Property/Casualty Illinois for State Exam All Answers Correct

Property/Casualty Illinois for State Exam All Answers Correct ISO (Insurance Services Office) ️ISO creates standardized property and casualty insurance policies that are approved by states and used as a standard policy for insurers. -they can be modified to comply with state regulations -may be modified to a degree for insurance companies to create their own policy form define insurance ️Insurance transfers the risk of loss from an individual or business entity to an insurance company, which in turn spreads the costs of unexpected losses to many individuals define risk ️uncertainty concerning the occurrence of a loss What are the 2 types of risk? ️Pure and Speculative What is the difference between pure and speculative risk? ️only pure risk is insurable since it can only result in a loss or no change speculative risk is not insurable since it can result in a loss or gain (like gambling) What are the 3 types of hazards? ️1) Physical - hazards arising from the material, structural, or operational features 2) Moral - refers to applicants that may lie on their application 3) Morale - increase the hazard presented by a risk arising from the insured's indifference to loss because of the existence of insurance (combustible material near a furnace) peril ️causes of loss hazards ️conditions/circumstances that increase the probability of an insured loss occurring there are 3 types direct loss ️direct physical damage to buildings/personal property *this includes proximate cause: chain of events resulting from a covered peril indirect loss/consequential losses ️losses considered a result of direct loss; this usually results from when repairs begin so it could be additional living expenses for homeowners or loss of profits for businesses named peril ️lists of specific perils; no coverage for unlisted perils open perils (all risk) ️insures against any risk of loss that is not excluded Explain the difference between vacancy and unoccupied ️vacancy refers to a property that has no people or personal property in it for 60 days unoccupied refers to a property that has no people in it but there is personal property in it 3 elements of insurable risk ️1. Financial (a monetary interest) 2. Blood (a relative) 3. Business (a business partner) indemnity ️to reimburse or make whole; permitted to collect only to the extent of financial loss (cannot gain) subrogation ️The process by which an insurer can, after it has paid a loss under the policy, recover the amount paid from any party (other than the insured) who caused the loss or is otherwise legally liable for the loss. Accident vs. Occurrence ️an accident is a sudden, unplanned and unexpected event not under the control of the insured and results in injury/damage that is not intended/expected an occurrence includes losses caused by continuous or repeated exposure to conditions resulting in injury to persons or damage to property that is neither intended nor expected BLANKET VS SPECIFIC ️BLANKET COVERAGE-provides coverage for different classes of property under one policy SPECIFIC INSURANCE-is when you insure a specific item or specific kind of property actual cash value ️recognizes the reduction of value of property as it ages and becomes subject to wear and tear and obsolescence calculated by: (current replacement cost) - (depreciation) replacement cost ️The cost to replace damaged property with like kind and quality at current price, without any deduction for depreciation market value ️valuing a loss based upon the amount a willing buyer would pay to a willing seller for the property prior to the loss; considers the land and location rather than the cost of rebuilding the structure itself (rarely used) agreed value ️provision agreed upon by the insurer and insured as to the amount of insurance that represents a fair valuation for the property at the time the insurance is written and suspends coinsurance (items whose value does not fluctuate much) stated value ️An amount of insurance scheduled in a property policy that is not subject to any coinsurance requirements in the event of a covered loss 3 types of liability ️1. Absolute - if you aren't protecting others from it (absolutely something will go wrong; swiming pool) 2. Strict - deals with product liability; manufacturers/sellers of a product makes an implied warranty that a product is safe; business is liable for defective products 3. Vicarious- responsible for others' actions; transfer liability to someone with a greater ability to pay (dog unleashed; children throw party) per occurrence vs per person ️per occurrence puts a ceiling on the payment for all claims that arise from a single accident/occurrence per person put a limit on the amount of payment available for bodily injury for a single person aggregate limit ️maximum amount an insurer will pay for all covered losses during the covered policy period what are the designated coverages for 25/50/25? ️25 - injury of a single person 50- bodily injury for 2 or more people 25 - damage to property of others this is a split limit Combined Single Limit ️The most the policy will pay for all losses of all types resulting from any one