PROPERTY AND CASUALTY INSURANCE EXAM|WITH COMPLETE SOLUTIONS|ALREADY GRADED A|DOWNLOAD TO PASS

Specific insurance This type of insurance designates a particular item to be insured Blanket insurance This type of insurance covers more than one item of property at a single location or one more items of property at multiple locations. Speculative possibility of both gain and loss. Not insurable. Pure only the possibility of loss. Insurable. What are the 5 methods of managing or handling risk? avoid, control, retain, and transfer risk. Hazard A condition or situation which increases the chance for loss Physical Hazards a hazard that arises from the condition, occupancy, or use of the property itself. ex: skateboard left on the steps Moral Hazards when an individual through carelessness or by irresponsible actions can increase the possibly for a loss. ex: person who drives carelessly just because they know they are insured. Morale Hazards when a person might create a loss situation on purpose just to collect from the insurance company. ex: Prearranged, faked theft of someone's old vehicle so they can get an insurance payout to buy a new vehicle. Replacement Cost The amount of money it would take to replace a damaged or destroyed item with one of like kind and quality AT THE TIME OF LOSS. No deduction for depreciation. Actual Cash Value (ACV) Replacement Cost, minus depreciation. Pair and Set Clause Loss to one item of a pair or set does not constitute loss to the entire pair or set. Appraisal A method of resolving disputes between insurers and insureds over the amount owed on a covered loss. -both parties select an appraiser -the two appraisers select an umpire -if the appraisers do not agree, the umpire is consulted -the amount agreed on by 2 out of 3 is the amount that will be paid Subrogation An insurer's right to recover the amount of its loss payment from the third party who is legally responsible for the loss. Arbitration this condition is similar to the Appraisal Condition but it is not limited to disputes over the value of the loss. It may also be used to resolve other areas of disagreement between the insured and the insurance company. What does WC SHAVVER stand for? Windstorm, Civil commotion, Smoke, Hail, Aircraft, Vehicles, Volcanic eruption, Explosion, Riot What does BIG AFFECT stand for? Burglar damage, Ice & snow weight, Glass breakage, Accidental discharge, Falling objects, Freezing of pipes, Electrical damage, Collapse, Tearing apart. Insolvency A financial state that occurs if liabilities are greater than assets. Law of Agency Knowledge of the Agents is Knowledge of the Principal (Insurance Company) Principal Insurance Company What is the ISO? Insurance Services Office which is an organization established for the benefit of its member insurance companies. This organization gathers statistics, provides loss costs, drafts policy forms and coverage provisions and conducts inspections for rate making purposes. Coinsurance Clause Requires the insured to carry a minimum specified amount (generally 80%) of the replacement cost value of the insured property in order for partial losses to be paid in full. Estoppel A legal bar to changing or denying a fact because of one's own previous actions or words to the contrary. ex: If an insurance company representative intentionally or unintentionally gives the impression that a specific fact exists when it does not and a client relies on that impression and is damaged a result. Binder A temporary contract of insurance, oral or written, offered by an insurer pending issuance of the policy. Usually written for a period of 30-60 days and remains in force for that period or until a permanent policy is either issued or denied by the insurer. Warranty A provision in a policy that pledges that a condition does exist or will exist at some time in the future. Deposit Premium Tentative charge made at the beginning of certain policies and reinsurance agreements to be adjusted when the actual earned charge has been later determined. Audit Verification of books or accounts to determine their accuracy. Occurrence An accident, including continuous or repeated exposure to the same harmful conditions, which result in bodily injury or property damage. Special Damages type of compensatory damages that reimburse the injured part for direct and specific expenses involved in the loss. Such as medical expenses, funeral expenses and loss wages. General Damages type of compensatory damages that reimburse the injured party for such things as pain and suffering and disfigurement. Punitive Damages type of damages intended to punish the defendant and make an example out of her to discourage others from behaving the same way. Proximate Cause An act, through an uniterrupted chain of events, that can be determined to be the immediate or actual cause of a loss. 4 elements of negligence 1. The existence of a DUTY to act in a certain way 2. A FAILURE to live up to this duty 3. An actual INJURY must occur 4. The failure in duty must be the PROXIMATE CAUSE of the injury. Negligence An unreasonable or prudent act, A thoughtless or careless act or one committed out of ignorance. It may be a non-act or omission, but it is NEVER an intentional act. Casualty Insurance Refers to coverage designed to address the liability of individuals and organizations resulting from negligent acts in their personal, business, or professional roles. Overinsurance Exists if a property or an insurable interest in property is insured by one or more insurance contracts against the same hazard in excess of the fair value of the property or of such interest. Specific Insurance Coverage on ONE type of property (real or personal) in ONE location. Blanket Insurance A single policy written on an insured's interest for 2 or more different types of property (dwelling/building and contents) at the same location, or at different locations. Uninsured Motor Vehicle A motor vehicle or trailer to which: - No liability coverage at the time of accident -has liability coverage but not enough to meet the state's financial responsibility requirement - Operated by a hit and run driver - Has invalid liability insurance at the time of the accident because the insurer is insolvent or denies coverage Part C: Uninsured Motorist Coverage this coverage compensates the insured for bodily injury ONLY as a result of an accident with an uninsured motorist. Medical Payments Insurance company agrees to pay for reasonable expenses incurred for necessary medical and funeral services because of bodily injury. - Covers first party. - "Stays in the car" - 3 years is time limit for incurring medical expenses Supplementary Payments Payments made in addition to the Limits of Liability. - Up to $200/day for loss of earnings - Up to $250 for the cost of bail bonds required because of an accident. Excess Any insurance that is provided for a vehicle you do not own, shall be excess over any other collectible insurance. Example: If you borrowed your friend's car, your own liability coverage will act as excess to your friend's primary coverage. Single Limit Basis One amount representing the total (aggregate) limit for all claims arising from any one accident. (1 amount for Bodily Injury and Property Damage)