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P&C Exam-Casulty
| Question | Answer |
|---|---|
| Direct Physical Loss | A loss in which damage occurs as the result of an occurrence without an intervening cause, such as hail damage to the roof of a house |
| Intervening Cause | An event that interrupts the chain of causation by providing an independent cause of the final result |
| Indirect/Consequential Loss | A loss in which damage occurs as the result of a direct loss, such as the insured's increase in expenses when required to stay in a hotel because a hail-damaged home cannot be lived in |
| Exposure | The condition of being at risk for financial loss due to hazards or unforeseen events |
| Legal Hazard | Legal risks are created when legal authority in a certain situation is unclear/ unsettled. Can arise from changes in the law or from court rulings. An example would be a change in the building code requiring new construction to use different materials |
| tort | a civil wrong that unfairly causes someone else to suffer loss or harm resulting in legal liability for the person who commits the tortious act. can be crime or negligence |
| Elements of Insurable Risks - A risk must: | be accidental and due to chance; be measurable with respect to value; be predictable; be one unit in a large enough pool that law of large numbers allows for accurate predictions; not be CAT in nature; generate rate that is reasonable and fair |
| Insurability of pure vs. speculative risks | pure risks are insurable, speculative risks are not |
| Reinsurer vs. Ceding Insurer | Re sells reinsurance to ceding insurers; Cedent buys re from reinsurer and issues primary policies of insurance and/or business |
| Reinsurance - Excess of Loss | Reinsurer only pays for losses that exceed a certain dollar amount (e.g. $500,000) |
| Reinsurance - Proportional | Reinsurer only pays a share of every reinsured loss (e.g., 90%). |
| Deductible | The monetary amount an insured must pay before the insurer will begin making loss payments. A deductible is a form of risk-sharing and cost containment. Most forms of insurance contain standard deductible amounts (e.g., $500) |
| Co-insurance | clause requires a specified amount of insurance based on the value of the insured property. If insd insures the property for less than this amount, he/she must share in a % of a loss to the same % that the property is under insured at the time of the loss |
| Stock Companies | Insurers organized under the laws of the state in which they are incorporated that are owned by shareholders who elect officers and directors and share in profits through stock growth and dividends |
| Mutual Companies | Insurers owned by policyholders who share profits through dividends and can attend and vote at company meetings. Mutual insurers are further divided into Risk Retention Groups and Purchasing Groups |
| Assessment Mutual Insurers | Losses are shared among group members |
| Assessment Mutual Insurers: Pure Assessment Group | There is no advance premium; losses are assessed to each member as they occur |
| Assessment Mutual Insurers: Advance Premium Assessment Group | Prems paid at the beg of each assessment period-claims are paid from these prems. If there are more claims than premiums paid in, additional assess levied against each member. If there is $ left at the end of period the $ is returned to the group members |
| Reciprocals (Reciprocal Insurers) | Groups that exchange insurance on each other; appoint/empower attorney-in-fact which binds members together; share in profits or losses; insured members call subscribers |
| Risk Retention Groups | A mutual insurer that insures people in the same profession or business |
| Purchasing Groups | not an ins co; any group of persons with similar/related liab risks who form an org; purpose is to purchase commercial liability insurance on a group basis; no specific legal structure req; members must be in sim/related business/ exposed to sim risks |
| Purchasing Groups - Trade Association | a simple resolution of the board authorizing the organization's officers to make arrangement to purchase commercial liability insurance on a group basis would be sufficient to establish the purchasing group |
| RRG vs. PG | Both RRGs and PGs require members to be homogeneous, i.e. engaged in similar businesses or activities that expose them to similar liabilities; primary diff = RRGs retain risk/require members to capitalize while PGs do not/no capital |
| Fraternal Benefit Societies (Self-Insurers) | based on religious, ethnic, or national lines, and noted primarily for social and charitable functions. Fraternal Benefit Societies are societies, orders, or supreme lodges, with no capital stock that may or may not be incorporated |
| Syndicate Insurers/Lloyd's Associations | Not really insurance companies, syndicates provide a place for members to meet and transact the business of insurance individually or as groups (through a syndicate manager). |
| Financial Status (Independent Rating Services) | provide info on co's such as $fin. strength, mgmt caliber, & efficiency of op: publish guides to analyze almost all prop & liab business insr; review UW results, mgmt, adeq of reserves for liabs that aren't discharged, ade of PH, soundness of investments |
| Exclusive/Captive Agents or Producers | Agents appointed by an insurer to represent the company by selling and servicing policies on its behalf, representing only one company |
| Independent Agents or Brokers | Agents that represent several insurers and can, therefore, offer various premiums to the customer |
| Nonresident Agent | An agent authorized to write business in a state other than the one in which he lives. |
| Direct Writer | An insurer that deals directly with the insured through a salaried representative or captive/exclusive agent rather than through independent brokers |
| Direct Mail/Direct Response | Policies are marketed from the company's home office rather than through agents. Marketing is done through direct mail, internet, newspapers or magazines, and radio or TV |
| Insurer as Principal | the insurer empowers the agent to act as a representative of the company. Legally, the acts of the agent are considered to be the acts of the principal |
| Law of Agency | Any act on the part of an agent of the company is the same as if the company itself did the act |
| Responsibilities to the Applicant/Insured | the ins co must pay all sums up to the policy limits that the insd becomes leg liab to pay-the insr pays the lower of the claim/loss or the pol lim. Deductibles will be applied to any prop claims, but there is no deductible for medical or liabclaims |
| Offer and Acceptance - for there to be an agreement | applicant submits app along with correct prem; insurer issues policy - if app doesn't submit $ with app, it is only an invitation to insurer to make offer and agent can't bind coverage |
| Legal purpose | insurance policy owner must have an insurable interest in the property or person being insured - financial interest wherein the insured could lose financial position if the property were damaged or destroyed, or if the person was injured or died |
| Contract of Adhesion | Only one party to the contract, the insurer, prepares the contract and submits it to the other party, the insured, for acceptance. The insured cannot make any changes to the contract |
| Aleatory Contract | Unequal amounts of money are exchanged. The premium that the insured pays is less than the potential benefit he or she will receive in the event of a loss. |
| Personal Contract | cover the insurable interest of the individual insured and cannot be transferred or assigned to another individual-the exception is life insurance, i.e. insurance contract |
| Unilateral Contract | Only one party is legally bound to perform any duties once the premium is paid; insurer has to legally enforce promises, insured doesn't make promise but pays prem to constitute consideration |
| Legal Interpretations Affecting Contracts: Ambiguities in a Contract of Adhesion | Any doubt or ambiguity found in an insurance policy will be found in favor of the party that did not draw up the contract-the insured |
| Legal Interpretations Affecting Contracts: Reasonable Expectations | The reasonable expectations of policy owners or beneficiaries will be honored even though the strict terms of the policy do not support these expectations |
| Legal Interpretations Affecting Contracts: Utmost Good Faith | Applicants and insureds are expected to make a full, fair and honest disclosure of facts. Insurers are expected to promptly indemnify the insured in the event of loss according to the contract |
| Agent Misrepresentation | whether intended or not, is more likely to void a policy than the insured's rep, (unless insd's misrep is material to the risk.) For example, an agent may falsely represent that certain coverage is contained in the policy, when in fact it is not. |
| Warranties | The insured's guarantee that facts as stated are correct in reference to the risk, or that specified conditions will be fulfilled to maintain the contract |
| Concealment | The willful failure to disclose facts that are material to the risk. An applicant's concealment of information from the insurance company could affect the insurer's decision whether or not to insure the property and could void the policy |
| Fraud | Deceit, intentional misrepresentation, or the concealment of material facts with the intention of causing injury to another party |
| Waiver | The voluntary abandonment of a known or legal right or advantage |
| Estoppel | The concept that, once a fact has been admitted to be true by a previous action, it can no longer be denied to be true |
| Underwriting | review the application to verify information and to decide if this risk is one acceptable by the company |
| After underwriting, an insurance application be categorized as: Acceptable with standard rates | The insurance policy will be issued as applied for, subject to full premium payments |
| After underwriting, an insurance application be categorized as: Acceptable with substandard rates or with exclusions | The policy will be issued, but the insured must sign an endorsement showing that he or she accepts the changes and/or increased premium and must pay the increased premium to keep the policy in force. |
| After underwriting, an insurance application be categorized as: Unacceptable and denied coverage | If the insurer denies coverage to an applicant, the insurer must give a detailed, written explanation as to why the coverage was denied. Any paid/unearned premium is returned; insd can seek ins through high risk insr or state FAIR plan |
| Loss Ratio | one way of measuring the insurer's profitability by comparing claims expense to premiums; the lower the ratio the bettrer the insr's claims experience and more profitable the company |
| Loss Costs | Loss costs represent the portions of insurance rates used to cover claims and the costs of adjusting claims. Insurers determine rates by estimating their future loss costs and adding a provision for expenses, profit, and other |
| Components/Premium Rate Determination | claims costs and related expenses, insurer administrative expenses, investment income (from invested premiums and other income), producer commissions, and insurer profits |
| Legal liability exists if | a. negligence occurred b. that there was actual damage or loss c. that the negligence was the proximate cause of loss |
| Common Law defenses | Automatism, duress, insufficient mental capacity, SODDI |
| Compensatory Damages - Special/Specific | The actual expenses incurred by an individual or entity as the result of lost wages or income, medical bills, or damaged property |
| Compensatory Damages - General Damages | Damages due to pain, suffering, mental anguish, and similar losses |
| Punitive/Exemplary Damages | assessed in addition to specific and general damages as a punishment for extreme or gross negligence by the offending and liable party |
| When are Punitive/Exemplary Damages requested/awarded | In a lawsuit when the defendant's willful acts were malicious, violent, oppresive, fraudulent, wanton, grossly reckless; could include sexual harrassment |
| Absolute/Strict Liablity | individual can be held liable even if negligence does not exist or cannot be proven. The injured party may collect damages even though there is nothing legally wrong with what the other person did or the manner in which they did it |
| Vicarious liability | arises out of imputed negligence - one individual becomes liable for the negligent behavior of another |
| Application | A request in writing (provided by the insurer) for specific coverage for specific risks (becomes part of the entire contract) |
| Proof of Loss | It is written proof that a loss has been incurred (police report, repair estimate, medical report) |
| Additional/Supplementary Coverage | payments that the insurer will pay over and beyond the policy's liability limits, including legal fees for defending ins'd if lawsuit goes to trial, claims expense, 1st aid exp to others, damage to prop/person of others when not LL, loss assessment cov. |
| Definition of an Insured | The named business (corporations, sole proprietors, or partnerships), its officers, partners, employees, real estate managers, custodians and mobile equipment operators acting within the scope of the business, newly acquired operations |
