
Liability Loss
A liability loss occurs when a
person is responsible, or liable, for loss to another person or another person's
property and is required to make financial restitution.
Negligence
lack of reasonable care
that is required to protect others from the unreasonable chance of harm
Proximate Cause
Proximate cause is one of the elements required to establish a charge of negligence. It is an action that, in a natural
and continuous sequence, produces a loss.
Absolute Liability
Absolute liability is imposed by law on those participating in certain activities that
are considered to be especially hazardous.
Individuals involved in such activities may be held liable for the damages of another,
even though the individual was not negligent.
Vicarious Liability
liability that a person or business incurs because of the actions of others, such as family members or employees.
Third Party Losses
The insured is the first party. The insurance company representing the insured is the second party. The person
who sustained the injury or damage is the third party.
Liability Policies
agree to pay on behalf of the insured all sums for which the insured becomes legally liable to pay as damages because of bodily injury or property damage
Liability Policies - Supplementary Payments
Defense costs, postjudgrnent
interest, and premiums for certain types of bonds are examples of coverages that
are usually included as supplementary payments.
Aggregate Limit
limit that applies to all losses occurring within any one policy
period. An aggregate limit is not restored after payment of a loss.
Assumption of Risk
Person knowingly exposes himself to danger or injury.
Comparitive Negligence Law
A finding of liability may be made even when both parties have contributed to the loss,
with an award based on the extent of each party's negligence.
Special Damages
all direct and specific expenses involved in a particular loss, such as medical expenses, lost wages, funeral expenses, and the cost to repair or replace damaged property.
Dwelling Policy
The dwelling policy provides
more limited property coverage than the homeowners policy. The unendorsed dwelling policy provides property coverage
only,
Dwelling Policy Eligibility
To be eligible, a mobile
home must be permanently located. An apartment building may not contain more than four units.
Dwelling Policy Inclusions
A dwelling policy automatically includes coverage for the dwelling, other structures, personal
property, and fair rental value. Liability and medical payments coverage may be
added by endorsement.
Coverage C Exclusions
Animals, motor vehicles, and most types of boats are excluded under Coverage C.
DP-1 Automatic Coverage
The only perils that are
automatically covered under the DP-1 are fire, lightning, and internal explosion.
DP-1 Extended Coverage
Coverage for the extended
coverage perils and vandalism and malicious mischief is optional.
DP - 2
Automatically covers all of the
standard and optional perils available on the basic form: fire, lightning, the extended
coverage perils, and vandalism and malicious mischief.
DP - 3
Called the special form. It
provides named peril coverage for personal property and open peril coverage for the dwelling and other structures.
How are Losses paid on DP1, DP2, DP3?
The DP-2 and DP-3 pay losses to the dwelling and other structures on a
replacement cost basis. Under the DP-1, losses are paid on an actual cash value
basis.
Qualify for Replacement Cost Coverage
To qualify for replacement cost coverage, the insured must carry insurance equal
to 80% of the replacement cost of the building.
DP - 2, DP - 3, Coverage E
dditional living expense.
The DP-2 and DP-3 include Coverage E—
additional living expense. It pays for additional living expenses the insured
incurs after a covered loss, including reasonable motel, dining, laundry, and
transportation expenses. T
Dwelling Insurance - Glass Breakage
he glass or safety glazing material other coverage pays for breakage of glass or safety
glazing material and damage to covered property caused by glass breakage. It is included in the DP-2 and DP-3 but not the DP-1.
Dwelling Policy with Broad Theft
redit cards, motor vehicles and their equipment, and property in the custody of
a cleaner are all excluded under the broad theft coverage endorsement.
HO-5
The HO-5, the comprehensive form, provides open peril coverage for dwellings,
other structures, and personal property.
HO-4
The HO-4 is designed for tenants. It provides broad coverage for personal
property and no coverage for the dwelling.
HO-3
The HO.3 provides open peril coverage for the dwelling and named peril coverage for personal property. The HO-8 provides basic coverage for the dwelling and personal property. The HO-6 offers limited coverage for the dwelling and broad
coverage on personal property.
Unendorsed Homeowners Policy
Up to two boarders per family
are allowed if the home is also occupied by the insured. An endorsement is required to insure a mobile home under a
homeowners policy. The insured must live in the dwelling to qualify for homeowners coverage.
Homeowners Liability Coverage
The liability coverage is
identical in all of the homeowners forms. The property coverage varies with the homeowners form selected.
Perils Covered in All Homeowners forms
Fire, Theft, Volcanic Eruption, Smoke
Collapse Additional Coverage
HO-8
Special Limits under a Homeowners Policy
Animals, birds, fish, and
property of boarders are excluded. The items listed in the other answer choices are
covered with no special limits of liability.
Which classes have special limits for personal property - theft
Firearms, Silverware, Jewelry
Unendorsed Homeowners Policy - how are dwelling & structure losses paid?
eplacement cost. Losses to the
dwelling and other structures are paid on a
replacement cost basis.
All forms but HO-5
n all homeowners
forms except the HO-5, personal property
losses are paid at actual cash value. The
HO-5 provides replacement cost coverage
for personal property.
Medical Payments to Others
Injuries to the named insured
or regular residents other than resident employees are not covered.
Personal Liability Coverage
The insurance company will
provide a defense for the insured at the insurer's expense, even when the charges are groundless.
Homeowners Endorsement -

