Flashcards
A type of professional liability insurance that protects an insurance producer from claims arising from services provided (or those not provided). E&O does not cover criminal acts.
Exclusions in a property insurance policy delineate the specific risks or perils that are not covered by the insurer.
In insurance, exposure is a measure of the potential risk faced by an insurance company as a result of their normal business operations – namely, selling insurance policies. When an insurer sells a policy, they must cover insured losses that fall within the terms and conditions of coverage.
Express authority in insurance refers to the explicit powers and permissions granted to an agent (producer) through a written agreement. It outlines the agent’s scope of authority and activities they are authorized to undertake on behalf of the insurer.
The Act (Title VI of the Consumer Credit Protection Act) protects information collected by consumer reporting agencies such as credit bureaus, medical information companies, and tenant screening services. Information in a consumer report cannot be provided to anyone who does not have a purpose specified in the Act.
Misstating an insurance company’s financial position is an unfair trade practice.
False or deceptive advertising is an unfair trade practice.
Flood insurance is insurance that compensates for property damage arising from flooding. The federal government is the primary underwriter of the coverage, which offers the coverage in federally designated flood areas. Flood coverage is excluded on most homeowners and dwelling fire policies.
A foreign insurer is one whose home office is in another state. The foreign insurer is doing business in this state.
Insurance fraud occurs when an insurance company, agent, adjuster, or consumer commits a deliberate deception in order to obtain an illegitimate gain. It can occur during the process of buying, using, selling, or underwriting insurance.
The Gramm-Leach-Bliley Act seeks to protect consumer financial privacy. Its provisions limit when a financial institution may disclose a consumer’s nonpublic personal information to nonaffiliated third parties.
Established at the state level to support insurers and protect consumers in the event of insurer insolvency. Guaranty Associations are funded through assessments charged to admitted insurers.
A hazard is something that increases the risk. Hazards may be physical, moral, or morale hazards.
Homeowners insurance is a combination of both property and casualty coverages arising out of the ownership of a home, its contents, additional living expenses, and for the insured’s personal liability. The homeowners’ coverage can be used in different formats to insure mobile homes and farms.
Implied authority refers to the actions of an agent (producer) that may extend beyond the rights and powers explicitly provided in the agency contract.
Indemnity is the process by which loss responsibility is explicitly transferred within a contractual relationship. Without this, there’s no way for an insurance policy to establish that accountability – meaning there would be no way to enforce its provided protections.
An indirect loss (or consequential loss) is financial damage that isn’t a direct result of physical damage, but rather a consequence of it, like lost income, extra expenses (temporary rent), or spoilage from a fire or power outage, which insurers cover under specific policies like Business Income Insurance to restore the insured’s operations.
Inland marine insurance is a broad category of property insurance generally coverage loss to movable property or unusual risks. In personal lines, inland marine includes coverage for personal effects like jewelry, fine art, sports, or musical equipment. Inland marine coverage in commercial lines can include, but is not limited to, equipment floaters, builders risk, jewelers block, and difference in condition polic
Insurance is a legal agreement between two parties – the insurer and the insured, also known as insurance coverage or insurance policy. The insurer provides financial coverage for the losses of the insured that s/he may bear under certain circumstances.
The laws that govern the business of insurance in a state.
The Insurance Services Office, Inc., is an organization that collects statistical data, promulgates rating information, develops standard policy forms, and files information with state regulators on behalf of insurance companies that purchase its services. Most state P&C exams cover ISO policy forms.
The person or organization covered by an insurance policy.
The insurance company.
The insuring agreement or clause outlines the specific perils or risks that the insurer agrees to cover in exchange for the premium paid by the insured.
The insuring clause is found on the first page of the policy, the face of the policy. It is the insurer’s legally enforceable promise to pay. The insuring clause includes the parties to the contract, the policy effective date, and the coverage.
The law of large numbers is a statistical concept that calculates the average number of events or risks in a sample or population to predict something. The larger the population is calculated, the more accurate the predictions. In the field of insurance, the Law of Large Numbers is used to predict the risk of loss or claims of some participants so that the premium can be calculated appropriately.
For an insurance policy to be a legal contract it must include four elements. C – O – A – L. L stands for legal purpose and capacity. The policy must be purchased for a legal purpose and the owner must be the age of majority in the state and of sound mind.
The amount of policy reserves (cash on hand) required under state insurance laws.
Liability coverage protects individuals and businesses from financial loss if they’re found legally responsible (liable) for causing bodily injury or property damage to a “third party” (someone other than the insured or insurer). It pays for legal fees, medical bills, and settlements when negligence leads to harm, covering common incidents like slip-and-falls (premises liability), auto accidents, or faulty products/work (product/operations liability).
Required for an insurance producer (agent) to legally engage in the business of insurance in a state. Issued for a period of time, states will require a fee and many require continuing education to be completed to renew a license.
Limits of liability are the maximum amounts an insurer will pay for covered damages or losses, capping financial responsibility for events like accidents or property harm. These limits are crucial for managing risk, often structured as per-occurrence (for a single event) and aggregate (total for a policy period), protecting both the policyholder from huge payouts (beyond the limit, you pay out-of-pocket) and the insurer from unlimited financial exposure, defining coverage for bodily injury, property damage, and legal fees.
Livestock coverage is designated for horses and other farm animals if they are damaged or destroyed. The insurance includes registered cattle and herds, other farm livestock, and zoo animals. This type of insurance protects the farmer or rancher against the premature death of animals resulting from natural causes, fire, lightning, accidents, act of God, acts of individuals other than the owner or employees, and destruction for humane purposes.
The amount an insurance company pays on a claim. On a property and casualty policy, physical damage to property or bodily injury, including loss of use or loss of income.
The fair value or the price that could be derived from current sale of an asset.
A significant misstatement on an application form. If a company had access to the correct information at the time of application, the company might not have agreed to accept the application.
It is this 1945 Act that exempts insurance from federal law to the extent that it is regulated by state law.
A false statement of a material fact, accidental or intentional.
The frequency of premium payment is referred to as the mode of payment. The more often the premium is paid the more expensive it will be due to service fees.
Hazard arising out of an insured’s character, habits, financial responsibilities, etc. A liar represents a moral hazard.
Hazard arising out of an indifference to loss because of the existence of insurance. A careless person represents a morale hazard.
In a property insurance policy, mortgagee rights are provisions that protect the interests of a mortgage lender (mortgagee) in the event of loss or damage to the mortgaged property.
An insurance company owned by its policyholders. Mutual insurance companies usually issue participating policies. The policyowners of participating policies may receive dividends.
The association of state insurance Commissioners. They work together to solve insurance regulatory issues and form and recommend model legislation and requirements.
Negligence is failure to act as a reasonable person in the same set of circumstances. Negligence is a civil tort. It is grounds for a lawsuit.
An insurance company that is not licensed to operate within a state. Surplus lines insurers are allowed to do business in a state without a license, they are nonadmitted insurers.
Nonrenewal occurs at policy expiration, the policy is no longer in force, it is not renewed. There is no refund owed at a non-renewal.
A notice of claim is an initial formal communication from the policyholder to the insurance company, alerting them of a potential loss or damage that may be covered under the policy, setting the claims process in motion.
An accident, including injurious exposure to conditions, which results, during the policy period, in bodily injury or property damage neither expected nor intended from the standpoint of the insured.
For an insurance policy to be a legal contract it must include four elements. C – O – A – L. O stands for offer. In general, the applicant makes the offer when they fill out the application and submit the first premium payment.