| Additional Insured | an individual or entity who, other than the named insured, qualifies as an insured under the policy. This is especially the case if there is a specific interest involved, such as a mortgage or a business arrangement |
| The insured may cancel the policy by | Returning the policy to the insurer or to the insurer's representative; Notifying the insured in writing as to when the cancellation is to take effect |
| The insurance company may cancel the policy by written notice because of non-payment of premium: | 10 days before cancellation |
| The insurance company may cancel the policy by written notice because of any reason (aside non-payment of premium) | within 60 days of application |
| If an insurance policy is in effect for more than 30 days, the insurer may | cancel the policy on its anniversary date, within 31 days of written notice |
| The insurance company may cancel the policy by written notice at any time within 31 days for which reasons | discov of grossly neg acts/omissions by insd that increase risk of hazard; op changes in ind's bus or the cov risk; phys changes in insd's prop- uninsurable; insd convicted on crime that increases hazard; disc of fraud in obtaining policy/pursuing claim |
| Non-Renewal Provisions | The insurer may non-renew or conditionally renew with a reduction of limits or with elimination of some coverages, by giving at least 30 days written notice |
| Non-Currency | Two or more policies may be in force for the same risk, but they do not cover a risk in the same way at the same time. This may create coverage gaps for the insured if the policies miss a needed section of coverage |
| Pro-Rata | When more than one company insures a particular risk, pro rata apportionment is the division of a loss according to the percentage interest of the various companies providing the insurance on the risk |
| Limits of Liability | The maximum amount the insurer will pay for the entire policy period to cover legal requirements the insured may be liable for as the result of an accident is shown on the Dec Page. |
| Limits of Liability - each of these coverages have its own separate policy limit: | BI/PD, Products Liability, Fire Liability, Personal and Advertising Injury, Medical Payments |
| General Liability Aggregate Limit | exists because a company is in business. For example, it covers someone tripping and falling down at a business. |
| Products Completed Operations Liability Aggregate Limit | exists for liability that arises out of the business pursuits of the insured, including production of goods, business services and/or damage that results therefrom |
| Personal Liability Limits: Per Occurrence (Accident) Limit | Amount available for any individual loss or claim up to the aggregate limits, unless the aggregate limits of the policy have already been reached |
| Personal Liability Limits: Per Person Limits | amount available for any one person through the policy. Ex- Person A may only be covered for up to $20,000 after an automobile accident, but the total amount available for each claim is $40,000; often used for med cov |
| Split Limits | coverage is a different amount for different things, such as $10,000 for bodily injury per person and $40,000 BI per occurrence. Split liability is shown as 20/40/15 and is usually used in general liability and auto liability. |
| Duties after loss (claims handling) | fully cooperate with insurer's investigation/settlement/defense of claim; provide proof of loss and take reasonable steps to prevent further loss; third party claimaint must make claim against insured-insd must submit claim to own insr |
| Subrogation | The insured must assign rights to make a claim against the other party to the insurer upon the insurer's handling of the claim settlement |
| Arbitration | In the event of disagreement of the insurer's handling of a claim, the insured and the insurer may each select an appraiser, and if there is still disagreement, the two appraisers select an umpire appraiser |
| Salvage | The insurer may pay either the cost to repair or replace the damaged vehicle or property, or the Actual Cash Value; insurer has right to possess item after full value - deductible is returned to insured; can sell and keep proceeds |
| Assignment | the transfer of a policy or some of the policy's rights from the insured to another entity |
| Assignment Clause | states that the policy cannot be assigned/transferred to another without written authorization, signed by an officer (not the agent) of the insurance company |
| Liberalization | If the insurer changes the same type of policy the insured owns in any way, providing for more coverage without additional premium, the insured's original policy will be extended for those coverages without need for additional forms or premium |
| Duty to Defend | The insurer has the responsibility to defend the insured against lawsuits or liability claims |
| Fair Credit Reporting Act | federal law that regulates the collection, dissemination, and use of consumer information, including consumer credit information |
| Use of Consumer Credit Information | A growing number of personal auto and homeowner's insurance companies have begun looking at consumer credit information to decide whether to issue or renew policies, or to decide what premiums to charge for those policies |
| Insurance Companies may not use consumer credit to | discriminate against people with low incomes, particular genders, or races. They also may not gather information to track medical information and use that in figuring credit worthiness and premium rates |
| Underwriting Use of Credit Information | issue a new policy or to renew existing policies. Some state laws prohibit insurance companies from refusing to issue a new policy or from non-renewing an existing policy based solely on information obtained from a credit report |
| Consumer rights in regard to credit info & rating | A consumer must be told if their premium has been adversely affected by a credit score; They may get a free report from the reporting agency, and challenge any adverse info |
| While consumers can't change the information that adversely affects their premium, they can | a. discover what creditors issued offending information and write them asking to correct misinformation b. Write the credit company with their side of a credit dispute |
| How long can negative information stay on a credit report | credit reporting co can generally report most neg info for 7 years; info about a lawsuit/judgment against you can be reported for 7 years or until statute of lim runs out, whichever is longer |
| Time limits on reporting negative information do not apply if the credit report will be used in connection with | •Your application for a job that pays more than $75,000 a year; Your application for more than $150,000 worth of credit or life insurance |
| Loss/Claims Settlement Provision | The provision in an insurance policy that defines the method that will be used to determine if a claim will be paid and the amount of money (claim payment) the insured will receive as a result of a claim |
| Loss/Claim settlement provision in liablity losses | ins co can settle the claim with a 3rd party at it's own discretion, often depending on what will be most cost effective; in E&O or Malpractice (Prof Liab) case, insurer must obtain insured's consent since claim could affect the insured's reputation |
| Acts of Terrorism must first be certified by | the Secretary of the Treasury, in concurrence with the Secretary of State and the Attorney General of the United States |
| Acts of Terrorism must be certified by the proper parties and also must be: | a violence act/act dangerous to human life, prop, infrastructure; result in damage with US/outside US in case of air carrier/vessel/premises of US mission; committed on behalf of foreign person/interest as effort to coerce civ pop of US or influence pol |
| What is not considered an act of terrrorism | Act that is committed in the course of a declared war |
| Terrorism exceptions | for purposes of WC; for the case of P&C policies where the losses resulting from the act exceed $5M in total losses |
| Insured loss from TRIA: any loss if it occurs | within the US; in air carrier, to a US flag vessel/vessel based in US or which US inc tax is paid & whose ins cov is reg in US regardless of where loss occurs; at premise of US mission |
| TRIA insured loss excludes | amounts awarded in a civil action that are attributable to punitive damages |
| Difference between Certified and Non-Certified Act Requirement for Terrorism Risk Coverage to be Offered a Certified and Non-Certified loss in TRIA | The main difference between a certified and a non-certified act of terrorism is that a certified act always involves a foreign person or interest, while a non-certified act may not |
| Requirement for Terrorism Risk Coverage to be Offered | Insurers are allowed to charge extra premium for terrorism coverage, but must give the option to all commercial property and casualty insureds |
| To speed availability of terrorism risk insurance as called for in the Act | rates+forms for the cov dont need to be pre-filed with any state/ be subject to prior approval/ awaiting period under any state's law through 12/31/03, but may be subject to regulatory review for excessive charges/compliance with state laws once in use |
| TRIA Effect on Workers' Compensation | The federal program shares the risk of loss with Workers' Compensation for acts of war as well as for acts of terrorism. |
| TRIA Extention Act of 2005 | extended the program through 2007 so that the term “P&C ins” doesnt include Comm Auto; Burglary and Theft; Surety; Prof Liab; Farm Owners Multiple Peril |
| TRIA Exexntion Act of 2005 Marketplace Aggregate Retention Amount | will now be the lesser of the aggregate amount for all insurers and $27,500,000,000 for 2007. |
| Reauthorization Act of 2007 | An “act of terrorism” can be done by any individual(s) as part of a effort to coerce the civilian population, no longer only in the interest of a foreign person or interest |
| TRIA Deductible in Reauthorization Act of 2007 | 2008-2014 is the value of an insurer's direct earned premiums for the previous year multiplied by 20% |
| Loss Assessment Coverage | an optional coverage that protects the individual condominium owner or homeowners association member from their share of a pro rata loss assessed by the association for losses over the amount of the association's policy |
| HO-2 | Broad form coverage, named peril |
| HO-3 | Special Form Coverage, all-risks/open peril |
| HO-4 | Homeowners contents/tenant/renter's coverage |
| HO-5 | Comprehensive form with all-risk/open peril |
| HO-6 | Condominium unit owner form |
| HO-8 | Modified coverage form, market value policy |
| HO Section II - Liablity Coverages - which parts of policy cover liability | Coverage E covers personal liability; Coverage F covers medical payments to others |
| HO Coverage E | Covers amounts for which an insured is Leg Liab because of BI/PD caused to third party, whether on or away from insured premises - includes $100,000 liability coverage |
| Onsite and Offsite examples of Coverage E | A visitor falls down the stairs of the insured home; The insured breaks someone's leg while playing basketball at a local gym |
| HO Coverage F | Medical payments; covers emergency medical tretment to those other than the insured for injuries on the insured premises or by an insured - considered good will; purpose is to avoid entering liability coverage by taking care of minor injuries |
| Additional Coverages for HO Section II | Deb Remov; Pres of prop; fire dep service charges (max $1000); clean-up for pollutants from land/water if covered loss caused discharge/escape of polluted material (max $10k); increase cost of construction due to change in ordinance/law; electronic data |
| Exclusions under HO 2000 | Hovercraft liability; communicable disease (BI/PD arising out of transmission of comm dis); sexual molestation/corp pun/phys or mental abuse; controlled substance; liabity caused by intentional acts/neg; liability to insd EE |
| Additional HO Personal Property Exclusions for | Hovercraft and Parts; water or steam-water |
| Hovercraft and Parts | Self propelled motorized ground effect vehicles such as flarecraft and air cushion vehicles |
| Water or Steam-Water | not considered personal property of the insured, even after it has passed through the insured's water meter. |
| Pair and Sets Clauses | If a single item in a pair or set is lost or destroyed, the insurer will repair, replace, or pay the value of the lost part, or will pay the difference between the actual cash value of the property before and after the loss |
| Additional/Supplemental HO Coverage - payments over the stated insured amount include | Debris removal and cost of reasonable repair to prevent add loss; loss of trees/shrubs/plants for limited perils only (5% Cov A; $500 per plant); fire dep charges up to $500; Credit card/check forg/counterfeit $ up to $500 |
| Excluded Perils on HO Policy | 8 general fire policy exclusions + theft & vehiclar damage to building if done by owner/tenant; V&MM if vacant for 60 days; agricultural/industrial smudging; damage by wear/tear/rot/deter/settling/cracking/mech breakdown; damage by birds etc; animals |
| HO Duties after loss | Insured must cooperate with the insurer in the event of a claim investigation |
| HO Legal Action after loss | the time allows to bring action against the insurer is 2 years |