Business Pursuits
This endorsement provides liability coverage for a business
conducted away from the residence premises.
Homeowners Endorsement -

Personal Injury
This endorsement modifies
the definition of bodily injury to include personal injury.
Homeowners Endorsement -

Personal Property Replacement Cost
This endorsement adds replacement cost coverage for personal property.
Homeowners Endorsement -

Scheduled Personal Property
This endorsement provides open peril scheduled
coverage for nine optional classes of property.
HO-6 Coverage
In the HO-6, the accidental discharge or overflow of water or steam peril includes
coverage for the costs to tear out and replace any part of the building necessary to repair the system or appliance from which the water or steam escaped.
HO-8 Coverage
Accidental and sudden
discharge of water from a plumbing system is covered in all forms except the HO-8.
Coverage E of Homeowners Policy
The definition of bodily injury includes required care, loss of services, and death.
Coverage E Standard Liability Limit
$100,000
Coverage E of Homeowners Policy - Property Damage
The definition of property damage includes loss of use.
Section 2, Homeowners Policy Exclusion
Excluded because the damage
was expected or intended by the insured.
Excluded because the loss arose from the rendering of professional services.
Excluded because the injury
arose out of the ownership of aircraft.
Insurance Company Cancellation
The insurance company may cancel a policy for any reason with 10 days' written notice to the insured during the first 60 days of a policy term.
Personal Auto Policy -

Name 4 Coverages
Part A—liability coverage,
Part B—medical payments coverage,
Part C—uninsured motorists coverage, and
Part D—coverage for damage to your auto.
Parked Car Damage
Part D coverage for damage to your auto covers physical damage losses to the
insured's car.
Hit an Embankment
Part B—medical payments coverage provides protection for the named insured,
family members, and passengers in the
named insured's auto for injuries received in an accident, regardless of who was at fault.
Hit and Run Driver
A car operated by a hit-and-run driver
who cannot be identified is considered an uninsured motor vehicle.
Damage to the car from falling object/tree
Damage caused by a falling object and breakage of glass are considered other than collision losses under Part D of the personal auto policy.
Damage to the car from other driver running stop sign
This would be considered a collision loss 12. under Part D of the personal auto policy
because it involves the impact of an auto covered by the policy with another vehicle. Part A—liability coverage would not cover damage to the insured's own car.
Personal Auto Policy

What does Part A & B Cover?
Part A—liability coverage covers damages for bodily injury or property damage that
an insured becomes legally responsible for because of an auto accident. Injuries to
the named insured or the insured's family members would be covered under Part
B—medical payments coverage.
Personal Auto Policy

Medical Payments Coverage
Medical payments coverage provides protection for the named insured, family
members, and passengers in the named insured's auto for injuries received in an accident, regardless of who was at fault. It is not a form of liability coverage for injuries sustained by passengers in another auto involved in an accident with the insured
No Fault Insurance
Under a no-fault law, an insured driver is reimbursed by his own insurance company
for medical expenses and loss of wages arising out of an auto accident, regardless of
who was at fault for the accident.
Assigned Risk
Assigned risk plans insure motorists with poor driving records who are unacceptable
risks for most insurance companies.
Personal Auto Policy -

Family Member
The personal auto policy defines a family member as any person related to the named insured who is a resident of the insured's household
Part A -

Financial Responsibility
The financial responsibility
provision under Part A—liability coverage states that the insurance company can
certify the policy as proof of future financial responsibility.
Out of State Coverage
The out-of-state coverage provision would amend the policy to reflect the state's higher financial responsibility limit.
Part C limit of liability provision
states
that the insurer will not pay any part of a
loss that could be covered under a workers'
compensation law.
Nonowned Auto
Under physical damage
coverage, a temporary substitute auto is considered to be a nonowned auto instead
of a covered auto.
Loss Excluded under Part D
Damage due to freezing is
normally excluded under Part D. However, an exception is made when the damage results
from the total theft of the auto.
National Flood Deductible
The standard deductible is $500 under 8.the regular program and $1,000 under the
emergency program. Higher deductibles are available.
Which Flood Insurance has a Deductible?
Both coverages do.
Who administers the NFIP?
It is managed by the Federal
Insurance Administration.
Maximum Coverage under the Emergency Flood Insurance Program
additional coverage may be purchased: up to $250,000 for building coverage and up
to $100,000 for contents.
Earthquake Coverage
The dwelling and homeowners
policies do not cover the earthquake peril. This coverage is provided by adding
an endorsement to the dwelling or homeowners policy or buying a separate policy.
Mobile Home Polcies
Mobile home policies include
coverage for contents and additional living expenses.
Personal Inland Marine Policy

Personla Articles Form
The personal articles form provides scheduled coverage for nine optional classes of personal property: jewelry,
furs, cameras, musical instruments, silverware, golf equipment, fine arts, stamp collections, and coin collections
Personal Inland Marine Policy

Personal Property Form
provides open peril coverage for personal property.
Personal Inland Marine Policy

