Casualty Insurance

Question 1

Additional coverages; coverage extensions; extended coverages; other coverages

Answer 1

Supplement insurance coverage that applies only in certain circumstances, have reduced or separate limits of liability, or require the insured to meet certain requirements before they are applicable.

Question 2

Aggregate Limit

Answer 2

Type of policy limit found in liability policies that limits coverage to a specified total amount for all losses occurring within the policy period.

Question 3

Assumption of risk

Answer 3

Defense against liability based on the common law principle that a person who knowingly exposes themselves to danger or injury takes on the risk of loss and cannot hold another person responsible for the loss.

Question 4

Absolute liability

Answer 4

Type of liability imposed by law on those participating in certain activities that are considered especially hazardous; a person involved in such operations may be held liable for the damages of another even though the individual was not negligent.

Question 5

Advertising Injury

Answer 5

Coverage in the CGL that covers losses caused by oral or written material that slanders or libels, violates privacy rights or infringes on copyrights, titles or slogans.

Question 6

assigned risk plan; automobile insurance plan

Answer 6

A state sponsored plan that provides automobile insurance to those who are uninsurable under standard auto insurance policies.

Question 7

bid bond

Answer 7

Type of surety bond that guarantees that if a contractor’s price is accepted, the contractor will enter into a contract and provide the required performance bond.

Question 8

bodily injury (BI)

Answer 8

Defined in most policies to include injury, sickness, disease and death resulting from any of these at any time.

Question 9

burglary

Answer 9

The taking of property by a person unlawfully entering or leaving the premises as evidence by visible signs of forced entry or exit.

Question 10

claims-made form

Answer 10

CGL coverage form that pays off bodily injury (BI) or property damage (PD) losses for which a claim was first made against the insured during the policy period.

Question 11

Comparative negligence

Answer 11

Law that allows an injured party to collect from another party for a loss, even when the injured party contributed to her own loss. Damages are reduced to the extent of the injured party’s negligence.

Question 12

blanket position bond

Answer 12

Fidelity bond that covers losses arising from the dishonesty of one or more employees acting separately or in collusion; provides a single limit of liability applicable to each employee involved in a loss.

Question 13

certificate of insurance

Answer 13

Written form that verifies a policy has been written; provides a summary of the coverage provided under the policy.

Question 14

Collision

Answer 14

Type of physical damage coverage that covers loss that occurs when the insured auto strikes another object or vehicle; may also include upset or overturn of the insured auto.

Question 15

Compensatory damages

Answer 15

Damages that reimburse an injured party for losses that were actually sustained.

Question 16

Completed operations

Answer 16

Coverage in the CGL policy that covers work that has been completed or finished and put to its intended use.

Question 17

concealment

Answer 17

The withholding of a material fact involved in the contract on which the insurer relies.

Question 18

court bond

Answer 18

A type of surety bond used to settle legal arguments that do not involve monetary damages.

Question 19

defense costs

Answer 19

Legal expenses incurred by the insurer to defend suits brought against insured, these costs are paid in addition to payments for BI or PD claims.

Question 20

comprehensive coverage

Answer 20

Found in an auto policy, a broad physical damage coverage that covers all property losses except collision and those perils or property that are specifically excluded; also called Other than Collision (OTC).

Question 21

contribution by equal shares

Answer 21

Type of other insurance condition found in liability policies; it calls for all insurers to contribute equally up to the limit of the policy having the smallest limit, whereupon that company stops paying, the other companies share in the remainder of the loss until the loss is paid in full or all policy limits are exhausted.

Question 22

Custodian

Answer 22

An insured, partner or employee who has care and custody of insured property within the premises.

Question 23

direct writer

Answer 23

Insurance marketing system where the company’s agents are also employees of the company.

Question 24

directors and officers (D&O) liability insurance

Answer 24

Type of errors and omissions policy written for the board of directors or its officers of the company, who may be sued as individuals by shareholders.

Question 25

doctrine of reasonable expectations

Answer 25

Legal principle that provides that an insurance policy includes coverages that an average person would normally expect it to include, regardless of what the policy actually provides.

