All Terms and Subject

Question 1

What is HO-5 Comprehensive Form

Answer 1

Open peril for structures and personal property

Question 2

What is HO-3 Special Form

Answer 2

Open peril coverage for dwelling and other structures.

Named Peril coverage for personal property.

Question 3

Open Peril Approach

Answer 3

Covers damages caused by all perils except those specifically excluded.

HO-3 and HO-5

Question 4

HO-8 Modified Coverage Form

Answer 4

Named Peril Coverage
Covers fewer perils
Covers at ACV
Considers fair market value of home
Cheaper

Question 5

HO-6 Unit Owners Form

Answer 5

“Condo Form”
Covers owner’s belongings
Covers all finished surfaces of the individual condominium unit.

Question 6

HO-4 Contents Broad Form

Answer 6

“Renter’s Insurance”
Against all broad form perils
Only covers personal property.

Question 7

HO-2 Broad Form

Answer 7

Named Peril Policy

Insures against all 17 broad form perils

Question 8

Broad Form Endorsement

Answer 8

Vandalism or malicious mischief
Theft
Falling objects
Weight of ice, snow, or sleet
Damage from steam or hot water system
Accidental discharge or overflow of water or freezing
Artificially generated electrical current

Question 9

Extended Coverage

Answer 9

Covered: Windstorm, hail, explosion, riot or civil commotion, vehicles, aircraft, smoke

Question 10

Named-Peril Approach

Answer 10

Covers losses caused only by perils named in policy.

Question 11

Commercial Lines

Answer 11

For possessions included for business or corporate use.

Question 12

Personal Lines

Answer 12

For possessions included for personal use.

Question 13

Monoline Policy

Answer 13

An insurance policy that covers only one risk or type of risks

Question 14

Line of Coverage

Answer 14

A particular risk or groups of risks covered by an insurance policy.

Question 15

Negotiation Techniques

Answer 15

Humor, questions, demonstration, pleasant surprise, diversion, silence, have a back-up offer ready, flexibility.

Question 16

Prior to Negotiations

Answer 16

Complete investigations
Complete estimate
Know circumstances
Be clear about objectives
Understand possible obstacles
Know maximum about insurer willing to pay
Have an idea of minimum amount claimant will accept

Question 17

Settlement Options

Answer 17

Full release
Scheduled Release
Partial Release
Advanced Payment
No Release
Structured Settlement

Question 18

Dispute Resolution

Answer 18

Arbitration
Mediation
Appraisal
Declaratory Judgement Action
Litigation

Question 19

Recorded Statements must include

Answer 19

Introduction Statement (including convo recorded)
State names and locations of everyone
Age and address of interviewee

Body
Where, when, how loss occurred
Description of injuries
Where started where headed
What happened after
Explain interruptions
Stay objective
Avoid excessive empathy
Don't discuss insurance or settlements

Conclusion
Interviewee must verify he understood all questions. Interviewee states again convo is recorded.

Question 20

Written statements should include

Answer 20

Introduction
Identify interviewer and interviewee
Date, time, and place of interview

Body
Where, when, and how loss occurred
Description of injuries

Conclusion
Interviewee verifies in own handwriting
Signature below on right side
Witness signs left

Question 21

Claims Investigation

Answer 21

Liability Claims
Critical Evidence
Official Reports
Other Evidence
Written Statements
Recorded Statements

Question 22

Investigation: Property Claims

Answer 22

Inspect damages
Take photos
Interview claimant and witnesses
Review police report
Consult w/ professionals

Question 23

Determine Insurer’s Liability

Answer 23

Was policy active at time of loss?
Does claimant have insurable interest?
Does policy cover type of damage or injury being claimed?
Is there a history of similar claims?
Will any other policies cover loss?
Has insured met all requirements of the contract?

Question 24

Claims Process Steps

Answer 24

Acknowledge claim
Establish commmunication
Prepare necessary paperwork
Determine insurer's liability
Investigate the losses
Determine time and cost of repairs
Apply all policy coverages and provisions
Negotiate Settlement
Prepare final report.

Question 25

General Damages

Answer 25

Compensatory damages are determined by the court and awarded for intangible, emotional losses that are not quantifiable.

Question 26

Special Damages

Answer 26

Compensatory damages awarded for tangible losses with a quantifiable value.

Question 27

Diminution of Value

Answer 27

Total amount of all damages resulting from an occurence.

Question 28

Compensatory Damages

Answer 28

Money awarded for tangible and intangible economic loss. 2 types: Special and General

Question 29

Categories of Harm

Answer 29

Physical Financial Physical and Financial Emotional and/or Reputational

Question 30

Types of Liability Policy Limits

Answer 30

Single Split Aggregate

Question 31

Dangerous Instrumentality Doctrine

Answer 31

Holds a party strictly liable for damages caused during inherently dangerous activity.

Question 32

Strict Liability

Answer 32

Holds a party 100% liable for damages when the activity or instrument they are performing is inherently dangerous.

Question 33

Res Ipsa Loquitor

Answer 33

Circumstances of the injury make it obvious that the defendant is negligent, no proof is needed.

Question 34

Defense to Claim of Negligence

Answer 34

Assumption of Risks Contributory Negligence Comparative Negligence

Question 35

Vicarious Liability

Answer 35

The transfer of negligence from one party to another

Question 36

Liable

Answer 36

Obligated according to law, responsible

Question 37

Coinsurance Penalty

Answer 37

Actual Insurance / Coinsurance Requirement = Penalty

Question 38

Coinsurance

Answer 38

Encourages the insured to purchase an adequate amount of coverage, typically at least 80% of a property's value. Requires 80% of property's value

Question 39

Types of Deductibles

Answer 39

Fixed Percentage Franchise

Question 40

Constructive Total Loss

Answer 40

When the cost of repairing damaged property is higher than the property's current value.

Question 41

Actual Total Loss

Answer 41

When property is completely destroyed and unrepairable

Question 42

Total Loss

Answer 42

When insured property is damaged so badly that it is not worth repairing.

Question 43

Partial Loss

Answer 43

When insured property is only partly damaged, and repair cost fall within the policy limit.

Question 44

Valued Policy

Answer 44

Agreed Value or Guaranteed Value Valuation method that assigns a set value to each insured item. Value determined prior to insurance policy.

Question 45

Obsolescence

Answer 45

When something is no longer used or wanted, despite being in good working order.

Question 46

Characteristics of Replacement Cost

Answer 46

No depreciation Based on replacement cost at the time of loss Higher premiums

Question 47

Broad Evidence Rule

Answer 47

Takes into consideration any evidence available to determine value

Question 48

Accumulated Depreciation

Answer 48

Annual Depreciation x Age =

Question 49

Annual Depreciation

Answer 49

Replacement Cost / Item's Useful LIfe

Question 49

Actual Cash Value

Answer 49

Valuation method that takes into account and item's depreciation Replacement Cost - Depreciation =

Question 50

Methods of Valuation

Answer 50

Actual Cash Value Replacement Cost Stated Amount Agreed Value

Question 51

Subrogation

Answer 51

The transfer of rights that allows the insurer to recover its losses after it has indemnified a policyholder.

Question 52

Insurance Adjuster

Answer 52

Represents insurer responsible for evaluating the circumstance of a claim.

Question 53

Claims Process

Answer 53

``` Filing a claim Acknowledgement Investigation Evaluation Adjustment ```

Question 54

Claim

Answer 54

A demand for payment in accordance with the terms of an insurance policy.

Question 55

Indirect Loss

Answer 55

An economic loss that results from a direct loss.

Question 56

Direct Loss

Answer 56

Physical harm to tangible property.

Question 57

Damages are covered: | Proximate Clause

Answer 57

If caused by a covered peril. If their proximate cause was a covered peril.

Question 58

Original Occurrence

Answer 58

Causes damage that then leads to more damage. The proximate cause of all resulting losses.

Question 59

Proximate Cause

Answer 59

When there is an unbroken chain of events between an occurrence and a loss, then the occurrence is the proximate cause of the loss.

Question 60

Legal Hazard

Answer 60

Increased chance of loss due to legal action.

Question 61

Physical Hazard

Answer 61

Physical conditions that increases the chance of a loss.

Question 62

Morale Hazard

Answer 62

Takes place when insured acts differently because of the comfort that insurance protection provides.

Question 63

Moral Hazard

Answer 63

Results from policy holder's deliberate decision. Involves reckless behavior because of financial security offered by insurance. "Behavioral Hazard"

Question 64

Estoppel

Answer 64

Legal principle that prevents an insurer from denying coverage if the insured has reasonably come to believe that he has such coverage, based on insurer's practices.

Question 65

Concealment

Answer 65

Deliberately withholding relevant information.

Question 66

Warranties

Answer 66

Promises or guarantees that certain conditions will be met.

Question 67

Specific Limits

Answer 67

Limits that apply to one specific type of property.

Question 68

Blanket Coverage

Answer 68

"Blankets" more than one property, type of property, or coverage under a single limit.

Question 69

Binder

Answer 69

Temporary coverage for an insurance applicant until the policy is issued.

Question 70

Risk Retention

Answer 70

Acknowledging the risks and preparing to handle unexpected losses that may occur.

Question 71

Risk Management Techniques

Answer 71

Avoidance Reduction Transference Retention

Question 72

Coverage D

Answer 72

Loss of Use For indirect losses that result from direct losses.

Question 73

Coverages for Loss of Use

Answer 73

Additional Living Expenses (ALE) Fair Rental Value (FRV) Prohibited Use (a.k.a Civil Authority)

Question 74

Additional Living Expenses

Answer 74

Pays increase in expenses needed for the insured to maintain normal standard of living after a covered loss. Only covers costs that exceed the insured's normal living expenses.

Question 75

Fair Rental Value

Answer 75

Indemnifies insured for lost rent if a tenant has to move out due to covered damages. Pays lost rental income until unit is habitable. Only pays net loss: subtracts any expenses that do not continue while the tenant is gone. Coverage does not include losses due to cancelled lease or agreement. Only pays up until the unit is repaired, not until the insured finds a new tenant, if applicable.

Question 76

Civil Authority Coverage

Answer 76

Pays for ALE and FRV when a civil authority prevents the insured from using the home.

Question 77

Coverage D - Limits

Answer 77

Measured in time rather than dollars. ALE paid until premises is repaired or replaced, or until the insured's household can settle elsewhere. FRV is paid for the shortest amount of time needed to restore the rented area to rentable condition. Civil Authority pays until access to the home is restored up to a maximum of two weeks. Allow ALE and FRV to extend beyond the policy expiration date if needed.

Question 78

Loss of Use Deductibles

Answer 78

ALE and FRV subject to the policy deductible. Civil Authority NOT subject to any deductible.

Question 79

Debris Removal

Answer 79

Additional 5% of policy/coverage limit.

Question 80

Reasonable Repairs

Answer 80

Coverage reimburses homeowner for expenses to protect property from further damage.

Question 81

Loss Assessment

Answer 81

For condo owners under HO-6 Pays when condo association charges an assessment after a loss.

Question 82

Ordinance or Law

Answer 82

Pays up to 10% of the Coverage A limit as additional insurance.

Question 83

Building Additions and Alterations

Answer 83

For HO-4 and HO-6 only. Covers structural alterations made at renter's or unit owner's own expense.

Question 84

Exclusions to HO Property Coverage:

Answer 84

Ordinance or law, earth movement, water damage, off-premises power failure, neglect, war, nuclear hazard, intentional acts, mechanical breakdown.

Question 85

Deductible

Answer 85

If there are two or more deductibles under a policy, the highest deductible amount applies.

Question 86

Suit Against Us

Answer 86

Insured cannot take action against an insurer unless the insured has fully complied with all terms of the policy and starts the action within two years of the date of loss.

Question 87

Our Option

Answer 87

Insurer can repair or replace any part of a damaged property with material or property of like kind and quantity, as long as they give written notice within 30 days of receiving proof of loss.

Question 88

Loss Payment

Answer 88

Clarifies how, when, and to whom a claim will be paid.

Question 89

No Benefit to Bailee

Answer 89

Policy will not pay a third party who has custody or control of the insured's property, even if it is with the insured's granted permission.

Question 90

Recovered Property

Answer 90

After the claimant has been indemnified, if either party recovers any property involved in the claim, they must tell the other party about it.

Question 91

Volcanic Eruption Period

Answer 91

One or more volcanic eruptions that occur within a 72-hour period are considered one volcanic eruption.

Question 92

Section 1 Conditions

Answer 92

Interest, deductible, duties, concealment, loss settlement, pair or set, appraisal, other insurance, suit against us, our option, loss payment, abandonment, mortgage, no benefit to bailee, nuclear hazard, recovered property, volcano, policy period.

Question 93

Section II Conditions

Answer 93

Limit of Liability, Severability, Duties After "Occurrence," Duties of an Injured Person, Claim Payment, Suit Against Us, other insurance, policy period, concealment or fraud

Question 94

Section I and II Conditions

Answer 94

Subrogation, cancellation, nonrenewal, liberalization, waiver or change, assignment, death

Question 95

Insurance to Value Requirement

Answer 95

If home is insured at 80% of value or more: Replacement Cost If home is insured at less than 80%: policy pays the higher of: ACV or Replacement Cost minus the insurance to value requirement. (Insurance Limit / 80% of property value) x Covered Damage

Question 96

Coverage A

Answer 96

Dwelling, attached structures, material located near it

Question 97

Coverage B

Answer 97

Other detached structures

Question 98

Coverage C

Answer 98

Personal Property (Contents)

Question 99

Coverage D

Answer 99

Loss of Use

Question 100

Liability Coverage can pay for:

Answer 100

``` Medical Bills Lost Wages Pain and Suffering Inconvenience Property Damage ```

Question 101

Coverage E - Personal Liability

Answer 101

Pays for bodily injury and property damage to third party if insured is found negligent. Applies even if the insured's property causes a third party damages. Never pays the insured. $100.000 minimum coverage Pays for insured's legal defense fees Insurer pays fees all the way to the end of a lawsuit, even if limit is exceeded. Insurer has the right to settle damages with the claimant however it wants.