Personal Effects Form
covers an insured's
personal belongings, such as baggage, while traveling.
Large Boat Coverage
This
coverage can be provided through inland
marine forms, ocean marine policies, or specialized policies.
Typical Outboard Motor Boat Policy Coverage
This insurance is written to cover the
physical damage exposure of boats. It is
commonly provided under open peril inland marine floaters.
Under NFIP Policy what pays replacement cost?
Single-family dwellings (other than mobile homes) are the only buildings that may be insured on a replacement cost basis under a flood policy
NFIP Coverage Begins
nless an exception applies, coverage does
not take effect until after a waiting period of 30 days following the date of application.
Commercial Package Policy
Other types of coverage
besides property and liability may be included in a CPP. Ocean marine and aviation insurance are not eligible for the CPR
CPP Eligble Policies
Most commercial coverages are eligible for the CPP, with the exception of ocean marine, aviation, workers'
compensation, and businessowners coverages.
Common Policy Declarations
The common policy conditions are included in every CPP and every monoline policy issued using CPP forms.
Who may cancel a Commercial Package Policy?
First Named or Insurance Company
When can a transfer occur without written permission of the company
When the named insured dies, rights are transferred to the deceased's legal
representative while acting within this scope.
Largest Office Building eligible for a Businessowners policy?
Office buildings that are no more than 6 stories high and contain no more than
100,000 square feet are eligible for the
businessowners policy.
2 Major Property Coverages provided by Businessowners policy
The two primary coverages in the businessowners property section are buildings and business personal property.
Presertvation of Property Additional Coverage
Preservation of property additional coverage covers loss from any cause of loss to property that was removed from the insured location to protect it from damage by a covered peril. Coverage applies for up to 30 days after the property is first moved.
Standard Deductible for a Businessowners policy
The standard deductible is $500.
Optional Coverages for BOP
Optional coverages are usually preprinted
in the policy but apply only if they are
designated in the declarations.
Coverage included in BOP
The businessowners liability coverage
includes the following coverages: BI
liability, PD liability, personal and
advertising injury liability, and medical
expense.
Personal Property covered in BOP, Building Coverage
Property owned and used by the
insured in the business, such as photocopy
machines and furnishings in the insured's
private office, would be covered under
business personal property coverage.
Personal Property covered in BOP
Property owned and used by
the insured in the business and tenants'
improvements and betterments made
at the tenant's expense that cannot be
legally removed are covered under business
personal property coverage. Materials that
are on or within 100 feet of the premises
being used for alterations, such as the
cans of paint, are covered under building
coverage. Personal property used to
maintain or service the building, such as
the fire extinguishers in, are also covered
under building coverage.
Property Covered under BOP policy
The pollutant cleanup and
removal additional coverage pays the costs
to extract pollutants from the insured's
premises, not property belonging to others.
2 Conditions to be met for a loss to be covered under the utility services, direct damage endorsement
Two conditions must be met for a loss to be
covered under the utility services—direct
damage endorsement: the damaged
property must be scheduled for coverage
on the endorsement, and the service
interruption must be caused by a covered
cause of loss.
Components of a Commercial Property Coverage part
A commercial property coverage part
must include the following components:
common policy declarations, common
policy conditions, commercial property
declarations, commercial property
conditions, one or more commercial
property coverage forms, causes of loss
form, and any mandatory endorsements.
Commercial Property Coverage Form -

Builders Risk
The builders
risk coverage form covers buildings
under construction.
Commercial Property Coverage Form -

Legal Liability
covers the insured for liability arising
out of negligent damage to the property of
others in the care, custody, or control of
the insured.
Commercial Property Coverage Form -

Extra Expense
reimburses the insured
for extra expenses required to avoid a
suspension of business and continue
operations.
Commercial Property Coverage Form -

Building anad Personal Property
covers buildings, the
insured's business personal property, and
the personal property of others located
at the business premises.
Commercial Property Coverage Form -

Condominium Association
insures a
condominium 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 association while it is
located at the premises.
Commercial Property Coverage

Perils Covered in the Cause of Loss - Basic Form
Explosion and Smoke
Earthquake and Volcanic Eruption - Hours per Incident?
Under this endorsement, all earthquake
shocks or volcanic eruptions that occur
within any 168-hour period constitute a
single earthquake or volcanic eruption.
Which causes of loss form provides open peril coverage?
e basic and broad causes of loss forms
are named peril forms.
Loss caused by sprinkler leakage covered under which commercial property causes of loss form
Basic, Broad, Special
Loss caused by collapse covered under which commercial property causes of loss form
Broad and Special
Commercial Property Endorsement -

Value Reporting Endorsement
This
endorsement provides coverage based on
the actual values of property at certain
locations at specific times.
Commercial Property Endorsement -

Spoilage Endorsement
This endorsement
is used with the building and personal
property and condominium commercial
unit-owners coverage forms. It adds
coverage for the insured's perishable
stock—personal property that must be
maintained under controlled conditions to
protect it from loss or damage.
Commercial Property Endorsement -

Ordinance/Law Endorsement
coverage
for demolition costs and increased
construction costs required or regulated by
law or ordinance.
3 types of coverages provided by the Building and Personal Property Coverage
Under the building and personal property
coverage form, the insured may select
one or more of the following coverages:
building, business personal property, and
personal property of others.
Building and Personal Property Coverage -

Inventory
Inventory would be covered
under business personal property coverage.
Building and Personal Property Coverage -