Question 26

endorsement

Answer 26

A form attached to an insurance policy that alters the policy's coverage, terms and conditions. The additional coverage is listed in the policy, and the cost of insuring each risk must be added to the cost of the premium.

Question 27

exclusions

Answer 27

Section of an insurance policy that lists property, perils, persons or situations that are not covered under the policy.

Question 28

discovery form

Answer 28

Commercial crime form that covers losses that are sustained at any time and discovered either during the policy period or up to 60 days after the policy expires; the discovery period for losses related to employee benefit plans extends for up to one year after policy expiration.

Question 29

earned premium

Answer 29

Premium an insurance company has actually earned by providing insurance protection for the designated period of time.

Question 30

errors and omissions (E&O) insurance

Answer 30

Professional liability coverage that protects the insured against liability for committing any mistakes in the performance of professional duties.

Question 31

exclusive remedy doctine

Answer 31

One of the precepts upon which the workers' compensation system was founded. Stipulates that the only means available to employee to receive compensation from employers for injuries covered by workers' compensation laws is through the benefits mandated by those laws.

Question 32

exemplary damages' punitive damages

Answer 32

Type of damages intended to punish the defendant and make an example out of them to discourage others from behaving the same way.

Question 33

exposure

Answer 33

A condition or situation that presents o possibility of a loss.

Question 34

extended reporting periods (ERP)

Answer 34

Period of time provided by the claims made commercial general liability coverage form during which coverage will be provided for claims made after the expiration date of the policy if certain conditions are met. The basic runs 60 days and can be extended to five years. Supplemental runs for an unlimited duration, but is available only by endorsement for an additional premium.

Question 35

fidelity bond

Answer 35

Class of bonds that guarantees an employee's honest discharge of duty. Written to protect an insured from dishonest acts by employees.

Question 36

experience modification factor

Answer 36

Used with workers' compensation insurance and is a factor assigned to a company based on its prior three-year loss history compared against the average, Losses are based on only those job codes that apply to the business.

Question 37

express authority

Answer 37

Legal doctrine that states that an agent has the authority specifically given to the agent, either orally or in writing, by the principal.

Question 38

Federal Employers Liability Act (FELA)

Answer 38

Federal law that provides benefits to injured railroad workers who are exempt under state workers' compensation laws.

Question 39

fiduciary bond

Answer 39

Type of surety bond that guarantees that a person of special trust will fulfill its obligations set forth by law/

Question 40

financial responsibility laws

Answer 40

State laws that require owners or operators of autos to provide evidence that they have the funds to pay for automobile losses for which they might become liable. Insurance is the usual method for providing this evidence to the state.

Question 41

garage coverage form

Answer 41

Commercial auto coverage form that provides liability, garage keepers, and physical damages coverages for vehicle dealers, including dealers that have repair operations on the business premise.

Question 42

hazards

Answer 42

Something that increases the chance of loss. Three types are: -moral -morale -physical

Question 43

host liquor legal liability

Answer 43

Additional coverage to a CGL, where the insureds are not in the business of selling or serving liquor, covers insured for their legal responsibility for BI or PD to others; example: office picnic where beer and wine is served.

Question 44

first-named insured

Answer 44

The first person listed in the declarations as an insured; may have a higher level of duties or rights under the policy.

Question 45

garagekeepers insurance

Answer 45

Coverage that is part of the garage coverage form, covers a garage risk's legal liability for customers' auto in care, custody or control of the garage; at the insured's option and for additional premium, can also apply without regard to fault.

Question 46

hold harmless agreement

Answer 46

Contractual arrangement where one party assumes the liability of a situation and relieves the other party of responsibility.

Question 47

insured contracts

Answer 47

Term used in the CGL and businessowners liability forms to describe contracts for which contractual liability coverage is available under the policy, such as LEASE : leases, easement of license agreements, agreement with a municipality as required by ordinance, sidetrack agreement, elevator maintenance agreements.