Question 102

Coverage F - Medical Payments

Answer 102

No fault coverage. For medical expenses incurred by third party due to an accident on insured's premises. Only necessary, reasonable medical charges. $1,000 minimum limit

Question 103

Section II - Additional Coverages

Answer 103

Property of Others First Aid Claims Expenses Loss Assessment

Question 104

Coverage E Exclusions:

Answer 104

Bodily injury and property damage to the insured Bodily injury to persons covered by Workers Compensation Insurance Damage to property rented by insured, occupied or used by insured, or held in insured's custody and care Liability for contracts

Question 105

Coverage F Exclusions:

Answer 105

The insured person Anyone who lives on residence premises regularly Anyone eligible for Workers Comp or Disability for the occurrence. Harm to a resident employee who is not in the course of employment, or is not at premises at time of occurrence.

Question 106

Coverages E and F Exclusions:

Answer 106

Intentional or malicious harm to third party by insured Harm from war Disease transmitted from insured to third party Sexual molestation or abuse by insured Drug, use, sale, manufacture, possession

Question 107

Exclusion relating to vehicle use:

Answer 107

Harm or damage caused by insured's automobile use Exceptions: vehicles for property maintenance, handicapped persons, or those in storage. Recreational vehicles are covered under certain conditions. Aircraft Watercraft

Question 108

Excluded from HO Liability Coverage:

Answer 108

Third party losses due to insured's business Third party losses from insured's failure to render business services

Question 109

Liberalization

Answer 109

Applies to changes made up to 60 days before the policy inception

Question 110

Payment of Claim - Coverage F - Medical Payments to Others

Answer 110

Coverage F is voluntary coverage: if a claim is paid, it is not admission of insurer's liability.

Question 111

Lawsuit Against Insurer:

Answer 111

All Section II terms must be met No one can join insurer in suit against insured No suit pertaining to Coverage E can be brought until obligation of insured is agreed to

Question 112

Homeowners Endorsements (typically):

Answer 112

``` Sinkhole Collapse Sewer Backup Earthquake Hurricane (coverage can be removed) Ordinance or Law Personal Property Replacement Cost Inflation Guard Scheduled Personal Property ```

Question 113

Changing Limits and Valuation

Answer 113

For increased premium, endorsements can add: Replacement Cost valuation rather than ACV Inflation Guard to automatically increase limits Scheduled Personal Property, such as jewelry, furs, collectibles

Question 114

Georgia Notice of Cancellation or Non-renewal

Answer 114

During the first 60 days of policy: at least 10 days prior to cancellation. After 60days: at least 30 days prior to cancellation For non-payment of premiums: at least 10 days prior to cancellation Notice of Non-renewal: at least 30 days before policy expires

Question 115

(Georgia) When cancelling or non-renewing:

Answer 115

Insurer must: Deliver notice in person or by first class mail Refund any unearned premiums Provide information about the Georgia FAIR Plan

Question 116

Georgia Cancellation / Non-renewal

Answer 116

Must be for specific, approved reasons: Non-payment of premiums Fraud or misrepresentation Violation of the terms or conditions of the policy A significant change in the level of risk which increases the likelihood of a loss

Question 117

Georgia Personal Liability

Answer 117

Covers the insured for any liability to someone else on or off the premises

Question 118

Georgia Premises Liability

Answer 118

Only covers the insured for liability to someone else on the property's premises

Question 119

Georgia Mobile Home Coverage

Answer 119

Can be covered by endorsement or stand-alone policy Must be used primarily as a residence Endorsement covers: mobile home and any additions, items permanently installed or attached to the home Mobile home policy (MHP): HO-7

Question 120

Georgia Watercraft Policy

Answer 120

in addition to HO policy: Covers physical damage and liability exposure Eligible property: owned watercraft, trailers, outboard motors, watercraft accessories Covered craft must stay within the US, its territories, Puerto Rico, or Canada, and within 12 miles of the coast. Personal use only Excludes: air-propelled crafts, modified crafts, experimental crafts, hovercraft, submarines

Question 121

Georgia Watercraft Policy Structure

Answer 121

Part A - Liability Part B - Medical Payments Part C - Uninsured Boaters Part D - Coverage for damage to your watercraft Additional coverages under Part D: Salvage expense, towing and assistance expense, personal effects Part E - Insured's duties after an accident or loss Part F - General provisions

Question 122

Georgia Watercraft Policy Conditions

Answer 122

Lay-up Period : No coverage if the watercraft is used during the lay-up period specified in policy; unless: the insurer consents in writing, the insured uses it in an emergency and reports the situation within 10 days. Reduces premium Total Loss Settlement In case of total loss, the insurer considers the property's physical condition and depreciation to determine ACV Insured pays the difference if the replacement property has a higher value than the original property. When more than one policy can cover the insured's liability, the watercraft policy: pays amount equal to its share of the total amount of insurance available pays on an excess if: the insured is operating a non-owned watercraft ,the watercraft is being transported on land

Question 123

Dwelling POlicy

Answer 123

For persons not eligible for homeowners insurance Corporation not eligible for homeowners insurance Persons or corporations who do not need HO options Property only, not liability (unless an endorsement is added)

Question 124

Dwelling Policy Property Types

Answer 124

Single-family homes 1-4 unit dwellings (duplexes, four-plexes, etc.) No more than 5 occupants Mobile homes, if permanently installed Incidental business risks, if insurer allows

Question 125

DP-1 "Basic Form"

Answer 125

Named-peril coverage Covers only fire, lightning, internal explosions

Question 126

DP-2 "Broad Form"

Answer 126

Same perils as the Basic Form, plus many more +Extended Form Perils +Broad Form Perils

Question 127

DP-3 "Special Form"

Answer 127

If a peril is not excluded, it is covered Named-peril coverage to personal property. Includes all the perils that the DP-2 "Broad Form" covers

Question 128

DP-3 Exclusions

Answer 128

General exclusions Settling, cracking, shrinking, bulging of patios, foundations, etc. Damage from birds, insects, vermin, domestic animals Wind or hail damage to antennas, lawns, trees Ice or snow damage to awning, fences, outdoor structures, foundations theft of anything not part of structure Pollutant damage Gradual or expected loss from wear and tear, marring, or deterioration Mechanical breakdown Inherent vice: a characteristic of an item that causes it to damage or destroy itself smoke form agricultural or industrial operations

Question 129

Dwelling Policy Sections

Answer 129

``` Coverage A B C D E Additional Coverages Exclusions Conditions Endorsements (If any) ```

Question 130

Coverage A - Dwelling

Answer 130

Principal dwelling Attached structures: garages, apartments, etc. Service machinery: furnace, A/C compressor, etc. Not included: construction tools, damage to land itself

Question 131

Coverage B - Other Structures (Dwelling policy)

Answer 131

Limit: 10% of Coverage A limit (per claim) Under DP-1, the 10% is included as part of Coverage A limit In DP-2 and DP-3, the 10% is added to the Coverage A limit

Question 132

Coverage D - Fair Rental Value - Dwelling

Answer 132

Pays rental income lost due to damage

Question 133

Coverage E - Additional Living Expenses - Dwelling

Answer 133

For the increase in the insured's living expenses when a covered peril makes the dwelling uninhabitable. Automatically included in DP-2 and DP-3 Not included in DP-1

Question 134

Personal Auto Policy (PAP)

Answer 134

A policy that combines liability insurance with other optional coverages.

Question 135

PAP - What is covered?

Answer 135

Will indemnify for: Property damage bodily injury legal defense Will not pay punitive damages Insurer must defend policyholder against liability claims, in or out of court

Question 136

PAP Sections

Answer 136

``` Declarations Part A - Liability Part B - Medical Payments Part C - Uninsured Motorist Part D - Coverage for Damage to Auto Part E - Duties after an Accident or Loss Part F - General Provisions Endorsements ```

Question 137

Auto Insurance Deductible

Answer 137

Fixed on per claim basis Typically only applies to collision and comprehensive coverages

Question 138

Bodily Injury (Auto Insurance)

Answer 138

Does not include mental distress or psychological trauma

Question 139

Covered Auto

Answer 139

Car specified on declarations page Newly acquired auto Trailer the insured owns A temporary substitute for car or trailer listed on dec page due to: breakdown, repair, servicing, loss, destruction

Question 140

Newly Acquired Auto

Answer 140

my not be covered under another insurance may not be sued for the transport of goods and materials automatically get the broadest coverage provided to any one car listed in policy

Question 141

Adding Newly Acquired Autos

Answer 141

Reporting (according to the standard PAP) insured has 14 days to report newly acquired auto Most states and insurers actually require that your report any new auto within 10 - 30 days. Comprehensive and Collision coverage: Can be added within 4 days of getting new car Automatically applies for first 4 days with $500 deductible

Question 142

Auto Insurance Medical Payments

Answer 142

Pays for covered medical expenses for up to three years from the date of an accident.

Question 143

Part A - Auto Liability

Answer 143

Establishes Pay liability costs, up to policy limits Covers injury or damage caused by covered auto or any car the insured drives with permission Settle or defend liability lawsuits

Question 144

Part A - Auto Liability Limits

Answer 144

One Person's Injury/Max for all Injuries/Property Damage

Question 145

Primary and Secondary Coverage

Answer 145

Coverage is "primary" if it involves a car the insured owns "Secondary" if it involves a car the insured does not own.

Question 146

Part A - Auto Supplementary Payments

Answer 146

Assist policyholder with a variety of accident-related expenses. Not subject to liability limits ``` May include: Lost wages - up to 250/day Expenses due to requests for documents Bail bonds - up to 250 Accrued interest after a judgement Premiums on appeal bonds and attachment bonds ```

Question 147

Part A - Auto Exclusions

Answer 147

Does not include: intentional damage or injuries property owned or being transported by the insured damages incurred under the scope of employment; except domestic employees ineligible for worker's comp. properties rented to or used by insured hired vehicles company-owned business vehicles damages or injuries caused while repairing, servicing, parking, or storing vehicles vehicles taken without permission damages or injuries arising from or related to a flying car

Question 148

Auto No-Fault Insurance

Answer 148

Designed to indemnify the insured for his own injuries, regardless of fault. Covers bodily injury only Mandatory in some states

Question 149

Part B - Medial Payments Exclusions

Answer 149

Accidents where an insured is occupying a vehicle with fewer than four wheels Autos rented or leased for hire Autos used without permission Commercial vehicles covered by a Business Auto Policy Vehicles located for use as a residence Injuries sustained under scope of employment (if covered by worker's comp) Begin only after Personal Injury Protection (PIP) coverage is fully exhausted.

Question 150

Part C - Uninsured/Underinsured Motorist Coverage

Answer 150

Covers bodily injuries caused by people with insufficient or no insurance Coverage for physical damage can be added by endorsement

Question 151

Uninsured Motorist (UM)

Answer 151

Driver w/no liability insurance Driver whose insurer won't pay Hit-and-run driver Driver who does not have enough insurance to pay for all damages

Question 152

Exclusions to UM/UIM Coverage

Answer 152

Insured's own auto that is not listed in the policy Government vehicles Off-road vehicles (but only while not on public roads) Vehicles used as a premises Covered autos that are rented or used for hire Cars used without reasonable belief that permission was granted

Question 153

Part D - Collision Coverage

Answer 153

Pays for damage to insured's vehicle caused by collision or rollover Applies even when insured is at-fault Included "your covered auto" and any "non-owned" car the insured is driving. (unless the insured borrows it frequently: then it is not covered)

Question 154

Auto Comprehensive Coverag

Answer 154

Theft hail, water, or flood Windstorm, fire, vandalism, explosion, earthquake, riot/civil unrest, missiles or falling objects, contact with birds or animals

Question 155

Part D - Auto Exclusions

Answer 155

Normal wear and tear Freezing Mechanical or electrical breakdown Tire damage Government or civil confiscation Losses to non-owned autos taken without permission Losses involving any racing or speed event or facility Stereo equipment and electronics (unless permanently installed, then subject to limits)

Question 156

Personal Injury Protection (PIP)

Answer 156

Covers injuries to the insured et al caused by an accident , no matter who was at fault.

Question 157

Farm Insurance

Answer 157

Combines both homeowners coverage for personal property and commercial coverage for business assets. Rancher needs all and additional protection for livestock.

Question 158

Farm Insurance Policy

Answer 158

Property insurance for dwelling and contents Scheduled and unscheduled farm personal property insurance Mobile agricultural machinery and livestock coverage Farm liability insurance

Question 159

Eligibility for Farm Insurance

Answer 159

Farmers must live and conduct business on the insured property Properties not eligible: Farms that manufacture or process goods Farms raising race or show animals Some vacant farm properties

Question 160

Farm Property Coverage Forms

Answer 160

Cover direct losses to physical property on the insured's farm. List the types of property covered Use attached Causes of Loss Forms to list covered perils

Question 161

Coverage A - Dwelling Farm

Answer 161

For main dwelling, attached structures, and necessary materials Not covered: trees, shrubs, plants, or lawns (except with endorsement)

Question 162

Coverage B - Other Private Detached Structures Farm

Answer 162

Covers private structures not attached to main dwelling

Question 163

Coverage C - Household Personal Property Farm

Answer 163

Covers theft or damage of personal property Includes personal property of family and guests staying on the premises Has a limit of 50% of Coverage A Sets special limits for some items.

Question 164

Cover G - Commercial Coverage Farm

Answer 164

Barns, outbuildings, and other farm structures covers: Barns, silos, and granaries Pens and Fencing (except for fields and pastures) Corrals and livestock chutes Feeding structures Outdoor masts, towers, and antennae Farming storage structures Construction or repair materials kept on or adjacent to these structures

Question 165

Inland Marine Forms

Answer 165

Two commonly added to farm policies: Mobile agricultural machinery and equipment form Livestock Floater

Question 166

Mobile Agricultural Machinery and Equipment Form

Answer 166

Covers agricultural machines and their tools and equipment Allows higher limits of insurance than other forms Scheduled or unscheduled coverage Requires coinsurance for full coverage to apply Not covered: Equipment for sale or on consignment Machinery used in logging or forestry

Question 167

Livestock Floater

Answer 167

Covers horses, mules, cattle, swine, sheep, and goats. Scheduled or unscheduled Includes animal injured or killed while in transit Provides named-peril coverage. Requires coinsurance

Question 168

Farm Property - Causes of Loss Basic Form

Answer 168

Fire, theft, lightning, aircraft, smoke, vehicles, wind, sinkhole collapse, hail, volcanic activity, explosions, loss of livestock by flood, riot, vandalism, loss of livestock by earthquake, civil commotion

Question 169

Farm Property - Causes of Loss Broad Form

Answer 169

