Flashcards

Other insurance provisions are crucial in property insurance policies as they delineate how claims are managed when multiple policies are in effect. These provisions help avoid over-insurance and ensure equitable distribution of coverage responsibility among insurers.

A peril is a cause of loss. Life insurance covers death due to two perils: accident and sickness. With a P&C policy, a peril is the cause of property damage or personal injury.

Personal Liability coverage protects the insured against claims alleging that a property owner’s negligence or inappropriate action resulted in property damage or bodily injury to another.

Personal lines are property/casualty insurance products that are designed for and bought by individuals, including homeowners and automobile policies. Many states allow an agent (producer) to sell exclusively personal lines policies with a limited lines license instead of the full P&C licenses.

Pet insurance is a policy that pet owners acquire to help them with veterinary bills. Pet insurance mainly covers emergencies, illnesses, and injuries due to accidents. Many pet insurance policies also provide coverage for damage or injuries to third parties. Many states require a P&C license to sell pet insurance.

A physical hazard is something you can see or touch that increases the risk.

The printed legal document stating the terms of an insurance contract that is issued to the policyowner by the company.

The terms or conditions of an insurance policy as contained in the policy clauses.

The payment, or one of the periodic payments, a policyowner agrees to make for an insurance policy. Depending on the terms of the policy, the premium may be paid in one payment or a series of regular payments, e.g., annually, semi-annually, quarterly, or monthly. The premium charged reflects the expectation of loss, expenses, and profit contingencies.

An insurance policy shall not provide compensation to the policyholder that exceeds their economic loss. This limits the benefit to an amount that is sufficient to restore the policyholder to the same financial state they were in prior to the loss. Property and casualty policies and accident and health policies follow the principle of indemnity.

A general term applied to an agent, broker, or other person who sells insurance.

Professional Liability insurance is liability insurance that covers liability as a result of performing a profession such as doctors, engineers, lawyers, insurance agents, and accountants. It can also include coverage for wrongful acts for other types of businesses such as beauty and barber shops to hi-tech companies. It can include policies for errors and omissions insurance or for the medical field malpractice insurance.

In the context of property insurance, proof of loss is a formal statement made by the policyholder to the insurance company, detailing the insured’s loss and the amount being claimed under the policy.

Insurance coverage for the direct or consequential loss or damage to property of any kind. There are many types of property insurance products.

Proximate cause is a underlying cause of an accident, the legal cause of the accident.

No change of gain, only chance of loss. Pure risk is insurable.

Rebating occurs when the agent (producer) returns part of their commission to the insured as an inducement to buy the policy. Rebating is a prohibited trade practice under insurance law.

Reinsurance occurs when the insurance company buys insurance on the risks it insures, done to reduce the insurance company’s risk.

Replacement cost is the cost to repair or replace property with the same or a similar property without any deduction for depreciation.

Representations are the truth to the best of your knowledge. Life and health insurance applications ask the applicant to make representations.

Funds held by the insurance company to help fulfill future claims.

Retention of risk is the net amount of any risk that an insurance company does not reinsure but keeps for its own account.

Risk is the chance of loss. Pure risk is insurable. Pure risk involves no chance of gain.

The basic premise of insurance, a large number contribute to cover the losses of a few.

When a property policy has paid a claim in full the property belongs now to the insurer and can be sold by the insurer for its salvage value. The right to salvage belongs to both parties. If the insured would like to keep the totaled property, the insurer will deduct the salvage value from the claim amount paid to the insured.

A specific policy provides coverage for a specific property, versus blanket coverage which provides single coverage for multiple properties or assets.

Speculative risk involves chance of gain or loss. Speculative risk is not insurable. Gambling and investing involve speculative risk.

In a stated or agreed value policy the policy limit is determined in advance. How much is paid in the case of a loss is known to the insured. There is no deduction for depreciation. Fine arts floaters, inland marine on jewelry, these are both examples of stated or agreed value policies.

An insurance company owned by its stockholders. Stock insurers issue nonparticipating policies. Dividends, when paid, are paid to the stockholders, not the policyholders.

Strict liability, also called absolute liability, there is no requirement to establish negligence, lack of care or recklessness. If a failure to act or specific actions lead to losses, injury or damages, the defendant can be held liable for a strict liability tort.

Subrogation is a situation where an insurer, on behalf of the insured, has a legal right to bring a liability suit against a third party who caused losses to the insured.

The territory provision in a property & casualty insurance policy specifies the geographical area within which the coverage applies.

Tort law deals with civil wrongs that cause harm or injury to another person, providing remedies like compensation for victims by holding responsible parties (tortfeasors) liable, aiming to deter such conduct, and covering intentional acts (assault, battery), negligence (accidents, malpractice), and strict liability (defective products, dangerous activities).

A transfer of risk shifts responsibility for losses from one party to another in return for payment. Insurance involves the transfer of risk from the insured to the insurer.

An umbrella or excess liability policy is written to provide excess limits over existing liability provisions that a customer may have such as automobile, homeowners, liability, and watercraft policies. May provide additional coverages not provided by the underlying policies. This is available in both personal and commercial policies.

Unauthorized insurers are those who are nonadmitted, meaning they have not been approved or authorized to sell insurance in the state.

The person who reviews the insurance application and decides if the applicant is acceptable and at what premium rate.

The process by which an insurance company determines whether it can accept an application for insurance, and if so, on what basis so that the proper premium is charged.

Most states have adopted similar laws related to unfair claims settlement practices. These practices apply to both the insured and the insurer.

Unfair discrimination happens when similar risks are treated differently and premiums are based not on relative risk but on factors like race. State laws will address unfair discrimination related to insurance. For example, in some states, car insurance premiums cannot be based on gender. In those, states to base car insurance premiums on gender would be a form of unfair discrimination.

Most states have adopted similar laws related to unfair trade practices. These include unfair discrimination, misrepresentations related to the benefits, advantages, conditions, or terms of an insurance policy, misrepresentations related to dividends, and misleading statements related to the financial health of the insurer, amongst many others.

Insurance contracts are an example of a unilateral contract. This means they are one-sided. So long as the life insurance premium is paid, the insurance company promises to pay the beneficiary the death benefit if a certain event occurs (the insured dies). With a unilateral contract only the insurer makes a legally enforceable promise to pay covered claims.

Unoccupancy is when the insured is gone but their property is still there. If the homeowner is on vacation the house is said to be unoccupied.

Vacancy occurs when the insured is gone and the property is empty (belonging are gone too). If the homeowner has been transferred to another state, packed up their house, and put their empty house on the market, the home is vacant.

Vicarious liability is liability that you have related to the acts of others. It is the legal responsibility for another person’s mistake.

A voluntary giving up of a legal, given right.

If the underwriter approves an incomplete application the insurer is waiving their rights to contest a claim related to whatever was left blank (doctrine of waiver and estoppel).

A strict promise by the insured that certain facts are true or conditions will be met; if the insured breaches a warranty (like failing to maintain a fire alarm), the insurer can deny a claim, even if the breach didn’t cause the loss, making compliance crucial for coverage.

Watercraft insurance covers the loss exposure from the ownership of a watercraft including the vessel, its contents, and the liability of the owner. Can be modified to cover the use of watercraft and where it travels.

An insurance plan that employers are required to have to cover employees who get sick or injured on the job. Worker’s compensation insurance covers medical and rehabilitation costs, lost wages, and death benefits for employees injured at work; required by law in all states.