Oklahoma Property and Casualty
Questions & Answers
Coinsurance - ANSWER-A policy provision which requires the insured to carry an
adequate amount of insurance. Penalty applies when property is insured for an amount
under the market value of the dwelling.
Mandatory Parts of a Policy - ANSWER-1. Declarations
2. Insuring Agreement
3. Conditions
4. Exclusions
Non-mandatory Parts of a Policy - ANSWER-1. Endorsements
2. Definitions
Endorsements - ANSWER-Add, delete or modify the insurance contract.
Definitions - ANSWER-Defines terms for a specific contract.
Declarations - ANSWER-Who, what, when, where and how much.
Insuring Agreement - ANSWER-Provides the major coverages (two to four per policy).
Conditions - ANSWER-Policy territory, appraisal cause, arbitration, insured's duties in
the event of a loss, cancellation or non-renewal, other insurance, subrogation, standard
mortgage clause, assignment, right of salvage, abandonment, loss settlement,
liberalization, loss payment and property coinsurance.
Exclusions - ANSWER-Omit risks which are not insurable, eliminate risks duplicated by
another policy, eliminate risks for high risk exposures.
Limit of Liability - ANSWER-The maximum amount the policy will pay in the event of a
covered loss.
Right of Salvage - ANSWER-The insured turns the damaged property over to the
insurer after payment is made for the damaged goods.
Subrogation - ANSWER-After an insurance company has paid a claim, it takes over the
rights to recover from the responsible third party.
80% - ANSWER-Standard co-insurance amount.
, Vacant - ANSWER-Property that does not contain sufficient furnishings to support its
intended use.
Risk Management Techniques - ANSWER-1. Retain the Risk.
2. Avoid the Risk.
3. Reduce the Risk.
4. Transfer the Risk.
Appraisal Clause - ANSWER-Found in the conditions section of a policy, used to
determine the amount of property loss.
Risk - ANSWER-A chance of loss.
Indemnity - ANSWER-Restoring the policyholder to his/her original financial condition
before the loss, while not allowing gain.
Concealment - ANSWER-The failure of an applicant for insurance to disclose a known
fact on an application.
Two Types of Risk - ANSWER-1. Pure
2. Speculative
Unilateral Contract - ANSWER-A contract that is legally enforceable by only one party.
Actual Cash Value (ACV) - ANSWER-Replacement cost at the time of loss less
depreciation.
Actuary - ANSWER-The person who establishes rates for the insurer.
Law of Large Numbers - ANSWER-The larger the number of units considered, the more
predictable the losses are.
Assignment - ANSWER-The condition that allows the insured to change the ownership
of the policy to another person with only the insurer approval.
Abandonment - ANSWER-The insured leaving the damaged property and demanding
full payment for a total loss.
Negligence - ANSWER-The failure to act as a reasonable and prudent person would do
under the same or similar circumstances.
Bailee - ANSWER-Business people in service occupations who have temporary custody
of the property of others in order perform a service.
Other Insurance Clause - ANSWER-Term used under a property policy when two
insurers pay on the same claim.
Questions & Answers
Coinsurance - ANSWER-A policy provision which requires the insured to carry an
adequate amount of insurance. Penalty applies when property is insured for an amount
under the market value of the dwelling.
Mandatory Parts of a Policy - ANSWER-1. Declarations
2. Insuring Agreement
3. Conditions
4. Exclusions
Non-mandatory Parts of a Policy - ANSWER-1. Endorsements
2. Definitions
Endorsements - ANSWER-Add, delete or modify the insurance contract.
Definitions - ANSWER-Defines terms for a specific contract.
Declarations - ANSWER-Who, what, when, where and how much.
Insuring Agreement - ANSWER-Provides the major coverages (two to four per policy).
Conditions - ANSWER-Policy territory, appraisal cause, arbitration, insured's duties in
the event of a loss, cancellation or non-renewal, other insurance, subrogation, standard
mortgage clause, assignment, right of salvage, abandonment, loss settlement,
liberalization, loss payment and property coinsurance.
Exclusions - ANSWER-Omit risks which are not insurable, eliminate risks duplicated by
another policy, eliminate risks for high risk exposures.
Limit of Liability - ANSWER-The maximum amount the policy will pay in the event of a
covered loss.
Right of Salvage - ANSWER-The insured turns the damaged property over to the
insurer after payment is made for the damaged goods.
Subrogation - ANSWER-After an insurance company has paid a claim, it takes over the
rights to recover from the responsible third party.
80% - ANSWER-Standard co-insurance amount.
, Vacant - ANSWER-Property that does not contain sufficient furnishings to support its
intended use.
Risk Management Techniques - ANSWER-1. Retain the Risk.
2. Avoid the Risk.
3. Reduce the Risk.
4. Transfer the Risk.
Appraisal Clause - ANSWER-Found in the conditions section of a policy, used to
determine the amount of property loss.
Risk - ANSWER-A chance of loss.
Indemnity - ANSWER-Restoring the policyholder to his/her original financial condition
before the loss, while not allowing gain.
Concealment - ANSWER-The failure of an applicant for insurance to disclose a known
fact on an application.
Two Types of Risk - ANSWER-1. Pure
2. Speculative
Unilateral Contract - ANSWER-A contract that is legally enforceable by only one party.
Actual Cash Value (ACV) - ANSWER-Replacement cost at the time of loss less
depreciation.
Actuary - ANSWER-The person who establishes rates for the insurer.
Law of Large Numbers - ANSWER-The larger the number of units considered, the more
predictable the losses are.
Assignment - ANSWER-The condition that allows the insured to change the ownership
of the policy to another person with only the insurer approval.
Abandonment - ANSWER-The insured leaving the damaged property and demanding
full payment for a total loss.
Negligence - ANSWER-The failure to act as a reasonable and prudent person would do
under the same or similar circumstances.
Bailee - ANSWER-Business people in service occupations who have temporary custody
of the property of others in order perform a service.
Other Insurance Clause - ANSWER-Term used under a property policy when two
insurers pay on the same claim.
