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205 Cards in this Set
- Front
- Back
- 3rd side (hint)
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What is a Risk?
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The uncertainty as to the outcome of an event when there are two or more possibilities.
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Will I have a accident or not on my way to work today?
Will my good health continue? |
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Define Hazard?
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A condition that increases the probability of a loss occurring or has an effect on the extent or size of a loss.
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Bald tires on a car, slippery floors, unsanitary conditions, or icy roads are examples of..
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What is a Peril?
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The cause of a loss.
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fire, water, lightning, or theft for property insurance.
Insurance policies will contain the ? they insure by listing them by name or listing those ? that are not covered. |
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Economic Loss
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Any decrease in the value, quality, or quantity of assets.
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depending on the type of policy "loss" can result from death, bodily injury, property damage, stolen property, or an illness.
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Indemnity
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a basic insurance principle states an insured should not be allowed to profit from an insurance loss.
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Under this.an insurance policy is only required to return an insured to the same financial status that exited immediately prior to the loss. NO BETTER NO WORSE
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Insurable Interest
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any interest an insured as in any insurable asset such as a business, vehicle, or residence.
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For property and liability policies this must exist at the time of application.
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Deductible
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The amount of monetary loass an insred must pay before the policy will pay towards a loss.
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The method of self insuring a risk, the higher the ? the lower the premium.
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Direct Loss
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direct physical or financial loss to property or assets as a result of a covered peril.
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Collison damage to a car, fire damage to a home, or theft of property are examples of..
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Indirect Loss
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the consequence of a direct loss. Ex. The cost of a rental car as a result of a collision.
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the cost of temporary housing while your home is being repaired.
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Named Peril Policy
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name all the perils that are covered under that policy.
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If loss is caused by a peril not specifically listed in the policy, there is no coverage.
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All Risk Policy
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insures against all perils except for those specifically exculded under the policy.
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also known as "Special" policies-contain a longer list of exclusions than those under a named peril policy.
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Specific Coverage
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provides a specific amount of coverage for a specific property at a specified location.
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A valuable painting insured for 50,000.
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Blanket Coverage
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provides a single amount of insurance for property that would be difficult to list specifically.
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A homeowner's policy would insure personal property for 50,000. It would be difficult to list each item specifically, such as assisgning a value to each piece of clothing.
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Actual Cash Value
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Today's replacement cost- Depreciation
used to determine the amount an insured is entitled to after a loss to covered property. |
determines the value associated with the different aspects of a covered loss.
the insured will collect this minus their applicable deductiable. |
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Replacement Cost
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allows for full replacement cost without an adjustment for depreciation.
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no adjustment for depreciation
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What is a Risk?
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The uncertainty as to the outcome of an event when there are two or more possibilities.
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Will I have a accident or not on my way to work today?
Will my good health continue? |
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Define Hazard?
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A condition that increases the probability of a loss occurring or has an effect on the extent or size of a loss.
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Bald tires on a car, slippery floors, unsanitary conditions, or icy roads are examples of..
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What is a Peril?
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The cause of a loss.
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fire, water, lightning, or theft for property insurance.
Insurance policies will contain the ? they insure by listing them by name or listing those ? that are not covered. |
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Economic Loss
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Any decrease in the value, quality, or quantity of assets.
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depending on the type of policy "loss" can result from death, bodily injury, property damage, stolen property, or an illness.
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Indemnity
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a basic insurance principle states an insured should not be allowed to profit from an insurance loss.
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Under this an insurance policy is only required to return an insured to the same financial status that existed immediately prior to the loss. NO BETTER NO WORSE
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Insurable Interest
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any interest an insured has in any insurable asset such as a business, vehicle, or residence.
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For property and liability policies this must exist at the time of application.
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Deductible
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The amount of monetary loss an insured must pay before the policy will pay towards a loss.
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The method of self insuring a risk, the higher the ? the lower the premium.
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Direct Loss
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direct physical or financial loss to property or assets as a result of a covered peril.
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Collison damage to a car, fire damage to a home, or theft of property are examples of..
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Indirect Loss
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the consequence of a direct loss. Ex. The cost of a rental car as a result of a collision.
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the cost of temporary housing while your home is being repaired.
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Named Peril Policy
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name all the perils that are covered under that policy.
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If loss is caused by a peril not specifically listed in the policy, there is no coverage.
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All Risk Policy
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insures against all perils except for those specifically exculded under the policy.
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also known as "Special" policies-contain a longer list of exclusions than those under a named peril policy.
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Specific Coverage
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provides a specific amount of coverage for a specific property at a specified location.
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A valuable painting insured for 50,000.
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Blanket Coverage
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provides a single amount of insurance for property that would be difficult to list specifically.
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A homeowner's policy would insure personal property for 50,000. It would be difficult to list each item specifically, such as assisgning a value to each piece of clothing.
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Actual Cash Value
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Today's replacement cost- Depreciation
used to determine the amount an insured is entitled to after a loss to covered property. |
determines the value associated with the different aspects of a covered loss.
the insured will collect this minus their applicable deductiable. |
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Replacement Cost
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allows for full replacement cost without an adjustment for depreciation.