``` Basic form plus: Falling objects weight of ice, sleet, or snow glass breakage sudden and accidental tearing apart accidental discharge or leakage of water or steam sudden and accidental discharges of electricity collapse electrocution of covered livestock attack of covered livestock (excluding sheep) by wild animal drowning of covered livestock loading and unloading accidents accidental shooting of covered livestock ```

Question 170

Farm Property - Causes of Loss Special Form

Answer 170

Exclusions: Normal wear and tear, or purposeful neglect rust, corrosion or decay settling, cracking or shrinking of structures infestation by rodents, vermin, or birds mechanical breakdown disappearance of farm property, unless stolen voluntary, fraudulent parting of farm property unauthorized instructions to transport property vandalism or glass breakage, if vacant 30 days dishonest or criminal acts by the insured

Question 171

Farm Liability Insurance

Answer 171

protects the farmer against liability for harm caused to others

Question 172

Coverage H - Farm LIability

Answer 172

Bodily injury and property damage liability Covers damage or injury caused by normal business operations Applies to damages that occur on insured premises

Question 173

Coverage I - Farm Liability

Answer 173

Personal and advertising injury: Pays for claims not involving property damage or personal injury Includes malicious prosecution, wrongful entry or eviction, and libel or slander

Question 174

Coverage J - Farm Liabilty

Answer 174

Medical payments coverage Covers medical injuries suffered on farm property or because of farmer's activities. Includes medical, dental, hospital, and funeral costs

Question 175

Farm product Liability

Answer 175

Covers injury or illness caused by eating the farmer's products

Question 176

Farm Pollution Liability

Answer 176

Covers pollution damage caused by farm property and operations. Includes animal waste overflow, chemical spill Does NOT include chemical over-spray from aircraft (separate endorsement required)

Question 177

Custom Farming Liability

Answer 177

Covers farmers doing contract work. Will not apply if a farmer makes more than 5,000 a year as a contractor.

Question 178

Farm Employees Liability

Answer 178

Available via endorsement Covers employee injuries not allowed under Workers' Comp

Question 179

Agritainment

Answer 179

Refers to farm-based entertainment Excluded from farm form Endorsements can add this coverage back in: Agritainment - Property: adds coverage for damage to the farmer's property caused by agritainment Agritainment - Liability: covers the farmer's liability for injuries that occur during agritainment activities on his farm.

Question 180

Agricultural producer

Answer 180

A business that grows and sells crops for a profit

Question 181

Crop Insurance

Answer 181

Insurance that covers losses to a crop's profitability Two Types: Crop-yield insures against losses to actual crops Crop-revenue insures against losses to crop value when prices change or the crop is damaged

Question 182

Crop-Yield Insurance

Answer 182

Covers physical losses to the insured crop 2 common forms: Crop-Hail Insurance Multi-Peril Crop Insurance (MPCI)

Question 183

Crop-Hail Insurance

Answer 183

Covers more perils than just hail. Typically available through private insurers. Not reinsured or government subsidized Rated on an acreage basis Coverage can be a percentage of expected crop value Policies sometimes have a minimum amount of losses required before they will pay anything.

Question 184

Crop-Hail Insurance | Perils Covered

Answer 184

``` Hail Fire Lightning Wind (by endorsement) Transit to storage after harvest Wildfire ```

Question 185

Crop-Hail Insurance Exclusions:

Answer 185

Failure to harvest a mature crop "Unit normal visible stand" (crop must be up to be covered) Before effective hour (damage prior to start of policy) Crops that can be recovered by harvesting Crop not owned by the insured (shared drops) Damage to trees, bushes, fruit, or nut crops Damage to leaves or plants, unless affecting the actual crop

Question 186

Multi-Peril Crop Insurance (MPCI)

Answer 186

Covered Perils: wind, drought, excessive moisture, frost, flood, lightning, tornado, hurricane, hail (by endorsement), volcano, earthquake, disease, insects and wildlife, insect infestation (if unavoidable), irrigation failure (if unavoidable), low/poor quality yields, prevented planting, late planting/replanting. Government subsidizes it with the Federal Crop Insurance Corporation and regulates it through the U.S. Department of Agriculture

Question 187

MPCI Rules for Policy Changes

Answer 187

Policy changes and increases only allowed before sales closing date Requires planting to be done by set planting dates No changes during growing season: must remain in effect for an entire crop year After the first crop year, a farmer may change or cancel policy, but only before the cancellation date

Question 188

MPCI Exclusions

Answer 188

Neglect or malfeasance Failure to reseed Failure to follow good farming practices

Question 189

Federal Jurisdiction of Crop Insurance

Answer 189

All crop insurance is supervised by the National Crop Insurance Services

Question 190

Risk Management Agency (RMA)

Answer 190

Promotes sound risk management practices Subsidizes the premiums of crop growers for federal crop insurance policies Sets critical production dates Assigns commodity market prices to protect the producer's revenue

Question 191

Crop Policy Changes and Pilots

Answer 191

Pilot program lets the RMA test policies in small areas before releasing o the rest of the country New policies are typically pilots for several years

Question 192

MPCI: APH Policy

Answer 192

Actual Production History (APH): history of a farm's crop yield over several years (requires at least 4 years of records) Protects against low yield. Guarantees the crop will produce a set percentage of its APH Crops typically insured at 50% to 85% of the APH Yield Guarantee: Minimum amount of yield that the policy guarantees for the insured crop Coverage kicks in if the crop produces less than this amount. Yield Guarantee Formula: APH Yield per Acre x Percentage of Coverage = Percentage of Projected Price: Insured chooses a percentage of the expected price of insured crop Expected price is determined by the RMA How much the insurer pays regardless of how much the crop is actually worth at harvest time ``` How to calculate indemnity: (Yield Guarantee - Actual Production) x Percentage of crop price x Crop price (set by RMA) x Insured's share in the crop =Total Indemnity ```

Question 193

Crop Revenue Insurance

Answer 193

Insurance that protects against loss of crop value Includes losses from: Decline in prices during the growing season Low crop yields A combination of both

Question 194

Crop Revenue Insurance Guarantee

Answer 194

Sample Formula: (corn yield guarantee) x (expected sell price at harvest-time) Policy establishes a guaranteed dollar amount Farmer gets indemnity if crop-yield and selling price combined are less than guarantee

Question 195

MPCI Policies

Answer 195

APH Policy - Crop yield policy Actual Revenue History - Pilot Policy, guarantees a percentage of average revenue not yield covers lost revenue due to low yield, falling prices, bad quality, or any combination of these Yield Protection Revenue Protection: covers revenue losses due to low yield, low prices, or a combination of both. Uses two prices: projected price to set coverage; harvest price to determine if indemnity is due Calculated Revenue = actual production x harvest market price Revenue Protection with Harvest Price Exclusion - Same as RP, but revenue guarantee does not go up if the harvest price goes up Whole Farm Revenue Protection (WFRP) - Insures entire farm revenue, not individual crops. Uses info from Schedule F tax forms and yearly reports to establish approved farm revenue Farmer sets coverage at a percentage of this number (50% - 85%) Policy pays indemnity if farm's actual revenue falls below the insured revenue Area Risk Protection Insurance (ARPI) - Area-based coverage. Triggered if entire county experience a loss. Three option: area revenue protection, area revenue protection with harvest price exclusion, area yield protection Dollar Plan - Covers loss in value caused by damaged crops. RMA sets maximum dollar amount of insurance per acre. Insured chooses a percentage. Policy pays an indemnity if actual value per acre is lower than dollar amount of insurance Margin Protection (MP) - Pilot policy that insures farmer's operating margin. Expected Margin = Expected Revenue - Expected Costs Area based plan Coverage set according to how much margin the country as a whole expects Policy pays indemnity if the county's margin is lower than expected. Livestock Policies - Available for swine, cattle, lambs, and milk. Protect against declining market prices Uses prices from the Chicago Mercantile Exchange Group Two Types: Livestock Risk Protection and Livestock Gross Margin Rainfall Index (R) Policies - pay an indemnity if the area gets less rainfall than usual. Vegetation Index (VI) Policies - pay an indemnity if there is less vegetation growth in the area than usual. Pasture, Rangeland, Forage (PRF) - Currently pilot policy. Covers acres used as pasture, rangeland, or forage. Based on the area's average precipitation Triggered when there is less rainfall than usual. Helps offset costs of buying feed and other risk management measures. Small and Corse Grains Provisions - Cover both crop yield and reduction in crop value Grains must be grown on "insurable acreage" Small grains: wheat, barley, oats, flax, rye, buckwheat Coarse grains: corn, grain, sorghum, soybeans Catastrophic Risk Protection Endorsement (CAT Coverage) - covers losses exceeding 50% Pays 55% of the price of the crop (according to RMA) Premiums paid by government Administrative fee paid by farmer for insured crops High-Risk Alternate Endorsement (HR-ACE) - For farmers with some crops on high-risk land and some crops on non-high-risk land Adds coverage for high-risk land that is lower than coverage for the rest of his crops. Supplemental Coverage Option (SCO) - Area-based coverage that can help pay deductibles on underlying policy. Follows coverage of underlying policy, except in what triggers coverage: triggered by county-wide losses; premiums are 65% subsidized

Question 196

Small/Course Grains - Covered Perils

Answer 196

``` Hail Drought Excessive Moisture Fire Wildlife Failure of irrigation (if unavoidable) Insect damage and plant diseases (assuming good farming practices) ```

Question 197

Small/Course Grains - Insurance Period

Answer 197

The period between when the crop is planted to when it's harvested. ``` Other events that can set end of insurance period: end of crop's season complete destruction of crop final adjustment of a claim abandonment of the crop ```

Question 198

Crop Policy Provisions - Duties of Insured

Answer 198

File a claim within 72 hours Protect crops from further damage Leave samples of the damaged crop intact in each field, so adjuster can inspect item Acreage Reporting: every crop year, farmer must submit acreage report, due by the acreage reporting date. Insured must: plant correctly maintain the crop correctly Use required fertilizers, pesticides, soil additives, etc. (does not apply to organic farming)

Question 199

Crop Policy Provisions - Site Assessment

Answer 199

During claims site assessment, the adjuster records: location: latitude and longitude plant samples soil samples normal yields for the region comparison with similar crops in the same area

Question 200

Crop Policy Provisions - Loss Payments

Answer 200

Usually made at actual cash value Can be made in multiple payments

Question 201

Crop Policy Provisions - Cancellation/Nonrenewal

Answer 201

Insurance applications must be signed before the closing date specified by the NCIS. Policies may not be canceled during the first crop year. Insurance coverage: continuous cancellation only allowed in writing and before the cancellation date specified in the policy

