A D BANKER PROPERTY AND CASUALTY CHAPTER 2
Accident - Answers - A sudden, unforeseen, unintended, and unplanned event from
which loss or damage results.
Occurrence - Answers - An accident includes continuous or repeated exposure to the
same general harmful conditions.
Cancellation - Answers - The termination of an insurance policy before its expiration
date. Once cancelled, a policy provides no coverage. A policy may be cancelled by the
insured or insurer.
Proximate Cause - Answers - The primary cause of loss. If only one peril caused the
loss, the proximate cause is the first event in the unbroken chain of events that resulted
in loss. If more than two perils caused or contributed to the loss, the proximate cause is
the peril having the most significant impact in generating the loss or damage.
Hostile Fire - Answers - A fire that burns outside its intended boundaries, or becomes
uncontrollable. Examples of a hostile fire include a wildfire or a fire that damages a
home when a spark from a fire in the fireplace ignites a piece of furniture.
Friendly Fire - Answers - A fire that was intentionally set and stays within its intended
boundaries (e.g., a fireplace) and results in smoke damage to the inside of a fireplace.
Property insurance does not cover damage
Inherent Vice - Answers - A quality within property that causes it to damage or destroy
itself. Examples include rust, rot and the fading of paint. not covered by a property
policy.
Binder - Answers - A legal agreement issued by an insurance company or a producer
that provides temporary proof of insurance until the insurer is able to issue an insurance
policy. issued for specific time periods (maximum of 60 days) and automatically end
when the policy is issued.
Arbitration - Answers - Process whereby a disputed claim is decided by a neutral third
party. The disputing parties choose the impartial third party and agree in advance to
accept the final decision
Right of Salvage - Answers - The right of the insurer to take possession of damaged
property after paying for its loss. The salvage belongs to the insurer.
Salvage Value - Answers - The amount for which property can be sold at the end of its
useful life.
Endorsement - Answers - A policy form that alters or adds to the provisions of a
property and casualty insurance contract.
, Concurrent Causation - Answers - A principle holding that when two perils
simultaneously cause a loss (i.e., they are both considered the proximate cause of
loss), the insurer must pay the loss even if one of the perils is excluded by the policy.
Concurrency/Concurrent Policies - Answers - The existence of two or more policies
covering the same exposures, having the same policy periods, and the same coverage
triggers.
Deductible - Answers - The specified amount of each loss that the insured must bear. In
property insurance (and with a per claim, or per occurrence, deductible), the insurer
subtracts the deductible from the amount of loss when making payment.
Pro Rata Cancellation - Answers - A proportionate cancellation of insurance that
refunds premium to the insured based on the precise number of days coverage was in
effect. The earned premium is the premium charged and retained by the insurer for the
number of days coverage was in place; the unearned premium is the premium refunded
to the insured for the number of days coverage was not in place.
Short Rate Cancellation - Answers - A cancellation of insurance that incurs a financial
penalty. Sometimes when the insured cancels the policy before its expiration date, a
short-rate cancellation is issued. The insurer retains a portion of the unearned premium
to cover costs.
Flat Cancellation - Answers - A cancellation of insurance that is retroactive to the
effective date of the policy. No coverage is provided and the insurer must refund the
policy premium paid by the insured.
Nonrenewal - Answers - The termination of a policy at the expiration of its term. The
policy does not renew and no coverage is provided after the expiration date.
Non-Currency/Concurrent Policies - Answers - The existence of two or more policies
covering the same exposures that don't have the same policy periods. Non-concurrency
may create a coverage gap when underlying liability policies and an umbrella policy are
non-concurrent because if an underlying liability policy exhausts its aggregate, it may
violate the umbrella's underlying limits requirement.
Bailee - Answers - A person or any organization to which property has been entrusted,
usually for repairs, servicing or storage. Because bailees are legally responsible for
property in their care, property insurance policies specifically exclude coverage for
property in the care of a bailee.
Bailor - Answers - A person or organization that entrusts property to a bailee.
Primary Insurance - Answers - Any type of coverage that responds to a loss before all
other coverage responds.
