SUMMARY OF PROPERTY AND CASUALTY INSURANCE GRADED A+

SUMMARY OF PROPERTY AND CASUALTY INSURANCE GRADED A+ Inland Marine policies protect... - ANSWER Business property that gets transported over land (such as medical equipment, construction vehicles, etc.) Aggregate Limit - ANSWER The maximum amount an insurer will pay for all covered losses during the covered policy period. Arbitration - ANSWER Settling a dispute by agreeing to accept the decision of a neutral 3rd party Commercial Umbrella Insurance - ANSWER Extends coverage beyond the limits of scheduled underlying liability policies. Fidelity Bond - ANSWER Insurance policy that pays the employer money in the case of employees' theft Fiduciary - ANSWER Someone who has to act in the best interest of another party GL class code - ANSWER Code to identify different types of businesses based on their risk level (helps insurer determine cost) Hold Harmless Agreement - ANSWER Protects a party from liability if there are damages or losses (protects from a 3rd party's claim) General Liability policies protect... - ANSWER Your business if a 3rd party is harmed as a result of your business activity Commercial Auto policies protect... - ANSWER Your business if you're in an auto accident while working or in a company vehicle Workers Comp policies protect... - ANSWER Your business if an employee is injured on the job Professional Liability policies protect... - ANSWER Your business if a client accuses you of making a mistake or giving bad advice (AKA errors and emissions insurance) Commercial Property policies protect... - ANSWER Your business if the space, assets, and/or equipment are damaged and need to be replaced/repaired Fiduciary Liability policies protect... - ANSWER Your business from lawsuits claiming the mismanagement of employee benefit plans Host Liquor Liability policies protect... - ANSWER Businesses that don't sell alcohol, but permit drinking on their property (generally included on a GL policy) Indemnity - ANSWER A payment for damage or loss (agreement between business and insurer to help business be whole after a loss) Insurance Adjuster - ANSWER Someone who evaluates damages to determine costs insurer will pay for losses Loss Payee - ANSWER A person or an entity other than the named insured to whom the proceeds of insurance will be paid Named Perils - ANSWER Only those perils specifically named in the policy are covered Nose Coverage - ANSWER Protects business from claims filed for an incident that occurred during an older/previous policy Open Perils - ANSWER All perils are covered unless specifically excluded (common with property insurance) Products and Completed Operations - ANSWER Helps cover losses if your products/completed service causes bodily injury or damage to another person's property Products-Completed Operations Aggregate Limit - ANSWER The most the insurer will pay for losses payable under Coverage A included in the Product and Completed Operations Hazard. Rider - ANSWER Additional that provides more coverage than base policy Subrogation - ANSWER The right for an insurer to pursue a third party that caused an insurance loss to the insured Vicarious Liability - ANSWER Legal responsibility placed on one person for the acts of another Workers Comp class code - ANSWER Codes that identify type of work and risk workers face Direct/physical loss - ANSWER Self explanatory (house fire, car accident, etc.) Indirect loss - ANSWER Consequential loss as the result from a direct loss (temporary housing, rental car, etc.) Peril - ANSWER The cause of a loss (fire, flood, disease, icy roads, etc.) Moral Hazard - ANSWER Results from a decision to do something wrong or be less cautious Morale Hazard - ANSWER Results from careless or reckless actions/attitudes (ex: texting and driving) Physical Hazard - ANSWER Self explanatory (slippery floor, icy road, structural defects, etc) Risk Sharing - ANSWER Distribute risk among a number of individuals Transfer risk - ANSWER Insurance, hold harmless agreements Principle of indemnity - ANSWER States that insurance companies will restore you to the same financial position you were in before (ex: if your house burns down, an insurer will not pay for you to build a better house, but one to the same standard as before) Actual Cash Value - ANSWER replacement cost minus depreciation Replacement cost - ANSWER the cost to replace an inventory item in its identical form Judgement Rating - ANSWER each exposure is individually evaluated, and the rate is determined largely by the judgement of the underwriter Manual or Class Rating - ANSWER uses company rates for a particular state or area that are contained in a manual Merit Rating - ANSWER a rating plan by which class rates are adjusted upward or downward based on individual loss experience HO-2 - ANSWER -Broad form -covers the dwelling, other structures, and personal property on a named perils basis -owner occupied HO-3 - ANSWER -special form -Dwelling and other structures are covered on an open perils basis. Personal property is covered on a named perils basis -owner occupied HO-4 - ANSWER Renter's insurance HO-5 - ANSWER -comprehensive form -provides open peril coverage for the dwelling, other structures, and personal property -owner occupied HO-6 - ANSWER Modified HO-2 policy specifically designed for condo owners HO-8 - ANSWER For older homes that have a replacement cost that is much higher than its market value DP-1 - ANSWER -Basic Form of Dwelling Policy -Covers direct physical loss to property caused by only three perils: fire, lightning, and internal explosion (unless additional