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NV Ins Exam

QuestionAnswer
Which Insurance company is owned by its policyholders?
What are the 7 type of insurers? Stock Insurance company, Mutual Insurance company, Reciprocal Insurance company, Lloyds of London, Fraternal benefit societies, Risk Retention groups and self insurer
If an insurance company wants to transfer its risk, what type of insurance would it need to buy?
What is a domestic insurer? An insurer who is organized under the laws of this state in which it conducts business, whether or not it is admitted to do business in this state.
What is a foreign insurer? An insurer who is not organized under the laws of this state, but in one of the other states inside of the United States, whether or not it is admitted to do business in the state.
What is an alien insurer? An insurer who is organized under the laws of any jurisdiction outside of the United States, whether or not it is admitted to do business in this state.
Which insurance company is organized under the laws of a different state in the US?
Which department of an insurance company accepts insurance risk?
Law of agency? Is the relationship in between 2 or more parties, where either the agent or producer, represent the other party, either principal or insurer.
Broker An individual who is licensed to negotiate insurance contracts with the insurer.
Insurance Producer (Agent) A person who is licensed in their state to sell insurance on behalf of an insurance company.
Which person represents the insurance companies? Producer (Agent)
Which kind of authority does the general public believe the agent should know when giving insurance quotes? Implied
What is the fair credit reporting act? Applicants can review the report, protects the consumers privacy, any reports given cannot include any lawsuits that are 7 years or older and bankruptcies that are over 10 years old.
Financial Anti-terrorism Act Helps to keep record keeping and reporting on government banks.
A person who is wrongfully involved in misuse of funds, embezzlement can be fined up to how much and possible imprisonment up to how many years? $50,000 / 10 years
A federal regulation
Breach of trust Violating the relationship between all parties involved
Type of Risk Speculative & Pure
Speculative Risk Chance for loss, gain or neither loss or gain. This risk cannot be insured. Ex. Gambling
Pure Risk No chance for gain. This risk is insurable. Ex. property that was damaged due to fire or other natural disaster, financial loss because of death.
Loss Decrease of value
Peril The cause of loss
Hazard A condition that would increase the probability of a loss from a named peril
What are the 3 types of hazard? Physical, Moral & Morale
Physical Hazard A physical issue that elevates the probability of a loss. Ex. Flammable items that are placed too close to a furnace or fireplace
Moral Hazard Being dishonest that can lead to an increase in a probable loss. Ex. Someone who tries to collect insurance money by causing damage to their own property on purpose
Morale Hazard Somebody's carelessness such as leaving your vehicle unlocked or not locking up belongings
A dishonest act that can increase the loss of a hazard? Moral Hazard
Principal of Indemnity The insured should not gain a profit from any kind of insurance transaction, meaning that the insured is returned to their previous financial state.
Underwriting Being able to classify, selecting and grading a risk.
Insurability Meeting the underwriters requirements by the person applying for coverage
Tort law Civil wrongs; resulting in injury or harm
Returning to previous financial state Indemnity (Principle of indemnity)
4 elements of a legal contract Must be competence, legal purpose, agreement, and consideration.
Contract law Enforcement of the contracts
Contract of utmost good faith Both sides that are involved in dealing with forming the contracts. Both sides rely on both sides being honest and truthful
Waiver Own willed surrender
Would a person who is under the influence be able to enter into a legal contract? No
Contract of adhesion One person involved writes the contract , without any input from another. (Take-it or leave-it)
Estoppel This prevents a fact to be retracted, if it was previously said to be true.
Aleatory contract The value is unequal. Ex. The insured's premium payment is less than benefit that is suppose to be given if the event.
Endorsement A policy that adds provisions
Personal Contract The person who owns the policy, is unable to transfer its ownership to someone new.
Unilateral Only 1 side is required
What is not an element of the legal contract ?
Warranty When in the application in the policy that are said to be true and If warranties are later discovered untrue (past, present or future), coverage is voided.
Premium Cost of the insurance that is purchased. Ex. $25,000 of coverage = $5 rate x 25 (for $1,000 of ins.) , $125 premium
Underwriting factors Claims history, hazards, nature, other typs of risk that are insured.
Rate An amount that is charged for a set if insurance
Formula for a company's loss ratio Paid losses + loss reserves ÷ total earned premium
Expense Ratio Dividing an insurer’s Total operating expenses by the written premiums.
Flat cancellation n A cancellation of insurance that is retroactive to the effective date of the policy. No coverage is provided and the insurer must refund the policy premium paid by the insured.