New Building
The newly acquired or constructed property
coverage extension covers new buildings
that are being built on the described
premises and buildings the insured
acquires. The most that will be paid under
this coverage extension is $250,000 per
building.
Building and Personal Property Coverage -

Personal Effects Prop of Others
The personal effects and property of others
coverage extension is available even if
the insured has not purchased personal
property of others coverage, as long as the
coinsurance requirement is met.
Building and Personal Property Coverage -

Special Loss Valuation
Stock, glass, valuable papers
and records, and tenants' improvements
and betterments all have special valuation
requirements.
Building and Personal Property Coverage -

Vacant Building
Damage in a vacant building
due to sprinkler leakage is covered if the
system was protected against freezing.
Builder's Risk Coverage Form
The builders risk coverage form covers
the building under construction and its
foundation. Fixtures, machinery, equipment
used to service the building, and the
insured's building materials and supplies can
be covered if they will become a permanent
part of the building and are within 100 feet
of the building
Builders Risk Coverage Form -

Vacant Building
The builders risk coverage form does
not have a vacancy condition because
buildings under construction are not
considered vacant.
Definition of Business Income
definition of business income includes
net income that would have been earned
if the loss had not occurred and the cost of
continuing normal operations.
Business Income -

Extra Expense Coverage
The business income with extra expense
coverage form covers money spent to avoid
or minimize a business shutdown.
Perils Included in Cause of Loss - Broad Form
Collapse,
Weight of Ice, Snow, Sleet
Falling Objects
Water Damage
Ocean Marine Insurance -

Hull Insurance
ocean marine hull
insurance provides coverage for physical
damage to the ship.
Ocean Marine Insurance -

Protection and Indemnity Insurance
Ocean marine protection and indemnity
insurance covers a variety of types of
liability, such as damage to cargo through
negligence and damage to other property
or another boat resulting from collision.
Ocean Marine Insurance -

Cargo Insurance
Ocean marine cargo
insurance covers goods while they are in
transit over water.
Ocean Marine Insurance -

Freight Insurance
Ocean marine freight
insurance protects the insured against the
loss of shipping costs.
Ocean Marine Insurance -

Jettison
voluntary action to rid the ship
of cargo to prevent further peril. Jettison
is permitted if the action is taken to save
the remaining property. The loss incurred
by sacrificing a portion of the cargo will be
reimbursed.
Ocean Marine Insurance -

General Average Losses
A general
average loss is one in which a partial loss
resulting from a sacrifice of cargo to save
remaining property is shared by all other
property owners, including the owner of
the ship.
Ocean Marine Insurance -

Nationwide Definition
The nationwide definition was developed
to identify the kinds of risks that are
eligible for either ocean or inland marine
insurance.
Commercial Inland Marine Insurance -

Categories of Risk
Imports and
exports are covered under ocean marine
insurance. Personal property floater risks
are covered by personal inland marine
insurance.
Commercial Inland Marine Insurance -

Commercial Package Policy
Filed
classes of inland marine insurance can
be written under the commercial inland
marine coverage part of the commercial
package policy. They include the following
coverage forms: mail, physicians and
surgeons equipment, theatrical property,
film, commercial articles, accounts
receivable, valuable papers and records,
signs, jewelers block, floor plan, equipment
dealers, and camera and musical
instrument dealers.
Motor Truck Cargo Policy
This form protects the carrier, instead of
the shipper, for liability for loss to domestic
shipments in transit.
Bailee's Customer Policy Covers
A bailee's customer policy reimburses the
insured for damage to a customer's property
that is in his care, regardless of whether the
insured is liable for the damage, as long as
the damage resulted from a covered peril.
Breach of an Implied Warranty
Implied warranties
are an important concept in ocean marine
insurance. They are not written into the
policy but carry the same weight as those
that are written. Breach of an implied
warranty can void the contract. These
warranties include seaworthiness (i.e.,
the vessel must be fit for the voyage,
must not be overloaded, and must have a
competent crew), conditions of cargo (i.e.,
the cargo must be warranted to be sound
and packed properly), legality (i.e., the
trip must involve a lawful enterprise), and
no deviation in voyage (i.e., the ship must
follow an agreed route, with no changes in
destination and no untoward delays).
Forms included in Commercial Inland Marine Coverage Part
1. One or more of the 12 filed coverage forms,
2. Commercial Marine Conditions form
3. Commercial Marine Declarations form
4. Common Policy conditions and declarations
Commercial Inland Marine Insurance -

Proof of Loss
he commercial inland marine conditions
form states that the insured must send a
signed, sworn statement of loss within 60
days after the insurer requests it.
Commercial Inland Marine Insurance -

Pays with 2 insurances
he other insurance condition in the
commercial inland marine conditions
form states that if the insured has other
insurance that is written on the same basis
as the commercial inland marine form,
the commercial inland marine form pays
on a pro rata basis. If the other coverage is
not written on the same basis, commercial
inland marine coverage is excess over
any other insurance that applies to the
loss, regardless of whether the insured can
collect under the other insurance.
Commercial Inland Marine Insurance -

Mail Coverage
he mail coverage
form provides open-peril coverage against
loss to property in transit by registered mail,
first class mail, certified mail, or express
mail. Food stamps and money may be
covered when sent by registered mail.
Physicians and Surgeons Coverage Form
This form covers
medical and dental instruments on and
off the premises, furniture and fixtures
at the office and the insured's interest in
improvements and betterments. Radium is
not covered.
Physicians and Surgeons Coverage Form -