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no adjustment for depreciation
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Functional Replacement Cost
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In the Property Loss Valuation
used for items that are difficult or impossible to repair with like kind or quality parts. |
maybe associated with high end custom construction. Or antiques and other nonreplicable objects.
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Salvage Value
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In the Property Loss Valuation
dollar value of property which is deemed to be damaged for repair but may maintain some value as salvage. |
If a vehicle subtains to much damage in an accident to make it economically feasible to repair, the insurer may choose to pay the insured for the loss and sel the vehicle for its ? rather than make repairs on the vehicle.
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Mortgagee
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Individual, bank or credit union, Mortgage Company, or any other institution that has a financial interest in an insured property.
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Usually associated with property such as residence or business structures.
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Loss Payee
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Individual, bank or credit union, Finance Company, or any other institution that has a financial interest in an insured personal property such as car loans, boat loans etc.
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associated with personal loans.
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Misrepresentations
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oral or written misstatements of fact concerning any insurance transaction.
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transaction includes anything from the initial completion of an insurance application to a claim filed for a loss under a policy.
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Material Misrepresentation
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are those that if known by the insurance company at the time of the transaction, would have caused a policy not to be issued, or caused a larger premium to be charged.
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Can void an insurance policy's issuance or payment of a claim.
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Warranty
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statement made on an insurance application that is guaranteed to be true in all aspects.
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if is untrue in any way even if the applicant is unaware of the untruth, it is a Breach of that ? and the Insurance Company may void that transaction.
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Concealment
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misrepresentation by silence.
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must be material in nature to void an insurance contract.
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Negligence
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failure of a natural person to exercise the degree of care that a reasonable and prudent person would exercise under similar circumstances to avoid harming another person.
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can either be an act of commision(doing something, an act of omission(failure to do something), or a combination of both.
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Liability
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the obligation a person has if she or he is found negligent in harming or injuring another person in some way.
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If a guest is injured by tripping over an obstacle in your home, you may be found ? for his or her injuries.
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Summary Payments
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payments made by insurance companies when there is no doubt as to who is at fault for a loss.
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The evidence is clear that the money is owed.
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Bodily Injury
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defined in most insurance policies as including injury, sickness, or disease sustained by any person, which occurs during the policy period, including death as a result of any of these at any time.
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Property Damage
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Physical injury to or destruction of tangiable property during the policy period.
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includes loss of use of property as aresult of damage to that property.
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Person Injury
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injury, other than bodily injury. such as: slander, libel, false arrest, invasion of privacy, wrongful entry, or malicious prosecution.
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coverage provided under commerical general liability policies.
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Accident
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defined under most insurance policies as unplanned and unexpected event, which occurs suddenly and can be identified by a specific time and place.
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Deposit Premium
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Paid at the beginning of a policy based on an estimate of what the final premium will be.
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used in situations where premium is based on fluctuation data that is changing during policy periods.
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Premium Audit
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examination of an insured books or financial statements to gather data necessary to calculate a premium for an insurance policy.
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Workers Compensation Policy subject to this.
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Liability Limits
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listed in the policy as the maximum amount of dollars that he policy will pay under conditions listed in the policy.
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In property and liability purposes 3 types. Single, Split, and Aggregate.
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Single Limits
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One amount for both bodily damage and property damage or a combination of the two.
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associated more with commercial risks.
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Split Limits
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expressed as different amounts for different types of losses. normally associated with personal auto policies.
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30/60/25 30,000 per person, 60,000 per accideent, with a limit of 25,000 for property damage.
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Aggregate Limits
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associated with liability policies and the limit listed is the most that will be paid during the entire policy, regardless of the number of incidents.
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Normally used with commercial liability policies.
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Certificate of Insurance
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wriiten document used as evidence that an Insurance Policy has been written and is in effect.
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summerize policy information such as effective dates, amounts of coverage, and companies providing the coverage.
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Binder
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Statement that provides temporary insurance coverage for a specified period of time.
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can be wriiten or oral. Property & Causualty agents have binding authority for most of the contracts they write.
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Endorsement
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written or printed document attached the policy that changes a policy or its provisions in some way.
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can either restrict or broaden coverage.
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Liberalization Clause
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contained in property insurance contracts. States if any legislative body or rating bureau makes a change in a law or regulation that broadens the coverage under an insurance policy or endoresemt, and on additional premium is required, than all existing insurance policies of the same type will be interpreted as containing the broadened coverage.
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First named Insured
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the first name appearing on the declarations page of a commerical policy.
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Monoline Policy
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only protects against one specfic type of loss.
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A policy that covers only liability losses.
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Package Policy
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combines more than on type of coverage under the same policy.
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mordern homeowners' policy which combines liability, property damage,& medical payments under the same policy.
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Provisions
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statements in an insurance policy that explain the conditions, benefits, and other features of an insurance contract.
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Usually policies contain 5 clasess of these.
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Declarations
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printed statement in the policy contains information such as name and address of the insured, the policy period, amounts of insurance, and the premium charged.
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Usually the first page of a policy.