Accident A sudden, unforeseen, unintended, and unplanned event from which loss or damage results.
Proximate Cause The primary cause of loss. The 1st loss that has occurred
Arbitration A disputed claim is decided by a neutral third party.
Pro rata cancellation Refunds premium to the insured based on the number of days coverage was in effect.
Salvage value The amount for which property can be sold at the end of its useful life. In property insurance, the salvage value is the scrap value of damaged property.
Cancellation The termination of an insurance policy before its expiration date. A policy can be cancelled by the insured or insurer.
Right of salvage The right of the insurer to take possession of damaged property after paying for its loss. The salvage belongs to the insurer.
Binder An agreement provided by a producer that provides temp. proof of insurance until the insurer is able to give an insurance policy. Includes the name of the insurer, the amount and type of insurance, and the perils insured against.
Deductible Anything that clearly described and used in an insurance policy for the purpose of making it clear of the intent of the insurer and to avoid any type of coverage disputes
Bailor A party that entrusts it property to a bailee
Bailee A party who accepts the entrusted property for storage or service from a bailor
Robbery Taking of property from a person and who has been caused harmed or threatened in the process.
Burglary Taking of property that is located INSIDE a location that is locked and forceful entry was made.
Mysterious disappearance When items have gone missing and it is unknown.
Which is added to a policy?
Vacancy Does not contain personal property
Theft Broad form; Any act of stealing
Unoccupancy Contains property but no person lives there
Loss valuation A property policy pays for losses to property based on the valuation method contained in the policy or chosen by the insured in an endorsement added to the policy.
Actual cash value (ACV) cost to repair/replace at replacement value minus Depreciation
Named Perils Property coverage only provides insurance for the causes of loss,or perils, listed.
Functional Replacement Value
Direct loss A loss that causes direct damage to property without anything being involved.
Concealment
Subrogation 3rd party is responsible for loss, the insurer controls the expenses & premium, Helps block the insured from collecting double for the same loss, Also this lets the insurer collect the the person who has caused the loss.
Open perils
Valued policy The insurance company is required to pay the amount in its entirety, for the total loss
Indirect loss (consequential)
Replacement Value The cost to replace property with property of like kind and quality, at current pricing without a deduction for depreciation value.
D.I.C.E Declaration, Insuring agreement, Conditions, exclusions
Method of loss valuation that values damaged property at the cost to replace with property of like kind and quality, at current prices, and without deduction for depreciation.
Specific limit Insures a single item of property for a single limit of insurance. For example, a fire policy insures one dwelling for $100,000.
Declarations describes what information Who, What, Where, When, How much
Insurable Interest and Limit of Liability The insurer will not be responsible for payment of loss in an amount greater than the financial interest of an insured.
Market value The price a buyer would pay for property purchased from a seller
Scheduled limit Insures one or more items of property on a policy together and the amount of insurance applying to each item is shown on a schedule.
Agreed Value The insurance company and the person insured agrees to a value of a certain property before the policy is issued.
Blanket limit Insures property that is located at 1 or more location OR more than 1 property at the same spot OR both. Ex. the $1mil blanket limit applies to two different buildings at 2 separate locations, as well as the businesses personal property
Determine the actual cash value (ACV) of a loss? The cost to repair or replace property at its replacement value, minus depreciation
Liberalization clause Specifies that if the insurer broadens coverage with no increase in premium, that broadening of coverage will apply to existing policies without the need for an endorsement
Abandonment insurer is not obligated to accept any property abandoned by an insured.
No benefit to bailee No coverage applies if loss payment benefits a bailee.
Appraisal Agreement by 2 parties to settles the loss. Each party pays the cost of its own appraiser and shares the costs of the umpire and the appraisal.
Each of the following is a typical property insurance policy exclusion, except:
Mortgage clause Protects the mortgagee's financial
First named insured The 1st person that appears first on the declaration
A Liberalization Clause serves which of the following purposes?
The duties and obligations of the insured are found under what part of the insurance policy?
What is Coinsurance? A common property policy provision that requires the insured maintain a certain limit of insurance coverage in order to avoid a penalty in the event of a partial loss.
Which is not true of coinsurance? It applies in the event of a total loss, this would be Valued Policy Law
Valued Policy Law Paid in the event of a total loss
Tort A wrongful act, that violates a duty
Punitive damages An award to an injured party, in addition to compensatory damages, to punish and discourage a wrongdoer from repeating negligent acts or omissions. Most liability policies do not provide coverage for punitive damages.
