Personal Lines-California Insurance final exam question and answers

Personal Lines-California Insurance final exam question and answers Insurance Insurer, entity, principal, underwriter, carrier or company. Uses "we, us, and our". Insurer is the 2nd party to contract Person receiving benefits Insured, policyholder, owner. Named insured uses "you and your". Insured is first parry on contract. Claimant Person seeking recovery. In property=insured. In liability=3rd party Falsification provision Warning found on claim forms that those filing a false or fraudulent claim are subject to fines and imprisonment CIC California Insurance Code- state insurance laws proposed, written, enacted and changed only by state Legislatures. Commissioner just enforces CCR California Code of Regulations- rules and procedures written by the commissioner to carry out the intent of the code. Commissioner writes and changes the regulations. Pooling Sharing or spreading the risk Department of Insurance/California Department of Insurance DOI and CDI Rescind Voiding or revoking a contract back to its inception date (beginning) as though it never existed (flat cancellation). Can ONLY be done for material misrepresentation, material concealment, and breach of warranty or fraud CIC definition of Insurance Insurance is a contract (written) in which one undertakes to indemnify (restore/whole) another against loss, damage or liability arising from a contingent or unknown event (may or may not happen) Layman definition of Insurance Substitution/exchange of a small certain loss (premium) for a large uncertain loss (claim) Conceptual definition of Insurance Social device transferring risk from individuals to a group Insurance Contract Policy, written instrument, indemnity agreement and legal document Benefits of insurance Device that allows individuals and society to recover from unexpected loss; secure credit; satisfy legal requirements; source of investment income; reduce social burdens; promotes loss control; reduces anxiety, uncertainty. Cost benefits increases moral and morale hazards (dishonesty/lack of care) Loss Any reduction in quantity, quality or value of something. Can mean death, bodily injury, property damage, incurred expenses, reduction in quality of life or an obligation to pay for any such loss Property insurance loss Direct to tangible property or indirect Liability insurance loss Obligation to pay for bodily injury, property damage, personal injury, advertising injury. Harm caused by the insured to others Loss exposure Possibility of loss. There are 3 dimensions of loss exposure. Type of value exposed to loss, the peril causing loss, the extent of the potential financial consequences. Normally written as Property, Liability or Human/Personnel Property Loss Exposure Damage to the insureds property Liability Loss Exposure Harm caused to others/another Personal Loss Exposure Death, retirement, unemployment, disability Human Loss Exposure Considered personal unless they give work scenario (personnel) Financial Loss IS NOT a loss exposure, it is a consequence of all of the exposures Personnel Loss Exposure Death, resignation, termination, disability Peril Cause of loss or reason for loss Named Peril Fire, lightening, etc. the perils are named/listed/stated in the contract. Not listed claim is not paid. The burden is on the insured to prove the damage was caused by listed peril. (Basic form: dp1, ho8 Broad Form: dp2, ho2, ho4, ho6) Open Peril/All Risk Lists exclusions and does not name/state/list the perils but states it covers all or any peril except those specifically excluded. This type of policy shifts the burden of proof to the insurer (company). The insurer must pay unless they can show the cause of loss was an exclusion under the policy/contract. (Special: dp3, ho3 Comprehensive: ho5 Inland/Ocean Marine) Hazard (Key phrases: increases or leads to) Chance/likelihood/severity of loss. Types of Hazards: Moral, Morale, Physical, and Court Moral Hazard Dishonest, ethics/habits/fraud, liar, exaggerating a loss, felony, alcoholism, dru