Assignment 8 - Managing Property and Liability Risk

Question 1

• other prop. and liability policies
• policy that covers breach of duty, neglect, error, misstmt, misleading stmt or omission
• used for persons serving on various kinds of BoDs

Answer 1

directors and officers liability policy

Question 2

only source of flood and mudslide ins. cov’g for indiv.

Answer 2

Nat’l Flood Ins. Program

Question 3

special endorsement on homeowner policies that automatically increases the cov’g limits periodically by small %age amts.

Answer 3

inflation guard

Question 4

variation of homeowner’s ins. policy that provides open perils cov’g on all cov’d prop.

Answer 4

Homeowners 5

Question 5

variation of homeowner’s ins. policy that covers personal prop. for tenants

Answer 5

homeowners 4 (HO-4)

Question 6

new replacement cost less the amt the prop has physically depreciated since it was built or was new

Answer 6

actual cash value

Question 7

• ins. protection that covers damages b/c of bodily injury and property damage
• pays on behalf of the insured all sums up to the policy limit that the insured is legally obligated to pay
• limit is placed for each insurable occurrence regardless of # of persons injured or amt of separate property damage
• ins. comp. agrees to defend insured in any court suits - no matter if it is groundless - up to liability limit on policy
• certain exclusions to policy due apply

Answer 7

comprehensive personal liability coverage

Question 8

auto ins. personal injury protection
plan that allows insured persons to voluntarily relinquish a part of their right to sue in return for reduced prem.

Answer 8

Choice Type No-Fault Plan

Question 9

HO-3

Property Coverages

Answer 9

• A: Dwelling ($500,000)
• B: Other Structures ($50,000; 10% of dwelling amt, but may be incr’d)
• C: Personal Prop. anywhere in the world ($250,000; 50% of dwelling or incr’d or decr’d to 40%) or on residence of insured other that residence described in the policy ($25,000; 10% of Cov’g C limit, but no less than $1,000)
• D: Loss of use (100,000 or 20% of dwelling amt)

Question 10

HO-3

Liability Coverages

Answer 10

• E: Personal ($300,000 each occurrence)
• F: Medical pmts to others $1,000 each person

Question 11

the loss of assets or earnings through the judicial process as a result of one’s negligence or other legal liability

Answer 11

personal liability

Question 12

Comprehensive Personal Liability Ins. does NOT apply to:

Answer 12

• bus/prof. pursuits
• ownership/maint. or use of automobiles
• injury/damage caused intentionally by the insured
• benef. payable under WC Laws
• liability assumed by insured under contract/agreement
• anything linked to crime

**any situations in which other ins. is applicable - CPL doesn’t not cover

Question 13

when basic property cov’g and CPL are added to some other cov’gs or written on an open risk basis, it is the resulting, more comprehensive policy

Types 2-6 and 8

Answer 13

Homeowner’s Insurance (HO)

Question 14

• type of HO insurance
• provides broad specified perils prop cov’g

Answer 14

HO-2

Question 15

• type of HO insurance
• open/specified perils on builidngs and broad form on personal prop

Answer 15

HO-3

Question 16

• type of HO insurance
• personal prop. cov’g only (broad form) for tenants (renters insurance)

Answer 16

HO-4

Question 17

• type of HO insurance
• comprehensive form providing open perils cov’g on all cov’d prop.

Answer 17

HO-5

Question 18

• type of HO insurance
• specified perils
• personal prop. and loss-of-use cov’g (broad form), and cerain dwelling cov’g w/in the unit and for which the unit owner may have ins. respons. under an assoc. agreement
• for condos and cooperative unit owners

Answer 18

HO-6

Question 19

• type of HO insurance
• specified perils
• cov’g on bulidings and personal prop. that is more limited than HO-2
• used to provide cov’g on homes that my not meet the insurer’s UW guidelines for other homeowner’s forms

Answer 19

HO-8

Question 20

stmt that applies to the insured’s dwelling and other structures

states that prop. damaged or lost will be replaced subj. to terms of policy

Answer 20

replacement cost provision

Question 21

replacement cost provision statement

Answer 21

• If insured carries ins. on a building = at least 80% of its replacement cost new, any covered loss to the building will be paid to the extent of the full cost to repair or replace the damage w/o deducting for appreciation, up to policy limit*
• OTHERWISE:*
• depreciation will be taken in account and subtracted from formula*

Question 22

Replacement Provision Options

Answer 22

1. RC w/o any depreciation deduction.
2. ACV = RC - depreciation
3. obtain a RC protection endorsement, which allows insurer to incr. limit and prem. based on prop. eval.

Question 23

no-fault regulations for auto ins.

benefits provided are payable to injured, cov’d persons by their own ins. comp. w/o the cov’d persons needing to show that anyone was negligent in causing the injuries

Answer 23

personal injury protection (PIP)

Question 24

auto insurance

single limit of liability that applies to all cov’d liability arising out of an accident

Answer 24

Personal Auto Policy

Question 25

Parts of Automobile Insurance Coverage

Answer 25

• A: Liability cov’g (bodily injury and prop. damage liability
• B: Medical pmts cov’g
• C: uninsured motorists cov’g (underinsured)
• D: damage to cov’d autos (comprehensive, collision, towing and labor, and transportation exp.)

Question 26

key components of auto ins. policies

Answer 26

• uninsured motorist cov’g
• underinsured motorist cov’g
• phys. damage
• comprehensive
• collision

Question 27

UW guidelines in determining cost of auto ins.

Answer 27

1. age/gender
2. use of auto
3. territory where the auto is garaged
4. operators’ driving records

Question 28

• other prop. and liability policy
• designed to pay and defend liability claims after limits of underlying liability policies are exhausted
• usually min of $1 million
• worldwide in scope

Answer 28

Personal Excess Liability or Umbrella Policies

Question 29

• other prop. and liability policy
• covers professionals against claims and suits arising out of possible or alleged negligence or errors/ommissions in practice of business

Answer 29

Prof. Liability Ins. Cov’g

Question 30

Types of Prof. Liability Ins. Cov’g

Answer 30

• claims-made basis
• occurrence forms

Question 31

• Type of Prof. Liability Ins. Cov’g
• the event or incident occurs after the effective date of the policy and is reported to the ins. company prior to the end of the policy period

Answer 31

claims-made basis

Question 32

• Type of Prof. Liability Ins. Cov’g
• claim must occur during the policy period, but a claim can be made during OR after period
  *

Answer 32

occurrence forms

Question 33

• also known as “open risk”
• protects against all risks or perils that may cause a loss to a prop., except for those specifically excluded in the policy

Answer 33

any-risk cov’g

Question 34

the cause of a possible loss

Answer 34

peril

Question 35

ONLY protects against specific causes of loss named in policy

Answer 35

specified perils cov’g

Question 36

2 basic approaches for insuring property

Answer 36

1. specified perils cov’g
2. “any risk of loss” cov’g

Question 37

common personal liability exposures faced by most indiv.

Answer 37

• ownership, rental and/or use of automobiles
• ownership and/or rental of premises
• prof. or business activities
• directorships or officerships in corp., cred. unions, school boards, and other orgs
• employment of others (WC)
• ownership, rental, or use of watercraft or aircraft
• other personal activities