Chapter 1: Insurance Terms and Concepts Flashcards
Insurance
Insurance is a type of:
Risk Transfer
What is the difference between Pure Risk and Speculative Risk
Pure risk involves the chance of LOSS OR NO LOSS, WHEREAS Speculative risk involves the chance of LOSS OR GAIN.
Note:Speculative risk is not insurable.
In a insurance policy the insurer promises to
The insurer promises to make claimants FINANCIALLY WHOLE when covered losses occur.
In PROPERTY INSURANCE, the insurer promises to pay covered losses that occur during the policy period on the condition that
The INSURED pays the premium when due AND
That the insured takes certain actions such as:
REPORTING The loss in a timely manner
PROTECTING the property from further damage
COOPERATING with the insurer
PROVING the loss with appropriate documentation
CONTRACTS
What is a contract
Is a legally binding agreement
CONTRACTS
What does a Contract need to be VALID
CONSIDERATION LEGAL PURPOSE Agreement Between the Parties Parties Who are Mentally Competent (CLAP)
CONTRACTS
Agreement between parties is
An offer by one party that is ACCEPTED by the other party is an AGREEMENT
A Conditional contract is
This means that ONE party’s obligation is conditioned on the performance of certain SPECIFIED DUTIES of the other party
A Contract of ADHESION is written by the (insurer)
If a dispute occurs over unclear VAGUE OR AMBIGUOUS words, what will be apply
The doctrine of reasonable expectations will apply
Note:the court will typically favor the insured.
What are NOT accidental losses
Losses caused INTENTIONALLY by an insured
Losses that are INEVITABLE OR EXPECTED
Examples: normal wear and tear, rust, corrosion, mechanical breakdown, losses caused by latent defects (defectos ocultos)
CONTROLLABLE LOSSES such interior damage from failing to shut windows and doors, frozen pipes
Adverse selection when does this occur
It occurs when people seek coverage only when they have the MOST RISK like rushing to buy flood insurance at the last minute.
Note:to prevent adverse selection the insurance company requires 30 days advance purchase
Representations are
STATEMENTS MADE that one reasonably believes to be true at that time.
Note: oral questions and those on written applications and claim forms, are legally considered to be REPRESENTATIONS.
Misrepresentation is
If an applicant or claimant falsifies an answer in response to any verbal or written question IF THE PERSON LIES during the application process, or at any time is considered to be MISREPRESENTION
REPRESENTATIONS AND MISREPRESENTATIONS
What is considered to be insurance fraud
Material representation and Material Concealment
Constitute INSURANCE FRAUD.
Note:in case of insurance fraud by a policyholder/claimant, the insurance coverage is VOID.
HAZARDS INCREASE THE CHANCE OF LOSS
What is a Hazard
Is a feature or characteristic about the subject of the insurance, existing BEFORE A LOSS OCCURS, that makes a loss MORE LIKELY
HAZARDS INCREASE THE CHANCE OF LOSS
What are Physical Hazards
Examples: large quantities of combustible materials, being located in a dangerous or crime-ridden area or being VACANT for a prolonged period
Crime-ridden =plagado de crimenes
Vacancy is an specially important physical hazard
A vacant building is when
The building is empty, without occupants, inhabitants, or contents.
Note: Many property policies automatically suspend coverage for the perils of VANDALISM
When the vacancy persists BEYOND 60 DAYS
HAZARDS INCREASE THE CHANCE OF LOSS
Moral and Moral Hazards are
Characteristic of PEOPLE that make a loss more likely.
Examples: acquiring the policy falsely, intentionally causing a loss, or PADDING A CLAIM.
Moral hazards occur when the property is not their own, lack of concern, they are careless.
Insurable interest is
When a party has economic interest in property.
We have Insurable interest when we have a
FINANCIAL STAKE in the property.
(Participacion financiera)
Insurable interes is created when we:
Own property
Or when we use, borrow, or have custody of non-owned property other than buildings.
Are a LIENHOLDER or the mortgagee (like a bank)
Are a BAILEE with possession of non-owened property to perform a SERVICE on it.