| HO other insurance | Losses covered by a home warranty or service plan are covered first by the warranty or service plan. The Homeowners Policy becomes secondary coverage, paying after the other plan's coverage ends |
| HO Coverage A & Limit of Liability for HO -2,-3,-5,-8 | Dwelling; primary limit is ACV, Market Price, or Replacement Cost |
| HO Coverage B & Limit of Liability for HO -2,-3,-5,-8 | Other Structures; 1 & 2 family dwellings - 50% Cov A; 3 family dwellings: 30% Cov A; 4 family dwellings: 25% Cov A |
| HO Coverage C & Limit of Liability for HO -2,-3,-5,-8 | Personal Property; 1 & 2 family dwellings: 50% Cov A; 3 family dwellings: 30% Cov A; 4 family dwellings: 25% Cov A |
| HO Coverage C & Limit of Liability for HO -2,-3,-5,-8 | Any necesary increase in living expense so household can maintain normal standard of living - payment is for shortest time required to repair/replace damage or shortest time to settle elsewhere |
| HO Coverage A & Limit of Liability for HO -4,-6 | Dwelling; HO-4 - N/A; HO-6: $1,000 limit |
| HO Coverage B & Limit of Liability for HO -4,-6 | Other structures; Limit N/A |
| HO Coverage C & Limit of Liability for HO -4,-6 | Personal Property; this is the policy's primary limit, and depends on amount of insured's personal property |
| HO Coverage D & Limit of Liability for HO -4,-6 | Any necesary increase in living expense so household can maintain normal standard of living - payment is for shortest time required to repair/replace damage or shortest time to settle elsewhere |
| Special Provisions for States (HO 01 24) | There are provisions for homeowners policies which vary from state to state. If the policy wording differs from a state law, the state law prevails. |
| HO - Limited Fungi, Wet/ Dry Rot, or Bacteria Coverage Endorsement | Loss covered when such damage is caused by the accidental discharge or overflow of water/steam, or by constant seepage/leakage of water or the presence of condensation or humidity/moisture/vapor. Damage must be unknown/hidden in walls/ceilings/floors |
| HO - Limited Fungi, Wet/ Dry Rot, or Bacteria Coverage Endorsement Additional Coverages (for additional premium) | Remove the fungi, Tear out &replace any part of the building needed to gain access to fungi, Test air or prop to confirm the absence/presence/ level of fungi only if there is a reason to believe there is the presence of fungi, wet or dry rot or bacteria |
| HO - Limited Fungi, Wet/ Dry Rot, or Bacteria Coverage Endorsement - Cov E | This endorsement also covers liability caused as the result of the build-up |
| HO - Limited Fungi, Wet/ Dry Rot, or Bacteria Coverage Is included in | Coverage is included on the HO-3 and HO-5, and endorsable on the other forms |
| HO - Permitted Incidental Occupancies Endorsement | endorsement extends coverage to premises business property and premises liability for a named particular businesses. Off-premises coverage not included. |
| HO - Earthquake Endorsement | Covers loss caused by earthquake or volcanic eruption; quake can cover buildings only or both buildlings+Pers Prop of insured |
| HO - Earthquake Endorsement Deductible | When added to the property policy, this coverage may have the same deductible as the rest of the policy but usually has a separate deductible that is often expressed as a percentage of the total loss rather than a set amount. |
| HO - Home Day Care Endorsement | This P&L Coverage may be both endorsed or added to the policy - typical endt is for insureds caring up to 3 children in addition to own children; special permission from UW req for more children |
| HO - Business Pursuits Endorsement | (generally exluded but in this case) professional liability/bus pursits of insured who is not the owner/partner in bus are covered for endt |
| HO - Business Pursuits Endorsement does not cover | bodily injury, sickness, disease or death of any fellow employee of the insured; corporal punishment may be purchased for liab but not medical |
| HO - Business Pursuits Endorsement - Examples of possible insured | Teachers, clerical employees, and salesmen |
| HO 24 75 - Watercraft Endorsement | provide personal liability and bodily injury for watercraft with less than 50 horsepower motor rented to you; sailing vessel with less than 26 feet owned by you; watercraft with less than 25 horsepower outboard motor owned by you |
| Watercraft HO 24 75 Endorsement | to cover bodily injury and personal liability for specified watercraft not covered in other HO policies. It does not cover liability incurred in a prearranged race or competition, unless the competition is for sailing vessel or is a predicted log cruise |
| HO Personal Injury Endorsement | adds coverage for non-bodily damages suffered by an individual due to such things as false arrest, slander, malicious prosecution, wrongful entry or eviction, or violation of a person's right to privacy other than by advertising or through the media |
| HO Personal Liability Supplement | Provides personal liability coverage as a separate policy (for someone who owns no property, for instance) or on a supplemental basis to the mono-line Dwelling policies. |
| Motor Vehicle Financial Responsibility Law | Proof of financial responsibility is required when getting a drivers license and after an accident |
| If the driver or owner of a car is involved in an accident, they must show financial responsibility unless | the car was legally stopped/parked; the vehicle was driven without the owner's permission; no damage occurred to any person/property other than yourself |
| Financial responsibility for Motor Vehicle can also be proven in one of the following ways, which vary by state | Show valid insurance coverage (most common), a self-insured identification card issued by the state; post money to the state's Office of Driver's Services; obtain release from injured/damaged party or file agreement to an installment plan after accident |
| Motor Vehicle Financial Responsibility Law: Failure to show or maintain proof of financial responsibility | will result in the suspension of the drivers license and registration |
| State Laws and Personal Auto Policy (PAP) - Required Limits of Liability | min requirements vary by state; lowest limits of liab are in Louisiana (10/20/10); highest are in Maine (50/100/25) |
| Personal Auto Policy Limits of Liability | BI coverage per person/BI coverage per occurrence/PD coverage per occurrence |
| Personal Auto Policy - Required Proof of Insurance | to drive a vehicle; to obtain a license; to title and/or register an automobile; to reinstate a license after it has been revoked |
| Automobile Insurance Plan | A mechanism established by indiv states to make sure that individuals/companies can obtain auto insurance even if private insurance companies are not willing to write such insurance on a voluntary basis; Assigned risk plans may be Joint Underwriting |
| Notice of Eligibility in Assigned Risk Plan | When the insurance company notifies the named insured of cancellation or the intent to not renew, the insurer must also notify the named insured of their possible eligibility for automobile insurance through the Automobile Assigned Risk Plan |
| Personal Auto Policy - After Market Parts Regulation: OEM | The original equipment manufacturer is the maker of the car who also makes the replacement parts. |
| Personal Auto Policy - After Market Parts Regulation: Non-OEM | A non-original equipment manufacturer is a manufacturer who did not make the car but does make replacement parts for the car |
| Personal Auto Policy - After-market parts | generally less expensive than OEM parts and are therefore often preferred by insurers intent on keeping claim costs to a minimum |
| Though the law varies by state, no insurer can require the use of after-market-parts unless | The part is equal in quality to that of the OEM and carries identification that it is an after-market-part; •The insured is notified in writing and consents in writing to the use of after-market-parts |
| Newly Acquired Auto Provision | When someone has an auto policy and purchases or leases a new or additional vehicle the newly acquired auto is covered for 31 days under the current policy. You have 31days from the date of acquisition to declare the new auto |
| Personal Auto Policy - Insured/Covered Parties include | Named insured & spouse; Any family members/relatives living in the insured's household; Others driving/occupying the insured auto with stated or implied permission; Omnibus clause |
| Omnibus Clause | Anyone or any organization legally responsible for the covered auto due to legal acts or omissions of an insured |
| The Personal Auto Policy | (1977) Standard form used in US; Amendatory endorsements are required to make the policy fit individual state laws when it is used; •Does not have required language, but the PAP is used by most insurers with some modifications for competitive purposes. |
| Personal Auto Policy - BI/PD | Pays damages for which the insured is Leg Liab b/c of BI to another person or for PD arising from the use of a described covered auto or other vehicle. Bodily Injury is also referred to as Coverage A; Property Damage is referred to as Coverage B. |
| Personal Auto Policy (PAP) - Limit of Liability | Max amount insurer will pay to cover legal req the insured may be liable for as result of accident is on Dec Page; many states haave min liab cov requirement; can be split amount or single limit |
| Personal Auto Policy - Split Liability | coverage would be shown as: BI coverage per person/BI coverage per occurrence/PD coverage per occurrence. Examples of split liability limits include: 20/40/15, 50/100/25, 100/300/50, and 250/500/100 |
| Personal Auto Policy - Single Liability Limit | the limit pertains to all BI and PD damages |
| Minimum Liability Requirements for Personal Auto Policy - Split Liability Basis & Single Limit Basis | Split: 20/40/15; Single: $55,000 |
| Personal Auto Policy - Out of State Coverage | If the insured has at least the minimum liability coverage required by her own resident state, most policies extend coverage to any broader coverage amount required by another state if the insured is operating an insured vehicle in that state |
| Out of State Coverage Example | If an insured has $55,000 single liability coverage on his/her policy and she is traveling in a state requiring a minimum coverage of $75,000, the policy would be extended to the $75,000 coverage while in that state |
| Personal Auto Policy - Supplementary Payments | Claim related exp incl cost of defense and interest on judgment, over cost of claim liab but not over policy lim; bail bonds up to $250; all reasonable exp incurred by insd at insr request including loss of inc up to $100/day |
| Personal Auto Policy Exclusions: Liability from: | the carrying of people or prop for a fee, except for shared-expense car pools; criminal use of vehicle; the sponsoring or taking part of racing/speed contest |
| Personal Auto Policy Exclusions: Liability caused by | intentional acts/at direction of the insured/failure to prevent another person's intentional act; use of non-owned vehicles without owner's permission |
| Personal Auto Policy Exclusions: Liability Incurred | with a non-owned and non-insured vehicle while employed or otherwise engaged in the auto business. (Transportation, selling, repairing, service, storing, or parking. Generally covered by a Commercial Garage keeper Policy.) |
| Personal Auto Policy Exclusions: Liability Covered by | a nuclear energy policy, even if that policy's limits are exceeded |
| Personal Auto Policy - Medical Payments Coverage (Coverage E) | Pays for reasonable medical or funeral expenses incurred by an insured in or caused by an auto/vehicle; covers ins whil entering/alighting from/occupying a vehicle or while a pedestrian and hit by a vehicle |
| Personal Auto Policy - Medical Payments Coverage (Coverage E) Example | If an insured falls and twists her ankle on a slippery curb while getting out of the car- it's covered. |
| Personal Auto Policy - Medical Payments Coverage (Coverage E) Limit | generally a per person amount, which may/may not be shown on the Dec page. If limit is $10K & there are 3 injured individuals, the 3 indiv would have cov up to $10K each. There is usually also an aggregate limit, i.e. $10K/person, $50K/occurrence. |
| Personal Auto Policy - Medical Payments Coverage (Coverage E) Time Limit | Medical expenses are covered for up to one year after an accident |
| Personal Auto Policy - Uninsured Motorists Coverage (Coverage C) | Pays sums for only BI sustained by insd as result of accident caused by owner/op of uninsured MV or by a hit&run vehicle |
| Personal Auto Policy - Uninsured Motorists Coverage (Coverage C) must be included | in most states when liability coverage is included in the policy |
| Personal Auto Policy - Uninsured Motorists Coverage (Coverage C) minimum requirement | is the same as the minimum liability requirement, but insurers must allow the insured to increase limits to the same level as liability limits covered on the policy |
| Personal Auto Policy - Personal Injury Protection (PIP) | an extension of car insurance available in some states that covers medical expenses and, in some cases, lost wages and other damages; prem shouldn't increase due to a PIP claim |
| Why is PIP also known as "no-fault" coverage | because the statutes enacting it are generally known as no-fault laws, and PIP is designed to be paid without regard to "fault," or more properly, legal liability |
| PIP coverage in different states | varies from one state to another in terms of both what is covered and what types of treatments are considered customary and reasonable; only available in certain states |