Question 48

LEASE - contractual agreements

Answer 48

LEASE: leases, easement of license agreements, agreement with a municipality as required by ordinance, sidetrack agreement, elevator maintenance agreements. L - lease of premises E - easement of license agreements A - agreement with a municipality as required by ordinance S - sidetrack agreement E - elevator maintenance agreements

Question 49

Jones Act

Answer 49

Federal Law that allows members of ships' crews to sue their employer/ship owner at common law for injuries caused by the employer/ship owners' negligence.

Question 50

lessor endorsement

Answer 50

Commercial auto endorsement used to make leashed vehicles considered owned vehicles for coverage purposes.

Question 51

liquor liability coverage

Answer 51

CGL coverage form that provides coverage for liquor liability excluded by the standard CGL policies for those who are in the business of manufacturing, disturbing, selling, serving or furnishing alcoholic beverages.

Question 52

judicial bond

Answer 52

Category of surety bond that guarantees that the principal will fulfill certain obligations set forth by law - includes fiduciary bond and court bonds.

Question 53

libel

Answer 53

A false publication, as in writing, print, signs or pictures that damages a person's reputation .

Question 54

Longshore and Harbor Workers' Compensation Act

Answer 54

Endorsement used with the workers' compensation and employers liability policy that cover the additional benefits required by federal law for maritime workers injured while working on navigable waters or shore - site areas.

Question 55

monopolistic state fund

Answer 55

Method of providing workers' compensation coverage used in some states; employers must purchase workers' compensation insurance from a state fund; private insurance companies are not allowed to compete.

Question 56

newly acquired vehicles

Answer 56

New or used vehicles acquired by the insured during the policy period in addition to or as replacement to vehicles already owned and listed on the policy.

Question 57

negligance

Answer 57

The lack of reasonable care that is required to protect others from the unreasonable chance of harm.

Question 58

no -fault insurance

Answer 58

For of auto insurance where each insurance company pays the damages of its own insureds, regardless of who was at fault for the accident.

Question 59

obligor/principal

Answer 59

The party bound or obligated to do or not to do something for another party.

Question 60

occurrence form

Answer 60

CGL coverage form that covers BI or PD that occurs during the policy period, regardless of when the claim is made.

Question 61

payment bond

Answer 61

Type of surety bond that guarantees bills for labor and materials will be paid to the contractor as they are due.

Question 62

personal auto policy (PAP)

Answer 62

Policy that provides property and liability coverage both owned and non - owned autos used, maintained or operated by the insured and the insured's family members.

Question 63

pollution liability coverage extension endorsement

Answer 63

CGL endorsement that provides coverage for BI and PD claims arising out of pollution losses; excludes coverage for pollution clean - up costs.

Question 64

position schedule bond

Answer 64

Fidelity bond that covers specifically named positions in the company, rather that the individuals who hold these positions.

Question 65

permanent disability

Answer 65

A disability that will affect the worker for the rest of his life.

Question 66

personal injury

Answer 66

Injury other than bodily injury arising out of such things is libel, slander, false arrest, wrongful entry, violation of privacy and malicious prosecution.

Question 67

pollution liability coverage

Answer 67

Business liability exposure arising out of the business location or the activities of the business; covered under the CGL.

Question 68

Premium audit

Answer 68

Survey of the insured's financial records to gather information used to calculate the premium, such as exposers and limits.

Question 69

Products coverage in CGL

Answer 69

Coverage in the CGL policy that covers items manufactures or sold by a business when it is off the premises.

Question 70

Property damage

Answer 70

Damage to or destruction of property, including loss of use of the property.

Question 71

retention limit; self-insured retention limit

Answer 71

In an umbrella policy, the amount the insured must pay for a loss that is not covered by an underlying policy before the umbrella will begin to cover the loss.

Question 72

producer

Answer 72

General term used to describe someone who sells insurance, such as an agent, broker or solicitor.

Question 73

professional liability

Answer 73

Liability arising out of rendering or failing to render services of a professional nature.

Question 74

replacement vehicles

Answer 74

When a new vehicle replaces an existing vehicle, the same coverages would apply to new vehicle as were on the car it replaced.

