Ch. 2 - Property Insurance Basics NOTE CARDS Flashcards
Reduction in value, particularly due to wear and tear.
Depreciation
The portion of premium paid in advance that now belongs to the insurer because it applies to the elapsed part of the policy.
Earned premium
Used as a measure of the rating units or the premium base of a risk (exposure units multiplied by the rate results in the premium)
Exposure units
The degree to which items are similar
Homogeneity
A legal term meaning that a product is suitable for its intended purpose and that it fits an ordinary buyer’s expectations.
Implied warranty
The date at which the insurance policy goes into effect.
Inception
The failure to use the care that a reasonable, prudent person would under the same or similar circumstances.
Negligence
Depreciation in the value of a property due to becoming outdated.
Obsolescence
A written law passed by a legislative body.
Statute
The reduction, decrease, or disappearance of value of the person or property insured in a policy, by a peril insured against.
Loss
The insured must have an insurable interest in the person or property covered by an insurance policy.
Insurable Interest:
3 Elements of Insurable Risk:
- Financial: A monetary interest
- Blood: A relative
- Business: A business partner
The process of reviewing applications for insurance and the information on the application. (A risk selection process.)
Underwriting
A point system used by insurance underwriters to predict risk and possibility of claims, and determine charges for premiums.(AKA insurance risk score)
Credit Scores
What insurance are Credit Scores typically used in?
Homeowners and personal auto insurance
A formula used by insurance companies to compare premium income to losses, including claims paid and claim-related expenses.
Loss ratio
What is the Loss Ratio formula?
(Incurred losses + Loss adjusting expense) / Earned premium = Loss ratio
The amount charged for a particular amount of coverage.
Insurance Rate
How can insurance rates be developed?
Property values, revenues receipts, or payroll
The practice of computing a price per unit of insurance that applies to all applicants possessing a given set of characteristics.
Class Rating
Another name for class rating
Manual rating
What are the different types of insurance rates?
- Class rating
2. Individual rating
What is the most common approach to calculating insurance rates?
Class rating
Which insurance types typically use Class Rating?
- Life insurance
- Property insurance
- Casualty insurance
What are the advantages of Class Rating?
Permits the insurer to apply a single rate to a large number of insureds, resulting in a simplified process of determining premiums.
When the characteristics of the units to be insured vary so widely that it is deemed desirable to calculate rates on the basis that attempts to measure more precisely the unique loss-producing characteristics.
Individual Rating
5 Individual Rate-Making Approaches:
- Judgment Rating
- Schedule Rating
- Experience Rating
- Retrospective Rating
- Merit Rating
Rates for when credible statistics are lacking or when the exposure units are so varied that it is impossible to construct a class.
Judgement Rating
Another name for judgment rating
A rated
Ocean Marine Insurance uses what rating system typically?
Judgment rating
Rates developed by applying a schedule of charges and credits to some base rate to determine the appropriate rate for an individual exposure.
Schedule Rating
Rates used on a class-rating system and adjusts the insured’s premium either up or down, depending on the extent to which his experience has deviated from the average experience of the class.
Experience Rating
A self-rating plan under which the actual losses during the policy period determine the final premium, subject to a minimum and maximum premium.
(Deposit is required at the inception of the policy. Premium is then adjusted at the end of the policy term based on the actual loss experience.)
Retrospective Rating
Rating used in personal auto insurance, where the insured’s premium is based not on the actual loss record, but on other factors that indicate the probability that loss will occur.
Merit Rating
A rating method developed by ISO that provides an insurer with that portion of a rate that does not include provisions of expenses or profit and are based on historical aggregate loss and loss adjustment expenses projected through development to their ultimate value and through trending to a future point in time.
Loss Costs
Factors that determine rates including loss reserves, loss adjusting expenses, operating expenses, and profits.
Components
A specific cause of loss.
Peril
4 standard perils in property policies:
fire, wind, hail, explosions.
A term used in property insurance to describe the breadth of coverage provided under an insurance policy form that lists specific covered perils. (No coverage is provided for unlisted perils.)