Question 202

Crop Policy - Important Dates

Answer 202

``` Sales closing Production Reporting Final Planting Acreage Reporting Notice of Crop Damage Payment Due Cancellation Debt Termination End of Insurance ```

Question 203

Crop Insurance

Answer 203

Usually does not have deductibles Crop insurance uses thresholds instead of deductibles threshold is a percentage of insured crops Losses above threshold have full policy coverage.

Question 204

Crop Insurance Notes

Answer 204

Forms are "non-standard Coverage usually limited to the growing season Annual policy form is the most common. Also available are three-season, five-season, and continuous-until-cancelled forms

Question 205

Commercial Property Insurance

Answer 205

Covers direct and indirect losses related to business property Does not include farms and 1-4 family dwellings Insures on a ACV basis Replacement Cost is available as an endorsement

Question 206

Commercial Property Policy Sections

Answer 206

1. Declarations Page 2. Conditions 3. Coverage Forms 4. Causes of Loss Forms

Question 207

Commercial Policy Conditions

Answer 207

``` Cancellation/Non-Renewal Changes to Policy Concealment, Misrepresentation, and Fraud Control of Property (breach in policy conditions only affects the property where the actual breach occurred) Other Insurance (usually the two policies will split the loss based on how much coverage each policy provides.) Liberalization Legal Action Against Insurer Subrogation No Benefit to Bailee Vacancy ```

Question 208

Commercial Property Coverage Forms

Answer 208

``` Building and Personal Property Coverage Business Income Coverage Contingent Business Interruption Coverage Builders Risk Coverage Condominium Coverage Leasehold Interest Coverage Legal Liability Coverage Difference in Conditions Coverage Other Coverage Forms and Endorsements ```

Question 209

Building and Personal Property Forms - Commercial

Answer 209

The basis for all commercial property policies Coverage A - Buildings and Structures Coverage B - Business Personal Property Coverage C - Personal Property of Others

Question 210

Commercial Coverage A

Answer 210

Covers building and structures listed on the "Dec Page" as well as: additions, additions under construction, any construction equipment within 100ft of insured property, machinery and equipment inside the building, maintenance property.

Question 211

Commercial Coverage B

Answer 211

Covers property of the business that is not affixed to the structure, such as: Business owned personal property used for business purposes Labor, services, and material furnished on the personal property of others Inventory or products held for sale Leased business personal property Property within 100ft of the business premises

Question 212

Commercial Coverage C

Answer 212

Applies to property owned by another party when it is in the care of the insured business. Commonly $2,500 of coverage Applies to locations listed on the "Dec Page"

Question 213

Common Additional Commercial Coverages:

Answer 213

``` Debris Removal Pollution Clean-up and Removal Preservation of Property Fire Department Service Charge Increased Construction Costs Electronic Data ```

Question 214

Commercial Debris Removal

Answer 214

Limit: 25% of total claim for property damage Additional $25,000 of coverage is available if: property damage plus debris removal exceeds policy limit Debris removal expense exceeds 25% limit

Question 215

Commercial Pollution Clean-Up and Removal

Answer 215

Pays up to $10,000 for pollution damages caused by a covered peril. Insured must report the loss within 180 days

Question 216

Commercial Preservation of Property (Removal Coverage)

Answer 216

Applies when the insured removes property to protect it from a covered peril. Property is covered for any cause of loss during removal and storage at another location. Coverage lasts up to 30 days.

Question 217

Commercial Construction Costs

Answer 217

Applies when insured has to pay extra in order to conform to new building ordinances when repairing or replacing a covered loss Limit is the small of two amounts: $10,000 5% of Coverage A limit Only applies to building insured on RC basis

Question 218

Commercial Electronic Data

Answer 218

Covers costs of replacing or restoring electronic data lost or damaged by a covered loss Includes losses caused by viruses or malicious code, unless introduced by employees of the insured Limit: $2,500 per year Limit does not apply to data used to operate: elevator, lighting, heating, ventilation, air conditioning, security system

Question 219

Commercial Coverage Extensions:

Answer 219

Only for insureds who maintain the coinsurance requirement of 80% of the property's value Not subject to policy limits

Question 220

Commercial Coverage Extensions

Answer 220

Newly Acquired Property includes new buildings under construction on insured premises and newly acquired properties off premises 30 days of coverage $250,000 coverage for building and structures Property Off-Premises: $10,000 for covered property that is temporarily located off the premises Excludes property off-premises if it's being sold Personal Effects and Property of Others: up to $2,500 in coverage for damage or destruction of personal belongings loss must occur on the insured premises Valuable Papers and Records: up to $2,500 towards the recovery or replacement of valuable papers and computer records does not cover money and securities Outdoor Property: covers damage to television and radio antennae, detached signs, and trees, plants or shrubs limit: $1,000 limit for trees, plants, and shrubs: $250 per unit covered perils: fire, lightning, explosion, riot, civil commotion, and damage by aircraft Non-Owned Detached Trailers: covers damage to non-owned trailers being used on the premises limit: $500 only applies if trailer is not attached to a vehicle only if insured is contractually responsible for damages to the non-owned trailers

Question 221

Commercial - Business and Personal Property Conditions

Answer 221

``` Abandonment Appraisal Duties in the Event of a Loss Loss Payment Recovered Property Vacancy Valuation Coinsurance Mortgagee Clause ```

Question 222

Commercial Property: Optional Coverages and Endorsement

Answer 222

Agreed Value Coverage Inflation Guard Replacement Cost Value Reporting

Question 223

Commercial Optional Coverage - Agreed Value Coverage Option

Answer 223

Policyholder and insurer agree on a specific value for the property before the policy is written Coinsurance requirement is waived Often applies to rare property or high-value collector items

Question 224

Commercial Optional Coverages - Inflation Guard

Answer 224

Policyholder can increase the limit of insurance by a specified percentage periodically throughout the policy term Keeps the amount of coverage consistent with rising prices

Question 225

Commercial Optional Coverages - Replacement Cost

Answer 225

Changes loss settlement terms from ACV to RC Requires coinsurance minimum Does not apply to property of others on the insured premises When covered damages occur: pays ACV up front pays the remaining difference between ACV and RC once property has been repaired.

Question 226

Commercial Optional Coverages - Value Reporting

Answer 226

For businesses whose property values fluctuate or who buy and sell multiple properties throughout the year: Insured purchases a limit of insurance to cover the highest property value expected that year Every month, insured submits "value report" of the actual property value If insured fails to submit a report, insurer uses the numbers from the previous month There is a percentage penalty for under-reporting the value of a property

Question 227

Commercial Optional Coverages - Other Coverage Forms

Answer 227

``` Business Income Contingent Business Interruption Builders Risk Condominium Leasehold Interest Legal Liability Difference in Conditions ```

Question 228

Commercial Business Income Coverage Form

Answer 228

"Business Interruption Form" Provides protection for loss of income due to a covered loss Period of Restoration: time frame within which business income coverage indemnifies the policyholder for loss of income begins exactly 72 hours after damage occurs ends the date that either the damaged property is restored or that business resumes at a new location What does it pay for? Loss of net income on a Profit and Loss statement Any continuing operating expense incurred during the period of restoration (rent, salaries, payments to the bank, utilities, taxes, administrative costs)

Question 229

Business Income Coverage Form

Answer 229

provides protection for loss of income due to a covered loss Period of Restoration: time frame within which Business Income Coverage indemnifies the policyholder for loss of income. begins exactly 72 hours after damage occurs Pays for loss of net income on a profit and loss statement any continuing operating expenses incurred during the period of restoration

Question 230

Business Income: Profit and Loss Statement

Answer 230

Determines loss of Net income Relies on: total revenue, cost of goods sold, operating expenses Equation: Total Revenue - Cost of Goods Sold = Gross Income Gross Income - Operating Expenses: Net Income from Operations

Question 231

Business Income Coverage Exclusion

Answer 231

Excludes Cost of Goods Sold Means any expenses that go into making or selling a product, including: inventory, labor, material, supervision

Question 232

Business Income: Extra Expense Coverage

Answer 232

Covers the costs of getting a business running again after a covered loss. Must be: necessary incurred during the period of restoration type of expense that would not have been incurred had there been no loss to the covered property.

Question 233

Extra Expenses: Two Categories

Answer 233

"Ture Extra Expenses": necessary to avoid or minimize the halt in business operations "Expediting Expenses": the cost of repairing or replacing property in order to get the business going again.

Question 234

Business Income: Extra Expense Coverage

Answer 234

Period of Restoration: Begins immediately after damage occurs (no 72 hour waiting period before coverage begins) Ends when damaged property is repaired or replaced Period of Restoration never subject to the policy period.

Question 235

Business Income Coverage with Extra Expense

Answer 235

Loss of business income Costs associated with getting the business running again

Question 236

Business Income Coverage without Extra Expenses

Answer 236

Loss of business income "expenses to reduce loss" - but only to the extent that the extra expenses reduce the original loss

Question 237

Extra Expense Coverage without Business Income Coverage

Answer 237

For companies that must continue business regardless of loss of income, such as: banks, hospitals, newspapers, utilities "Limit of Loss Payment": limits the total amount of recovery available to the insured based on 30-day increments

Question 238

Business Income and Extra Expense: Additional Coverages (Order of Civil Authority)

Answer 238

Order of CIvil Authority Provides coverage when a civil authority restricts a business from being occupied due to a pending covered loss. Coverage lasts for up to 4 consecutive weeks 72-hour window before benefits apply

Question 239

Business Income: Coinsurance

Answer 239

Businesses have the option of establishing a level of coinsurance at 50, 60, 70, 80, 90, 100, or even 125% of the business's normal income

Question 240

Business Income: Maximum Period of Indemnity

Answer 240

Takes away coinsurance requirement and the Period of Restoration lasts up to 120 days after the 72hr window. If the policy maxes out, coverage will end before 120 days.

Question 241

Business Income: Monthly LImit of Indemnity

Answer 241

Removes coinsurance requirement, but the policyholder parcels his stated limit of coverage. into a fractional maximum available each month (i.e. 1/3, 1/4, 1/6)

Question 242

Business Income: Agreed Value

Answer 242

Waives coinsurance requirement Insured submits two reports: Financial data from the previous year Financial data for the upcoming year Insured and insurer set an Agreed Value of coverage. Losses are paid in full

Question 243

Contingent Business Interruption Form

Answer 243

Covers a business for loss of income caused by damages to a key supplier or key customer. Indemnifies the dependent company, not the key supplier Has nothing to do with the supplier's insurance

Question 244

Builders Risk Coverage FOrm

Answer 244

Provides protection for buildings, materials, and equipment under construction or renovation 100% coinsurance is required on the building