perils added) DP-2 - ANSWER -Dwelling broad form -damage by burglars, falling objects, accidental discharge, freezing of home systems, damage caused by ice, sleet, snow (+ basic form's fire, lightning, internal explosion) DP-3 - ANSWER -Dwelling special form -all perils except ones specifically excluded Commercial GL Coverage A - ANSWER Covers bodily injury, property damage Commercial GL Coverage B - ANSWER Covers personal and advertising injury liability Commercial GL Coverage C - ANSWER Covers medical payments Business Owners Policy (BOP) - ANSWER A policy that combines property, liability and business interruption coverage for small- to medium-sized businesses Builder's Risk Insurance - ANSWER A form of property insurance that provides coverage for loss or damage to the work during the course of construction Concealment or Fraud Condition - ANSWER commercial property coverage is void if the insured intentionally conceals or misrepresents facts concerning the coverage part, the covered property, the insured's interest in covered property, or a claim Liberalization Condition - ANSWER Any change that extends coverage without an additional premium will auto. apply to the coverage part if the change is adopted by the insurer during the policy period or within 45 days of the policy's effective date BAILED - ANSWER bonds, aid, interest, loss earnings, expenses, defense costs Time Element Coverage - ANSWER Coverage for the loss of business income over a period of time that results from direct physical loss Personal Articles Floater - ANSWER Personal Inland Marine insurance which provides all-risk coverage on 9 classes of personal property: jewelry, furs, cameras, musical instruments, silverware, golf equipment, fine arts, stamp collections and coin collections. Nationwide definition of inland marine - ANSWER -imports -exports -personal floaters -domestic shipments -instrumentalities of transportation or communication -commercial property floater risks National Flood Insurance Program (NFIP) - ANSWER Makes flood insurance available to eligible communities through federal subsidization Farm Coverage A - ANSWER dwellings Farm Coverage B - ANSWER other private structures appurtenant to dwellings Farm Coverage C - ANSWER household personal property Farm Coverage D - ANSWER loss of use Farm Coverage E - ANSWER scheduled farm personal property Farm Coverage F - ANSWER unscheduled farm personal property Farm Coverage G - ANSWER Barns, Outbuildings, Silos, and Other Farm Structures Farm Coverage H - ANSWER farm liability coverage - pays up to the limit of insurance for sums the insured becomes legally obligated to pay as the result of bodily injury Farm Coverage I - ANSWER personal and advertising injury Truckers Coverage Form - ANSWER Covers business exposures of motor carriers for hire who transport the goods of others. Elements of Insurable Risk - ANSWER - be a predictable loss - be a chance occurrence (outside of control) - be measurable and definitive - must cause financial hardship (losses too small are not insurable risks) Stock Company - ANSWER company that is owned by people who own the company's stock Mutual Companies - ANSWER Insurance organizations that have no capital stock, but are owned by the policyholders Fraternal Benefit Societies - ANSWER Have memberships based on religious, national, or ethnic affiliations (primarily sell life insurance to its members) Reciprocals - ANSWER Unincorporated group of individuals or organizations that agree to pool their risks together for the purpose of paying losses and purchasing reinsurance. They are managed by an attorney-in-fact. Risk Retention Group - ANSWER A group-owned liability insurer which assumes and spread product liability and other forms of commercial liability risks among its members Captive (Exclusive) Agency System - ANSWER Insurance company contracts with agencies to represent and sell insurance only for that company Independent Agency System - ANSWER Producers not affiliated with a particular insurer (may represent as many insurers as they desire) - paid by commissions, no salary Managing General Agent (MGA) - ANSWER An authorized agent of the primary insurer that manages all or part of the primary insurer's insurance activities, usually in a specific geographic area Brokers - ANSWER Independent producers who sell insurance through many different companies and do not have binding authority Direct Response Marketing - ANSWER Some marketing done through direct selling methods in mass media Direct Writing Companies - ANSWER Companies whose products are sold by employees, not independent contractors. Internet Insurance Sales Systems - ANSWER insurance can be purchased online directly from the insurance company or agent. Lines/categories of insurance - ANSWER Property, Casualty, Life, Health/Disability Types of property insurance - ANSWER Dwelling Homeowners Commercial property Inland marine Ocean marine Crime Types of casualty insurance - ANSWER Aviation Auto Workers comp Surety bonds Underwriting - ANSWER the process of selecting, classifying, and pricing applicants for insurance Express authority - ANSWER Authority given specifically to an agent orally or in writing by the principal Written authority - ANSWER Provided through agency agreement that allows agent to countersign, issue, and deliver policies and provide other services Implied authority - ANSWER Authority given by insurance company that is not formally expressed or communicated Apparent authority - ANSWER Doctrine that holds that an agent may have whatever authority a reasonable person would assume the agent has