| PIP may cover | within the specified dollar and time limits, the medical and funeral expenses of the insured, others in its vehicle at the time of the loss, and pedestrians struck by its vehicle |
| Basic PIP Coverage | is for the insured's own injuries, on a first-party basis, without regard to liability. Again, it is only available in certain states |
| Underinsured Motorists Coverage (Coverage D) | pays for the amount in excess of liability coverage provided in the at-fault driver's policy, up to a maximum of the limits of the insured's policy |
| Underinsured Motorists/Uninsured Motorists Rejection | Most states require that, unless specifically rejected, policies which provide liability coverage must also provide coverage for accidents with uninsured and underinsured motorists (UM/UIM). The rejection must be in writing. |
| Coverage for Damage to the Auto - Collision | Pays for loss to an insured vehicle due to a collision or upset, less any applicable deductibles. Includes, for example, collision with other autos, fences, and buildings |
| Coverage for Damage to the Auto - Other than Collision (Comprehensive) | coverage is all-risk/ open-peril & pays for loss to an insured vehicle by accidental means other than collision, except for exclusion; |
| Comprehensive Coverage Includes | theft, riots or vandalism, flood, glass breakage & collision with an animal or a bird, fire, missiles or falling objects, and natural events such as tornado, windstorm, earthquake, etc., less applicable deductibles |
| Uninsured Motorist Property Damage (UMPD) | Covers damage only to the insured vehicle when caused by an uninsured driver, must be allowed on policies that do not include collision coverage |
| Personal Auto Policy - Deductibles | a coinsurance in which the insured pays for the first portion of costs and the insurer pays the balance. Deductibles apply to the physical damage to the insured's vehicle, but do not apply to liability coverage |
| Personal Auto Policy - Transportation Expenses | Pays up to $15/day and up to $450 for expense to rent a substitute vehicle while the insured auto is out of service for 24 hours or more due to loss by a covered peril. Additional amounts may be purchased for additional premium |
| Personal Auto Policy Exclusions | Employees of the insured and liability caused by or injury to them (covered by Workers' Comp; The USA or any of its agencies; Any person including the named insured, using the vehicle as an employee of the federal government |
| Personal Auto Policy is designed to cover | cover non-commercial use of automobiles |
| Personal Auto Policy - Types of Covered Vehicles (1-2) - must be | • private passenger auto, not for hire (share-expense car pools can be included)& owned by an indiv or a married couple; pickup truck/van with a load capacity (GVW) under 10k lbs not used in delivery or cargo transportation |
| Personal Auto Policy - Types of Covered Vehicles (3-4) - must be | Utility trailers owned by the insured or attached to the insured vehicle; non-owned, temporary substitute vehicles not normally for use by the insured |
| Personal Auto Policy - Premium Rating Factors | Liability Rating Factors, Physical Damage Rating Factors, Assigned Risk |
| Liability Rating Factors | Age, sex, marital status, vehicle use, annual mileage, territory of where the vehicle is garaged, and the liability limits selected. |
| Physical Damage Rating Factors | The liability rating factors plus the age, make and model of the insured vehicle and the selected deductible |
| Assigned Risk | if a risk is turned down by several insr the applicant can apply for ins to the state & will be assigned to a regular insr doing business in the state. Assignment is made to insrs in proportion to prems they collect in the state for that line of ins |
| Personal Auto Policy Selected Endorsements: Amendment of Policy Provisions | spells out the exact meaning of phrases such as who the term “insured” refers to. Or it may describe the maximum amount payable on a policy because States may have laws or regulations that differ from the standard auto policy wording |
| Personal Auto Policy Selected Endorsements: Towing and Personal Auto Policy Selected Endorsements: Labor Costs | Pays towing and labor costs at the place of disablement due to disablement of the insured vehicle. There is often an amount payable limit, such as $25 or $50 |
| Personal Auto Policy Selected Endorsements: Extended Non-Owned Coverage | Covers non-owned autos furnished for the insured's regular use, such as a company car. Also extends coverage to vehicles used to carry people or property for a fee |
| Personal Auto Policy: Miscellaneous Type Vehicles | Extends the definition of a covered vehicle to include motorcycles, all-terrain vehicles, dune buggies, golf carts, and motor homes, but excludes coverage for any non-owned vehicles, except for temporary substitute vehicles |
| Personal Auto Policy: Joint Ownership Coverage | Used on policies issued to two or more persons who live together or relatives other than husband and wife |
| Personal Auto Policy: Mexico Coverage | Extends policy territory coverage as excess to a licensed Mexican insurance company policy, but only if the insured is within 25 miles of the border on a trip of 10 days or less |
| Personal Auto Policy: Rental Vehicle Coverage | Insurers renewing/issuing a MV ins policy which provides Collision or Comp cov must offer in writing to the insured the opportunity to purchase rental reimbursement coverage for a temporary replacement vehicle after an accident to the insured's vehicle |
| Commercial Auto Policy | 1978; coverages may be written as a stand-alone (monoline) policy or as a package policy |
| Business Auto | Covers vehicles used for commercial purposes; •Revised by the Insurance Services Office (ISO) along with other commercial policies to simplify and standardize them, and to make them more compatible with other commercial liability coverages |
| Commercial Auto: Garage Form | Provides Auto and General Liability coverage to businesses that deal with the sales, repair, servicing, storage or parking of automobiles |
| Commercial Auto: Business Auto Physical Damage | Provides coverage for the insured's owned autos as described in the policy declarations. |
| Commercial Auto: Truckers Coverage Form | Designed for businesses that transport goods or commodities for others. It is similar to the Business Auto Form |
| Commercial Auto: Motor Carriers | defined as a business that engages in the transportation of property or passengers, not just property |
| (CA) Coverage Form Setions - Covered Autos | autos described in Dec page; replacement autos; newly acq vehicles, usually for first 30 days after acq (all other V's must be insured with same insurer; utility trailers owned by ins'd/attached to ins'd vehicle; |
| (CA) Coverage Form Setions - Covered Autos (2) | non-owned, temp subsitute vehicles not normally used; vehicles owned, leased, hried, or borrowed by business; can include private passenger cars, trucks, trailers, and other commercial vehicles designed for use on public roads |
| Commercial Auto Policys & liability | will often cover liability coverage for any auto used in the business, but will cover physical damage only to specifically listed vehicles |
| (CA) Liability Coverage | Covers bodily injury or property damage liability from garage operations |
| (CA) Garagekeepers Coverage | Provides liability coverage for damage to customer's autos that are in the insured's care |
| (CA) Trailer Interchange Coverage | Covers trailers that the insured does not own but that are in his/her possession with a trailer interchange agreement in which the insured assumes liability for the trailer |
| (CA) Physical Damage Coverage | Provides coverage for the insured's owned autos as described in the policy declarations |
| Commercial Auto Phyiscal Damage Exclusions | loss caused by war etc.; loss from theft of non-permanently installed sound reproduction equipment; Radar/laser detectors; special carpeting etc; Damage due to wear & tear/mech breakdown; tire damage unless by fire/theft/vandalism |
| CA Physical Damage Exclusions - Loss caused by war &... | loss caused by war, insurrection, rebellion, revolution, nuclear reaction, radiation, radioactive contamination, or consequences of these |
| CA Physical Damage Exclusions - loss from theft of non-permanently installed sound reproduction equipment including | tape/CD players or mobile phones, and computer/FAX equipment as well as media used with these electronic devices, such as tapes, CDs, or diskettes |
| CA Physical Damage Exclusions - Special Carpeting as well as | furniture (captain's chairs in a van), height extensions, or other custom modifications unless specifically endorsed to be included |
| Commercial Auto Conditions | The policy applies only to accidents, occurrences, and losses during the policy period that occur in the U.S., its territories or provinces, or in Canada; Interest in the policy cannot be transferred to anyone else without the insurer's written consent |
| (CA) Selected Endorsements - Additional Insured & Loss Payee-Lessor | adds coverage for both liability and physical damage for add insureds by name- such as a lien holder or lessor. Under a typical LP clause, the insr is under no ob to make a payment to the loss payee if payment for a loss can be denied to the insured |
| (CA) Selected Endorsements - Mobile Equipment (CA 20 15) | Covers vehicles primarily used off of public roads when attached to the CA policy |
| Mobile Equipment Endorsement Example | a backhoe may be insured under the BAP because it is required to have auto liability insurance. But anything attached to the backhoe, such as the bucket, is excluded from the auto policy, so the Mobile Equipment endorsement is required |
| (CA) Selected Endorsements - Auto Medical Payments Coverage | Per person and per occurrence limits, as in the Personal Auto Policy |
| (CA) Selected Endorsements - Drive Other Car Coverage | Coverage available for personal use by employees, executives, or any person supplied a company vehicle but who does not own a personal vehicle and thus does not have coverage under a personal auto policy |
| (CA) Selected Endorsements - Individual Named Insured | Required for all policies that have the Drive Other Car endorsement. Gives named insured status to individuals named in the endorsement, most often used to include family members of a sole proprietor in a Commercial Auto Policy |
| Commercial Carrier Regulations: The Motor Carrier Act of 1980 | fed law-requires certain min levels of auto liab cov for trucking co's. The policy endorsement for motor carrier policies of insurance for public liability is the MCS-90 |
| Motor Carrier Act of 1980: MCS-90 | a Proof of Financial Responsibility form that the certifies the insured maintains a minimum level of financial responsibility for compensating others involved in truck-related accidents resulting in bodily injury, property damage or environmental damage |
| Commercial Package Policies | for large businesses; allows insured to pick and choose coverages on a monoline policy basis, grouping the monoline policies together into one place for the insured's convenience |
| Coverage on a Commerical Building and Property form/part | on a monoline basis for the builidings only; ACV basis but RC settlement can be added as endorsement; covered peril forms include those in DP and HO policies/Broad&special causes of loss forms & earthquake; sinkhole/sprinkler leak is added peril; V&MM<60 |
| Commercial Building & Personal Property Covered Property | covered buildings; covered busniess personal property; covered personal prop of others |
| Commercial Building & Personal Property Covered Property: Buildings | these structures are listed and described in the Declarations section; anything that is or has become a permanent part of the buildings (additions, fixtures, extensions, machinery, and equipment) is covered as well |
| Commercial Building & Personal Property Covered Property: Business Personal Property | - property that is owned by the insured and used in the course of the insured's business |
| Commercial Building & Personal Property Covered Property: Personal Property of Others | improvements and alterations made by the insured to a building that is leased and that cannot be removed upon the termination of the lease, and personal property of someone other than the insured that is under the care, custody, or control of the insured |
| Policy Territory of Commercial Policy | Coverage only in the US & its territories, Puerto Rico or Canada |
| Interline Endorsements | Endorsements can modify one or more of the Commercial Package Policy coverages. An endorsement that modifies two or more coverages is called an interline endorsement |
| Commercial Policy must contain at least two of the following commercial coverages | Commercial Property; Commercial General Liability, Commercial Crime, Commercial Auto, Commercial Inland Marine; Boiler & Machinery; Farm Property and Liability |
| Commercial General Liability (CGL) | policies cover liability from the insured's business at the beginning of the policy as well as those that may arise from new operations acquired during the policy period |
| CGL Coverage A | Bodily Injury & Property Damage Liability; includes premises & ops (owners/landlords/tenants); Products & completed ops(manufacturers/contractors); contingent liability - owners+contractors/independent contractors |