Question 245

Builders Risk Extensions

Answer 245

``` Debris Removal Fire Department Service Charges Pollutant Cleanup and Removal Preservation of Property Scaffolding, Construction Forms, and Temporary Structures (Only while property is on the insured premises) Property at other locations (10,000 limit) Property in Transit (25,000 limit) Sewage Backup (5,000) ```

Question 246

Condominium Coverage Form

Answer 246

Condo Buildings and complexes Common areas of the condo building Infrastructure essential to function of the condo as a whole (piping, ductwork, electrical and wiring units, etc) Business personal property used y the condo as a whole

Question 247

Leasehold Interest Coverage Form

Answer 247

Favorable Lease A lease that is acquired below market value Leasehold Interest Coverage Form Pays for the difference in cost between the old rental and the new

Question 248

Legal Liability Coverage Form

Answer 248

Property damage to personal property of others caused by negligence Expenses for legal defense when claims are brought against the business Theft of other's personal property

Question 249

Differences in Conditions "All-Risks" Form

Answer 249

Bridge coverage gaps left by typical policies Only covers perils that could lead to catastrophic losses Excludes risks that are already covered under a different policy Does not require coinsurance Usually requires a very large deductible Can be purchased as a separate policy or added as an endorsement to an existing policy.

Question 250

Commercial Property Endorsements

Answer 250

Earthquake and Volcanic Eruption (Percentage deductible at limit of liability) (Single Occurrence = Within a single 168hr or 1 week period) (Excludes tidal waves and tsunamis) Ordinance ``` Peek Season (Temporarily increases coverage limits at specified intervals over the course of the year in order to account for increased inventories) ``` Protective Safeguard (Insurer offers lower premiums if the insured agrees to use certain safety precautions) Spoilage (Adds perishable stock to covered property, so if it spoils, the insurer will purchase the stock based on the following formula:) (indemnification = market selling price - any discounts the insured would expect)

Question 251

Causes of Loss Forms: Exclusions

Answer 251

Loss due to enforcement of building ordinances Earthquakes or Land Movements Seizure or destruction by government authority Nuclear reaction, radiation Loss resulting from utility service failure War Flood, rising water, mudslides, and the backup of water through sewage pipes Damages to wiring or devices caused by artificially generated electrical currents Explosion of boilers, steamers, pipes, and engines

Question 252

Commercial Basic Cause of Loss Form

Answer 252

Covers only named perils: fire, lightning, explosions, windstorm or hail damage, smoke damage, aircraft or vehicles, riot and civil commotion, vandalism and malicious mischief, sprinkler leakage, volcanic events and shock waves, sinkhole collapse.

Question 253

Commercial Basic Cause of Loss Form

Answer 253

Covers only named perils: fire, lightning, explosions, windstorm or hail damage, smoke damage, aircraft or vehicles, riot and civil commotion, vandalism and malicious mischief, sprinkler leakage, volcanic events and shock waves, sinkhole collapse.

Question 254

Commercial Broad Cause of Loss Form

Answer 254

Named peril policy, covers Basic Form perils, plus: breakage of glass, falling objects, weight of ice snow and skeet, water damage from sources other than sprinkler, additional coverage for collapse, if cause by: any covered perils, hidden decay, hidden insect or vermin damage, weight of people personal property or rain collecting on rooftop, use of defective materials or construction methods.

Question 255

Commercial Special Cause of Loss Form

Answer 255

Open peril policy that covers all known perils except for those listed in the exclusions sections, such as:

Question 256

Commercial Property Insurance

Answer 256

Provides coverage against direct and indirect losses resulting from damage to business property.

Question 257

Commercial Property Policy Sectins

Answer 257

1. Declarations Page 2. Conditions 3. Coverage Forms 4. Causes of Loss

Question 258

Commercial Property Coverage Forms Available:

Answer 258

Building and Personal Property Coverage Form Business Income Coverage Form Contingent Business Interruption Coverage Form Builders Risk Coverage Form Condominium Coverage Form Leasehold Interest Coverage Form Legal Liability Coverage Form Differences in Conditions Coverage Form Other Coverage Forms and Popular Endorsements

Question 259

Building and Personal Property Coverage Form (Commercial)

Answer 259

Coverage A - Buildings and Structures Coverage B - Business Personal Property Coverage C - Personal Property of Others

Question 260

Commercial General Liability (CGL) Insurance

Answer 260

Protects a business from a wide variety of financial hazards associated with normal business operations

Question 261

CGL Covers

Answer 261

Bodily injury/property damage Damage to a premises Products and completed operations Acts of others Contracted responsibilities Personal and advertising injury

Question 262

2 Different Forms of CGL

Answer 262

Occurrence Claims-made

Question 263

Occurrence Form (CGL)

Answer 263

Coverage triggered by occurrence or accident

Question 264

Claims-Made (CGL)

Answer 264

Coverage triggered by claim

Question 265

Occurrence Form (CGL)

Answer 265

Triggered by when the actual injury or damage occurred. Covers events that happened during policy period, no matter when the claim is made.

Question 266

Claims-Made Form (CGL)

Answer 266

Triggered when the claim is filed. Covers any claim filed during the policy period, no matter when the damage or injury occurred. Insurers can price premiums to reflect current risks of lawsuit awards. Insurers will specify a retroactive date which says how far back an occurrence will be covered. Claims-Made and Reported: insured must report claim or possibility of a claim within the policy period. Pure Claims-Made: Insured must inform insurer of a claim as quickly as possible (not necessarily within the policy period.)

Question 267

Pros and Cons of Each Coverage Form:

Answer 267

Occurrence Form: lower risk for businesses, higher risk for insurer, higher premiums Claims-Made Form: higher risk for businesses, lower risk for insurer

Question 268

Tail Coverage Overview (Claims-Made)

Answer 268

Claims-made coverage can be extended by tails, or tail cover. Occurrence coverage last forever for damage or injury during the policy period. Tails last only for a relatively short period. Tails require premiums from the insured as long as the policy is extended. 2 Kinds of Tails: basic extended and supplemental extended

Question 269

Basic Extended Tail - Claims-Made

Answer 269

Automatically applies to every canceled or expired claims-made policy. Extends coverage for occurrences 60 days past policy period. Extends window for making a claim for 5 years past occurrence.

Question 270

Supplemental Extended - Claims-Made

Answer 270

Extends coverage for occurrences 60 days past policy period. Extends window for making a claim forever Insured must request coverage and pay the premium within 60 days of the policy period.

Question 271

CGL Coverage Forms:

Answer 271

Coverage A: Bodily Injury and Property Damage, Premises and Operations Liability, Products and Completed Operations Liability, Contractual Liability for Insured Contracts Coverage B: Personal and Advertising Injury Liability Coverage C: Medical Payments to Others Damage to Premises Rented by You

Question 272

CGL Coverage A

Answer 272

Protects the insured from liability for bodily injury and property damage. Covers 3 Kinds of Hazards: Premises and Operations Products and Completed Operations Contractual Liability for Insured Contracts

Question 273

CGL Premises Liability

Answer 273

Covers bodily injury and property damage on premises owned, rented, or leased by insured including the ways immediately adjoining.

Question 274

CGL Operations Liability

Answer 274

Covers bodily injury and property damage when working outside premises

Question 275

CGL Product Liability

Answer 275

Insured's liability for bodily injury and property damage caused by the use of products made or sold by insured. 3 Types of Product Liability Claim: 1. Strict Liability: any defect in safety is manufacturer's fault. 2. Negligence: manufacturer did not exercise a reasonable amount of caution. 3. Breach of Warranty: Insured failed to notify public of a known safety hazard, or failed to deliver the quality of item advertised.

Question 276

CGL Completed Operations Liability

Answer 276

The insured's liability for work completed away from the insured premises. Work is "completed" the moment that: the insured has fulfilled the terms of an agreement, or any portion of the work is used for its intended purpose. (whichever is earlier)

Question 277

CGL Insured Contracts

Answer 277

Lease of premises Sidetrack agreements An obligation to indemnify a municipality Elevator maintenance contracts Any contract in which the policyholder assumes the tort liability of another party for bodily injury or property damage

Question 278

CGL Libel and Slander (Personal and Advertising Injury)

Answer 278

Coverage protects insured against claims of personal injury. Libel: written words that falsely damage another's reputation. Slander: spoken words that falsely damage another's reputation.

Question 279

CGL False Arrest (Personal and Advertising Injury)

Answer 279

False arrest, detention, or imprisonment Malicious prosecution

Question 280

CGL Wrongful Entry or Eviction (Personal and Advertising Injury)

Answer 280

Wrongful Entry: when a landlord uses improper means to repossess real estate or rented space. May also involve invasion of privacy. Wrongful Eviction: when a landlord or shop-owner evicts a person from public space without cause.

Question 281

CGL Advertising Injury (Personal and Advertising Injury)

Answer 281

protects insured against claims of advertising injury. Advertising Injury means a third party suffered damages as the result of the insured party advertising their good and/or services in a public arena. May take the form of: libel and slander, copyright infringement, stealing and advertising ideas.

Question 282

Supplementary Payments

Answer 282

Supplementary Payments - Coverages A and B Assist policyholder with a variety of claim or lawsuit expenses. Not subject to liability limits. Covers litigation expenses for a third party named in the same suit as the insured. (insured must have assumed liability for the other party through an insured contract; liability is covered under the policy; there is no conflict of interest; third party must agree in writing to cooperate with the insurer) May include: lost wages; expenses due to insurer's request such as retrieving official reports or record, copy fees; bail bonds (up to $250); accrued interest after a judgement is entered; premiums on appeal bonds and attachment bonds

Question 283

CGL Coverage C: Medical Payments

Answer 283

No-fault coverage that pays: medical, dental, hospital, nursing, funeral costs Resulting form an occurrence on insured's premises or form its business operation.

Question 284

CGL Damage to Premises Rented by You

Answer 284

Coverage A usually excludes loaned or rented properties. Damage to Premises Rented by You lifts this exclusion (adds coverage) Applies to properties that the insured rents for 7 or fewer consecutive days.

Question 285

CGL Conditions Page

Answer 285

Contains provisions the policyholder must meet as a condition of coverage. Highlights the rights and duties of insured and insurer. States the rights of each regarding cancellation, changes, lawsuits, etc.

Question 286

CGL Conditions

Answer 286

Policies cover occurrences in US, Puerto Rico, and Canada. Products Liability is worldwide, as long as the product was made or sold in US, Puerto Rico, or Canada.

Question 287

Limits of CGL Insurance - Aggregate Limits

Answer 287

Maximum amount a policy will pay for certain specified types of claims over the course of the policy period. Products-Completed Operations Aggregate: maximum amount the policy will pay to satisfy claims regarding Products and Completed operations only. General Aggregate: maximum amount the policy will pay out over the policy period for Coverage A, B, and C except for Products and Completed Operation. Products and Completed Operations has separate aggregate limit from all other coverages.

Question 288

Limit of CGL Insurance - General Aggregate Limit

Answer 288

Payments under these coverages are all under one aggregate: Coverage A: Premises and Operations Liability only Coverage B: Personal and Advertising Injury Liability Coverage C: Medical Payments to Others Damage to Premises Rented by You

Question 289

Limits of CGL - Per Occurrence Limit

Answer 289

How much an insurer will pay for any one occurrence. Always subject to aggregate limits

Question 290

Limits of CGL - Per Occurrence Sub-Limits

Answer 290

General Aggregate Limit Per Occurrence Limit Personal and Advertising Injury Limit: the maximum amount the insurer will pay for personal and advertising injury to any one person or organization. Medical Payments Limit: maximum amount the insurer will pay for bodily injury sustained by any one person. Damages to Premises Rented by You

Question 291

Limits of CGL - Legal Defense

Answer 291

No limit on Legal Defense CGL covers all legal expenses, without limit, up until judgement or settlement.

Question 292

CGL Endorsement: Owners and Contractors Protective Liability

Answer 292

Responds to all liability claims filed against the hiring business arising out of work performed by the independent contractor. protects the hiring business from losses due to contractor's work. Vicarious Liability: a company can be held responsible for the actions of a hired contractor. Purchased by the contractor, but the hiring business is the insured. Specific to a single project and place. Expires when project is completed.

Question 293

CGL Laser Beam Endorsement

Answer 293

Allows an insurer to exclude specific types of accidents, products, work, or locations from CGL coverage.

Question 294

CGL Liquor Liability Coverage Form (or Endorsement)

Answer 294

Alcohol-related occurrences are excluded in regular CGL policy. And added liquor liability coverage endorsement fills this gap. Coverage includes cases involving over-service or illegal service to minors.

Question 295

CGL Pollution Liability Coverage

Answer 295

Covers bodily injury or property damage caused by pollutants released into air, water, or land. Covers pollution normally excluded by CGL. "Pollution Incidents" include release of pollutants at insured site, off-site due to pollutant emanating from site, during transportation, at non-owned disposal sites. Pollution Liability Coverage Broad Form: Bodily Injury and Property Damage and Clean-up Costs Pollution Liability Limited Coverage Form: Bodily injury and property damage only

Question 296

Professional Liability Coverage

Answer 296

Covers lawsuit and settlement costs when a claim is made because of alleged wrongful acts.

Question 297

Professional Liability Coverage: Malpractice Insurance

Answer 297

Medical Professional Liability Lawyers' Professional Liability Both covers claims of act or omission if professional service differs from accepted standard.

Question 298

Professional Liability Coverage: Errors and Omissions (E & O)

Answer 298

Protects the insured form consequences of failure to perform. Excludes coverage for libel, slander, punitive damages. Protects persons and organizations Exclusions: Bodily injury, property damage, fraudulent or criminal acts

Question 299

Professional Liability Coverage: Claims Made Policy

Answer 299

covers claims made during policy period does not cover a claim filed after policy period expires. can apply retroactive dates to policy period.

Question 300

Professional Liability Coverage: Occurrence Policy

Answer 300

covers liability for occurrences happening during policy period. covers after term expires if occurrence was during policy period.

Question 301

Professional Liability Coverage: Unique Provision "Consent to Settle"

Answer 301

clause protects the insurer if the insured does not approve a recommended settlement. insurer pays expenses up to the date the insured refuses, but is not required to continue lawsuit expenses afterward. Defense cost not included in policy limits

Question 302

Professional Liability Coverage: Other Specialty Liability Coverages

Answer 302

Directors and Officers; Fiduciary; Employment Practices; Cyber; Liquor

Question 303

Professional Liability Coverage: Directors and Officers Liability

Answer 303

Available to: private companies, educational institutions, non-profit organizations; corporate officials Pays for: legal defense, damages awarded in lawsuits Excludes: criminal/fraudulent acts

Question 304

Professional Liability Coverage: Fiduciary Liability

Answer 304

protects fiduciary from: mistakes in handling funds, omissions in communicating plan information to employees

Question 305

Professional Liability Coverage: Employment Practices Liability Insurance (EPLI)

Answer 305

Provides legal defense for businesses and pays for damages awarded in court when employees claim violations

Question 306

Professional Liability Coverage: Cyber and Privacy Insurance

Answer 306

Coverage for losses in the event of a data breach. Can be written to include costs related to privacy breach

Question 307

Professional Liability Coverage: Liquor Liability

Answer 307

covers cost of alcohol-related: bodily injury and property damage. Includes protection for losses related to serving minors.

Question 308

Surety Bonds

Answer 308

Not insurance May be sold by insurance companies Suretyship: An arrangement between three parties, in which one party promises to perform for another party, and a third party guarantees that they will fulfill that promise. Principle: agrees to fulfill on obligation Obligee: party to whom the principal owes the obligation. Surety (Guarantor): guarantees to pay obligee if principal defaults.

Question 309

Surety Bond: Indemnitor

Answer 309

Fourth party to a surety bond who agrees to reimburse the surety for losses sustained if the principal defaults.

Question 310

Terms related to Surety Bonds

Answer 310

Penal Sum: specified amount that a surety might have to pay if the principal fails to perform as promised. Collateral: surety usually requires, which is a principal's cash or valuable property kept in reserve by the surety. In a case of default it is forfeit to the surety. Joint Control: The surety may reserve the right to regularly audit all disbursements, or even co-manage actual work.

Question 311

Types of Surety Bonds

Answer 311

Contract Bonds Judicial Bonds: fiduciary bond: guarantees work of someone appointed to take financial responsibility for others court bond: often required of litigants in civil suits to protect opposing parties bail bond: court bond that guarantees appearance of a defendant in court Public Official Bonds: protects the public form a public official's lack of performance Customs Bond: guarantees that an importer/exporter will pay all customs taxes and fees, and obey all regulations and laws. Financial Guarantee Bond: guarantees that principal and interest will be paid per the terms of the contract or promissory note. Lost Instrument Bond: guarantees that an insurer of a copy of a lost financial instrument will not suffer and economic loss if the owner of the instrument later finds and transacts the original. Reclamation Bond: Guarantees the health, safety, and welfare of the public during and after mining operations, and guarantees land will be restored to original condition. Self-Insurance Worker's Compensation Bond: Pays workers' comp claims filed by the self-insurer's employees when the self-insurer itself cannot meet this obligation Faithful Performance of Duty Bond: Guarantees a principal will faithfully perform his duties as prescribed by law or the bylaws of the obligee

Question 312

Fidelity Bonds

Answer 312

Guarantee the principal (employee) will not do something ``` Principal = employee Obligee = employer Surety = insurer ``` Cover all dishonest acts committed by a covered employee, including: larceny, theft, embezzlement, forgery, misappropriation, wrongful abstraction, willful misapplication Scheduled or blanket basis

Question 313

Public Employee Dishonest Coverage

Answer 313

covers losses resulting from government employee dishonesty. Coverage Form O = per occurrence Coverage Form P = per employee

Question 314

Commercial Package Policies

Answer 314

Benefits to policyholders: simplicity (one policy for all needs, interline endorsements); elimination of gaps in coverage, reduced premiums Benefits to Insurers: less diverse selection of lines, customer loyalty strengthened

Question 315

Commercial Package: Representative Lines of Coverage

Answer 315