Named Peril
A term used in property insurance to describe the breadth of coverage provided under an insurance policy form that insures against any risk of loss that is not specifically excluded.
(Replaces the term “all risks”.)
Open Peril
Direct physical damage to buildings and/or personal property.
Direct Loss
Damage where the insured peril was caused by the direct loss (such as water damage from a fire being put out).
Proximate Cause of Loss
Losses considered a result of direct loss, typically from the time it takes to repair or replace damaged property.
Indirect loss
Another name for indirect loss
Consequential loss
Most prevalent type for individual homeowners?
Additional living expense while the home is being repaired
Most prevalent type for commercial properties?
Loss of profits due to being closed down while business is repaired.
A single property insurance policy that provides coverage for multiple classes of property at one location, or for one or more classes of property at multiple locations.
Blanket Insurance
A property insurance policy that covers a specific kind or unit of property for a specific amount of insurance.
Specific Insurance
6 Basic Types of Construction?
- Fire-resistive
- Modified Fire-resistive
- Masonry Noncombustible
- Noncombustible
- Joisted-masonry
- Frame
Which construction material rates best for property insurance?
Fire-resistive
Buildings constructed with masonry and/or other materials with a fire resistance rating between 1 hour and 2 hours.
Modified Fire-resistive
Buildings constructed with masonry or fire resistive walls and noncombustible or slow burning floors and roof.
Masonry Noncombustible
Buildings constructed of noncombustible materials (materials that will not ignite and burn when subjected to fire).
Noncombustible
Buildings constructed with masonry or fire-resistive walls and combustible floors and roof.
Joisted-masonry
Buildings constructed of combustible materials, or with noncombustible or slow-burning walls and combustible floors and roof.
Frame
Which construction material rates worst?
Frame
A factor in determining the premium charged and the amount of insurance required.
Loss Valuation
A method of valuation reinforces the principle of indemnity because it recognizes the reduction of value of property as it ages and becomes subject to wear and tear and obsolescence.
Actual Cash Value
Actual Cash Value Equation
Current Replacement Cost - Depreciation = ACV
The cost to replace damaged property with like kind and quality at today’s price, without any dedication for depreciation.
Replacement Cost
The cost to replace damaged property with less expensive and more modern construction or equipment.
Functional Replacement Cost
A seldom-used method of valuing a loss based upon the amount a willing buyer would pay to a willing seller for the property prior to the loss.
Market Value
A property policy with a provision agreed upon by the insurer and the insured as to the amount of insurance that represents a fair valuation for the property at the time the insurance is written and suspends any coinsurance or other contribution clauses in the policy.
Agreed Value
An amount of insurance scheduled in a property policy that is not subject to any coinsurance requirements in the vent of a covered loss. The scheduled amount is the maximum amount the insured will pay in the event of a loss.
Stated Amount
Used when it is difficult to establish the value of insured property after a loss occurs, or when it is desirable to agree on a specific value in advance. Provides payment of full policy amount in event of total loss without regard to actual value or depreciation.
Valued Policy
What type of policy does Ocean Marine Insurance usually use?
Valued policy
The failure to use the care that a reasonable, prudent person would have taken under the same or similar circumstances.
Negligence
4 Elements of a Negligent Act
- Legal duty
- Standard of care
- Proximate cause
- Actual loss or damage
Typically, burden of proof is on the injured party to prove other party was negligent. Liability is shifted from proof of injured party to the defendant when the following four things are established: legal duty, standard of care, proximate cause, and actual loss or damage.
Elements of a Negligent Act
Acting as a reasonable person would act.
The defendant must have used a standard of care that breached that legal duty.
Standard of Care
Element of negligence that must be shown that the defendant had a legal duty to act or not act.
legal duty
An act or event considered a natural and reasonably foreseeable cause of damage or event that occurs and damages property or injures a plaintiff.
Proximate Cause
When the negligence must have been the cause without which the accident would not have happened.