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Definitions
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Spells out certain words and phrases used in the insurance policy.
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used in hopes of giving the insurer and insured the same meanings when discussing the policy.
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Insuring Agreement
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section of the policy that lists the perils covered under the policy and describes what is covered.
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Includes the company's promise to pay for covered losses.
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Exclusions/Waivers-Exclusions
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states what the insurer will not cover.
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each seperate section of a policy will have its own list of ?
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Waiver
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intentional giving up a known right.
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Esstopel
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Once an insurer or one of its representative waives a right, the insurer will not be allowed to use that right as a defense at a later date.
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Conditions
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provisions in the poliy that list the rights and duties of the insurer and the insured.
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Will list what an insured must do after a loss.
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Domestic Insurer
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(Classification of a Insurance Company by its place of orgin).
used by a state to decribe a company formed under the laws of that state. |
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Foreign Insurer
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Formed under the laws of a state other than the state using the term to describe that company.
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An Insurance company that originated in South Carolina that also does business in North Carolina. North Carolina would classify this Insurance Company as an ?
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Alien Insurer
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describe any insurer formed under the laws of any country other than the United States.
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A insurer formed in Canada that does bussiness in the United States would be classified as an ?
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Authorized or Admitted
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A insurer has applied with the state to do business there, and the insurance regulators in that state have granted permission through a Certificate of Authority.
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Agents are usually required to do business only with this kind of insurer.
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Unauthorized or Nonadmitted
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companies have not received permission from the state to do business.
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Can provide surplus lines.
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Risk Management
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The treatment or management of the risks a person or a company might encounter.
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possibilty of a fire at your home or business, or a car accident can both be described as risks.
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A Pure Risk
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only two types of possible outcome- a loss or no loss.
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For Example a business is subject to losses by fire.
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Speculative Risk
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subject to three types of outcomes a loss, or no loss or a financial gain.
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you lose your money, you break even, or you win a bundle.
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A Physical Hazard
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tangible characteristic of property, persons, or operations that increase the probability and the severity of a loss.
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Flaming candles left unattended in a home or bald tires on a vehicle.
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Legal Hazard
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result of court actions that affect insurance coverages and losses.
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insurer faces the risk that a court may interpret a policy's language to provide coverage where none was intended by the insured.
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Morale Hazard
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condition that exists when a person is not as careful as they should be.
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leaving valuables in unlocked locations that are subject to theft, and not being concerned beacause the items are insured.
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A Moral Hazard
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condition that exists when a person may try to intentionally cause a loss or may exaggerate a loss for financial gain.
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attempting to over insure property in hopes of filing a claim and making prohit, arson for gain, and other types of illegal acts.
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List Elements of Insurability
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Loss must be Definite
Loss must be Definable Loss be Accidental Loss must Create an Economic Hardship Loss must not be Catastrophic The Chance of Loss must be Calculable Cost must be Affordable Large Number of Homogeneous Units |
An element of Insurability.
"determines if a risk is insurable" |
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" says the risk must be certain in terms of time and place.
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Loss must be Definite
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An element of Insurability.
"determines if a risk is insurable" |
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" says insurer must be able to place a monetary value on the possible loss.
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Loss must be Definable
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The value of property or the limits of liability insurance needed are two methods of defining a risk in terms of dollars.
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" says If the outcomes are expected, it is not an insurable risk.
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Loss must be Accidental
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An element of Insurability.
"determines if a risk is insurable" |
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" possible loss must be large enough in value to create an hardship.
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Loss must Create an Enocomic Hardship
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not intended to losses so minor that no financial hardship results.
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" expose a large number of units to the same peril at the same time are not considered to be insurable.
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Loss must not be Catastrophic
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examples of risks are flood, earthquake, war, and nuclear risks.
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" says a insurance company must be able to establish an estimate of the odds of a loss ocuuring.
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The Chance of Loss must be Calculable
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odds are based accumulated statistical data gathered from past losses.
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" insurer must charge such a large premium to cover a risk that consumers cannot afford to buy it, it is not an insurable risk.
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Cost must be Affordable
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An element of Insurability.
"determines if a risk is insurable" |
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Large number of Homogeneous Units
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to predict future losses with some certainty, an insurer must have a large enough number of similar risks facing similar loss exposures.
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Includes the law of large numbers. states that the larger the number of seperate but similar units in a group, the more accurate your prediction of future events such as losses will be.
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List elements that are required to be present in a contract before court will find them enforcable.
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Competent Parties
Legal Purpose, Agreement An Offer An Acceptance Consideration |
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List attributes of an insurance contract.
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Indemnity Contract
Aleatory Contract Adhesion Contract Personal Contract Conditional Contract Unilateral Contract Contract of Umost Good Faith |
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Indemnity Contract
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an insured should not be allowed to prohit from an insurance claim. contract only promises to return the insured to the same status that existed immediately prior to the loss.
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Aleatory Contract
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the contract may never be enforced. an unequal exchange of consideration between the parties.
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an insured may have a policy in force for many years and never file a claim. If a claim is never filed, the insurerdoes not have to meet their promise to pay.