``` Commercial Property Commercial General Liability Employment Related Liability Professional Liability Commercial Crime and Employee Dishonesty Commercial Inland marine Business Auto Boiler and Machinery Equipment Breakdown ```

Question 316

Business Owner Package Policy (BOP)

Answer 316

Bundles property, liability, and income protection in a single package Insurance to value requirement, works in the same way as coinsurance. Policy pays RC if coverage is at least 80% of property's value ``` If coverage is less than 80% of property's value policy pays the higher of: ACV or RCV x (Amount of Insurance/80% Property Value ```

Question 317

Features of Typical BOP

Answer 317

12 months business income coverage 12 months extra expense coverage inflation guard for buildings and structures liability protection for lawsuits from accidents or products slander and copyright protection deductibles on most claims RC valuation (ACV endorsement option) Open-peril coverage (named-peril endorsement option) Not typically covered: coverage for company owned vehicles; professional liability coverage; malpractice coverage

Question 318

BOP Eligibility

Answer 318

wholesaler and Distributors: Retail sales account for 25% or less of gross income; 25% or less of floor space is available to the general public Processing and Servicing: Annual sales under $3 million; no more than 25% of sales occur off-premises Limited Cooking and Fast Food Restaurants: 7,500 sf or fewer; max seating: limited cooking - 75, fast food - 150; beer and wine sales no more than 25% annual income; no liquor sales; maintenance of fire extinguishing equipment. Convenience Store: Gasoline sales less than 75% annual income; no auto repair or car wash; no propane or kerosene sales Self Storage Facilities: maximum of two stories (floor space not limited); no storage of pollutants, waste, chemicals, or industrial materials. Specialty Contractors: annual payroll no more than $300,000; annual sales no more than $3 million; subcontracted work no more than 10% total sales; no heavy construction; no working on buildings over 3 stories Motels: maximum of 3 floors; no bars or cocktail lounges; not seasonal; not closed more than 30 days per year Apartment Building and Condominium: occupancy must be residential or office; incidental occupancy no more than 25,000 sf; incidental occupancy by contractors not exceeding 7,500 sf or 15%; Office Buildings: less than 100,000 sf; no higher than 6 stories; tenants occupy no more 25,000 sf; contractors occupy no more than 7,500 sf or 15% of total sf

Question 319

Businesses CANNOT Qualify for a BOP

Answer 319

car dealerships, service stations, repair shops: parking lots, garages; amusement parks; bars, nightclubs, and the like; banks and similar financial institutions; manufacturing, processing, servicing businesses (except those eligible); condominium associations (except residential and office)

Question 320

National Flood Insurance Program (NFIP) Dwelling Form

Answer 320

Coverage A: 1 to 4 family dwellings Attached additions Coverage B: Personal Property Coverage C: Debris Removal Loss Avoidance Measures Property Removed to Safety Coverage D: Increased Cost of Compliance

Question 321

Three Loss Settlement Options

Answer 321

Actual Cash Value: 2, 3, or 4 family dwellings; units NOT used solely as single-family dwellings; detached garages; personal property; appliances, carpets, and carpet pads; outdoor awnings, outdoor antennas or aerials, and other outdoor equipment attached to dwelling; abandoned property that, after a loss, remains as debris at the described location. Replacement Cost: single family dwelling; owner occupied; insured's principal residence; insured at 80% of replacement value Special Loss Settlement: for mobile homes or travel trailer: at least 16 feet wide; at least 600 sq. feet inside; insured's principal residence policy pays the lowest of two amounts: replacement cost of dwelling (or 1.5 x ACV0; coverage limit

Question 322

Mechanical Breakdown: Coverage

Answer 322

Covers losses due to breakdown of motor vehicles Cover: engines; transmissions; drive trains; steering mechanisms; electrical and electronic systems; a/c systems; front suspension Require: proof of regular maintenance full inspection before the policy is issued repair costs cannot exceed the car's ACV. Exclusions: due to neglect or delay in maintenance; covered by regular auto insurance; due to racing or reckless driving; on vehicles with altered odometers; occurring while towing with or overloading the vehicle. Common Conditions: owner must take reasonable care to minimize repair costs vehicle may be subject to inspection before repairs are done subject to subrogation

Question 323

Excess Liability

Answer 323

Coverage comes into effect only after limits of base policy are reached.

Question 324

Excess Liability and the Base Policy

Answer 324

Follow Form and Stand Alone excess liability policies rely on the base policy. Operate only after liability limit of base policy is exhausted. Cover only what is also covered by base policy.

Question 325

Excess Liability: Follow Form

Answer 325

Follows base insurance policy to the letter. Uses all the same provisions, exclusions, and coverages as the base policy; easier to underwrite and less expensive than other Excess Liability policies; claims tend to be simpler

Question 326

Excess Liability: Stand Alone

Answer 326

Covers what base policy covers, but sets own exclusions and limitations to coverage. Adjuster must carefully review policy provisions to ensure a loss is covered.

Question 327

Umbrella Policies

Answer 327

May cover risk and exposures NOT included in underlying policy. (non-owned aircraft; marine craft; property in insured's custody; personal injury; pollution; professional liability, product recall) Umbrella policy can operate in several ways: can operate like stand alone; also works as primary policy; provides broadest coverage

Question 328

Umbrella Policies: Self-Insured Retention (SIR)

Answer 328

A type of deductible. Equal to the limits on base policy. If limit of base policy is paid, this pays the SIR

Question 329

Nationwide Marine Definition

Answer 329

Model regulation that defines six categories of eligible marine risks Ocean Marine: imports and exports Inland Marine: domestic shipments; instrumentalities of transportation or communication; personal property floater risks; commercial property floater risks

Question 330

Ocean Marine Insurance

Answer 330

Ocean Marine Policies are "Utmost Good Faith" contracts: difficult to investigate all the risks involved; ships are required to adhere to certain Implied Warranties in order to receive coverage.

Question 331

Implied Warranties of Ocean Marine Contract

Answer 331

Seaworthiness Condition of Cargo: owner must guarantee cargo is sound and everything is properly loaded. Legality: voyage must be legal No Deviation in Voyage: rout of the voyage must be clearly stated prior to departure; captain must adhere to this route throughout voyage, with no change in destination or unnecessary delays.

Question 332

Ocean Marine Premiums

Answer 332

Policyholder has 45 days to pay the premium in full or develop a payment option that is acceptable to the insured and the insurer. Upon cancellation premium will be paid on a pro-rata basis

Question 333

Ocean Marine Insurance Policies

Answer 333

Types: Hull Coverage; Cargo Coverage; Freight Insurance; Protection and Indemnity Coverage: Loss of Vessel; Loss of Cargo; May extend to property stored on docks and piers Policy Valuation: valued basis - full amount of policy is paid in the vent of a total loss unvalued basis - amount of payment is determined after the loss agreed value basis (valued policy); value of the vessel is determined when policy is issued

Question 334

Hull Policy: Coverage

Answer 334

Covers damages to, and loss of, a marine vessel Policy period: 1 year Establishes a defined geographic area

Question 335

Hull Policy: Deductibles

Answer 335

Average: standard, flat-rate deductible Franchise: if damage amount exceeds deductible, the insurer pays the full cost for damages if damage is less than deductible, the policyholder pays for all damages

Question 336

Cargo Policy

Answer 336

The good or property being moved in a shipment Cargo Coverage: Insures good in transport 3 Types of Cargo Coverage: Single Risk Form - insures the cargo on a single shipment only Floating, Open, or Long Term - insures multiple trips over a specific period of time Warehouse-to-Warehouse - insures cargo from point of origin to point of destination

Question 337

Freight Insurance

Answer 337

the charge for transporting goods, paid to the owner of the vessel Freight Insurance: protects the vessel owner in the event that the freight costs are not paid often combined with Hull coverage

Question 338

Protection and Indemnity Insurance

Answer 338

Liability insurance that protects the ship owner in the event that the ship causes damages or injuries to a third party. Often included as part of hull coverage Covers carrier's liability for bodily injury or property damage to crew, passengers, and sometimes cargo. Does not cover claims that fall under state or federal compensation acts

Question 339

Actual Total Loss

Answer 339

Insured items that have disappeared or are not salvageable

Question 340

Constructive Total Loss

Answer 340

Insured items that have been damaged beyond repair, or the cost to repair exceeds the cost to replace

Question 341

Cost, Insurance, and Freight (CIF)

Answer 341

Term of sale in which the seller or exporter is responsible for the cargo throughout shipment Seller must insure the cargo until it reaches its destination.

Question 342

Cost and Freight ( C&F)

Answer 342

Term of sale in which the buyer or importer is responsible for the cargo throughout the shipment.

Question 343

Free on Board (FOB)

Answer 343

Term of sale in which the seller is responsible for the cargo until it reaches a certain point, such as a specific ship or port. If followed by a city name, means the seller is only responsible for the cargo until it arrives in that city. At this point, the buyer becomes responsible for the goods.