Direct Liability
Actual injury or damage must have been suffered by the party seeking recovery.
Actual Loss or Damage
5 Defenses Against Negligence:
- Assumption of Risk
- Comparative Negligence
- Contributory Negligence
- Intervening Cause
- Statute of Limitations
The defense of an action for recovery for injuries that if a person recognizes and understands that there is danger involved in an activity and voluntarily chooses to encounter it, they may bar recovery for injury caused by negligence.
Assumption of Risk
The defense that the other party’s negligence or fault will not necessarily defeat the claim, but will be used to mitigate the damages payable to the other party.
The fault is shared between the two parties involved, and damages are reduced by the percentage of negligence of each party.
Comparative Negligence
Allows the plaintiff to recover the damages, as long as he or she is not 100% negligent.
Pure Comparative Negligence
The party who brings the lawsuit.
Plaintiff
The injured party may only recover damages if his or her fault is less than that of the defendant. (AKA equal to or greater than rule).
Modified Comparative Negligence
The party being sued.
Defendant
The defense that the injured party must be completed free of fault in order to collect. Any negligence on the part of the injured party that contributed to the injury, however slight, can defeat the claim.
Contributory Negligence
A variation of contributory negligence. Used as a defense by a negligent party who can show the injured party had the last clear chance to avoid the loss, but did not.
The Last Clear Chance Rule
Bars or reduces recovery to an injured person if an intervening cause interrupted the chain of events and set in motion a new chain of events
Intervening Cause
A time limit in which an injured party may bring legal action against another party for certain types of injuries.
Statute of Limitations
3 types of compensatory damages?
- special damages
- general damages
- punitive damages
The extent of the loss measured by the actual monetary loss the injured party suffered, which is measured by the value of the property damaged or destroyed and the loss of the use of that asset.
Property Damage
Can lead to claims by the injured party not only for medical expenses and lost wages, but also for disfigurement, pain and suffering, mental anguish, and loss of consortium (business associations).
Bodily Injury
Which is more difficult to determine: property damage or bodily injury?
Bodily injury
Compensation of specific out-of-pocket expenses for medical, miscellaneous expenses, and loss of wages.
Special Damages
Compensation of the injured person for pain and suffering, mental anguish, disfigurement, and other similar types of losses. (Highly subjective and can amount to whatever a judge or jury feels is right.)
General Damages
A form of punishment for extreme outrageous behavior, gross negligence, or willful intent.
Punitive Damage
3 types of liability:
- absolute liability
- strict liability
- vicarious liability
Imposed on defendants engaged in hazardous activities, such as harboring wild animals, using explosives, etc. The injured party does not need to prove negligence.
Absolute Liability
(Commonly applied in product liability cases.) When a person or business manufactures or sells a product with an implied warranty that the product is safe. The business is liable for defective products, regardless of fault or negligence.
If the product causes injury and the claimant can prove the defect, the defendant will be held strictly liable for the damage.
Strict Liability
Transfer the liability from one person to another person who would probably have a great ability to pay.
Vicarious Liability
What type of liability comes fromthe old English law “respondeat superior” where the master was liable for the acts of their servants?
Vicarious Liability
Every property or casualty policy includes: declarations, definitions, insuring agreement, additional coverage, conditions, endorsements, and exclusions and policy limits.
Policy Structure
What is included in a standard policy structure?
- Declarations
- Definitions
- Insuring Agreement or Clause
- Additional Coverage
- Conditions
- Endorsements
- Exclusions and Policy Limits
The section of an insurance policy containing the basic underwriting information, such as the insured’s name, address, amount of coverage and premiums, and a description of insured locations, as well as any supplemental representations by the insured.
Usually the first page of policy.
Declarations
Component of an insurance policy that clarifies terms used in the policy.
Definitions
The section of an insurance policy containing the insurer’s promise to pay, the description of coverage provided and perils insured against. Also includes parties to the contract, effective and renewal dates, the description of coverages provided, and perils.
Found typically after Declarations, but may be placed after Definitions.
