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FIN 512 > Chap 5 Commercial insurance > Flashcards

Chap 5 Commercial insurance Flashcards

1
Q

2 types of commercial insurance

A

1) Property Insurance (-direct loss -Indirect loss)

2) Liability Insurance ( -General liability -Professional liability -Employer liability)

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2
Q

Commercial insurance/ General Liability insurance

A

it is defined as the legal liability that an enterprise faces when running its day to day operations

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3
Q

Commercial insurance/ General Liability insurance/ 5 areas

A

1) Operations
2) Product
3) Completed Operations
4) Contingent liability
5) Contractual liability

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4
Q

Commercial insurance/ professional liability

A

Arise from negligent act, errors, omissions and poor performance by employees when performing their professional duties.

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5
Q

Commercial insurance/ employer liability

A

Covers the various risk exposure that an organization faces when it employs people to complete various tasks

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6
Q

Commercial insurance/ occurrence

A

Commercial insurance require that the loss or bodily harm be caused by an occurrence which includes:

1) continuous or repeated events over a period of time
2) accident
3) series of accident

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7
Q

Commercial insurance/occurrence policies

A

Pays for the loss that occurred during the policy period regardless of when the claim is filled

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8
Q

Commercial insurance/claim made policies

A

Pay for loss after a certain date but the claim are made during the policy period

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9
Q

Commercial insurance/ 3possible types of deductibles

A

1) aggregate deductible
2) straight or per occurrence deductible
3) franchise deductible

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10
Q

Commercial insurance/ aggregate deductible

A

The firm pays all the losses for the year until the deductible limit is reached

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11
Q

Commercial insurance/straight or per occurrence deductible

A

The firm pays the deductible for each separate loss

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12
Q

Commercial insurance/franchise deductible

A

It is only for ocean marine insurance. Either a dollar amount or a percentage of the loss and the entire loss is paid once the loss is greater than the deductible

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13
Q

Commercial insurance/ stop loss provision

A

Caps the amount the insured pays in total through out the policy period

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14
Q

Commercial insurance/ coinsurance in commercial property

A

An insured can elect to underinsure but will pay a higher premiums for doing so and is expected to keep the amount of coverage based on the current replacement value. If so, the insurer will pay all losses up to the limit of the policy

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15
Q

Commercial insurance/ coinsurance for commercial property: calculation of pure premiums

A

Expected loss paid / $coverage

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16
Q

Commercial insurance/ coinsurance for indirect loss

A

Covers extra expenses for additional cost incurred as a result of a direct loss. The coinsurance requirement is based on the amount of time a firm would be shut down if is incurred a loss

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17
Q

Commercial insurance/ captive insurers

A

Insurance companies owned by a firm or firms. The insurer insures the firm and perhaps other non related companies to capitalize on risk pooling. Can be pure captive or group captive

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18
Q

Commercial insurance/ pure captive

A

Insures only parents and parent’s subsidiaries

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19
Q

Commercial insurance/ group captives

A

Insurers having many parents

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20
Q

Commercial insurance/ 3 structures of coverage

A

1) umbrella policy
2) blanket insurance
3) multiple-line insurance

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21
Q

Commercial insurance/ structure of the coverage / umbrella policy

A

Provides protection against a catastrophic lawsuit by providing broad blanket coverage to areas not covered by the underlying policy. Covers beyond the scope of the underlying policy for personal injury and property damage

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22
Q

Commercial insurance/ structure of the coverage/ blanket insurance

A

Provides coverage under a single limit for:

  • 2 or more items
  • 2 or more locations
  • a combination of items and/or location
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23
Q

Commercial insurance/ structure of the coverage/ multiple-line insurance

A

Covers property and casualty in one contract it could provide insurance for property, general liability, business income, equipment breakdown and crime

24
Q

Commercial property insurance

A

Covers damage and loss to property. Loss can be direct or indirect/ consequential

25
Q

Commercial property insurance / 2 categories of direct loss

A

Loss due to perils

Loss due to dishonesty

26
Q

Commercial property insurance / direct loss due to perils / extended coverage

A

Provides protection against perils not covered by the basic policy such as riot and civil commotion

27
Q

Commercial property insurance / direct loss due to perils / specified perils

A

Covers a list of perils named

28
Q

Commercial property insurance / direct loss due to perils / open perils

A

Provides coverage for every peril except for a list of exclusion

29
Q

Commercial property insurance / direct loss due to perils / 9 types of possible coverage

A

1) building and personal property
2) boiler and machinery
3) account receivable
4) Builder risk
5) condominium association
6) credit insurance
7) crop (hail) insurance
8) glass insurance
9) marine insurance