Question 75

retroactive date

Answer 75

Under the claims - made CGL form, a date stipulated in the declarations as the first date on which an event may occur and be covered by the policy if a claim is filed.

Question 76

retrospective rating

Answer 76

Type of merit rating that bases the insured's premium on losses incurred during the policy period.

Question 77

risk retention group

Answer 77

Insurance company formed by several organizations to cover those organizations' liability loss exposures; exempt from most state laws that govern insurance companies.

Question 78

safe burglary

Answer 78

The unlawful taking of property from a locked safe or vault, evidence by marks of forcible entry or removal of entire safe or vault.

Question 79

single limit; combined single limit

Answer 79

One policy limit that applies to both BI and PD losses.

Question 80

risk

Answer 80

The chance or uncertainty of loss.

Question 81

robbery

Answer 81

The taking or attempted taking of property by one who has caused or threatened to cause bodily harm or committed a witnessed, obviously unlawful act.

Question 82

second injury fund

Answer 82

A fund established under workers' compensation law to help pay any increased compensation that may result when an employee with a previous injury is hired and then is injured again; most states will help pay.

Question 83

slander

Answer 83

Oral false statements injurious to a person's reputation; a false and malicious statement of report about someone.

Question 84

special damages

Answer 84

Category of compensatory damages that includes all direct and specific expenses involved in a particular loss, such as medical expenses and lost wages.

Question 85

supplementary payments (BAILED)

Answer 85

Provides extra coverage over and above the insured's limits of liability: B - Bonds: paid with no limit except $250 bail bond A - First Aid: no limit I - Interest on judgments' against client: no limit L - Loss of earnings, $250/day E - Expenses incurred at request of insurer D - Defense cost and investigation cost: no limit

Question 86

surety bond

Answer 86

Bond that guarantees that someone will perform faithfully whatever they agree to do or that someone will make an agreed - upon payment to another party.

Question 87

theft

Answer 87

A broad term encompassing any unlawful taking of property, including burglary and robbery.

Question 88

split limits

Answer 88

Policy limit that provides separate limits for BI and PD.

Question 89

surety

Answer 89

In bonds, the party (often the insurance company) that agrees to be responsible for loss that may result if the principal does not keep their promise.

Question 90

temporary disability

Answer 90

A disability that will go away over time.

Question 91

tort

Answer 91

A civil wrong for which monetary damages may be provided; does not include losses arising out of contracts.

Question 92

trailer interchange insurance

Answer 92

Under the trucker's coverage form, covers damage to a specific trailer under the policy of the trucker in whose possession the trailer is at the time of loss.

Question 93

underinsured motorists (UIM)

Answer 93

Auto coverage that pays the difference between the insured's actual damages for bodily injusry and the amount of liability insurance carried by the at - fault driver; may be added to personal or commercial auto policy endorsement.

Question 94

vicarious liability; imputed liability

Answer 94

Liability that a person or business incurs because of the actions of others, such as family members or employees.

Question 95

watchperson

Answer 95

someone retained specifically by an insured whose sole duty is to have care and custody of property inside the premise.

Question 96

umbrella policy

Answer 96

Type of policy that provides broad coverage for an insured's liability over and above liability covered by an underlying contract; may also cover losses that are excluded by the underlying policy; available as personal or commercial.

Question 97

uninsured motorist (UM)

Answer 97

Auto coverage designed to provide protection for the insured if they are involved in an accident in wich a person that does not carry insurance, motorists whose insurance coverage is below the state's minimum financial responsibility laws, drivers whose insurance companies are insolvent and hit-and-run drivers who cannot be identified.

Question 98

Waiver

Answer 98

The intentional relinquishment of a known right.

Question 99

Obligee

Answer 99

The party to whom the principal makes the promise and for whose protection the bond is written.

Question 100

Occurrence

Answer 100

A loss that occurs at a specific time and place or over period of time.

Question 101

workers' compensation common law defenses

Answer 101

- assumption of risk -contributory negligence -fellow servant rule