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Adhesion Contract
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written by one party, with another party simply entering the contract and agreeing to the terms in the contract with no inout from their side.
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Insurance contracts are an example.
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Personal Contract
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(with a few exceptions such as life insurance). insures the person who owns the property, not the property.
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Conditional Contract
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based on numerous conditions for both the insurer and the insured.
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insurer- cover a covered loss.
insured- notify insurer immediately after a loss, or assisting the insurer in investigating the loss. |
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Unilateral Contract
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one-sided contract One party the insurance company is legally bound under the contract.
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an insured my back out of the agreement at anytime with no legal consequences as a result.
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Contract of Umost Good Faith
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credit, conduct of the parties in an insurance contract. each party rely upon the other.
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insurer depends on insured to provide and disclose all data pertinent to the risk being insured. insured depends on insurer to pay when obligated to do so.
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What are the four elements that must be established before an insured party is guilty of negligence.
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Legal Duty
Breach of Legal Duty Owed Proximate Cause Damages |
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Defenses under the law that might aid in reducing or eliminating legal liability.
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Assumption of Risk
Contributory Negligence Compartive Negligence Statute Limitation Laws |
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Three certain situations a party may be held liable without regard for negligence or fault simply by participating in certain activities.
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Strict Liability
Absolute Liability Vicarious Liability |
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Liability Insurance
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designed to protect an insured from financial losses as a result of liability claims.
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Assumption Risk
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legal defense against a charge of negligence.
If someone understands the dangers in a particular situtaion and voluntarily assumes the risk, a court may bar recovery from negligent party. |
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Contributory Negligence
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legal defense against a charge of negligence.
If you contribute in any way to an injury, you cannot recover from another party. |
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Comparative Negligence
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legal defense against a charge of negligence. If you contribute in any way to an injury,
damages awarded the injury party are reduced proportionally by their contribution to the event. |
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Statute of Limitation Laws
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legal defense against a charge of negligence.
an injuried must file a claim within the time limits listed in these statutes. |
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Strict Liability
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when a party is held liable without regard for negligence or fault.(dealing with products)
If an injured party can show that their injury was a direct result of a product proven to be defective, the manufacturer of that product can be held liable. |
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Absolute Liability
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when a party is held liable without regard for negligence or fault
injured involves in activities deemed to be so hazardous that public policy demands that participants be held totally responsible for any injuries that result. |
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Vicarious Liability
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imposes liability on someone as a result of the activities of another party.
employer held liable for negligence of employee, insurance company held laiable for negligence of agents. |
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Liability Losses
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third party losses.
1. insured 2. insurance company 3. person whom suffered injury or damage. |
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Bodily Injury
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bodily harm, sickness or disease, including death that results from any of these at any time.
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Property Damage
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physical damage to tangible property and any loss of use of that property resulting from the damage.
General Liability polices covering Commercial Risks can also cover loss of tangible things that have not been damaged such things as product liability or advertising and personal injury. |
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Compensatory Damages
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when found liable for damages type of damage awarded.
Include specific and general damages |
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Specific Damages
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when found liable for damages type of damage awarded.
include a long list of damages for which a specific amount of damages can be calculated. ex. medical expenses, direct damage to property, loss of use of damaged property, loss of earnings, lump sum equal to the present value of injured or deceased party's lifetime earnings. |
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General Damages
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when found liable for damages type of damage awarded.
compensatory damages for intangible losses that be inferred as a result of injuries or death. ex, physical pain and suffering, mental anguish damages for bereavement death of loved one the loss by one spouse death disabled. |
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Punitive Damages
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when found liable for damages type of damage awarded.
awarded by courts to punish a negligent party for an act that may be considered malicious. |
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Defense Costs
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attorney fees and other resonable expenses necessary to provide a defense for a covered loss under the policy.
company has a duty to defend the insured even if the suit is frivolous or groundless. In addition to limits of liablity, the company will pay all defense costs. |
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Summary Payments
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paid in addition to the limits of Liability.
varies depending on type of risk insured, gnerally includes resonable expenses incurred in investgation claim bail bonds premiums on appeal bonds to release attachments cost taxes against an insured and interest accruing after entry of a judgement. loss of earnings because of attendance at trails or hearings at the request of insurer first aid to others at the scene of an accident. |
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Exclusions under Liablity polices
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things that the policy will not provide coverage for.
these are narmally included in all liability policies: damage to property owned by insured damage to property in the insured care custody, and control intentional damage or injuries caused by the insured bodily injury to an insured losses covered under Workers Compensation Laws losses covered under Nuclear Energy Liability Policies |
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rights and duties of the insured and insurer under various circumstances. primary in most liability policies are
Cancellation-list where either party can terminate the contract Misrepresentation, Concealment, Fraud- insurer can void policy if applicant or insured intentionally participates in these acts Assignement- assignment of a policy is not valid without the insurance company's wriiten consent Duties after a loss- list steps an insured must follow in order to collect for a covered loss by the policy. |
Conditions
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Subrogation
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A condition gives the insurance company the right to pursue any course of action in its own name or insured's name against a third party who may be liable for losses the insurance company has paid to the insured.
prohibits an insured from collecting for a loss under the insurance policy and then filing suit against the negligent party and collecting damages a second time. |
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Other Insurance
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conditions define -how payments are made if more than one insurance policy is available to cover the same loss.
