1E Flashcards
Insurance Application
is the applicant’s offer. whiteout is never acceptable.
Representations
a statement of fact
Warranty
guarantee of information
Material Fact
information that would alter decision to issue insurance
Binding Authority
authority given to a producer which provides temporary coverage. may be oral or written. 90 day max
Sources of Insurability
inspection services investigative consumer reports government agencies credit reports (can't be used as sole reason to determine insurability) insurance support organizations
Fair Credit Reporting Act of 1970 (FCRA)
protects consumers relative to collection and disclosure of personal info
Judgment Rating
oldest and least used form of rating - used with antiques and fine art
Manual Rate
most common method. look it up in a manual (ie personal residence)
Merit Rate
a manual rate modifier (ie good student modifier)
Experience Rate
a discount or surcharge based on experience
Retro Rate
initial deposit premium then a premium audit at the end of the term will determine any adjustments. aka “look back” (common on Worker’s Comp Insurance)
Policy Structure
- Declarations
- Insuring Agreements
- Condition
- Exclusions
- Definitions
- Additional & Supplementary Coverages
- Endorsements
Declarations
personalize the policy to the insured, identifies the insured, lists coverage and premium, policy period
Insuring Agreements
states what is covered, the losses for which the insured will be indemnified, type of property covered and perils against which it is insured
Conditions
conditions that apply to both the insured and the insurer
Exclusions
describes the losses for which the insured is not covered
Definitions
clarifies meaning of certain terms in the policy
Additional Coverages
additional coverages included w/o additional premium (ie. cleanup following a covered cause of loss)
Supplementary Coverages
gen associated w liability insurance include issues such as providing a defense in lawsuits, paying or bail bonds and costs the insurer incurs in investigation and settlement of a claim
Endorsement
modifies the policy in some way. might be added to broaden coverage (w an associated increase in premiu) or may be adde to limit or restrict coverage (w a decrease in premium). Not effective unless accepted by insurer and signed by an exec officer
Certificate of Insurance
proof of insurance
Insurable Interest
insured must face a risk of financial loss if property is damaged or stolen. used to prevent gambling and reduce moral hazards
In P&C Insurance, insurable interest must be demonstrated when?
at the time of loss
Cancellation by insured
at any time by providing prior written notification to insurer
Cancellation by insurer
can cancel only for specific reasons (30 days notice; non payment of premium is 10 days)
Proportionate (Pro-Rata) Share Refund
if INSURER initiates cancellation, insurer is required to refund 100% of the unearned premium
Short Rate
if INSURED initiates, the insurer is required to refund unearned premium but allowed to charge a small transaction fee
Flat Rate
either initiates a cancellation coincident with the effective date
Fire Insurance Policy
refers to a policy that provides coverage in relationship to property losses. can be named or open peril
Homeowner Policy Cancellation (Oregon requirements)
insurer may cancel a policy in force for > 60 days only bc of :
a. non payment of premium
b. fraud
c. violation of terms
d. substantial increase in risk of loss
e. director determination
Notificaton 10 days written if non payment of premium or fraud and 30 days for everything else
Policy < 60 days can cancel for any reason
Commercial Liability Cancellation
a. non payment of premium
b. fraud
c. substantial increase in risk of loss
d. failure to comply with loss control recommendations
e. breach of contractual duties, conditions or warranties
f. director determination
g. loss or decrease in reinsurance
h. other reason approved by director.
cancellation effective after 10 working days