Coverage
he physicians and surgeons equipment
coverage form covers collapse of a building
or structure when it is caused by one of the
perils specified in the form and damage
caused by theft or attempted theft to the
building.
Theatrical Property Coverage Form
ehicles are covered if they are actually
used on the stage in the covered
production. Admission tickets are not
covered property. Loss by theft from an 23.
unlocked, unattended vehicle is excluded.
Film Coverage Form
The film coverage
form covers exposed motion picture film,
soundtracks, video tapes, and magnetic
tapes used in the production scheduled in
the declarations and that the insured owns
or has in his custody or control. It does not
cover cut-outs, unused footage, positive
prints or films, or library stock.
Account Receivable Coverage Form
he accounts receivable coverage form
covers loss of records when removed
from the premises to protect them from
imminent loss. Removal coverage applies
only if the insured gives written notice of
the removal within 10 days.
Sign Coverage Form
Loss caused by
artificially generated current that creates a
short circuit or other electrical disturbance
within a covered item is not covered.
Jewelers Block Coverage -

Stock in Trade
A jeweler's stock in trade is not covered
while it is in transit by mail unless it is sent
by registered mail. Such property is also
not covered while being worn by a family
member or at an exhibition promoted or
financially assisted by a trade association.
Jewelers Block Coverage -

Coverage for Loss
he show windows
optional coverage covers theft of stock from
a show window when the window is cut or
smashed. Money coverage covers theft of
money from locked safes or vaults on the
insured's premises. Theft from any vehicle
is excluded unless the insured, an employee,
or other person whose only duty is to attend
the vehicle is actually in or on the vehicle
when the theft occurs.
Jewelers Block Coverage -

Insured's Requirements
e jewelers block coverage form requires
the insured to take a physical inventory at
least once every 12 months and maintain
detailed records of inventory, purchases,
sales, property of others, and property off
premises. These records must be retained
for three years after the policy ends.
Jewelers Block Coverage -

Floor Plan Coverage Form
Coverage under the floor plan form is
written on a reporting basis. The insured
must file reports of values within 30 days
after the end of each month.
Equipmenet Dealers Coverage Form -

Businesses Insured
The equipment dealers
coverage form covers mobile equipment
and construction equipment dealers. It
covers the insured's stock in trade as well
as customer property in the insured's care,
custody, or control. Watercraft is not
covered under the form.
Camera and Musical Instrruments Coverage Form

Covered Losses
This form excludes loss arising out of
artificially generated current that creates a
short circuit or other electrical disturbance
within an item covered under the policy.
Electronic Data Processing Equipment Floater
The electronic data
processing equipment floater provides
open-peril coverage for computer hardware,
software, and data that is owned by the
insured or in the insured's care, custody,
or control. Property in transit is covered.
Optional breakdown coverage insures
against damage to the equipment caused
by mechanical breakdown, electrical
disturbances, and temperature changes.
Installation Floater
An installation
policy covers loss to machinery, equipment,
building materials, and supplies in transit to
or being used with or during the course of
installation, testing, building, renovating,
or repair.
3 Business Liabilities that are covered under the Commercial General Liability Policy
The three major business liability
exposures that can be covered under
a commercial general liability policy
are premises and operations, productscompleted
operations, and indirect/
contingent.
Cover under an occurence is triggered on a CGL when -
With an occurrence policy, the policy that
was in effect at the time the loss occurred
will apply to the loss, even if the injured
party makes the claim years after the policy
expired.
True statements about 60 day basic extensded reporting period
When a claimsmade
policy is terminated, a 60-day basic
ERP automatically becomes available.
The insured does not have to apply for it,
and no premium is charged. It provides
automatic coverage for any valid claim
made during the 60 days after the policy
expires, as long as the incident occurred
between the expiring policy's retroactive
date and its expiration date.
Purpose of the retroactive date in a claims made form
The retroactive date provides some
protection against losses that occurred
before the claims-made form was written.
Cover under a claims-made is triggered on a CGL when -
Under the claims-made form, the policy
that was in effect when the claim is first
filed will apply to the loss, even if the loss
occurred before the policy was in effect.
CGL Coverage applies -

Coverage A
This coverage pays sums the
insured becomes legally obligated to pay
as damages because of bodily injury or
property damage to which the insurance
applies.
CGL Coverage applies -

Coverage B
This coverage applies to
offenses such as libel or slander.
CGL Coverage applies -

Coverage C
This coverage pays for
medical expenses incurred for bodily injury
caused by an accident on premises the
insured owns or rents.
CGL Coverage Exclusions -

Coverage A
Coverage A excludes
property damage to property owned by the
insured and property damage to property in
the care, custody or control of the insured.
Define cardiac output?