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Primary vs Excess
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If other insurance is available they will only pay the excess that the other insurance does not pay.
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Contribution by Equal Shares
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other insurance available to cover the same loss.
method used: the policies covering the loss will pay equal shares up the limit of coverage for the lowest face policy. |
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Property Insurance
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designed to cover a variety of losses to real property and personal property.
Real-builds and structues, but not land. Personal- any property other than real property |
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Non-Owned (Property)
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property not owned by the insured but used by the insured
Homeowners- provided linited amount of coverage for damage to property of others Commercial- provide coverage for personal propery while in the care, custody and control. |
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Off-Premises (Property)
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cover porperty when not on the premises.
Homeowners- cover personal property while anywhere in the world. Business- can get coverage for business personal property while in transit. |
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Builders Risk (Property)
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cover buildings while in the process of being contructed.
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Direct Losses (Property)
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the actual physical damage, destruction, or loss of covered property.
The cost to rebuild a fire damaged structure. |
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Indirect Losses (Property)
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consequential losses
homeowners-cost of hotel room if home is not inhabitable as a result of covered damage. Business- shut down while repairs are done, coverage for losses suach as lost business income may be obtained. |
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Market Value
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price property will bring in on open market.
very rarely used in valuing losses. |
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Valued Policies
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used in situations where it would be difficult to place a value on property after a loss occurs.
does not consider actual cash value or replacement cost. pay the policy limits when a lost occur. ex. Marine Cargo |
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Company A policy limits are $15.000
Company B policy limits are $35.000 A Total Loss of $40.000 is occurred, of which $30.000 has been paid. Company A has paid its limit. Company B has $20.000 coverage remaining. Company B will pay their $15.000 Equal Share plus the $10.000 remaining on the loss. So under contribution by equal shares Company A will pay a total $15.000 (their limit of liability), and Company B will pay a total of $25.000 |
Calculation of Other Insurance Contribution by Equal Share
An insured suffers a $40.000 loss covered by two liability policies. When Company A policy limits are $15.000 Company B policy limits are $35.000 |
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Policy B pays only $7.500 of the loss.
Company A would pay no more than $2.500. |
Calculation of Other Insurance Primary vs Excess
When company A states will pay excess if other appicable insurance exists. Insured has a $10.000 covered loss under policy B |
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Stated amount or Valued Policies (Property)
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list limit of coverage which serves a cap or upper limit of coverage which is the most the insurer will pay.
settled on an ACV basis with the limits listed as a cap or ceiling. used for items which present a difficulty in calculating ACV. ex. a renovated antique automobile. |
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Pair & Clause (Property)
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used to value losses that come in a pairs or a sets.
unique risks because the value of the complete set is is worth more than the sum of its parts. Insurance company usually Repair or replace- part of a pair or set to rstore it to its orignal value. replace missing,or repair damaged item to restore the set to its value prior to the loss. Insurer has right to choose to either repair or replace, not insured |
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Other Insurance (Property)
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under property policies usually call for a method of sharing losses.
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Pro-Rata Method (Property)
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states the insurer will only pay the proportion of the loss that its limit of liability bears to the total amount of insurance available under all applicable policies, wheather collectable or not.
Formula= Amount of loss paid by A= Policy a's limit of liability/A's limit + B's limit X Amount of Loss Amount of loss paid by B=Policy B's limit of liability/A's limit + B's limit X Amount of Loss |
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A=$25.000/$100.000 x $60.000=.25 x $60.000=$15.000
B=$75.000/$100.000 x $60.000=.75 x $60.000=$45.000 |
Calculation of Pro-Rata Method-Other Insurance(Property)
Insured has two policies with two companies totaling $100.000 Company A $25.000 Company B $75.000 Apply the Pro-Rata Formula? |
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Coinsurance Clause (Property)
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most property policies contain this.
used where replacement cost is included in the policy. requires the insured to carry a minimum precentage of replacement cost of the property insured, at the time of the loss. If fail to carry the amount of insurance required to meet the clause, the insurer must pay the larger of the 1. ACV of the loss 2. A Proportion of the replacement cost of the loss |
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Coinsurance Clause Formula (Property)
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Calculate ACV Todays Replacement Cost - Depreciation
Calculate Proportion of Replacement Cost: Insurance Carried/Insurance Required X Amount of Loss To find insurance required multiply todays's value of property X the coinsurance percentage (80%) Compare the two amounts and pay the larger amount. |
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Salvage Conditions (Property)
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insurer has a legal right to ownership of any damaged property for which they have made payment to an insured.
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Abandonment Conditions (Property)
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insured does not have the right to abandon property to the insurer in exchange for payment from the insurer.
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Appraisal Conditions (Property)
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if two parties disagree on the amount of loss, each party can pick a appraiser.