| CGL Coverage B | Provides protection for liability arising from libel or slander; false arrest; invasion of privacy; malicious prosecution; advertising injury (TM/copyright infringement; misappropriation of advertising slogans); wrongful entry/eviction |
| Advertising Injury | is an injury to a 3rd-party brought about by the business' advertising its goods and services. Can occur by copyright or TM infringement, or as a claim of libel, slander, or invasion of privacy |
| CGL Coverage B Advertising Injury Exclusions | Intentional acts of the insured (false publication of breaking the law); breach of contract; incorrect or misleading ad; media-related business (advertising/broadcasting/publishing/telecasting); do not call laws (2007) |
| Do not call laws (2007) | An example of this would be if an insurer were to continue to send "blast" advertising faxes to numerous prospects even after the prospects have demanded the insurer stop sending the faxes |
| CGL Coverage C | Medical Payments - Covers all medical expenses to non-employees of the insured caused by an accident on the insured's premises or as the result of the insured's operations; cov is up to insured's med expense limits regardless of fault |
| CGL Coverage C payment timeframe | expenses must be incurred/reported within 1 year of accident |
| CGL Coverage C Exclusions | Anyone excluded under coverage A (including the insured or employees of the insured; Tenants of the insured; People injured and covered through Products and Completed Operations; Anyone injured as the result of an athletic event |
| CGL Coverage D | Supplementary Payments - for BI/PD and Personal/Advertising injury liabilities; court costs taxed against insured; bail bonds up to $250; all reasonable expenses incurred by the insured at the insurer's request including loss of income up to $100/day |
| CGL Coverage D - court costs | The 2007 CGL policy doesnt include attorney's fees and expenses taxed against an insurd. Such (attorney) costs (if awarded separately) would be paid in the form of damages to the successful plaintiff, and thus such costs are paid within the policy limit |
| CGL - Who is an Insured | The named business (corporations, sole proprietors, or partnerships), its officers, partners, employees, real estate managers, custodians and mobile equipment operators acting within the scope of the business, newly acquired operations |
| CGL Limits of Liability | set agg limit for all claims assoc with policy; may be several claim occurrences but once the agg limit is reached for the year; there's no more cov and add cov would need to be purchased by insured; each cov has own sep limit |
| CGL Limits of Liability - separate limits apply to | Bodily Injury/Property Damage; Products Liability; Fire Liability, Personal & Advertising Injury, Medical Payments |
| CGL Conditions - Property covered | limited strictly to that which the insured owns or for which he is legally responsible |
| CGL Conditions - Commercial Policies are | excess policies- If theres another policy in force that covers the prop, the other policy will be primary-pay first. Com policies only pay after the other policy's lim have been exhausted. Prevents the insured from possible overcompensation for the loss |
| CGL Conditions - Discovery Period | •Covered losses must happen during the policy period, but there is a one-year “discovery period” after the policy ends. Coverage will be extended for the loss if it is discovered during the discovery period. |
| CGL Conditions - Loss valuation of property | Losses to property other than money and securities are compensated on an ACV basis |
| CGL - Damage to Property of Others | Per Occurrence or Annual/General Aggregate Limit |
| CGL - Damage to Property of Others: Per Occurrence | The maximum amount the insurer will pay for any one occurrence/ instance of damage to another's property |
| CGL - Damage to Property of Others: Annual or General Aggregate Limit | Mac amount insurer will pay during policy period for PD; personal except for any amount paid as damages b/c of BI/PD within Products/completed ops hazard |
| CGL - Damage to Property of Others: Annual or General Aggregate Limit for Products completed | Separate aggregate limit for this hazard |
| CGL: Contractual Liability | Liability assumed under any written or verbal contract or agreement |
| CGL Exclusions | nuclear energy liab; professional liab; employee benefit liab; D&O liab; insured's property; insured's product; property in insured's care, custody and control |
| Occurrence Policy | most common type; the damage must occur while the policy is in effect; the claim could be made either during the policy period or after the policy has terminated |
| Claims Made Policy | has a specified retroactive date and termination date, between which the occurrence must happen |
| Claims-Made Features | Trigger = notification of a claim to the insured/insurer; retro date = the first date claims are covered |
| CGL: Reporting Period/Mini-Tail | Any occurrences must be reported to the insurer within 60 days of the policy's termination |
| CGL: Midi-Tail | Claims must be made during the policy period or within 5 years of its termination |
| CGL: Supplemental Reporting Period/Full-Tail | Extends the time period claims can be made indefinitely, though occurrences must have happened during the policy's cov period; must be purchased before 60 day mini tail expires; purchased for add prem up to max one-time prem of 200% of expiring pol prem |
| Claim Information | Policy conditions section requires that the insured give the insurer prompt notice of all occurrences and prompt written notice of all claims; full cooperation; authorization to obtain any other necessary records; authoriz to and coop in subro proceedings |
| CGL: Premises and Operations | Protects a building owner or tenant from legal liability in the event of bodily injury or property damages on or away from the insured premises |
| CGL: Products and Completed Operations | Manufacturers/Contractors; Products Coverage covers legal liab arising from defective products; Completed Ops Cov coveres businesses doing construction/repair/servicing/installation on or away from insd place of business |
| CGL: Products Coverage (manufacturers/contractors) | Legal liab from defective products = covers BI/PD brought about through use of product (not damage of product); loss can be caused by neg or warranty; doesn't cover cost of product recalls |
| CGL: Completed Operations Coverage | covers businesses doing construction, repair or servicing work, and installation away from the insured's place of business - BI/PD caused by insd neg or faulty work; doesn't cover replacing work that caused damages |
| CGL: Contingent Liability-Owners & Contractors/Independent Contractors | aka “hold harmless clause,” where the person to do the work (contractor or sub) has a policy showing that he and he alone is responsible for the work to be done and absolving the person contracting with him, as named in the policy, from any liability |
| Contingent Liability-Owners & Contractors/Independent Contractors Pertains to | construction contracts where the person contracting with the contractor may incur indirect liability due to acts of the contractor |
| Contingent Liability-Owners & Contractors/Independent Contractors Protects | owners, landlords and tenants from liability caused by contractors, or protects contractors from damage caused by subcontractors |
| Contingent Liability-Owners & Contractors/Independent Contractors Covers things such as LEASE: | Leases, Easements, Agreements to indemnify a municipality, Sidetrack agreements, and Elevator maintenance agreements |
| CGL Exclusions | intentional acts of the insured; liquor liability (covered through DRAM shop laib); injured employees (covered through WC); discharge of pollutants or waste; auto, watercraft, or aircraft |
| CGL: Insured Contract | A contract for a lease of premises, A sidetrack agreement with the railroad; Any easement or license agreement, excluding construction or demolition; An obligation required by ordinance to indemnify a municipality; An elevator maintenance agreement |
| CGL Insured Contract in general | •Contract under which you assume the legal liability of another to pay a third party for bodily injury or property damage which you partially caused |
| Purpose of Insured Contract in CGL | Cov for an insured's contract is concerned with insd obligation to hold harmless/indem another - liab assumed has nothing to do with insd's fail to perform (breach of contract) |
| Burglary | Breaking and entering, with felonious intent and with visible signs of forced entry |
| Coverage Trigger | The trigger is the notification of a claim to the insured or the insurer |
| Discovery Trigger | The manifestation, or discovery, trigger activates coverage under the policy in place at the time the personal injury or property damage becomes known, or is discovered by, the property owner or victim |
| Loss Sustained Trigger | In an injury-in-fact, actual injury, or loss sustained policy, coverage under a general liability policy is triggered when the personal injury or property damage underlying the claim actually occurs |
| Custodian | The insured or any of the insured's partners or employees while having care and custody of the property inside the premises, excluding any person acting as a watch person or janitor |
| Employee | A person compensated by the insured and under the insured's service and direction |
| Extortion | Using force or illegal influence to take the property of another |
| Larceny | The taking of another's property with the intent to permanently deprive them of it |
| Messenger | The insured or any of the insured's partners or employees while having care and custody of the property outside the premises. |
| Money | Coin, currency, bank notes, money orders, and travelers checks, but not “Evidence of Debt.” |
| Mysterious Disappearance | An unexplained loss. Personal property is missing without any proof as to how or why it is missing |
| Property Other than Money or Securities | Tangible property as defined in the policy |
| Robbery | The taking of the personal property of another by force or fear of force |
| Securities | Both negotiable and non-negotiable instruments or contracts representing money, or other property including tokens, tickets revenue and other stamps |
| Theft | Any act of stealing, including burglary, robbery and larceny |
| Watchperson | Any person the insured retains who has no other duties than to protect the insured's property on the premises |
| Discovery Forms | Cov is provided for losses actually discovered during the policy period or within 60 days after the policy ends (within 1 year for employee benefit plans), regardless of whether or not the loss occurs during the pol period - ends once new pol replaces old |
| Loss Sustained Forms | Coverage provided for loss that occurs during the policy period and which is discovered within one year after the policy ends |
| Discovery Form Basic Summary | Basically, the Discovery basis covers losses that are discovered by the insured during the policy period and sixty days thereafter (unless replaced) no matter when the loss occurred, and it does not matter if the insured had prior coverage. |
| Loss Sustained Form under crime policy covers loss if | the prior crime policy was in force at the time of loss; crime cov has been in effect continuously, loss would've been covered by the prior crime policy & current crime policy |
| Employee Theft (Form A) Covers | loss from employee dishonesty; money, securities, and other property; there is always subrogation against a dishonest employee |
| Employee Theft (Form A) coverage basis | either blanket (new EE's automatically covered) or scheduled (EE's are listed) coverage |
| Employee Theft (Form A) Discovery Period | loss must be discovered during the bond period or during the discovery period - usually 6 months after bond period |
| Employee Theft (Form A) Coverage Termination | if any EE is discovered by the insured to have comitted a dishonest act during present/prior employment (in course of employment or not), cov on that EE is immediately terminated |
| Forgery or Alteration (Form B) | Covers any loss due to forgery or alteration of a check or draft, promissory or similar written promise; also covers any legal expense if the insured is sued for refusing to pay any covered insturment that was forged/altered; doesnt cov incoming checks |
| Theft, Disappearnace, or Destruction (Form C) | provides coverage for any losses of money or securities b/c of theft/disapp/destruction; adapts Gen Prov Form to specific needs of insured; $ and sec inside; outside in custody of messenger; dam caused to premises in course of crime |
| Robbery and Safe Burglary (Form D) | •Covers property other than money or securities against inside or outside damage by burglary or robbery. (Can be endorsed to cover money and securities); Covers inside loss by safe burglary |
| Premises Burglary (Form E) | covers prop other than $ & securities inside premises; covers damage to insured' prop; cov suspended until repairs to prem are completed; covers manuscripts, drawins, records of any kind or cost of reconstruction/reproducting info |
| Premises Burglary (Form E) Limits on Special Property | Coverage is restricted to no more than $1,000 for a loss to precious metals, precious or semi - precious stones, pearls, furs or items made of or containing such materials, when they're the principal value of the article |