What does venous return mean?
Cardiac output (CO) - volume of blood ejected from one ventricle per minute

Venous return (VR) is the volume of blood returning to the RA from vena cava or to LA from pulmonary vein per minute
In the CGl, who is considered an insured?
In the CGL, who is considered an insured
under the policy depends on how the
named insured is designated in the CGL
declarations: as an individual, partnership
or joint venture, limited liability company,
or organization other than a partnership,
joint venture, or limited liability company.
2. B. With an occurrence policy, the policy that
was in effect at the time the loss occurred
will apply to the loss, even if the injured
party makes the claim years after the policy
expired.
2 Methods used to pay a loss when 2 insurance apply to the claim
Contribution by equal shares and
contribution by limits. Under contribution
by equal shares, all insurers contribute
equally up to the policy with the lowest
limit. At that point, the insurer with
the lowest limit stops paying since it has
already paid its policy's limit, and the other
insurers share the remainder of the loss.
This continues either until the loss is paid
in full or each company has paid its limit.
Contribution by equal shares applies when
all policies involved specify this method
of handling other insurance. If they don't,
contribution by limits applies. Under this
method, each company pays a proportion
of the loss equal to the proportion its policy
limits bear to the total amount of insurance
available.
Difference between pollution liabilty full and limited coverage?
The difference between the two pollution
liability coverage forms is that the pollution
liability coverage form covers clean-up costs
and the limited form does not.
Products Completed Operations Exposure
The products-completed operations hazard
includes all BI and PD occurring away
from the premises owned or rented by the
insured, and arising out of the insured's
product or work, other than products that
are still in the insured's physical possession
and work that has not yet been completed
or abandoned.
CGL Business Exclusions
usinesses face
a number of liability exposures, including
work-related injuries to employees,
pollution, contractual agreements in
which the insured assumes liability, and
ownership, maintenance, or use of autos,
watercraft, and aircraft. However, because
of the unique nature of these liability
exposures, they are either excluded outright
from the CGL policy or may be covered
only in certain circumstances or for limited
amounts. More complete protection for
these liability exposures is available under
contracts specifically designed to cover
them
60 Day Basic ERP
The 60-day basic ERP automatically
becomes available when a claims-made
policy is terminated. It provides automatic
coverage for any valid claim made during
the 60 days after the policy expires, as
long as the incident occurred between the
expiring policy's retroactive date and its
expiration date.
Mobile Equipment defined in a CGL
Bulldozer, Road Construction Grader. Both of these items
are specifically listed in the policy's
definition of mobile equipment. An
auto is a land motor vehicle, trailer, or
semitrailer designed for travel on public
roads, including any attached machinery or
equipment.
CGL Coverage for Breach of Contract
Losses arising out of breach of contract 30.
are not covered.
CGL Business Exclusions -

Coverage C
Coverage C
excludes injuries to the insured's employees
and injuries that occur while participating
in athletics.
Automatic Coverage under CGL
CGL forms
automatically cover newly formed or
acquired organizations as a named insured
under certain circumstances. However,
coverage is not automatically provided for
newly acquired or formed partnerships,
joint ventures or limited liability
companies.
CGL Policy Non Renewal
The nonrenewal condition
states that if the insurer decides to not
renew the CGL policy, it must mail or
deliver written notice of nonrenewal to the
first named insured at least 30 days before
the expiration date of the policy.
Commercial Auto Insurance -

Business Auto
The business
auto coverage form covers a business's
owned, nonowned and hired autos against
liability and physical damage losses
Commercial Auto Insurance -

Business Auto Physical Damage
covers a business's owned or hired
business autos for physical damage only.
Commercial Auto Insurance -

Garage
The garage coverage form is designed for
various types of vehicle dealers. It includes
coverage for liability arising out of auto and
garage operations, physical damage, and
garagekeepers' losses arising out of owned,
nonowned, and hired autos.
Commercial Auto Insurance -

Truckers
The truckers
coverage form is written specifically for
the trucking industry.
Commercial Auto Insurance -

Motor Carrier
The motor carrier
coverage form is an alternative to the
truckers coverage form. It can be used to
cover anyone who transports property by
auto in a commercial enterprise.
Commercial Endorsement to extend coverage to immediate family members
The individual named insured
endorsement provides coverage similar
to that provided under the personal auto
policy to family members of the named
insured while using any auto.
Medical Payments, Uninsured Motorists, Underinsured Motorists - CAI
These coverages are not included in any
of the commercial auto coverage forms.
They must be added to the policy by
endorsement.
Mobile Equipment Exception -
CAI
Mobile equipment is usually excluded
under the business auto coverage form.
However, an exception applies under
liability coverage when the mobile
equipment is being towed or carried by a
covered auto.
Buisness Auto Liability Coverage
his coverage
pays all sums an insured legally must pay
as a covered pollution cost or expense to
which the policy applies as long as certain
conditions are met.
Who is insured under BALC?
Named Insured, Other using auto with permission, others who become liable for the conduct of an insured.
Exclusins under BALC?
Liability assumed under a contract that i considered an insured contract, damage to the insured own auto, liability for property in the insureds custody
Is Theft paid for under BALC comprehensive coverage?
Yes
BALC Garage Policy
There are two covered
auto symbols that are unique to the garage
coverage form. Symbol 30 is used for
customers' autos left with the insured for
service, repair, storage, or safekeeping.
Symbol 31 is used for physical damage
coverage only for the dealers' autos.
Direct Damage Garagekeepers insurance
Direct damage garagekeepers insurance
covers physical damage to customers'
property that is in the insured's custody,
regardless of whether the insured is liable
for the damage.
BALC Truckers Coverage Form
The purpose of the truckers coverage form
is to provide coverage for businesses that set
themselves out for hire to haul the goods of
others.
BALC MCS-90 Endorsement
The MCS-90 endorsement adds coverage
for public liability for bodily injury, property
damage, and environmental restoration to
the commercial auto policy.
BALC Mobile Equipment Endorsement
The mobile equipment endorsement
changes the business auto coverage form
by allowing mobile equipment to be
considered a covered auto under the policy.
Commercial Coverage -

