Cpcu 520 - Assignment 6

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Back 1

Legal liability is a civil obligation imposed by the law on a wrongdoer to financially compensate an injured party; such liability results from statutes, contracts, or torts

Front 2

Torts are wrongful acts, other than breach of contract, for which the remedy is monetary damages. Four classifications of torts are

Back 2

1.Intentional torts
2.Negligence
3.Strict liability
4.Vicarious liability

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Back 3

Auto insurance underwriters are affected not only by the legal and regulatory environment but also by the design of highways and automobiles, driver licensing requirements, vehicle inspection, and traffic density

Front 4

Ten specific factors considered when underwriting personal auto loss exposures

Back 4

(Memory Aid: MOST ACT ODD)
1.Marital status and gender
2.Occupation
3.Safety equipment
4.Type and age of auto
5.Auto use
6.Character traits
7.Territory
8.Operator's age
9.Driver's physical condition
10.Driving record

Front 5

Five categories of commercial general liability underwriting

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1.Personal injury and advertising injury loss exposures
2.Premises and operations liability
3.Premises medical payments loss exposure
4.Products and completed operations loss exposures
5.Contractual liability loss exposure

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Personal liability insurance coverage is included in every homeowner's policy and pertains to liability resulting from the premises, operations, and products of a family

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Personal activity loss exposures include all activities not expressly excluded and covers activities that may occur away from the premises

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Residence premises loss exposures include icy sidewalks and sliding glass doors; the applicant's attitude regarding the maintenance of the premises is a large underwriting factor

Front 9

Three types of professional liability insurance

Back 9

(Memory Aid: FED)
1.Fiduciary liability insurance
2.Employment practices liability insurance
3.Directors and officers liability insurance

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Back 10

Commercial and personal umbrella liability insurance policies are nonstandard policies that cover severe, infrequent losses; commercial policies usually require a retention of $10,000 while personal policies usually require a retention of $250.

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Excess policies differ from umbrella policies because excess policies increase the limit of underlying policies and do not broaden coverage

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Back 12

Workers' compensation is required in all states except Texas, South Carolina and New Jersey. Although benefits vary by state, the most common benefits include medical expenses, death benefits, disability income, and rehabilitation expense

Front 13

Ten workers' compensation underwriting considerations

Back 13

(Memory Aid: ROOMS)
1.Repetitive strain injuries (also called cumulative trauma disorders)
2.On-premises hazards
3.Off-premises hazards
4.Management capability and attitude
5.Subcontractors
6.Residual market
7.Occupational Safety and Health Act (OSHA)
8.Occupational disease
9.Maritime occupations
10.Seasonal and other temporary workers

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A premium audit is a careful review of the insured's records for the purpose of determining the actual exposure incurred for insurance already provided

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Attractive nuisance

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An enticing object that would lure a child onto the premises

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Breach of warranty

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Occurs when a product does not perform as expected

Front 17

Compensatory damages

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Damages awarded to compensate the plaintiff; always covered by liability insurance

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Completed operations loss exposure

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Loss exposure resulting from a company's finished product

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Hold-harmless agreement

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Agreement between two parties; first party holds the second party harmless

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Indemnitee

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The party in a hold-harmless agreement that is held harmelss by the other party

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Indemnitor

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The party in a hold-harmless agreement that holds the other party harmless

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Intentional torts

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Requires the intent of the tortfeasor to cause harm

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Invitee

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Individual who enters the property for the owner's financial benefit

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Liability insurance

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Insurance covering losses caused by property damage or bodily injury, for which the insured has legal liability and to which coverage applies

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Licensee

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Individual who enters property with permission

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Negilgence

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An unintentional tort involving failure of a person to exercise the care that a reasonably prudent person would have exercised under similar conditions to avoid harming another individual

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Negligent entrustment

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Closely related to vicarious liability and occurs when an individual negligently entrusts property to another; negligent entrustment claims are based on negligence

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Operations liability loss exposure

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Loss exposure resulting from either conducting business at a location other than the premises or from uncompleted work; also called operations in progress

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Premises liability loss exposure

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Loss exposure resulting from possessing or owning real property

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Premium audit

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A careful review of the insured's records for the purpose of determining the actual exposure incurred for insurance already provided

Front 31

Punitive damages

Back 31

Damages awarded to punish the defendant; coverage varies by state

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Strict liability (absolute liability)

Back 32

Liability that exists independently of an individual's negligence or intent

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Torts

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Wrongful acts, other than breach of contract, for which the remedy is monetary damages

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Trespasser

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Individual who enters property without permission

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Vicarious liability

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Liability that arises when one individual is held responsible for another individual's actions