Property & Casualty - PA – Basics Questions and Answers Rated A+

Property & Casualty - PA – Basics Questions and Answers Rated A+ Property Insurance 2 party contract. Casualty Insurance 3rd party contract. Liability. Insurable Interest Financial someone has in someone or something. Required for coverage. Must exist AT THE TIME OF LOSS. Underwriting Gathers information. Issue policy, decide on rates, fees and credits, may change coverage in order to issue, may reject a policy completely. GOAL = avoid adverse selection. Rates Objective = establish price to cover claims. Rate = price per unit. Premium = rate per unit x's number of units. 3 Types: judgment, manual & merit. Rates - Judgment Used for commercial policies only. Non-standard risks. Rates - Manual (Class) For those with similar characteristics are put into classes. Those classes are rated and everyone in that class is charged the same according to their risk etc. Rates - Merit Based on individual loss history. Experience and Retrospective (loss history) rating is used. WC policies. Considers characteristics. Hazards Increase possibility of loss. 3Types: Physical - structural, Moral - character flaw, Moral - careless. Peril Causes of loss. Peril - Named / Open Named - listed on the policy. Coverage provided to those listed. Open - All perils are covered UNLESS they are listed. Peril - Basic / Broad Basic - The basic perils all policies will cover unless excluded. Broad - includes all of the basic perils but goes further to add 7 more. Direct / Indirect Loss Direct -Loss caused directly from the peril. Indirect - loss due to circumstances caused by the direct loss (loss of use). Coverage - Blanket / Specific Blanket - specific limit, more than one type of property or at more than one location. Specific - specific insurance coverage for multiple locations. Construction of Property Frame, Joisted Masonry, Noncombustible, Masonry Noncombustible, Modified Fire Resistive, Fire Resistive. Loss Valuation Actual Cash Value (ACV)-Replacement Cost - Depreciation, Replacement Cost - cost to replace at the time of loss, Functional Replacement Cost - older structure replacements with more modern materials, Market Value - value of property if on the market at time of loss, Agreed Value - an agreed upon value with insured and insurer, Valued Policy - used for total loss. Policy - Declarations Page The who, what, when. Named insured, location of property, description of insurance, endorsements. Personalizes. Policy - Definitions Page Defines terms found in the policy. Policy - Insuring Agreement Summaries the promises made by the insurer.