Robbery
crime forms, robbery is defined as the
unlawful taking of property from the care
and custody of another person. The robber
must have caused or threatened to cause
bodily harm to the person being robbed
or must have committed an obviously
unlawful act that is witnessed by the
person being robbed.
Commercial Coverage -

Definition of a burglary
Although burglary
is not specifically defined in the crime
forms, it still has a specific meaning in the
insurance industry. Burglary is the taking
of property from inside the premises by
a person unlawfully entering or leaving
the premises. There must be evidence
of forcible entry or exit, such as marks
made by tools, explosives, chemicals, or
electricity. There is no requirement that
the property be taken from a custodian or
watchperson.
Commercial Coverage -

Definition of Theft
Theft means the unlawful taking of money,
securities or other property. This broad
term includes burglary, safe burglary and
robbery.
Commercial Coverage -

Employee Theft
Employee Theft coverage pays for loss or
damage to money, securities and other
property.
Commercial Coverage -

Defense Costs
Under forgery or alteration coverage, if the
insured is sued for refusing to pay a forged
or altered instrument and obtains the
insurer's written permission to defend the
suit, the insurer will pay reasonable defense
costs incurred by the insured.
Commercial Coverage -

Who is a Custodian?
A custodian is
someone who has care or custody of
property inside the premises. It includes
the insured, the insured's partners or
members, or any employee. It does not
include a watchperson or janitor.
Commercial Coverage -

Crime Insurance Policy
Securities are instruments or contracts
that represent money or property. Checks,
drafts, bonds, certificates of deposit, stock
certificates, stamps, and credit card receipts
are all considered securities.
Commercial Coverage -

Computer Fraud Coverage
Computer fraud coverage covers loss of
or damage to money, securities, and other
property due to the use of a computer to
fraudulently transfer that property from
inside the premises or banking premises to
a place or person (other than a messenger)
outside the premises.
Commercial Coverage -

Proof of Loss
If a loss occurs, the insured must provide a
sworn proof of loss within 120 days.
Commercial Coverage -

Outside Coverage Territory
The coverage territory for the crime
policy includes the United States and its
territories and possessions, Puerto Rico, and
Canada. Under employee theft coverage,
losses that occur outside the coverage
territory are covered when the employee is
temporarily outside the territory for 90 days
or less.
Commercial Coverage -

Purpose of Fidelity Bond
The purpose of a Fidelity bond is to
guarantee an employee's honest discharge
of duty and protect the insured against
dishonest acts by employees.
Workers Compensation -

Prove Employer Liable?
No
Worker's Compensation -

Compensable Injury
Work-related injuries must arise out of
employment and during the course of
employment to be compensable. Time,
place, and circumstances are all considered
in making this determination.
Worker's Compensation -

Types of Benefits Paid
Workers'
compensation laws pay benefits in four
categories: disability/loss of income
benefits, medical benefits, survivor/death
benefits, and rehabilitation benefits. They
do not pay benefits for pain and suffering.
Worker's Compensation -

Part One
Workers' Compensation
pays all compensation and other benefits
required of the insured by the workers'
compensation law in the state or states
where the insured's business operates.
Worker's Compensation -

Part Two
Employers Liability covers
the insured for sums the insured becomes
legally obligated to pay under common
law because of a work-related injury or
occupational disease.
Worker's Compensation -

Part Three
Other
States may be used to provide coverage for
states that are not listed in the information
page for part one coverage.
Worker's Compensation -

Part Four
our Duties if Injury Occurs addresses
the insured's obligations when an injury
occurs for which there may be coverage.
Worker's Compensation -

Part Five
Premium explains how the cost
of the policy is determined
Worker's Compensation -

Part Six
Conditions sets forth the conditions that
apply to the policy, such as cancellation
procedures.
Worker's Compensation -

State Exemption
Every state has some exempt classifications,
but the majority of the nation's employees
are covered under workers' compensation
laws.
Commercial Insurance, Misc

Farm Coverage
armers' businesses and homes are often at
the same location, so they need insurance
that will cover both their personal and
business exposures to loss. The Farm
coverage part includes several Farm
Property coverage forms that cover both
the personal and business property of the
farmer and a Farm Liability coverage form
for the personal and business liability
exposures of the farmer.
Commercial Insurance, Misc

Farm Coverage, Types
he Farm coverage part includes both
Property and Liability coverage.
Commercial Insurance, Misc

Farm Coveage, Items
Buildings-Equipment-Livestock, Liability from farm operations, farm dwelling and personal property
Commercial Insurance, Misc

Equipment Breakdown Protection
One breakdown means that if an initial
breakdown causes other breakdowns, all
will be considered a single breakdown.
All breakdowns at any one premises that
manifest themselves at the same time and
are the direct result of the same cause will
be considered one breakdown.
Commercial Insurance, Misc

Equipment Breakdown Protection, Temp Repairs
is coverage extension covers the
reasonable cost of temporary repairs and
expedition (speeding up) of permanent
repairs
Commercial Insurance, Misc