| Form E Coverages for Burglary | Burglary requires unlawfully entering or leaving the premises, and there must be a visible mark or forcible entry or exit. There is no coverage without the visible mark, even if desks or cabinets were broken into and there are marks on them |
| Form E Coverages for - Robbery of a Watchperson | The policy covers taking property by threat or by witnessing an unlawful act. Robbery coverage under Premises Burglary does not apply to any loss from robbery of a watchperson |
| Computer Fraud (Form F) | Covers $, securities & other prop; defined as theft of prop following and related to use of any computer to fraudulently cause a transfer of prop from inside to one outside the premises; excludes acts of employees, directors, etc. |
| Extortion (Form G) | Extortion (Form G) Pays for extortion payments for threats of bodily harm during real or alleged kidnapping of the insured, their employees or directors or family members |
| Outside the Premises (Form H) | Covers property other than money and securities outside the premises |
| Lessees of Safe Deposit boxes (Form I) | Covers lessees of safe deposit boxes involving theft, disappearance, or destruction of securities or property other than money and securities while in a vault or during the deposit or withdrawal from a safe deposit box on the premises of the insured |
| Securities Deposited with Others (Form J) | Covers securities from loss due to theft, disappearance, or destruction inside a custodian's premises, being transported by a custodian, or while on deposit in a depository |
| Guests' Property (Form K & L) | K: Guests' property while in a safe deposit on premises; L: Guests' property on premises and in the care, custody, and control of the insured |
| Safe Depository (Forms M & N) | Covers loss, damage, or destruction to the customer's property while on the premises of the business in a safe deposit box, in a vault, or while being transferred to and from safe deposit boxes or vaults. |
| Safe Depository: Legal liability for M | The legal liability of the business for the customer's loss has to be established |
| Safe Depository: Legal liability for L | •The legal liability of the business for the customer's loss does not have to be established |
| Money Orders and Counterfeit Money (Form R) | Covers money orders and counterfeit money |
| Government Forms | Note that Forms O, P, and Q are government forms and are therefore taken out of order: O= Employee dishonest per loss; P= EE dishonesty-per EE; Q= robbery and safe burglary |
| General crime exclusions include | indrect losses; losses due to acts comitted by the insured or any partner of the insured; losses that result from seizure/destruction of prop by order of a gov authority; loss resulting from war/nuclear hazard; legal exp due to legal action |
| Farm Liability Coverage Forms | Coverage H: Bodily Injury & Property Damage Liability; Coverage I: Personal and Advertising Injury Liability; Coverage J: Medical Payments |
| Custom Farming | The performance of specific planting/cultivating/harvesting/ similar specific farming ops by an insured, at a farm thats not an insured location, when the perform is for& under the direction/supervision of the owner/ op of the farm or the authorized rep |
| Customer farming does not mean | ops conducted at a premises rented to, leased to, or controlled by insured; ops for which no comensation in $ or goods is received; a neighborly exchange of services |
| Farm Employee | Any insured's employee whose duties are principally in connection with the maintenance or use of the insured location as a farm. These duties include the maintenance or use of the insured's farm equipment; doesn't mean any EE while engaged in insds bus |
| Farming | The op of an agri/aquacultural enterprise; incl the op of roadside stands on farm premises; maintained solely for the sale of products produced principally on those premises |
| Unless specifically indicated in the Declarations, farming does not include: | retail activity other than that described above or mechanized processing operations |
| Farm Bankruptcy | Bankruptcy or insolvency of the insured or of the insured's estate will not relieve the insurer of its obligations. |
| Farm: Insured's Duties In The Event Of Occurrence, Offense, Claim, Or Suit | Notice of claim must be provided to insurer ASAP including how/when/where occurence took place' names+addresses of any injured persons/witnesses/nature+location of any injury/damage arising out of occ or offense |
| Farm: If a claim is made or suit is brought against any insured; he or she must | immediately record the specifics of the claims/suit and the date received; notify the inusrer in writing ASAP |
| Farm: In addition to the duties after a claim, the insured must | notify policy if law may've been broken; immed send insurer copies of demands/eegal papers/etc; authorize insurer to obtain other records/info; cooperate with investigation; assist in enforcement of any right against person/org that may be liabile to insd |
| Farm - Any injured person who makes a claim for payment of medical expenses under the provisions of Coverage J must | give the insured written proof of claim(under oath if req) ASAP; execute authorization to allow the insured to obtain copies of med reports/records; submit to phys examin by physican selected by insr when/as often as reasonable required |
| Farm: No Admission Of Liability With Medical Payments | No payment made under the provisions of Coverage J constitutes an admission of liability by any insured or the insurer |
| Farm: No Admission of Liability with Medical Payments: Other Insurance | this condition applies only if, in addition to the insurance provided under Farm, the insured has other ins under this/any other policy covering same ob to pay damages and provide defense against suits for damages |
| Farm Limits of Liability | Insr will pay only the proportion of cov damaged/related def costs in cov ocur arisising from any cause except ownership/maintainence/use/op/loading/unloading of a MV; vehicle which qualifies as mobile equip whil used on prem insd owns/rents; watercraft |
| Farm: Separation of Insureds | except with respect to the limits of insurance, and any rights/duties specifically assigned to the first named insd, the policy applies as if each named insured were the only NI; separate to each insd against whom claim is made/suit is brought |
| Farm Liability Exclusions | Exp/intend injury; contract liab; pollution; release/discharge from aircraft; BI/PD from perils; BI to an insd/PD to your product; damage to your work; damage to impair prop/prop not physically injured; sex mol etc; controlled substances; personal injury |
| Farm Liability Exclusions - BI/PD arising from the use of | aircraft/MV/Motorbike/trike; watercraft; mobile equip; use of livestock/other animal race/strength contest; business pursuits; custom farming; profess servises; rental of prem/ower/control of prem; comm disease; WC; EPLI; Build under contstruction |
| Custom Farming Exclusion | arising out of the insured's performance of or failure to perform custom farming operations but only when receipts from custom farming operations exceed $5,000 for the 12 months immediately preceding the date of the occurrence. |
| Farm Limits of Insurance | shown in Dec page; fix the most the insurer will pay regardless of the number of insureds; claims made/suits brought; persons/orgs making claims or bringing suits |
| Farm: General Aggregate Limit is the most insurer will pay for sum of | damages under Coverage H & Coverage I; Medical expenses under Coverage J |
| Farm: Each occurrence limit is the most the insurer will pay for the sum of | Damages under coverage H; Med expenses under Cov J due to all BI/PD arising out of any 1 occ; includes special lim of $10,000 for all cov damages insd is LL to pay b/c of stat imposed vicarious liab for actions of child/minor |
| Farm: Occurence with repeated exposure | All bodily injury and property damage resulting from any one accident or from continuous or repeated exposure to substantially the same general harmful conditions are considered to be the result of one occurrence |
| Livestock Coverage Form | Mainly used when livestock is the only farm exposure; also used to write livestock cov separately on a named peril basis and covers death or destruction of 11 perils |
| Livestock Coverage Form Covered Perils | fire, lightning, windstorm, hail, explosions, rio, collision with vehicles on public roads except vehicles owned/op by insured; sinkhole collapse; volcanic action; vandalism; theft |
| Livestock excluded from Livestock Coverage form | race or show animals, livestock on ranges, and livestock being transported to, from, or while at stockyards or commercial feed lots |
| Mobile Agricultural Machinery Form | Used when machinery and equipment is the only exposure. Provides all-risk coverage for mobile equipment; 80% coinsurance clause; cov written on blanket or sched form; cov is excluded for irrigation equip and dishonesty of insd; insured's EE's |
| Crop Insurance Coverages | . Crop Hail Insurance, FCIC (Federal Crop Insurance Corporation), Multi-Peril Crop Insurance |
| Crop Hail Insurance | Issued for only 1 season at a time, covers the marketable portion of a crop against damage from hail. Some policies also insure against the perils of fire, lightning and wind. A few states require that the perils of freezing and frost be covered as well |
| FCIC (Federal Crop Insurance Corporation) | orig 1938; act of 1980 established as a Fed all risk program - agency of the US Dep of Ag and provides cov against natural disasters |
| Multi-Peril Crop Insurance | Basically the same insurance as FCIC insurance but is written and serviced by private insurers and reinsured by those companies through the FCIC |
| How to receive crop insurance | Farmers can apply for coverage directly through the FCIC or purchase multi-peril crop insurance. |
| BOP | Commercial package policies that provide both property and liability coverage to certain types of small businesses; includes cov for loss of eanings due to insd hazard on an actual loss sustained basis |
| BOP Factors of Eligibility | the type of business; the size of the premises; the required limits of liability; the extet of activity offsite |
| Premiums for BOP policies are based on | business location; financial stability; building construction; security features; fire hazards in addition to eligibility features |
| Risks covered by BOP | bus with < 100 EEs & <$1M revenue; Apartment build; that may also contain offices+certain service & mercantile occupanies; eligible office buildings; restaurants; conven stores w/ gas pumps; laundries+dry cleaners; motels; contractors; self storage |
| Eligible office buildlings for the 2002 BOP policies are those that | are principally for office purposes; are no more than 6 stories & have <100,000 sq ft of floor space; may contain apartments & certain wholesale/service/processing incidental occupanies <25,000 sq feet |
| Restaurants eligible for BOP | delis, cafes, pizza parlors, etc. - limited to fast food types up to 7,500 sq feet; beer+wine sales limited to 25% gross sales |
| Convenience stores with gas pumps eligible for BOP | gas sales limited to 75% of gross sales; no auto services, restaurants, or propane/kerosene dispensing permitted |
| Motels eligible for BOP | not exceeding three stories and not including a bar/lounge |
| Self-Storage facilities eligible for BOP | those not exceeding 2 stories; excludes industrial storage facilities |
| BOP Cause of Loss Coverages: Standard Form | fire; lightning; explosion; windstorm/hail; aircraft/vehicle; riot/civil commotion;V&MM; sprinkler leakage; sinkhole collapse; volcanic action; transportation damage to prop in transit |
| BOP Cause of Loss Coverages: Special Form | open peril/all risk |
| BOP Standard Form Exclusions | Ordinace/law; earth movement; gov action; nuc hazard; utility failure away from insd prem; war; water i.e. flood/sewer backup; artif gen elec cur; water pipe rupt/burst; consequential loss(EE & increase of lost income);computer failure; loss to val papers |
| BOP Special Form Exclusions (in addition to Standard Form Exclusions) | wear/tear; rust etc.; smog/poll; sett/cracking/expansion; damage from birds etc; dishonest/crim acts of insd or EEs; voluntary fraud; rain/snow/etc to PP not in building; colllapse; faulty planning; smoke etc; frozen plumb; weather; neg; consequential |
| BOP Limits of Liability: Business Liability | $300,000 per person |
| BOP Limits of Liability: Medical Expense | $5,000 limit per person |
| BOP Limits of Liability: Fire Legal Liability | $50,000 limit |
| BOP Limits of Liability: Policy Aggregate Limit | Two times the business liability and medical expense liability limit for all damages or injuries that happen during the policy period |
| Loss Conditions for BOP: Loss of Income | unless $ lim is specified in Dec; BI or loss of I cov provided by BOP covers actual loss sustained by interr of ops during period of restoration that toccurs within 12 consec months following date of direct physical loss/damage |
| Loss Conditions for BOP: Extra Expense | is covered after the insured experiences a loss; this ehlps the business resume normal business activites; also means that less pure income is needed for use of EEs |
| Loss Conditions for BOP: Time Element | Most insr uses all purpose time element forms to provide the earnings protection needed by most bus; eliminating a # of forms previously used for the purpose |