Two appraisers pick an umpire. if appraiser can't agree on a amount the appraisers summit differences to the umpire. A decsion agreed on by any two of the three will be the amount accepted by both parties as the amount payable under the policy. |
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Arbitration Conditions (Property)
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can be used for disputes involving things (other than monetary disagreements)between two insurers as to which policy will pay for a loss covered under both policies.
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Liberalization Conditions (property)
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If a policy oe an endorsement's coverage is broaden by a legislative body, insurance company, or rating authority, and no extra premium is attached, all current policies and endorsements will be interpreted to contain the broadened coverage immediately upon the effective date of the change.
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No Benefit to Bailee Conditions (property)
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exclude coverage under the policy when personal property is in the care, custody, and control of a bailee.
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Vacancy and Unoccupancy Conditions (property)
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limit or exclude coverage for damage to property that is vacant or unoccupied.
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Mortgagee Conditions (property)
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lists the rights and duties owed by the insurer and the lender to each other.
ic has duty the lender if the insurer plans to terminate the policy for any reason. any loss payable under the policy will be paid to the insured and mortgagee jointly. if an insured is denied payment on a claim due to fraud, or any other acts which void coverage and the loss woild have been covered otherwise, the mortgagee may file their own claim and receive payment for their insurable interest. the insurer also has the obtain of paying the balance of the mortgage to the lender and taking ownwership of the property. |
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bailee (property)
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a business or person that has temporary care, custody, and control of someone else's personal property.
Ex. dry cleaners, shoe repair shop, or jewelry repair shop. |
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bailor (property)
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the insured of personal property
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vacancy (property)
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the absence of both property and people.
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unoccupancy (property)
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the absence of people only.
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What does SFP stand for?
(Personal Insurance) |
The 1943 New York Standard Fire Policy
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Explain the SFP..
(Personal Insurance) |
NC law requires that all policies that provide coverage for the peril of fire, conform "in substance" to the provisions of the Standard Fire Insurance Policy for North Carolina.
A named peril policy. One of the most widely used fire insurance policies most basic of the property insurance contracts revised in 1943 basis upon which all modern personal and commercial line policies are based. Standard provisions and exclusions found in the SFP are included in many other policy types. has been replaced in most states by a more mordern policy forms. Is not a complete contract Indentifies covered property does not define it. issued with various forms and endorsements attached to it to complete an insurance contract. |
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How many pages make up the SFP? (Personal Insurance)
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Two pages.
The first page contains the insuring agreement and declarations page. The conditions and exclusions are found in the 165 lines listed on the second page. |
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How many perils are insured against by the SFP? (Personal Insurance)
What are they, list them... |
three perils
fire, lightning, and removal |
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Explain the fire peril of the SFP... (Personal Insurance)
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is not defined in the SFP
over the years the court s have interpreted the word and established a standard definition for the word fire when relating it to insurance coverage. fire- rapid oxidation or combustion resulting in or accompanied by a flame or glow.-MUST BE SUDDEN AND UNEXPECTED Long term effects of fire such as scorching or discoloration are not covered. Two terms used to dtermine coverage are, "Friendly & Hostile". Only hostile fires are covered under the SFP. |
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Friendly fire SFP (Personal Insurance)
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intentionally set and confined, such as in a fireplace or a wood burning stove.
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Hostile fire SFP (Personal Insurance)
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one that has escaped its confinement, such as a spark igniting a fire outside the fireplace.
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Explain the Ligtning peril of the SFP..(Personal Insurance)
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defined as natural bolts of electricity, occurring atmospherically, produced by nature.
Damaged caused by fire or the direct explosive force of lightning is covered. Artificially generated current is not considered lightning and is not covered by SFP. |
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Explain the Removal Peril of SFP..(Personal Insurance)
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process of removing property to protect it from the perils of fire and lightning at the insured premises or when fire or lightning at neighboring premises endanger property located at the insured premises.
automatically provides removal coverage for only FIVE DAYS at another location.-listed in the insuring agreement requires an insured to protect property from damage where possible. any damage to property that occurs while making an attempt to save it will be covered. removal is covered only if the property is threatened as a result of fire or lightning. If property is damaged while trying to protect it from flood waters, no coverage would apply. If property is moved to the curb to protect it from a fire, and someone steals the property, theft becomes a covered peril. |
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Losses covered under the SFP?.....(Personal Insurance)
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Only direct losses from the named perils are covered.
Indirect losses are not covered. Direct Losses are defined to include: 1. Damage by the peril itself, such as fire burning covered property 2. Damage as a direct result of the peril, such as smoke damage caused by a fire 3. Water damage as a result of attempts to put out a fire. 4. Water damage to property inside from rain, as a result of a hole burned in the roof |
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Other facts to remember about Losses covered under SFP.....(Personal Insurance)
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damage must result from direct effect of fire, lightning, or removal.
Water damage to property inside a building as a result of the wind damaging the roof would not be covered as wind is not a covered peril. |
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Exclusion facts of coverage SFP..(Personal Insurance)
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SFP excludes coverage for "accounts, bills, currency, deeds, evidences of debt, and money or securities.