Insuring Agreement or Clause
A provision in an insurance policy that provides an additional amount of coverage for specific loss expense, at no additional premium.
Additional Coverage
Another term for additional coverage
Supplementary Coverage
Examples of Additional or Supplementary Coverage
Claim-related expenses, reasonable expenses incurred by an insured to protect damaged property from further loss, and defense expenses.
The section of an insurance policy that indicates the general rules or procedures that the insurer and insured agree to follow under the terms of the policy.
Conditions
Examples of conditions:
Inspections, changes to the policy, the liberalization clause, and the return of premium.
When an insurance company examines the insured’s location or books to determine the exact exposure for underwriting and rating purposes.
Inspections
What must be made by the insurer and in writing?
Changes to the policy in the Conditions section of a policy
Ensures that if the insurer introduces an improved free coverage, the insured will get the benefit of the new coverage immediately and will not have to wait for policy renewal.
Liberalization Clause
The method that will be used to calculate the return premium when the policy is cancelled before the expiration date.
Return of Premium
Causes of loss, exposures, conditions, etc. listed in the policy for which the benefits will not be paid.
Exclusions
Printed addendums to a contract that are used to change the policy’s original terms, conditions, or coverages.
Endorsements
When can endorsements be added?
May be included at the time the policy or issued or added during the policy term.
3 types of insureds?
- Named insured
- First Named insured
- Additional insureds
Anyone who is covered under the policy, where named or not.
insured
The individual(s) whose name appears on the policy’s declaration.
Named Insured
The individual whose name appears first on the policy’s declaration.
First Named Insured
The first named insured has control of the policy/is the only insured who may change or cancel the policy, as well as for paying premiums and reporting losses on what type of policy?
Commercial Insurance Policies
Individuals or businesses that are not named as insureds on the declaration page, but are protected by the policy, usually in regard to a specific interest.
Additional Insureds
The time period, stated on the declarations page, during which the policy provides coverage.
Policy Period
The location where coverage will be provided.
Policy Territory
The termination of an in-force insurance policy, by either the insured or the insurer, prior to the expiration date shown in the policy. Termination may be voluntary, involuntary, or in mutual accordance.
Cancellation
The termination of an insurance policy at its expiration date by not offering a continuation of the existing policy or a replacement policy.
Nonrenewal
A dollar amount an insured must pay on a claim before the insurance policy provides coverage.
Deductibles
A clause that states, in consideration of a reduced rate, the insured agrees to maintain a certain minimum amount of insurance on the insured property.
Coinsurance
What is the purpose of coinsurance?
Encourages the insured to insure the property closer to its full value.
The amount of insurance carried over the amount of insurance the insured should have had, multiplied by the loss, which equals the reduced payment for loss.
Coinsurance Penalties
Coinsurance Loss Payment Equation
Insurance Carried / Insurance Required) X Loss Amount = Loss Payment
A provision in an insurance policy that defines how the policy will respond if there is other valid insurance written on the same risk.
Other Insurance
The other insurance written on the same risk, but not on the same coverage basis.
Nonconcurrency
The policy that pays first in the event of a covered loss or in a layered program of insurance, the policy that covers the first layer of loss.
primary insurance
The policy that only pays for a loss after the primary has paid up to its limit. All other insurance must be exhausted before the excess policy will apply.
Excess insurance
A provision found in some property insurance policies that provides the sharing of loss with other insurance that may be written on the same risk in the same proportion as their limits of insurance bear to the total coverage of all policies covering, whether collectible or not.
Pro Rata insurance
A loss that is paid when 2 or more insurers issue policies on the same loss at the same level. Each insurer contributes an equal amount to the loss settlement until the loss is paid, or until each insurer has exhausted its limits of insurance, whichever comes first.
Contribution By Equal Shares
5 Types of Other Insurance
- Nonconcurrency
- Primary
- Excess
- Pro Rata
- Contribution By Equal Shares
In the event of a partial loss, the insurer only will pay or the actual amount of that loss. Before repairs are made, the limit is reduced by the amount of the partial loss. After the repairs, the policy is restored to OG limit.