| "All Purpose" Time Element | a product that addresses business interruption underwriting problems and loss experience |
| BOP Time Element Automatic Feature | business income insurance includes rental value cov by virtue of generalization of terms and extra expense cov without monthly limits |
| BOP Conditions | policy cancellation/changes; concealment; misrepsentation/fraud; insurer's right to examine co records & hold inspections+surveys; pol liber procedures; prem amounts; subro; other ins provisions |
| BOP: Inflation Guard Provision | increases building coverage by 8% each year; BPP can be increased up to 25% to provide for seaonsal stock variations |
| BOP: The Control of Property Condition | States that a negligent act of someone beyond the insured's direction or control will not affect coverage; If the insured violates contract conditions at one location, coverage to other locations will not be affected |
| BOP: Legal Action Against the Insurer Provision | Limits the insured's right to bring action against the insurer for damages to two years if the insured has complied with policy conditions and the insurer has not indemnified the insured for direct physical loss |
| BOP: Policy Period, Coverage Territory Condition | A loss must occur during the policy period and in the policy's coverage territory of the U.S. or its territories, Puerto Rico or Canada in order to be covered |
| BOP Optional Coverages - have to be noted in Dec page; Extra Premium | outdoor signs; exterior glass; interior glass; employee dishonesty; mechanical breakdown; burglary and robbery; money and securities |
| BOP Additional Coverages (subject to policy limits) | Debris removal; property preservation; fire dep service charge; loss of BI & EE; Poll cleanup and removal; order of civil authority; money order and counterfeit $; forgery and alteration |
| BOP Extended Coverages: Personal Property At a Newly Acquired Premises | up to $10,000 coverage |
| BOP Extended Coverages: Personal Property Off-Premises | i.e. at a storage facility; up to $5,000 coverage |
| BOP Extended Coverages: Outdoor Property | Up to $1,000 coverage with a $250 limit for any one tree, shrub or plant |
| BOP Extended Coverages: Valuable papers and records | up to $1,000 coverage |
| BOP Liability | Business liab: $300,000 limit; fire-legal liab: $50,000 limit; Policy Aggregate: 2x the bus + med liab limits for all damages/injuries that happen during the policy period; Products & completed Ops liab separate from other liab limits |
| BOP Insureds | The business, its owner(s) and employees acting in the course of employment and under the direction of the company are considered insureds under a BOP |
| BOP Selected Endorsements: Hired Auto and Non-Owned Auto Liability | provides coverage for hired or non-owned autos when used by the business if the insured does not have Commercial Auto insurance; i.e. ER requires EE use his own vehicle to run company errands = non-owned auto |
| BOP Selected Endorsements: Protective Safeguards | lists the protective devices/services the insured must maintain as a condition for cov. The insurer wont pay for loss if insured failed to keep the protective safeguard in working order/ if he didn't notify the insurer the device was not working properly |
| Protective Safeguards: P-1 | Automatic Sprinkler System |
| Protective Safeguards: P-2 | Automatic Fire Alarm System |
| Protective Safeguards: P-3 | Security Service |
| Protective Safeguards: P-4 | Service Contract for a privately owned fire department |
| BOP Selected Endorsements: Utility Services-Direct Damage Replacement Cost Coverage | Covers loss or damage to scheduled property caused by an interruption in water, communication or power service. The cause of the loss must be one of the policy's covered perils |
| Utility Services-Time Element Coverage | Covers loss of business income and extra expense that occurs as a result of utility service interruption. Again, the cause of loss must be one of the covered perils |
| Workers Compensation Regulation | State level; most states require; where cov is elective and not provided, ER can't use common law defense such as contrib neg if injured EE brings suit exposing ER to possible expensive legal costs/damage awards |
| WC Policies must conform to | state minimum requirements. If the policy does not, the law takes precedence |
| WC: when can benefits be denied | If a worker who intentionally injures him/herself |
| WC: Instead of Dec Page | Information Page which includes the insured's name/address/type of business; policy period+territory (list of states of business now and future); policy limits; premium amount |
| WC Policy Limits | Standard limits: $100,000/accident for injuries; $100,000/employee with a $500,000 aggregate for disease |
| Monopolistic WC Policy | The state covers all Workers' Compensation in the state and does not allow private insurers to write Workers' Compensation business in the state. The four monopolistic fund states are North Dakota, Ohio, Washington, and Wyoming |
| Competitive WC Policy | Offered by some states that compete with private insurers for the Workers' Compensation business in the state |
| WC: Elective/Voluntary Compensation | Provides coverage to injured employees not covered by state law requirements and gives the employee the option of accepting the WC coverage or of suing the employer for compensation |
| WC: Compulsory Compensation | Federal laws mandate coverage for certain types of employees, including those in the laws below and all U.S. civil employees and civilian employees at military bases |
| State's WC Laws: Exclusive Remedy | for employees injured on the job. Usually this benefits the employee, for instance, they are covered even when they harm themselves |
| Employees can file a suit other than a WC claim unless | the employer meant to harm the employee; the employer acted with gross negligence/fraud; employee was harmed by someone other than a co-employee; employee was injured while at another place of business |
| Employment Covered: Voluntary Coverage | Provides coverage to injured employees who are not covered. Also gives the employee the option of accepting the WC coverage or of suing the employer for compensation |
| Employment Covered: Required Coverage | All 50 states require businesses to have Workers' Compensation insurance to pay medical payments and lost wages to workers' |
| Workers' Compensation Laws: Covered employment can include | higher education; the armed forces; for disabled persons/young children; seasonal employees; students; drivers etc. |
| Workers Compensation Laws: Excluded employments | baby-sitters; religious emplyoment; children under age of 14; all of these not excluded if performing services for non-profts; gov entities; or indian tribes |
| WC: Covered Injures/Occupational Disease | Any accident or incident occurring which arises out of and in the course of employment. A disease caused by conditions or exposure at ones employment |
| WC Benefits Provided | Medical/rehab benefits; income benefits for either a total/prtial disability; shcedule benefits include set payments for loss of an eye/foot/death/etc; death benefits |
| WC Benefits Provided does not include | pain and suffering or punitive damages |
| WC Benefits may be increased | for certain losses as a penalty to the employer for serious or willful acts of the employer, such as failure to provide safety equipment or not following safety regulations as required by law. |
| WC: Second Injury Fund | state fund set up encourage the hiring of the handicapped or disabled. The state pays the benefits for prior disabilities or injuries. The employer is only required to cover the most recent injury |
| How to set up reimbursement for State Injury Fund the employer must demonstrate that | the EE had a qualifying PCE; EE was hired/retained with full knowledge of this conditions; subsequent injury + PCE = condition substantially greater than subsequent injury alone; 104 weeks of comp payments have been made |
| Federal Workers' Compensation Laws Federal Employers Liability Act | Mandates coverage for interstate railroad workers' |
| Outer Continental Shelf Lands Act | Mandates coverage for workers on the subsoil and seabed of the Outer Continental Shelf and structures built on it as if they were an area of Federal jurisdiction in a state |
| Outer Continental Shelf | Past the states jurisdiction - 3 nautical miles out - to the edge of the federal jurisdiction - up to 250 nautical miles out |
| U.S. Longshore and Harbor Workers' Compensation Act | Mandates coverage for workers' who load, unload, build or repair ships. Also covers workers' on yachts |
| The Jones Act | Mandates coverage for crews of ocean vehicles |
| WC covers claims brought by | employees, their spouses, or children against the employer for coverages not covered by Workers' Comp, such as loss of consortium or companionship |
| If an insurance agent is writing an application for a business that does business in several states and one or more of them is a monopolistic fund state | care must be taken to make sure the customers know they must purchase coverage directly from these states-including trucking companies that have routes through these states |
| WC: Medical/Rehab Benefits | unlimited dollar/time limit on covered medical expenses- necessary mental, physical, and vocational rehab including maintenance and institutional care |
| WC: Income Benefits, Total Disability | 3-day waiting period with retroactive benefits if disability extends past two weeks; income benefit is 2/3 of wagesfor disability's duration including life |
| WC: Income Benefits, Partial Disability | The percentage of wages lost is restore |
| WC: Scheduled Benefits | Provided for specific permanent partial disabilities such as the loss of an eye, hand, or a foot |
| WC: Death Benefits | Statutory amt is provided for burial exp; also income ben for a surviving spouse and/or children; subject to weekly mins&max; spouse income ben are up to 20 years or life (whichever is 1st); children eligible until 18 or 25 if in school |
| Section B of Workers Compensation Policy | Employers Liability Insurance; part that has a dollar limit shown for coverage; insures ERs for liab toward EE that is not covered by statutory WC provisions of state |
| WC Part 3 | Other States Insurance; cov is automatically extended if EE is injured in state other than one designated in policy; except 4 monop. state funds |
| If an employer has exposure in one of the four states with monopolistic funds coverage | the employer must apply for coverage to each of those states in which they have exposure |
| WC Part 4 | Your Duties if Injury ooccurs; insured's duties include notifying the insurer; providing for immediate medical care; and cooperating with the insurer's investigation |
| WC Part 5 | Premium; 5 main rating systems for WC policies |
| WC Part 6 | Conditions; insr has right to inspect ind prem; if pol last longer than 1 yr + 16 days; all pol provisions will apply as if pol was renewed on anniv date; insd can't assign pol tto any other persons/bus without ins co's consent; only 1st NI responsible |
| WC Part 7 | Our Duty To You For Claim Notification; The insurer's duties include responding to the insured's claim promptly, investigating when and where necessary, and paying the claim promptly and fully |
| Voluntary Compensation | Provides coverage to injured employees not covered by state law requirements and gives the employee the option of accepting the WC coverage or of suing the employer for compensation |
| Waiver of Subrogation | gives the insurer the right to pursue any course of action in its own name or the name of a policy owner against a third party who is liable for a loss that has been paid by the insurer |
| WC Premium Computation 5 Main Rating Systems | 1) Experience Modification Factor, 2) Job Classification, 3) Premium Discounts, 4) Participating Dividend Plans, and 5) Retrospective Rating |
| Experience Modification Factor | In experience rating, premiums are modified on the basis of the employer's prior loss experience, encouraging the employer to take steps to minimize losses |
| WC Premium Computation: Job Classification Payroll and Rates | In Job Classification or Manual Rating, Premiums are based on job classifications and payroll |
| Premium Discounts | Credits given to larger employers because some expenses associated with the premium rate do not change with the employer's size |
| Premium Computation: Participating (Dividend) Plans | A share of surplus allocated to a policyholder in a participating insurance policy; allowed with mutual companies where PH are also shareholders; may get some of prem back if co is doing well |
| Retrospective Rating | Prems adjusted at the end of the policy period due to actual losses and exposure amounts that can vary during the policy period; deposit prem charged at beg of pol per & each Q throughout pol; final prem decided after audit at end of pol per |
| Retrospective Rating: At the end of the policy period | the insured is either billed the additional premium not paid or is refunded the excess premium paid. |
| WC Rating Organization | An individual or organization other than an insurer, or a group of two or more insurers acting together, whose purpose is to make rates, rating plans, or rating systems |
| Premium Audits | makes personal lines diff than commercial; a way for insurers to modify the premium at the end of the policy period to reflect the actual risk exposure |