States that unless bullion and manuscripts are specifically named in writin in the policy, they are excluded also. excludes some losses even if occur as a result of a covered loss. |
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Exclusions under SFP ..(Personal Insurance)
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Acts of war, Orders of Civil Authority, Theft, Neglect, Explosion or Riot
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List the two conditional exclusions associated with the SFP ..(Personal Insurance)
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Increase in Hazard, Vacancy or Unoccupancy
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Inception/Expiration Explain SFP ..(Personal Insurance)
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located in the insuring agreement.
staes the policy shall cover the term of years specified on the declarations page. NC Am time is used and SFP maybe written for up to seven years. |
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List the 4 different limits on the most policy will pay for covered lost SFP..(Personal Insurance)
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the insuring agreement lists:
Recovery may not exceed the smallest of the following amounts: Policy Limit Actual Cash Value Cost to Repair or Replace Interest of the Insured Pro-Rata Liability |
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What are the two options SFP gives fo settling a claim?..(Personal Insurance)
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Insurer takes procession of all or any part of damaged or destroyed property, paying the appraised value to the insured and selling any salvage.
Second option allows the insurer to repair, rebuild, or replace damaged property, with material of like and quality within a reasonable time. |
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How is Concealment, Misrepresentation, & Fraud defined in SFP..(Personal Insurance)
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the entire policy shall be void, if whether before or after a loss, the insured has willfully made a material misrepresentation, concealment, or committed fraud.
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What are the requirements of the Insured in the event of a loss. SFP..(Personal Insurance)
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Insured shall give immediate written notice to the company of a loss.
insured shall protect property from futher damage. Separate damage and undamaged property put in proper place. Furnish a complete inventory of damaged and indamaged property, quantities, costs, ACV, and the amount of loss claim. Sunmit signed prooof of loss within (60)sixty days stating time and cause of loss, the interests of all parties, other insurance available, and any other information required by the policy. Produce books and records as required by the insurer, exhibit remains of damaged Property, and submit to examination uner oath. |
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Explain the Appraisal condition used if the insurer and insured cannot agree on the ACV of damaged property, or value of a loss. SFP..(Personal Insurance)
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the demand for appraisal must be submitted to the other party in writing
each party shall select an appraiser within 20 days The two appraisers will then select a competent and impartial umpire. The two appraisers will value the loss individually and submit any differences to the umpire An agreementby the two of the three will serve as the amount of the loss. Each appraiser shall be paid by the party selecting them, the appraisal expenses and cost of the umpire shall be equally paid by the insurer and insured. |
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Define Subrogation as it relates to the SFP..(Personal Insurance)
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insured is required to assign all rights of recovery from a negligent party onc ethe insurer has paid the insured for a loss.
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Explain Suit Against Company condition as it relates to SFP..(Personal Insurance)
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insured can bring suit against the isurer only after the insured has met all policy conditions listed in the policy.
SFP states that the insured must file suit within 1 year after the date of loss. NC Law changed this 1 year limit on bringing suit to 3 years. |
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Define Abandonment as it relates to the SFP..(Personal Insurance)
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condition states that there can be no abandonment of any property to the insurance company.
insurer has the right to keep damaged property as salvage and pay the insured damages the insured does not have the right to abondon property to the insurer in exchange for payment under the policy |
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Explain, define waiver as it relates to SFP..(Personal Insurance)
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clause states that any waivers of provisions in the policy must be in writing and attached to the policy to be valid.
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List the endorsements available in the extended coverage (EC) endorsement of SFP..(Personal Insurance)
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EC endorsements are available to increase the coverages under SFP
package of nine prils: Rev.R.C.Shaw Riot Explosion Vehicles Riot atttending Strike Civil Commotion Smoke Hail Aircraft Windstorm |
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List the endorsement available under the vandalism and malicious mischief endorsement (VM&M) SFP..(Personal Insurance)
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covers willful and malicious damage to or destruction of covered property.
Doesnot cover Glass- other than glass building blocks, which are part of a structure, Philferage, theft, burglary or larceny- will cover damage done by burglars while entering or leaving the building. Can not be purchased without the EC endorsement. Suspension of coverage occurs in a commercial risk when vacant or unoccupied for more than 30 consecutive days when a loss occurrs coverage is suspended. In dwelling, coverage is suspended only if dwelling is vacant for more than 30 days. |
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Additional Facts pertaining to SFP..(Personal Insurance)
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Liability coverage is never available on a SFP.
It is a monoline policy. An unendorsed SFP pays on an ACV basis only. SFP can be written for either tenant or owner risk, or for commercial risks The standard deductible on a SFP is 250.00 |
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NC Statutes and Regulations Pertinent to the SFP
..(Personal Insurance) Article-43- General Regulations of Business Section(58-43-5) Payment of Loss under Valued Policy |
No insurance company or agent shall knowningly issue any fire insurance policy on property in NC that exceeds the value of the property.