Equipment Breakdown Protection, Not Covered
nder the Equipment Breakdown
Protection coverage form, breakdown
means the following types of direct
physical loss that cause damage to covered
equipment and necessitates its repair or
replacement: failure of pressure or vacuum
equipment, mechanical failure, including
rupture or bursting caused by centrifugal
force, and electrical failure, including
arcing. Choice B is specifically excluded
under this definition.
Commercial Insurance, Misc

Aviation Policy, Hull Damage
Hull coverage provides Physical Damage
coverage for the aircraft.
Commercial Insurance, Misc

Aviation Policy, Liability
viation Liability insurance covers various
liability exposures of owners of aircraft.
A business that wants coverage for its liability for employment-related acts can obtain it by purchasing
Commercial General Liability Insurance or Employment Practices Liability Insurance
Purpose of Difference in Conditions Insurance?
his coverage is provided by Employment
Practices Liability insurance. The purpose of Difference in Conditions
insurance is to cover most of the exclusions
in the Commercial Property coverage part.
Commercial insurance for more liability insurance
ommercial Umbrella policies provide
catastrophic Liability coverage for business
risks.
Dirrence in Conditions Insurance
Difference in
Conditions insurance is written to exclude
the basic fire and extended coverage perils
but include most other insurable perils
that are not covered under Commercial
Property coverage. Consequently, it is
written in conjunction with policies
providing the basic coverage excluded
by the DIC policy. DIC policies are
usually written on large risks with a high
deductible.
Difference between a Fidelity bond and a Surety bond?
Fidelity bond is essentially a guarantee
that certain acts on the part of the
employee will not be committed. Surety
bonds guarantee that certain things will
happen. In broad terms, Surety bonds
guarantee that someone will faithfully
perform whatever he agrees to do, or
someone will make a payment as agreed
upon by that person and another party.
What are the parties to a Surety bond
here are 3 parties to a Surety bond: the
principal, the obligee, and the surety.
Contract Bonds

Public Officail Bond
ublic official bonds
guarantee that public officials will handle
public money correctly and otherwise
perform their duties faithfully and honestly.
Contract Bonds

Court Bond
Fiduciary bonds and court bonds are
2 types of judicial bonds
Contract Bonds

Bid Bond
Contract bonds guarantee the fulfillment of
contractual obligations.
Contract Bonds

Supply Bond
Contract bonds guarantee the fulfillment of
contractual obligations.
Contract Bonds

License and Permit Bond
License and permit bonds are sometimes
required in connection with the issuance
of licenses by government agencies. They
guarantee that the person who posts the
bond will comply with all applicable laws
pertaining to their activities.
Contract Bonds

Completion Bond
Contract bonds guarantee the fulfillment of
contractual obligations.
Contract Bonds

Fiduciary Bond
Fiduciary bonds and court bonds are
2 types of judicial bonds.
Contract Bonds

Performance Bond
Contract bonds guarantee the fulfillment of
contractual obligations.
Contract Bonds

Payment Bond
Contract bonds guarantee the fulfillment of
contractual obligations.
What Type of items can be insured under the Farm Property Coverage
There are 2 types of property that can
be insured under the Farm Property
coverage forms or separately under their
own specialized coverage forms: mobile
agricultural machinery and equipment and
livestock.
Equipment Breakdown Coverage - What is Covered
Business income and/or extra expense
losses, expediting expenses, and spoilage
damage are all coverage options in the
Equipment Breakdown Protection coverage
form.
Aviation Policy

2 Coverages
Aviation policies typically include Liability
and Physical Damage coverage.
How do deductibles apply in the Equipment Breakdown Protection?
eductibles apply separately for each
applicable coverage unless the deductibles
are shown as combined for any two or more
coverages. Depending on the coverage,
the deductible may be expressed as a dollar
amount, a time limit, a percentage of loss,
or a multiple of daily value.
Equipment Breakdown Protection - Suspension Provision
he insurer may immediately suspend
coverage whenever covered equipment is
found to be in or exposed to a dangerous
condition. Suspension applies only to that
particular equipment and takes effect as
soon as written notice is delivered to the
insured.
What is covered with Aviation Physical Damage?
Aviation
Physical Damage insurance is similar to the
Comp and Collision coverages provided
by auto insurance. It covers the complete
aircraft, including its airframe, engines,
controls, and electronic navigation and
communications equipment. It does not
cover personal effects.
Purpose of Directors and Officers Liability Insurance
Directors and Officers Liability insurance
provides Liability coverage for directors and
officers of corporations who may be sued as
individuals by stockholders.
What general surety bond category guarantees
that the principal will fulfill certain obligations set
forth by law?
Judicial bonds. This category of surety
bonds guarantees that the principal will
fulfill certain obligations set forth by law.
Individuals who are entrusted with the care,
control, or management of others' property might
require what type of bond?
A Fiduciary bond. Fiduciary bonds are
commonly used to bond persons appointed
by a court of law to manage the property of
others.
The newly elected treasurer of a certain state must
post a bond to guarantee that she will handle
money correctly and perform her duties honestly.
What type of bond would she obtain?
A Public Official bond. Public Official
bonds guarantee that public officials
will handle public money correctly and
otherwise perform their duties faithfully
and honestly.