| WC: Other sources of coverage: Self-insured and employer groups | some states allow ER to cover WC on a SI basis if business meets certain legal requirements; ER must obtain SI cert from state; if they go this route businesses can also purchase re or excess ins |
| WC: Residual Market Plans | covers certain types of ins that private insrs cant/wont insure |
| Umbrella Policy | adds additional liability or excess coverage for $1 million or more, over and above the basic liability limits of an underlying policy |
| Umbrella sits over base policies with underlying coverage such as | autos, houses, and other items (boats, recreational vehicles for example) |
| Umbrella Liability Limits | extended by the umbrella policy to cover a broad range of activities and include activities not covered or not required to be covered by the underlying policies |
| Excess Policies | Polices that give even additional liability coverage over the umbrella |
| Umbrella/Excess Liability Policies - When are they required | required by businesses and by some private individuals with higher than normal liability exposure due to the type or notoriety of the business, or because some coverages they require are not covered under other insurance |
| Personal Umbrella Policy | provides coverage for the insured and all household members against claims resulting from bodily injury or property damage to others caused by an accident on the insured's property or as a result of the insured's personal activities anywhere |
| The Personal Liability Supplement | a form used to provide personal liability insurance, and may be attached to a Dwelling Policy or written as a separate policy to provide liability coverage |
| Commercial Umbrella Policy | policy extends liability coverage beyond the liability limits of the required underlying commercial policies, including operations, property, and commercial autos |
| Errors and Omissions Coverage | protects professionals from liability caused by a professional mistake. Covered individuals include doctors, nurses, lawyers, insurance producers, accountants, and engineers. Directors and officers of businesses have a related coverage (D&O) |
| Claims Settlement Handling for E&O Policies | The insured's professional reputation could be affected by a claim; •Before an insurer can settle a claim out of court, the insurer must obtain the signature of the professional individual or organization |
| organization. Medical Malpractice | Professional negligence by act or omission by a health care provider |
| Directors and Officers Liability | Covers directors and officers of a company for claims for negligence or wrongful acts. Also covers the expenses incurred by the company (and often the directors and officers) during a lawsuit |
| Fiduciary Liability | Fid bonds issued by court order/decree to protect retirement plans & indiv who must take into their care or custody the settling of financial affairs |
| Financial affairs included in Fiduciary Bonds | retirement plans or investment funds for the estate of a deceased person or for a minor or other individual who cannot handle their own affairs |
| Liquor Liability | covers the seller if a buyer injures another person while intoxicated, if it can be shown that the seller caused or contributed to the intoxication of the buyer by the sale of alcoholic beverages. The specifics vary by state |
| Why is Liquor Liability needed as its own coverage | Commercial General Liability excludes liquor coverage, so a liquor or DRAM shop policy is needed |
| Employment Practices Liability | covers legal costs incurred for sexual harassment claims, wrongful termination claims, and discrimination claims |
| 2007 edition of Employment-Related Practices Exclusion Endorsement of CGL | has been changed to add the exclusion of malicious prosecution and also to state this exclusion applies even if the injury causing event occurs before, during, or after employment |
| 2007 edition of Employment-Related Practices Exclusion Endorsement of CGL coverage limits | limits the coverage for abuse or molestation only for the professional services described in the endorsement schedule, not for all of the insured's operations |
| Surplus Lines | Companies that offer insurance not offered through admitted insurers |
| Requirements for Surplus Lines License | The full amount/type of ins must not be available through admitted insurers; Financial consideration cannot be a deciding factor; once cov is offered by adm insurer, surplus must stop selling in the state or apply to be an admitted insr |
| Surety Bonds | provide for monetary compensation should there be a failure to perform certain specified acts within a stated time period |
| Parties in a Surety Bond | a three-party contract that guarantees a promise the insurer (surety) makes for the faithful performance or payment of an obligation by a principal or obligor to a third party, or obligee |
| Obligee | the party for whom the bond is written; If the principal defaults on his or her promise to fulfill the obligation, the surety pays damages to the obligee. |
| Surety Example | when a city contracts to have a new town hall built & the contractor can't build the town hall, the insurance company will cover the cost. The contractor is the principal or obligor. The obligee is the city, who will be paid. The insurer is the surety |
| Contract Bonds | Guarantees the contractor will perform a job on time, according to specifications, and without liens for materials or labor |
| License and Permit Bonds | Guarantee that laws or regulations of a business will be followed. |
| Judicial Bonds | Litigation bonds are required in the event of a lawsuit when one individual wants to tie up the assets of another party or restrain the other party from doing some action; includes litigation & fiduciary bonds |
| Fidelity Bonds | a form of insurance protection that covers policyholders for losses that they incur as a result of fraudulent acts by specified individuals. It usually insures a business for losses caused by the dishonest acts of its employees |
| Property Damage and Bodily Injury Liability in Aviation Insurance | may be separate or combined into a single limit. Hull ins can be allrisk for both on ground and in flight or can be written as allrisk on ground and limit flight perils to fire/lightning/explosion - excluding crash and collision |
| Bodily Injury Coverage is Aviation Liability | Passenger Legal Liability/Bodily Injury; Bodily Injury Excluding Passengers |
| Aviation Admitted Liability Coverage/Voluntary Settlement Coverage | provides a specified sum for loss of life/limb/sight by passengers; can only be written along with Passenger Legal Liability coverage |
| Aviation Admitted Liability Coverage/Voluntary Settlement Coverage payment requirements | the injured party must sign a release of liab against the insured. If the injured party wont sign release, offer of payment is withdrawn & party must bring suit against the insured. In this case, the insured is protected under the Passenger BI section |
| Medical Payments for Aviation | coverage that can be written only in conjunction with Passenger liability Coverage |
| Ocean Marine Insurance | provides property and liability coverage for all types of vessels and on their cargoes; these policies are valued policies |
| Valued Policy Definition | In the event of a total loss, the entire face amount of the policy is payable to the insured |
| Major Coverages of Ocean Marine Insurance: 1 | The perils clause |
| Major Coverages of Ocean Marine Insurance: 2 | The "Running Down" Clause; or RDC |
| Major Coverages of Ocean Marine Insurance: 3 | the “free of particular average,” or FPA, clause |
| Major Coverages of Ocean Marine Insurance: 4 | the general average clause |
| Major Coverages of Ocean Marine Insurance: 5 | the sue and labor clause |
| Major Coverages of Ocean Marine Insurance: 6 | the abandonment clause |
| Major Coverages of Ocean Marine Insurance: 7 | Coinsurance |
| Major Coverages of Ocean Marine Insurance: 8 | Express and implied warranties |
| Hull Insurance | Protects a ship owner against damage to the ship itself. Written on a modified all-risk basis. Includes a “running-down“ clause (RDC) that also protects against liability caused by damage to other ships due to collision |
| The RDC, or “running down” clause | provides coverage for legal liability of either the shipper or the common carrier for claims arising out of collisions. The RDC covers negligence of the carrier or shipper that results in damage to the property of others |
| Cargo Insurance | Protects the cargo owner from loss due to destruction |
| Freight Insurance | Indemnifies the ship owner from loss of income that would have been earned if the ship completed its voyage |
| Protection and Indemnity | A companion clause; covers the carrier or shipper for negligence that causes bodily injury to others; liability insurance for the ship owner from consequences of negligent acts of his own/those of his agents |
| Damages included in the Protection and Indemnity Clause | Lost/damaged cargo; Damage to other prop, whether other vessels or fixed objects such as docks; damage to prop on board ship caused by coll; injuries to seamen resulting from insd ship not being seaworthy/other job related injuries/gen dams caused by neg |
| Ocean Marine Express and Implied Warranties | Express warranties are promises written into the contract. Implied warranties are unwritten implications by the policyholder that the vessel is in a condition worthy to make the voyage that the policy covers |
| Ocean Marine Perils | Sinking; heavy weather; stranding; loss from war is excluded |
| General Average Clause | A voluntary loss of part of the vessel or cargo to save the remaining parts which affects all owners and receivers equally, and the expenses are shared equally |
| The General Average Clause in Ocean Marine Insurance Obligates | the insurers of various interests to share the cost of losses incurred voluntarily to save the voyage from complete destruction; sacrifices must be made voluntarily; necessary; and successful |
| Ocean Marine Insurance Particular Average | A loss which affects certain interests more than others. The opposite of general average |
| The FPA, or “free of particular average" Clause | excludes from coverage partial losses to the cargo or to the hull except those resulting from stranding, sinking, burning, or collision. Under its provisions, losses below a given percentage of value, ie 10 or 15& are excluded so insr doesn't pay small $ |
| Electronic Data Processing (EDP) | Provides all-risk coverage for loss of computer programs, data or media |
| Premiums for boat and yacht policies are partly determined on territory of boat/yacht use | The Great Lakes; inland rivers; inland lakes; coastal waters; open sea |
| Outboard Motor and Boat Insurance Policy | Covers physical damage to boats; usually written under a Homeowner policy or Inland Marine Policy |
| Boat Owner/Watercraft Package Policy | Boat pol similar to auto - package contract; covres smaller boats under 26-30ft long or less than certain $ value; combines prop, liab, med payments and legal defense; prem based on boat value; territory of use; and amt of liab cov |
| Personal Yacht Insurance | Provides phys dam cov to the vessel and liab cov to the insured; coverages called hull insurance and prop and indemnity cov |
| Other available yacht insurance coverages | Legal defense; med payments; uninsured boaters; hurricane protection |
| Available Yacht Inusrance Cov: Hurricane Protection | pays to haul the yacht out of the water if a hurricane is approach and put it back in the water after the hurricane has passed |
| Yacht policy written for | Pleasure boats that are too big (min 26-30 ft) to be covered under a Boat Owner Policy; yacht ins is usually written on an agreed or stated value basis |
| These are included on the policy for Yacht Insurance | territory where the craft will be used; value of the yacht; description of the vessel |
| Most marine insurance policies provide a cruising territorial limit | an area the boat must stay within for coverage to remain in force. If the boat is to travel outside the navigational limits prior written permission must be obtained from the insurance company |
| Oversea Insurance | can provide worldwide coverage for any vessel on any ocean |
| Difference in Conditions (DIC) | Covers (to a specified limit) any cause of loss that leaves the property in a different condition than it was before, excluding fire and extended coverage perils |
| DIC Insurance Provides coverage designed to do what | to close specific gaps in standard ins policies; usually available only for larger industrial/commercial risks. allows cov to be customized to extend to exposures as water dam, flood, collapse, earthquake, landslide, etc., according to the insured's needs |
| Residual Markets | Covers certain types of ins that private insurers cannot or will not insure; Some states require that these high-risk applicants be assigned to individual insurers on a predetermined basis while others require that losses from these individuals be shared |
| Residual Markets Joint Underwriting Associations (JUAs) | Insurance companies organized with statutory approval to provide particular types of insurance because there is no coverage through the voluntary market; generally allowed to establish their own rates and policy forms |
Created by:
nicolefassak