Fire policies in NC may be written for a policy period of up to 7 years. An insurer may add endorsements for replacement cost coverage and functional replacement cost coverage. Any policies issued by an insurer in violation of this section are binding on the company, and the company is liable for any penalities as a result of the violation of the law. |
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NC Statutes and Regulations Pertinent to the SFP..(Personal Insurance)
Section (58-43-10) Liability Limitation on Total Loss |
Insurers are not required to pay more than the actual cash value for loss by fire unless the policy is otherwise endorsed.
If appears insured has paid a premium in excess of the actual value, the insured must be reimbursed the excess of premium paid on the difference between the amount named in the policy and the actual value, with interest at 6% from the date of issue. |
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NC Statutes and Regulations Pertinent to the SFP..(Personal Insurance)
Article 44-Fire Insurance Policies Section (58-44-1) Contract Provisions Stated in Full |
In all insurance against fire the conditions must be stated in full. The rules and bylaws of the conpany are not warranty or a part of the policy, unless they are fully incorporated into the policy.
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NC Statutes and Regulations Pertinent to the SFP..(Personal Insurance)
Article 44-Fire Insurance Policies Section (58-44-5) Statement of Rates and Charges |
Upon request there shall be printed, stamped, or written on each fire policy issued in NC the basis rate, deficiency charge, the credit for improvements, and the rate at which insurance is written.
Whenever a rate cis made or changed on any property in NC, upon request by any owner or representative of prperty insured, a full statement showing the same rates, credits, and charges as listed above must be delivered. |
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NC Statutes and Regulations Pertinent to the SFP..(Personal Insurance)
Article 44-Fire Insurance Policies Section (58-44-30) Notice of Change in Risk or Coverage |
any notice in writing from the insured or his agent, that describes a change in the risk insured, is equivalent to an agreement and becomes a part of the policy.
The insured should be notified that any increase of hazard, unoccupancy, or other conditions, may result in coverage being denied. |
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What does
C-VAN-TIME-BE-SO-BAD stand for and how does the acronym relate to the SFP. |
Used by myself as a hint for the list of exculsions of the SFP. Currency, vancancy or occupancy, accounts, neglect, theft, Increase in hazard, money, evidence of debts, bullions, explosion or riot, securities, orders of civil authority, bills, acts of war, deeds.
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A unendorsed Dwelling Policy (DP) is ? what type of policy?
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monoline-only covers property damage.
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Unlike SFP, What can be endorsed to a DP?
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Liability
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What forms are available under the DP?
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DP-1 basic, DP-2 broad, DP-3 Special Form
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A DP may have up to ? per structure and ? broaders or roomers.
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four units per structure and no more than five broaders or roomers per structure.
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Who may be the (occupant)insured under this form?
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may be owner occupied or tenant.
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True of False
Dwellings under contruction are eligible for DP? |
True
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If dwelling contain more than four units will it be eligible for a DP?
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no must be written on a commercial policy.
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Are Farm Risks eligible for DP?
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no, must be wriiten on a farm form.
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Can permanently located mobile homes be insured on a DP?
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if they meet certain guidelines, but only under a DP-1 (basic) form.
As a rule in NC mobile homes are written on a policy type designed specifically for mobile homes. |
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Who is automactically covered under the DP?
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named insured and spouse if reside in the same dwelling.
If named insurer dies, coverage automatically extended to a legal representative, or temporary custodian until a legal representative is appointed. |
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explain what kind of business activity DP may allow?
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Permitted Incidential occupancies-must be service oriented NOT SALES, must be conducted by the insured, and don't allow more than two people working on the premises at the same time.
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Name all the DP coverage forms that cover direct losses.
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Coverage A Dwelling
Coverage B Other Structures Coverage C Personal Property |
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Name all the DP coverage forms that cover indirect losses.
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Coverage D Loss of Fair Rental Value
Coverage E Additonal Living Expenses |
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If an insured is buying DP coverage for a rental property what coverage(s) might he choose?
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Coverages a,b, and d
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DP equipment such as mowers, snow blowers, and other service related equiment used to service the premises are covered under which coverage?
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Coverage A dwelling
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DP covers patios, storage sheds, gazebos, fences or in ground swimming pools.
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Coverage B Other Structures
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DP covers actual physical dwelling and any structure attached to the building.
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Coverage A Dwelling
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DP coverage provided is 10% of A coverage. Is not paid in addition or over and above A coverage-under the DP1. Under DP2, DP3 is paid in ADDITION to any A coverage.
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Coverage B Other Structures
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DP covers the insureds personal property and the personal property of the insureds guests and servants?
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Coverage C Personal Porperty
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DP the insured chooses the amount of coverage. Is paid over and above any other payments received?
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Coverage C Personal Property
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DP what are the 33 exclusions under the Coverage C Personal property coverage form?
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money, securities, manuscripts, bullion, currency, accounts, deeds, evidence of debt, bank notes, coins, gold other than goldware, letters of credit, medals, personal records, platinum, silver other than silverware, tickets, stamps, books of account, drawings and other paper records, electronic data processing tapes, wires, records, discs, or other software media, credit card and transfer cards, animals, birds, fish, aircraft and motor vehicles, other than motorized vehicles used to service the premises, boats, other than rowboats and canoes.
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