Restoration
Liability policies written with an aggregate limit do not restore the limit following payment for an occurrence. The policy limit restored only on the anniversary (renewal) of the policy.
Nonreduction of Limits
The insurer’s liability for payment as stated in an insurance policy; the maximum amount of money the insurance company will pay for a particular loss, or for loss during a period of time.
Limits of Liability
The state of being responsible for something, especially by law.
Liability
5 types of Limits of Liability:
- Per Occurrence (Accident)
- Per Person
- Aggregate Limit
- Split Limits
- Combined Single
A sublimit in a liability policy that puts a ceiling on the payment for all claims that arise from a single accident/occurrence.
Per Occurrence (Accident)
The maximum amount available for payment of bodily injury to a single person in an accident, regardless of the policy limit stated in the policy for bodily injury claims.
Per Person
The maximum limit of coverage available under a liability policy during a policy year, regardless of the number of claims made or the number of accidents that occur. Losses paid reduce the available amount for future losses and are restored at the anniversary.
Aggregate Limit
Separately stated limits of liability for different coverages.
Limits are on a per person, per occurrence, or per policy period basis or can be split between bodily injury and property damage.
Split limits
What are split limits commonly used for?
auto liability policies
A single dollar limit of liability applying to the total damages for bodily injury and property damage combined, resulting from one accident or occurrence. May be used in any combination of amounts, not to exceed a single limit.
Combined Single
An insured structure in which no people have been living or working, and no property has been stored for the period of time required as stated in the policy (usually 60 days).
Vacancy
An insured structure in which no people have been living or working within the required period of time, but some property is stored.
Unoccupancy (nonoccupancy)
4 Named Insured Provisions?
- First Named Insured
- Duties After Loss
- Assignment
- Abandonment
The individual whose name appears first on the policy’s declaration.
First Named Insured
What are the 5 things a first named insured must due after a loss according to the Duties After Loss provision?
- Protect the damaged property from further damage.
- Prepare an inventory of damaged property.
- Cooperate with the insurer in settling the loss.
- Notify the police in the case of a theft loss.
- Submit to the insurer a signed sworn proof of loss within an allotted amount of time after being requested to do so.
The transfer of a legal right or interest in an insurance policy.
assignment
The relinquishing of insured property into the hands of another, or into the possession of no one in particular.
Abandonment
Used in the event of loss to repair or replace damaged property with property of like kind and quality or to adjust the loss and make payment to the insured or a person legally entitled to receive payment within 60 days of receiving the insured’s proof of loss.
Insurer Provisions
What are the 5 insured provisions?
- Liberalization
- Subrogation
- Salvage
- Claim Settlement Options
- Duty To Defend
A property insurance clause that extends broader legislated or regulated coverage to current policies, as long as it does not result in a higher premium.
Liberalization
The acquisition by an insurer of an insured’s rights against any third party for indemnification of loss or other payment, to the extent that the insurer pays the loss
Subrogation
The amount of money realized from the sale of damaged merchandise or property.
Salvage
The insurer’s loss payment options at the time of loss.
Claim Settlement Options
What are the four Claim Settlement Options?
- The value of the lost or damaged property.
- The cost of repairing or replacing the lost or damaged property.
- The cost of taking all or part of the property at an agreed or appraised value.
- The cost of repairing, rebuilding, or replacing the property with other property of like kind and quality.
A promise to defend the insured in any lawsuit involving the type of liability insured under the coverage.
Duty To Defend
The rights of a third party that may have a secured financial interest in the insured property.
Third-party Provisions
What are the 2 Third-Party Provisions?
- Standard Mortgage Clause/Loss Payable Clause
2. No Benefit To The Bailee
The clause used to cover the interest of a secured lender in personal property; a basis provision of all property policies for real property.