Question 344

Ocean Marine Provisions

Answer 344

Sue and Labor: the insured party is required to attempt to prevent further losses once damage occurs General Average: when the captain of a vessel decides to make a voluntary sacrifice of a part of the ship or its cargo in order to save the whole, all insurers for that ship must participate in the indemnification process Particular Average Clause: appropriates the loss to a particular company rather than each cargo owner sharing the loss Free of Particular Average Clause: excludes coverage for all partial or accidental losses, except those caused by stranding, sinking, burning, or collision; acts like a deductible - insurer is only liable for losses that exceed a set percentage of the value percentage is usually 10%

Question 345

Inland Marine Insurance

Answer 345

Covers property in transport (other than ocean transport) Covers property involved in transportation Policies typically known as "floaters" Eligible Property: movable; in transit; instrumentalities of transportation or communication, including - roads, bridges, tunnels, radio towers, power lines Actual means of transport NOT eligible

Question 346

Inland Marine Categories

Answer 346

Domestic Shipments Instrumentalities of Transportation or Communication Personal Property Floater Risks Commercial Property Floater Risks

Question 347

Domestic Shipments

Answer 347

Transportation Forms: protect against losses occurring during shipment or transport of goods; includes travel by truck, train, ship mail, or plane Annual Transit: uncontrolled forms that covers loss of goods in transit; applies to all of the insured's shipments during the year; choice of open-peril or named-peril coverages against fire, windstorm, or theft. Trip Transit: uncontrolled similar to annual transit, but which only insures a single shipment; coverage applies from the trip origination point to destination. Motor Truck Cargo: uncontrolled form; protects carrier of shipped goods while the shipment is in transit. common carrier legal liability: free on board shipping point (ownership of/responsibility for cargo transfers to buyer as soon as cargo leaves shipper); free on board destination point (ownership of/responsibility for cargo transfers to buyer after buyer accepts cargo when it arrive sat the buyer's destination) Mail Coverage: controlled form; provides open peril coverage for property sent by registered mail; shipper must report property value accurately

Question 348

Instrumentalities of Transportation and Communication

Answer 348

uncontrolled form pays for direct damage or loss of revenue due to covered loss covers property directly related to transportation and communication

Question 349

Personal Property Floater Risks

Answer 349

Personal Articles Floater: open-peril coverage; coverage is worldwide; no deductible; valuation is determined using the lease of the following (actual cash value, cost to repair or replace, coverage limits); subject to "pair and set" provision Exclusions: war; nuclear hazards; wear and tear; insects and vermin; spoilage; gradual deterioration

Question 350

Specific Personal Articles Floater Coverages

Answer 350

Jewelry Coverage: eligible items include items of personal adornment containing precious metals or jewels; pens; flasks; smoking equipment; trophies each item must be individually scheduled newly acquired property automatically covered for 30 days at 25% of coverage limit, up to $10,000 Furs Coverage: includes both genuine and imitation fur; each must be individually scheduled; newly acquired covered for 30 days Cameras Coverage: eligible items include photography equipment; binoculars; telescopes; microscopes each item individually scheduled, but blanket coverage available for accessories 30 day automatic coverage for new items Musical Instruments: each item individually scheduled, but blanket coverage available for accessories 30 day automatic coverage for new items Silverware Coverage: includes silver; silver plate items; gold; gold plate items items may get blanket or scheduled coverage Golfer's Equipment Coverage: items include clubs, equipment, and clothing blanket coverage Fine Arts Coverage: individual items must be scheduled, but blanket coverage available for small items or collections agreed value coverage newly acquired property automatically covered for 90 days at 25% of total limit of scheduled items no coverage for property on exhibit away from insured premises unique application of pair and set provision (insurer pays full scheduled amount for pair or set; insured must surrender any remaining pieces of set to insurer. Stamps and Coin Collection Coverage: items include postage stamps; rare and current coins; paper money; banknotes can provide blanket or scheduled coverage special limits - ($1,000 for any unscheduled coin collection; $250 for any individual item)

Question 351

Commercial Inland Marine Policies

Answer 351

include: domestic shipment; instrumentalities of transportation and communication; commercial property floater risks two types of conditions: general and loss Can be written on controlled or uncontrolled forms; includes: bailee forms; equipment floaters; business floaters; dealer policies

Question 352

Commercial Property Floater Risks: Bailees

Answer 352

Bailee: individual who holds someone else's property for a specific purpose and then returns it to the owner. Bailee Coverage: reimburses a bailee's customer for damage to the customer's property while in the bailee's control provides coverage for Confusion of Goods (a loss makes it impossible to identify damaged property)

Question 353

Commercial Property Floater Risks: Equipment Floaters

Answer 353

Uncontrolled Form May be open peril or named peril Covers heavy machinery and equipment (Physicians and Surgeons Equipment; Theatrical Property; Contractors Equipment; Commercial Articles)

Question 354

Commercial Property Floater Risks: Business Floaters

Answer 354

Accounts Receivable: controlled; open peril; reimburses insured for money that cannot be collected because company records have been destroyed. Valuable Papers and Records: controlled; covers losses to important documents, manuscripts, or records; does NOT cover money and securities Installation: controlled; often open peril; covers items that have been sold while they are being moved or installed, being accepted by the buyer Electronic Data Processing: covers hardware, data, media, recorded information, software liability coverage also available Signs: controlled; covers all types of signs owned by insured and those belonging to others that are in the insured's care

Question 355

Commercial Property Floater Risks: Dealer's Policies

Answer 355

Open peril Versatile Coverage: reporting or non-reporting; property covered while on or off premises; property covered while controlled by employees or in transit; covers property of others in insured's custody Covers dealers of: jewelry; stamps; art; coins; furs; cameras; musical instruments; equipment

Question 356

Jewelers Block

Answer 356

Bailee Form For jewelers with up to $250,000 in stock Covers: insured's merchandise; property of others in insured's care; property in transit and in showcases Covers: insured's stock in trade; jewelry sold, but not yet delivered; similar property of others in the insured's care (if such property is in jewelry trade, it is only covered up to the insured's financial interest in the property); damage to building housing merchandise when damage is caused by theft, attempted theft, and collapse Optional Coverages: (Show Windows: covers theft from a show window by cutting or smashing glass) (Money: covers theft of money from a vault or safe on insured premises) Exclusions: on exhibition in showcases not on the premises at exhibition that is promoted by a trade association or public authority sold on a payment plan after its leaves the premises being worn by the insured or an employee (or a family member either) in the mail, in express carriers, or motor carriers

Question 357

Jewelers Block: Loss Settlement

Answer 357

Determining Value: value is determined at the time of loss historical or antique value have no bearing on valuation Policy Pays the Least of: actual cash value cost to restore damaged property to pre-loss condition cost to replace damaged property lowest dollar value listed on the company's books

Question 358

Jewelers Block: Insured's Duties

Answer 358

Insured Must: maintain safeguards in place at policy inception take yearly inventory keep records for 3 years of: purchases, inventory, sales, property off premises, property of others on premises

Question 359

Inland Marine Insurance Review

Answer 359

indemnifies an insured party for losses to property in transport or property that is involved in the transportation of goods. Controlled Line Floaters: standardized forms filed with the state Uncontrolled Line Floaters: non-standard forms tailored to meet needs of each insured ``` 4 Categories: Personal Property Floater Risks (personal articles floater) Domestic Shipments (annual transit, trip transit, motor truck cargo, mail coverage) Instrumentalities of Transportation and Communication (bridges, tunnels, roads, dams, piers and docks, pipelines, power lines, antennas and towers for radio and TV) Commercial Property Floater Risks (bailees, equipment floaters, business floaters, dealer's policies) ```

Question 360

Aviation Insurance

Answer 360

Involves: huge potential for losses The Problem with Risk Pool in Aviation: insurance pool is small potential risk is huge Insurers and re-insurers often pool risk with underwriting groups specializing in aviation.

Question 361

Aviation Insurance Policies

Answer 361

No standard policies In general, all policies contain Hull Coverage and Liability Coverage

Question 362

Aviation Insurance: Hull Coverage

Answer 362

Insurance for the aircraft itself. 2 Types of Coverage: All Risks- Ground and Flight: this is the broadest aircraft coverage All Risks - Not in Motion: covers physical damage to the aircraft while the aircraft is not moving by its own power. Deductibles: usually percentage or fixed deductible separate deductibles for "in motion" and "not in motion" deductible does not apply to losses from (fire, lightning, explosion, theft, robbery, vandalism, transportation of aircraft) Exclusions: wear and tear freezing mechanical or electrical breakdown war risks losses to tires, unless caused by theft, vandalism, or malicious mischief embezzlement by someone who is legally in possession of the aircraft

Question 363

Aviation Insurance: Aircraft Liability Coverage

Answer 363

3 Types of Aircraft Liability Coverage= Bodily Injury Excluding Passengers: covers anyone injured by the use, maintenance, or ownership of the aircraft who is not a passenger on the place includes bodily injury, sickness, disease, mental anguish, death Passenger Bodily Injury: applies only to passengers Property Damage Liability: covers damage to property (or loss of use of property) caused by the use, ownership, or maintenance of the aircraft has a single, per occurrence limit

Question 364

Aviation Insurance: Aircraft Liability Coverage

Answer 364

Limits of Liability passenger bodily injury liability and bodily injury excluding passenger are subject to per person and per accident liability limits property damage liability has a single, per occurrence limit or, an insured could choose a single limit liability policy

Question 365

Aviation Insurance: Aircraft Liability Coverage

Answer 365

Medical Payments Coverage: no-fault coverage covers injuries that occur on, or while boarding or exiting aircraft pays for medical and even funeral costs

Question 366

Admitted Aircraft Liability (Guest Voluntary Settlement)

Answer 366

Guest signs release form that: allows a payment of predetermined amount for bodily injury releases insured from further liability Helps avoid lawsuits Insured can choose when to rely on this coverage

Question 367

Hangarkeepers Liability Coverage:

Answer 367

form of bailee insurance covers damage to planes in custody of insured

Question 368

War, Hi-Jacking and Other Perils Coverage:

Answer 368

Adds by endorsement coverage for perils typically excluded

Question 369

Airport Liability Coverage:

Answer 369

for those who own, operate, lease, or use space in airports Available coverages include: personal injury, contractual, premises, products and completed operations, premises medical payments

Question 370

Cargo Liability Coverage:

Answer 370

Indemnifies for lost or damaged: baggage and/or cargo

Question 371

Worker's Compensation

Answer 371

covers work-related injuries and protects employers from their liability when injury occurs. Covers an employee's medical bills and lost wages following a work-related injury. purchased by the employer primary coverage: pays before other policies "exclusive remedy" keeps employee from suing employer for covered injuries "no-fault" policy: applies no matter who is at fault for the injury Always primary coverage.

Question 372

Worker's Compensation State Specific Laws

Answer 372

Most states require WC Monopolistic: the state provides WC coverage Competitive: state has fund in direct competition with private insurers, employers choose which they prefer Georgia: no state fund only private companies offer WC all WC insurers must follow the same state laws

Question 373

Worker's Compensation: Compulsory vs. Elective

Answer 373

Compulsory: WC is required Elective: employers and employees may opt out of workers' comp

Question 374

Worker's Compensation: Georgia - Compulsory

Answer 374

All employment relationships must be covered. ``` Some Exceptions: companies with fewer than 3 employees independent contractors taxicab drivers prison inmates doing community service farm laborers domestic servants real estate agents amateur sports officials ```

Question 375

Worker's Compensation: Employer Benefits

Answer 375

the sole responsibility of the employer is to pay premiums or, in the case of self-insurance, pay benefits to an injured employee

Question 376

Worker's Compensation Coverage

Answer 376

Injuries and death occurring in a normal course of work Infections or diseases caused by work-related injury Occupational diseases caused by hazardous jobs Workers' Comp only covers injuries and death when: work performed is major contributing cause of injury

Question 377

Worker's Compensation Exclusions

Answer 377

injuries inflicted by a third party for personal reasons alcoholism or disability arising from alcoholism drug addiction or disability arising from drug addiction heart disease, heart attack, failure of coronary blood vessels, stroke, thrombosis

Question 378

Workers' Compensation Policy

Answer 378

Part One describes the benefits available to an injured employee. Benefits fall into 3 categories: disability and impairment benefits; medical expenses; and death benefits 3 Kinds of Disability/Impairment Benefits: total disability; temporary partial disability; and permanent partial disability

Question 379

Worker's Compensation: Average Weekly Wage

Answer 379

the employee's average weekly income in the 13 weeks leading up to the injury Maximum Medical Improvement: in cases of permanent injury, the point in which doctors determine that a worker has made as much medical progress as possible.

Question 380

Worker's Compensation: Disability and Impairment Benefits

Answer 380

Income Benefits: based on the employee's Average Weekly Wage subject to certain limits waiting period: 7 days (covered if the disability lasts over 21 days) Maximum Benefit Amounts: total disability: 2/3 of AWW for 400 weeks permanent partial disability: 2/3 of AWW according to rating schedule temporary partial disability: wage loss formula for 350 weeks

Question 381

Worker's Compensation: Temporary Total Disability Benefits (TTD)

Answer 381

Pay 66 2/3% of employees AWW | Time Limit: 400 weeks

Question 382

Worker's Compensation: Catastrophic Injuries

Answer 382

includes the following: Spinal cord injuring involving severe paralysis of arm, leg, or trunk Amputation of arm, hand, foot, leg Severe brain or close-head injury Secord or third degree burns to 25% of body or third degree burns to 5% of face and hands Total blindness or industrial blindness Any other injury that prevents employee from being bale to perform available work

Question 383

Worker's Compensation: Change in Condition

Answer 383

For Catastrophic Injuries: TTD are paid unless there is a change in condition of the injured worker Change in condition could be: change in wage-earning capability change in physical condition change in status Only the WC board has the authority to determine that an injury is no longer catastrophic and only after holding a hearing

Question 384

Worker's Compensation: Temporary Partial Disability Benefits (TPD)

Answer 384

Amount: 2/3 the difference between pre- and post-injury AWW Limit: $350 Time Limit: 350 Weeks

Question 385

Worker's Compensation: Permanent Partial Diasbility

Answer 385

Loss of function of a member or members of the body, or of the body as a whole ``` Benefits: for permanent disability due to work-related injury paid regardless of wage loss pay 2/3 of employee's AWW amount of time depends on injury ```

Question 386

Worker's Compensation: Schedule of PPD Benefits

Answer 386

Paid according to disability schedule listed in GA workers' compensation law Duration of benefits based on severity of impairment Benefits expire at the earlier of the following: completion of scheduled payment period; death of impaired person

Question 387

WC Policy: Medical Benefits

Answer 387

Pay for all medical expenses incurred because of work-related injury: doctors visits; surgery; emergency room visits; x-rays; medicine; necessary medical equipment (e.g. crutches, leg braces); rehabilitation services (for catastrophic injuries) Time Limits: for injuries that occurred on or before June 30, 2013, and for all catastrophic injuries: no time limit for injuries occurring on or after July 01, 2013: 400 weeks

Question 388

WC Policy: Death Benefits:

Answer 388

66 2/3% of the employee's AWW for up to 400 weeks Paid upon employee's death from injury arising out of or in the course of employment Maximum of $230,000 to a single dependent Funeral expenses up to $7,500

Question 389

WC Policy: Liability

Answer 389

Covers employers in the event of: suits by employees claiming negligence claims by others for liability of employees claims by relatives of injured employees

Question 390

WC Policy: Employer's Liability Exclusions

Answer 390

liability assumed under contract damages for employment that is unlawful injuries to employees knowingly working in violation of the law obligations under any compensation law injuries intentionally caused or aggravated by insured injuries outside US or Canada claims arising from unlawful discrimination, coercion, or discharge obligations under federal acts penalties imposed for breaking state or federal law

Question 391

Georgia Employers: 3 WC Options

Answer 391

Option 1: Purchase WC Option 2: Self-Insure employer must get authorization from State Board of WC and Georgia Self-Insurers Guaranty Trust Fund requires proof of ability to pay benefits Option 3: Join a Self-Insurance Group employers pool resources to insure their collective risks

Question 392

WC Policy - Georgia Employers: Out of State Coverage

Answer 392

Conditions: employer must let insurer know about out of state work state where work is taking place must be listed on policy

Question 393

WOC Policy: Employer's Duties

Answer 393

Provide necessary medical care for injured employee Report injury to insurer and cooperate with insurer's investigations Utmost integrity is expected of all parties, including employer

Question 394

WOC Policy Risk Classification

Answer 394

Premiums Employee Rate Classification: "High-risk" and "Low-risk" Factors that Affect Premiums: size of payroll risk level of work done location, safety records, etc.