Vicarious Liability The liability assigned to one party for the conduct of another, based solely on a relationship between the two. Examples include employer/employee relationships and parent/child relationships
Compensatory Damages Awarded to the injured party for the actual loss sustained. Damages are Special or General.
Negligence Failure to use ordinary care. For example, running a red light
Gross negligence Failure to exhibit any sort of care through recklessness or deliberate indifference to the well-being of others. For example, driving while under the influence of alcohol.
Loss of consortium Compensation to a husband or wife for the loss of companionship of a spouse.
Attractive Nuisance An artificial condition on land that attracts children, requires the owner to exhibit a special duty of care. Legally, children are considered invitees to the premises if it contains an attractive nuisance even when they are not expressly invited.
Bodily injury physical injury, including sickness, disease, and death caused by the acts or omissions of an insured. Bodily injury liability expenses include medical bills, lost wages, mental anguish, pain and suffering
Property damage physical damage to tangible property, including loss of use of that property, caused by the acts of an insured. Property damage liability expenses include the actual cost of repair or replacement of the damaged property not able to be use
Personal Injury Slander, false arrest, copyright infringement, libel, etc
Certificate of insurance Evidence that insurance was purchases but not proof of insurance being active
Contributory Negligence Helps prevent the negligent party from getting paid.
Assumption of risk Helps prevent the claimant form collecting any money, if they have known about the risk.
Statutory Law Written law that has been written and enacted on by legislatures
Comparative negligence Damages are only covered up to what the claimants negligence. Ex. If they claimant is 15% negligent, the insurance will only cover 85%
Statute of limitations The time during a trial
Strict & Absolute liability Legal things that presents legal liability that is based on conditions, activities, or products that can cause harm. ABSOLUTE - Animal ownership, abnormal activities, and employers. STRICT - Products
No fault liability
Which of the following is a common law defense used by the defendant when the injured party is partially responsible for his own injuries?
A party injured in an auto accident is not allowed to sue the negligent party who caused the accident under which of the following laws?
Pro rata liability - Specifies the process to be followed when more than one policy covers the same loss
Pol. A insures a dwel 4 $250k & Pol B insures the same dwel 4 $500k.Both pol cove the sam los, Pol A would pay 1/3 the loss bcus $250k represents 1/3 of all the ins avail 2 cover the loss ($250k = 1/3 of $750k, whic is sum of $250k/Pol. A &$500K/Pol. B Pro Rata Liability
Aggregate limit The most the policy will pay. for the losses occurred during policy, regardless of other policies.
The _______ Limit of liability applies to bodily injury, property damages, or both
The ______________________ is the most the policy will pay for the sum of all the losses occurring within a policy period.
Which of the following is designed to prevent the insured from collecting more than the actual extent of a loss?
DP-1 is which form? Basic: Perils against fore, lightening & Internal explosion. For addt amt EC (extended coverage) can be purchased
DP-2 is which form? Broad: Perils against are what is covered in DP-1 Plus the EC perils : Damage by burglars, falling objects, weight of ice, snow or sleet, accidental discharge or overflow, sudden tearing apart, cracking, burning or bulging, freezing, sudden elec curr
Losses to the dwelling and other structures are paid on Replace cost or actual cash value? Replacement
ACV is paid on Personal property
DP-3 is which form? Special : Open perils coverage
Which of the following is not eligible under the Dwelling Program?
Which of the following dwelling program forms covers the building on an open peril basis?
Which of the following dwelling forms pays for losses to the dwelling on an actual cash value basis?
An attached carport is covered under which of the following coverages?
HO-2 Broad form: Cov. A, B & C -
Which coverage pays for the loss of rents due to direct loss to the dwelling from a covered peril?
D.O.P.F.A Dwelling, Other, Personal, , Additional
HO-3 Special form: Dwelling, vandalism 60 con, days, mold, fungus, animals, smoke, wear & tear. Cov. A&B , open perils, 30%
Losses under Cov. A & B are valued at which cost Replacement Cost
HO-4 (Renter's or tenants) Contents Broad form, 30%
HO-5 Comprehensive: Broadest form of all of them, open perils, 30%
HO-6 Unit-owners, condos, Cov. A & C, 50%
HO-8 Modified homes: older homes, fire, lightening wind hail expl, riot, aircraft, vehicles, volca, 10%
Coverage A 60 or more days for vandalism not covered, 80% RC
Created by: lisasanchez