Standard Mortgage Clause
Another term for Standard Mortgage Clause
Loss Payable Clause
Nonmovable property (houses)
real property
Movable property (auto, mobile homes, furniture)
personal property
A provision that excludes any assignment or granting of any policy provision to any person or organization holding, storing, repairing, or moving insured property for a fee.
No Benefit To The Bailee
State organization established to protect insureds against insurer insolvency by:
Paying covered claims under certain insurance policies.
Avoiding excessive delay in payment and reducing financial loss to claimants or policyholders because of insolvency of an insurer
Assisting in the detection and prevention of insurer insolvencies
Providing an association to assess the cost of such protection amount insurers.
Ohio Property and Casualty Insurance Guaranty Association:
Any entity that is licensed to transact insurance in Ohio and that writes any kind of insurance to which the Insurance Code applies, including the exchange of reciprocal or interinsurance contracts.
Member Insurers
An unpaid claim, including one for unearned premiums, which arises out of and within the coverage of an insurance policy to which the law applies.
Covered Claim
Requires that any person or company insuring any structure against loss or damage by fire or lightning must have that structure examined by its agent, and obtain a full description with fixed insurable value.
Ohio Valued Policy Law
Every policy covering property located in Ohio must include wording obligating the insurer to cancel the policy upon the request of the insured. Member insurers must provide written notice of cancellation at least 30 days before cancellation.
Cancellation and Nonrenewal
If the cancellation of a personal lines insurance policy is for nonpayment of premium, a notice of cancellation must be mailed to the insured at least 10 days prior to the cancellation
Personal Policy Cancellation
After a Commercial Policy has been in place for 90 days, it can only be cancelled for:
- Failure to pay the premium when due
- Fraud/material misrepresentation from insured
- Discovery by the insurer of a moral hazard or morale hazard
- A substantial increase in hazard
- A loss or substantial reduction of reinsurance as long as the insurer can demonstrate that it made a reasonable effort to obtain replacement coverage.
- A failure of the insured to correct material violations of safety codes.
- The Superintendent’s determination that continuation of the policy would be hazardous to the policyholder or the public.
What must 4 things must a cancellation include?
- The policy number
- The date of the notice
- The effective date of cancellation
- The reason for the cancellation
How many days must a commercial policy cancellation give notice?
30 days
A medical malpractice insurance policy may not be cancelled, except for nonpayment of premium, unless notice of cancellation is mailed at least _______ before the cancellation date.
60 days
A temporary agreement issued by an agent or insurer providing temporary coverage until a policy can be issued.
Binder
How long can a binder last?
Up to 1 year
Do binders have to be written?
No; they can also be oral
When does a binder expire?
When the policy is written.
Any coverage written on a producer’s own life, health, or property and/or that of the producer’s immediate family or business associates
Controlled Business
A required second signature from a resident agent.
Countersignature
When the laws of any other state, district, territory, or nation impose any taxes, fines, penalties, license fees, deposits of money, securities, or other obligations or prohibitions on insurance companies of this state doing business in that state, district, territory, or nation, the same obligations will be imposed upon insurance companies of the other state, district, or nation doing business in this state and upon their agents.
Retaliatory Provisions
It is considered an unfair or deceptive insurance trade practice to decline an insurance policy issue or renewal based on the sex or marital status of the applicant or insured. Insurers cannot unfairly discriminate between individuals of the same class and of the same hazard in the amount of premium, policy fees, or rates charged.
Declination of Insurance and Unfair Discrimination
Loss caused by the collapse or lateral movement of structures that occur when underground mines cave in.
Mine subsidence
What is not included for loss in a mine subsidence?
Landslides
Earthquakes or volcanic eruption
Collapse of strip mines (surface mines), storm drains, sewer drains, or rapid transit tunnels.
How are losses covered for Mine Subsidence?
Covered losses come out of the Mine Subsidence Insurance Fund.
To be eligible for mine subsidence insurance, structures must be:
- 1-4 family dwellings
- Covered by a valid basic property, homeowners, farmowners, or mobile home owners policy.
- Located in an eligible county.