Accident - Answers - A sudden, unforeseen, unintended, and unplanned event from
which loss or damage results.
Occurrence - Answers - An accident includes continuous or repeated exposure to the
same general harmful conditions.
Cancellation - Answers - The termination of an insurance policy before its expiration
date. Once cancelled, a policy provides no coverage. A policy may be cancelled by the
insured or insurer.
Proximate Cause - Answers - The primary cause of loss. If only one peril caused the
loss, the proximate cause is the first event in the unbroken chain of events that resulted
in loss. If more than two perils caused or contributed to the loss, the proximate cause is
the peril having the most significant impact in generating the loss or damage.
Hostile Fire - Answers - A fire that burns outside its intended boundaries, or becomes
uncontrollable. Examples of a hostile fire include a wildfire or a fire that damages a
home when a spark from a fire in the fireplace ignites a piece of furniture.
Friendly Fire - Answers - A fire that was intentionally set and stays within its intended
boundaries (e.g., a fireplace) and results in smoke damage to the inside of a fireplace.
Property insurance does not cover damage
Inherent Vice - Answers - A quality within property that causes it to damage or destroy
itself. Examples include rust, rot and the fading of paint. not covered by a property
policy.
Binder - Answers - A legal agreement issued by an insurance company or a producer
that provides temporary proof of insurance until the insurer is able to issue an insurance
policy. issued for specific time periods (maximum of 60 days) and automatically end
when the policy is issued.
Arbitration - Answers - Process whereby a disputed claim is decided by a neutral third
party. The disputing parties choose the impartial third party and agree in advance to
accept the final decision
Right of Salvage - Answers - The right of the insurer to take possession of damaged
property after paying for its loss. The salvage belongs to the insurer.
Salvage Value - Answers - The amount for which property can be sold at the end of its
useful life.
Endorsement - Answers - A policy form that alters or adds to the provisions of a
property and casualty insurance contract.
, Concurrent Causation - Answers - A principle holding that when two perils
simultaneously cause a loss (i.e., they are both considered the proximate cause of
loss), the insurer must pay the loss even if one of the perils is excluded by the policy.
Concurrency/Concurrent Policies - Answers - The existence of two or more policies
covering the same exposures, having the same policy periods, and the same coverage
triggers.
Deductible - Answers - The specified amount of each loss that the insured must bear. In
property insurance (and with a per claim, or per occurrence, deductible), the insurer
subtracts the deductible from the amount of loss when making payment.
Pro Rata Cancellation - Answers - A proportionate cancellation of insurance that
refunds premium to the insured based on the precise number of days coverage was in
effect. The earned premium is the premium charged and retained by the insurer for the
number of days coverage was in place; the unearned premium is the premium refunded
to the insured for the number of days coverage was not in place.
Short Rate Cancellation - Answers - A cancellation of insurance that incurs a financial
penalty. Sometimes when the insured cancels the policy before its expiration date, a
short-rate cancellation is issued. The insurer retains a portion of the unearned premium
to cover costs.
Flat Cancellation - Answers - A cancellation of insurance that is retroactive to the
effective date of the policy. No coverage is provided and the insurer must refund the
policy premium paid by the insured.
Nonrenewal - Answers - The termination of a policy at the expiration of its term. The
policy does not renew and no coverage is provided after the expiration date.
Non-Currency/Concurrent Policies - Answers - The existence of two or more policies
covering the same exposures that don't have the same policy periods. Non-concurrency
may create a coverage gap when underlying liability policies and an umbrella policy are
non-concurrent because if an underlying liability policy exhausts its aggregate, it may
violate the umbrella's underlying limits requirement.
Bailee - Answers - A person or any organization to which property has been entrusted,
usually for repairs, servicing or storage. Because bailees are legally responsible for
property in their care, property insurance policies specifically exclude coverage for
property in the care of a bailee.
Bailor - Answers - A person or organization that entrusts property to a bailee.
Primary Insurance - Answers - Any type of coverage that responds to a loss before all
other coverage responds.