30
Q

Commercial property insurance / direct loss due to perils / 3 types of building and personal property

A

1) real property
2) business personal property
3) personal property of others

31
Q

Commercial property insurance / direct loss due to perils / boiler and machinery insurance

A

Protects against physical damage and financial loss that result from sudden and accidental breakdown of boiler machinery and equipment. It might provide inspection and repairs before the machine breaks down

32
Q

Commercial property insurance / direct loss due to perils /builders risk

A

Covers buildings under construction for fire, windstorm, flood, earthquake and vandalism

33
Q

Commercial property insurance / direct loss due to perils /Credit insurance

A

Protects manufacturers, wholesales, and service organizations against consumer insolvency

34
Q

Commercial property insurance / direct loss due to perils / glass insurance

A

Provides coverage for plate glass windows and doors which are often excluded from building coverage

35
Q

Commercial property insurance / direct loss due to perils / 2 types of marine insurance

A

1) ocean marine

2) island marine

36
Q

Commercial property insurance / direct loss due to perils / 4 major types of ocean marine insurance

A

1) Cargo insurance
2) Hull insurance
3) Protection and indemnity insurance
4) Freight insurance

37
Q

Commercial property insurance / direct loss due to perils / ocean marine insurance/ cargo insurance

A

Covers goods being shipped for damage and loss

38
Q

Commercial property insurance / direct loss due to perils / ocean marine insurance/ hull insurance

A

Covers the ship on an all risk basis

39
Q

Commercial property insurance / direct loss due to perils / ocean marine insurance/ protection and indemnity

A

Covers:

1) damage to piers, docks, and the ship’s cargo
2) illness or injury to passengers and crew
3) fines and penalties

40
Q

Commercial property insurance / direct loss due to perils / ocean marine insurance/ freight insurance

A

Covers loss of earnings to the ship’s owner if goods are damaged or losed and can’t be delivered

41
Q

Commercial property insurance / direct loss due to perils / island marine insurance

A

Covers articles in transit and also bridges and tunnels

42
Q

Commercial property insurance / direct loss due to perils / 3 major types of island marine insurance

A

1) Bailee
2) business floaters
3) means of transportation

43
Q

Commercial property insurance / direct loss due to perils / island marine insurance/ bailee coverage

A

Covers property held by someone who has temporary procession of the property that belongs to another

44
Q

Commercial property insurance / direct loss due to perils / island marine insurance/ business coverage

A

Policy that provides broad and comprehensive protection on a property that is frequently moved from one location to another

45
Q

Commercial property insurance / direct loss due to dishonesty/ 2 types of insurance

A

1) crime insurance for non employee theft

2) theft by employees covered by fidelity bonds

46
Q

Commercial property insurance / direct loss due to dishonesty / non employee theft / 5 major types of coverage

A

1) forgery or alteration
2) inside the premises
3) outside the premises
4) computer fraud
5) money orders and counterfeit currency

47
Q

Commercial property insurance / indirect or consequential losses / 6 types of coverages

A

1) Business income
2) Spoiled food
3) Extra expenses
4) Contingent business interruption
5) leasehold interest
6) rain insurance

48
Q

Commercial liability insurance / vicarious liability

A

The obligation of a principal to pay the losses of a third party caused. Y an agent such as an employee

49
Q

Commercial liability / strict liability

A

Those engaging in certain undertaking such as hazardous practices like the industrial use of high explosives are held responsible for injury without inquiry into fault

50
Q

Commercial liability/ products liability

A

It is increasingly held to strict liability for makers of items such as foods, cosmetics, drugs, automobile

51
Q

Commercial liability/ general liability/ 5 specific policies not covered by the exceptions

A

1) personal and advertising injury
2) environmental liability
3) fire legal liability
4) liquor liability
5) property in the insured’s care custody or control

52
Q

Commercial liability/ 5 types of professional liability

A

1) errors and omissions
2) directors and officers
3) malpractice
4) architects and engineers
5) general partners liability

53
Q

Commercial insurance/ Surety bonds

A

Bond that provides monetary compensation if the bonded party fails to perform certain acts. They guarantee the performance of the principal

54
Q

Commercial liability/ 3 parties involved in a surety bond

A

Principal (party bonded )
obligee (party reimbursed for the damages )
surety ( party the agrees to answer for the debt)

55
Q

Commercial liability / 9 types of surety bonds

A

1) auctioneer’s bond
2) insurance agent bond
3) judaical bond
4) federal surety bond
5) fiduciary bond
6) license and permit bond
7) lost instrument bond
8) public official bond
9) contract bond

FIN 512 (9 decks)

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