Question 395

WOC Policy: National Council on Compensation Insurance (NCCI)

Answer 395

Rating bureau that develops the rules for setting worker's compensation premiums that are used by most states

Question 396

WOC Policy: Conditions

Answer 396

Outline the rights of the insurer Insurer has right to inspect workplace at any time Insured cannot transfer rights or duties without written consent of insurer Explain how a policy may be cancelled Require first-named insured to act on behalf of all insureds with respect to policy transactions

Question 397

WOC Policy: Federal Programs

Answer 397

Federal programs can provide coverage outside of state WC programs. Some circumstances where state WC doesn't apply, because the workers are protected under a different law. Workers usually protected by one of several federal laws or WC programs.

Question 398

WOC Policy: Federal Employees Compensation Act (FECA)

Answer 398

Provides WC benefits for civilian federal employees Pays medical expenses, plus 2/3 of normal monthly salary Additional payments available for permanent injuries or to dependents Includes compensation for survivors in the event of death

Question 399

WOC Policy: Federal Employers Liability Act (FELA)

Answer 399

Covers interstate railroad workers and their families FELA Provisions: railroad workers not covered by state WC laws may sue employers worker must show legal negligence of employer

Question 400

WOC Policy: Jones Act

Answer 400

"Merchant Marine Act" Allows injured seamen to sue before a jury insurers usually require maritime coverage endorsement under liability section to protect employer some employers choose Voluntary Compensation Maritime endorsement to provide workers' compensation benefits without requiring a lawsuit.

Question 401

WOC Policy: Longshore and Harbor Workers' Compensation Act

Answer 401

Protects employees working on navigable waters or on shore in navigation-related industries Covered employees receive medical expenses and 2/3 weekly salary while injury continues Injury includes occupation-related illness Employers have 2 options: buy insurance form licensed insurer, or self-insure with permission of US Dept. of Labor

Question 402

WOC Policy: Black Lung Benefits Act

Answer 402

Provides monthly payments and medical treatments to coal miners who become totally disabled from black lung disease Employers must secure funding for benefits one of 2 ways: qualify as self-insured buy insurance from state or commercial insurer Payments must begin within 30 days of determination of liability

Question 403

Health Insurance

Answer 403

A plan that covers and shares expenses associated with health care. Health Insurance Contract = Evidence of Coverage

Question 404

Deductible

Answer 404

the amount the policyholder pays before insurance policy benefits activate

Question 405

Copayment

Answer 405

the amount the policyholder pays each time she accesses the benefits of a health insurance policy

Question 406

coinsurance payment

Answer 406

a percentage of the total health care expenses that the insured must pay

Question 407

out-of-pocket expenses

Answer 407

any deductibles, copayments, and coinsurance that a policyholder pays

Question 408

network provider

Answer 408

member physicians and healthcare facilities contracted to treat an insurer's policyholders

Question 409

capitation

Answer 409

an insurer's practice of paying a healthcare provider up front in return for the agreement to treat all members of the insurer

Question 410

Group Health Insurance

Answer 410

lower health insurance costs for the employer and employee all employees included, regardless of current health status helps eliminate or reduce policy waiting periods coverage often continues even after employee leaves the group Typically managed by: HMO-Health Maintenance Organization PPO-Preferred Provider Organization

Question 411

Individual Health Insurance

Answer 411

Comprehensive and/or Catastrophic Insurance: purchase directly from an insurance provider purchase through HMO, PPO, or POS

Question 412

Insurance Health Insurance Drawbacks

Answer 412

individual health insurance can be extremely expensive.

Question 413

Health Maintenance Organization (HMO)

Answer 413

managed care insurer providing health insurance through a provider network broad range of comprehensive medical care few exclusions and minimal deductibles restricts members from choosing care providers outside of the network promotes health programs in hopes of minimizing their healthcare costs

Question 414

Preferred Provider Organization (PPO)

Answer 414

members may choose healthcare outside of the Network Provider members pay the difference between network coverage cost and non-network costs Access to PPO network care at a very low cost flexibility of choosing own medical care

Question 415

Point of Service Plans (POS)

Answer 415

combines qualities of HMO and PPO plans: plan can cover visits in or out of network, based on the primary physicians recommendation

Question 416

Major Medical Plans

Answer 416

high medical coverage limits does not restrict the insurer to a network risk of major out-of-pocket costs high deductible, and significant coinsurance percentage requirement

Question 417

Surgical and Hospital Insurances

Answer 417

Surgical Expense Insurance: compensation for physician costs associated with surgical procedures Hospital Indemnity Insurance: coverage providing a flat amount of indemnification per day for hospitalization Hospitalization Expense Insurance: coverage for various hospital expenses (room and board, medical supplies, lab fees, nursing care, etc.)

Question 418

Accident Insurance

Answer 418

can pay expenses caused by a covered accident, including: ``` medical care for injuries ambulance fees hospital costs, including emergency room/intensive care loss of income death benefit ``` exclusions: self-inflicted injuries; injuries occurring while under the influence; injuries received in commission of a crime; disease and bacterial infections

Question 419

waiting periods

Answer 419

prevents applicants and insured's from seeking health insurance only after they become ill

Question 420

non-cancelable policies

Answer 420

guarantees continuous health coverage, at a set premium price for as long as the policyholder desires

Question 421

Renewable Policies

Answer 421

Conditionally Renewable: insurer may cancel under specific, stated conditions Optionally Renewable: insurer chooses whether to renew the policy when the policy period expires insurer may cancel coverage on the expiration date for any reason Guaranteed Renewable insurer guarantees coverage until the insured is a certain age insurer may increase the premiums over the life of the policy

Question 422

Residual Market Programs

Answer 422

state-run programs that provide insurance to high-risk individuals who cannot qualify for private insurance also known as "shared markets" or "involuntary markets" usually operate at a loss - meaning payouts exceed premiums collected state-licensed insurance companies fund shortfalls by "sharing their pool" of premiums with Residual Market

Question 423

Residual Market Programs: Consumer's Last Resort

Answer 423

last-resort option for consumers consumer must prove rejection by a certain number of private insurers minimal and highly restrictive coverage at expensive rates

Question 424

Residual Market Programs: Georgia

Answer 424

The Georgia Automobile Insurance Plan Workers' Compensation Assigned Risk Plan The Georgia FAIR Plan (Fair Access to Insurance Requirements)

Question 425

Georgia Automobile Insurance Plan (GAAIP)

Answer 425

administered by governing committee and regional manager policyholders and insurers can appeal rulings to commissioner sold by an agent with property and casualty license in Georgia

Question 426

Georgia Assigned Risk Reinsurance Pool

Answer 426

Georgia WC Insurance Plan also called the "assigned Risk Plan" provides high-risk WC coverage for Georgia businesses operates by spreading costs between all WC insurers in the state

Question 427

Georgia FAIR Plan

Answer 427

Administered by Georgia Underwriting Association Coverages Available: personal lines (homeowner, ho-8; dwelling, dp-1; wind and hail only; residential crime) commercial lines (commercial fire; wind and hail only; commercial crime) Coverage Limits: maximum coverage limits set by commissioner for any building (personal or commercial): $2,000,000 for a set of buildings: $20,000,000 homeowners section 2: personal liability: $100,000 per occurrence; medical payments: $1,000 per person Policies effective 1 year

Question 428

Adjusting Code of Ethics: Disclosure

Answer 428

Adjusters shall disclose all direct or indirect financial interest they have in adjusting a claim

Question 429

Adjusting Code of Ethics: Equal Treatment

Answer 429

adjuster shall treat all claimants equally: do not favor nice clients do not disfavor your rude clients

Question 430

Adjusting Code of Ethics: Avoid Prejudice

Answer 430

must never be prejudiced in their investigations, adjustments, or settlements

Question 431

Adjusting Code of Ethics: Truthfulness

Answer 431

adjuster shall make truthful and unbiased reports of the facts after making a complete investigation

Question 432

Adjusting Code of Ethics: Integrity

Answer 432

shall handle every adjustment and settlement with honesty and integrity

Question 433

Adjusting Code of Ethics: Diligence

Answer 433

should act with speed and care in completing the adjusting process every claim is important failure to settle a claim in a timely manner can result in disciplinary action by the insurance commissioner

Question 434

Adjusting Code of Ethics: Reporting Violations

Answer 434

shall promptly report licensed insurance representatives whose conduct violates any insurance laws, rule, or order

Question 435

Adjusting Code of Ethics: Elderly Claimants

Answer 435

shall exercise extraordinary care when dealing with elderly clients: take extra precautions to ensure an elderly claimant gets a complete and fair settlement do not let failing memory or impaired cognitive processes disadvantage the claimant

Question 436

Adjusting Code of Ethics: Attorneys

Answer 436

Claimant has the right to representation by an attorney Adjusters strictly prohibited from dealing directly with a claimant who has hired an attorney, in order to circumvent the advice of that attorney.

Question 437

Adjusting Code of Ethics: Witnesses

Answer 437

adjuster is permitted to interview any witness, or prospective witness, without the consent of opposing counsel or party must avoid any attempt to influence witnesses witnesses have the right to a copy of any signed or recorded statements

Question 438

Adjusting Code of Ethics: Right to Attorney

Answer 438

adjuster shall not advise a claimant to refrain from seeking legal advice, nor advise against the retention of counsel to protect the claimant's interest

Question 439

Adjusting Code of Ethics: Traumatized Claimants

Answer 439

shall not attempt to negotiate with, or obtain any statements from, claimants or witnesses who appear to be in shock or under severe emotional distress

Question 440

Adjusting Code of Ethics: Advising of Rights

Answer 440

adjuster must advise claimants of all their claim rights in accordance with the terms and conditions of the contract and of applicable laws. must make it clear to the claimant what losses are covered in a particular situation

Question 441

Adjusting Code of Ethics: Release Forms

Answer 441

adjuster shall not draft any form of release, unless approved in writing in advance by the insurer.

Question 442

Adjusting Code of Ethics: Competence

Answer 442

adjuster should not deal with a claim that he is not trained to take on

Question 443

Unfair Claims Settlement Practices

Answer 443

Forbidden by State Law Misrepresenting Policy Coverage Failing to acknowledge communications regarding claims promptly adjuster often responsible for promptly contacting claimant in Georgia, an insurer has 15 days to respond to a claim Failing to implement procedures for claims investigation and settlement insurer responsible for adopting and implementing procedures for proper investigation of claims Failing to pay legitimate, undisputed claims Low-balling claim estimates Refusing to pay claims without having conducted reasonable investigation Failing to affirm or deny coverage of claim within reasonable time frame insurer must make decision within reasonable amount of time after receiving all information needed for investigation insurer must notify claimant if extra time is needed if insurer rejects claim, must provide a written statement explaining why Making claims payments without explanation of coverage providing for them all claims payments should be accompanied by a statement specifying which coverage was used to make payment Delaying settlement process by requiring both formal proof of loss form and subsequent verification Failing to provide prompt, reasonable, and accurate explanation for claim denial, when requested by insured in writing Failing to provide claims forms promptly to claimant insurers must provide all necessary paperwork to claimant within 15 days of claim being filed, along with clear explanation of their use Failing to implement standards assuring good workmanship in company repair shops Indicating payment is final or releases insurer form claim unless: policy limit has been reached compromise settlement has been agreed to by first-party claimant and insurer Issuing payment under one coverage that includes language releasing insurer from its entire liability

Question 444

State Commissioners and Departments of Insurance

Answer 444

responsible for maintaining insurer solvency regulating rates protecting consumers making insurance available for all individuals