Mine Subsidence Distribution of Premium Collected
- Premium is set by the association and may not exceed $5 in a mandatory county. -Optional county may not exceed $20.
- The insurer retains 30% of all mine subsidence insurance premiums collected for policies delivered, issued, or renewed in the county.
How often are Mine Subsidences audited?
At least once a year, there is an audit to assure the affairs of the mine are fulfilling its obligations.
How long must data be kept on file for Unfair Claims Settlement Practices?
All data must be kept on file for at least 3 years or until the completion of the next financial examination.
Under Misrepresentation of Policy Provisions, the following practices are considered misrepresentation:
- Not fully disclosing to or willingly concealing from first-party claimants all benefits, coverages, and provisions.
- Denying a claim based on the claimant’s failure to make available the property for inspection.
- Denying a claim based on claimant’s failure to give written notice of a loss within a specific time limit.
- Indicating a claimant on a payment draft or check that the payment is final.
- Issuing checks or drafts in partial settlement of a loss or claim.
Under General Standards for Settlement of Claim, a claimant must receive notice within _____________ of receipt of proof of loss, determine whether to accept or deny a claim, or notify need for extension.
21 days
What must be included on a claim denial?
- A specific policy provision, condition, or exclusion.
What are the General Standards for Settlement of Claims?
- Within 21 days of receipt of proof of loss, determine whether to accept or deny a claim, or notify need for extension.
- Not deny a claim on the grounds of a specific policy provision, condition, or exclusion without referencing the documentation of the denial.
- Settle claims upon request by the insured with no consideration given to whether the responsibility for payment should be assumed by others.
- Not require an insured to subject to a polygraph exam.
- Give notice to claimants at least 60 days before the expiration of any statute of limitations.
- Provide payment to a claimant no later than 10 days after acceptance of a claim.
- If a claim involves a non-negligent party’s property loss and multiple liability insurer’s, insurers must adjust the property loss within a reasonable time and pay the loss in equal shares.
- If a claim involves multiple coverages under a policy, not withhold payment under any coverage when the payment is known.
- Document the application of comparative negligence to any claim settlement, and disclose info upon written request.
- Not use settlement practices that result in compelling claimants to litigate by offering less than the amounts claimed.
If fire damage to a structure located within municipal corp or township results in a recoverable amount higher than $5000, the insurer must be furnished with what?
Fire Loss - Treasury Certificate
When will the funds from a Fire Loss - Treasury Certificate be returned to the named insurance?
60 days
If a building is insured through multiple companies during Fire Loss - Treasury Certificate, proceeds are paid how?
On a pro rata basis
A temporary federal program that would share the risk of loss fro mfuture terrorist attacks with the insurance industry.
Terrorism Risk Insurance Act
Act of Terrorism
An act certified by the Secretary of the Treasury in concurrence with the Secretary of State, and the Attorney General of the United States with the following characteristics:
The act must be violent or dangerous to human life, property, or infrastructure.
The act must have resulted in damage within the US, to a US air carrier, to a US flag vessel, or other vessel in US or on the premises of any US mission.
The act must have been committed by someone as part of an effort to coerce the population, influence policy, or to affect the conduct of the US gov by coercion
The act must produce PC insurance losses in excess of a specified amount.
This program amends the Gramm-Leach-Bliley Act to repeal the contingent conditions under which the NARAB may not be established.
National Association of Registered Agents and Brokers (NARAB) Reform
NARAb is required to provide the following application requirements:
- Licensing, continuing education, and other qualifications of non-NARAB insurance producers
- Resident or nonresident insurance producer appointments
- Supervision and disciplining of such producers
- Setting of licensing fees for insurance producers.
Adopted a Model Bulletin, including an expedited filing form intended to help state insurance regulators advise insurers about regulatory requirements related to providing terrorism insurance under the revised program.
NAIC Property and Casualty Insurance Committee and Terrorism Insurance Implementation Working Group (TIIWG)
Under TRIA, what must the insurer do before government reimbursement?
Meet deductibles and retentions.