What is the Amount a party is able to recover under the ins. Policy for covered losses
Up to the LIMIT on the policy, and never more than its insurable interest in any covered loss.
Example:
Limit of $200,000.
Mortgage of $80,000
The bank’s recovery from Mr. Smith’s insurable policy will be LIMITED to $80,000.
Mr. Smith can recover $120,000.
Direct loss means
DAMAGE CAUSED BY A PERIL INSURED AGAINST.
Note: A direct loss includes physical damage, destruction or theft.
Windstorm or hail
Indirect loss is
Indirect loss is also known as LOSS OF USE or TIME ELEMENT LOSS or in COMMERCIAL ins.
Business interruption loss.
Additional coverages are
By definition, provided AUTOMATICALLY.
NOTE: IN Homeowners and Commercial property
A peril is
A peril is a CAUSE OF LOSS.
Note: property ins. Policies MUST state which PERILS are covered.
For each type of covered property, a policy will used two types of perils, what are they
NAMED-PERIL Approach or an
OPEN-PERIL Approach
To describe which perils are insured.
A policy using the NAMED-PERIL Approach Will
Will actually list, or name, the perils that the covered property is insured against
A policy using open-peril Approach will
Open-peril Approach (often referred to as ALL-RISK
Or SPECIAL FORM) Insures against all perils EXCEPT THOSE EXCLUDED.
EXCLUDED PERILS
There’s 2 groups of excluded perils which are
● GENERAL EXCLUSIONS these perils apply to most Open-Peril AND Named-Peril policies.
● SPECIAL FORM EXCLUSIONS.
These exclusions appear only in OPEN-PERIL policies.
Note:Special form exclusions DEAL with losses that are CONTROLLABLE, EXPECTED, INEVITABLE, Or otherwise NON-ACCIDENTAL.
Examples: Freezing of pipes when power is turned off .
DEDUCTUBLES
A deductible can be defined as DEDUCTION FROM LOSS. Examples are:
Example: policy limit of $ 15,000
Deductable of $ 1,000
In the event of $17,500 covered loss, How much the insured receive (assume 100% insurable interest)?
ANSWER: Covered loss minus deductible equals
$16,500, but the policy LIMIT is $15,000.
Thus, the insured will receive $15,000.
[The reader will note that $2,500 was DEDUCTED from the insured’s $17,500 loss.
Note:the insured became co-insured
Deductibles are normally stated on the policy as a DOLLAR AMOUNT, but sometimes a deductible is stated as
PERCENTAGE-OF-LIMIT.
Note: Percentage-of-limit deductibles MAY appear in Homeowners and Commercial property policies for EVENTS like earthquakes in the southwest, hail in the midwest, and hurricanes on the coasts.
Conditions can be described as
RULES governing the covered losses, and the
RIGHTS maintained by the insured, insurer, mortgagees, and possibly others.
Examples of property conditions are
Insured’s Duties in the Event of loss
> PROTECT the damage property from further loss
REPORT the loss to the insurer
COOPERATE with the insurer during the entire adjustment process
PROVE the loss (sometimes by submitting a formal proof of loss).
Replacement cost (RC), Actual cash value (ACV) Definitions:
REPLACEMENT COST basis: cost to replace the damaged property WITH NEW property of LIKE KIND and QUALITY.
ACTUAL CASH VALUE basis: replacement cost MINUS the amount of depreciation at the time of loss. RC-DEP=ACV
Abandonment is:
By the Insured
No insured may ABANDON covered property in the event of a covered loss.
RIGHT OF APPRASIAL
When there is a dispute over the AMOUNT of a covered loss the Right of Appraisal is invoked by either party, each parties hire appraisers, called an
UMPIRE
When any two of these three people agree on the total cost of the loss, the dispute is settled at that Amount.
Right of ASSIGNMENT
A named insured may transfer or assign the policy to another party
ONLY with Written consent of the insurer.
RIGHT OF SUBROGATION
The rights of an insured to financially recover from a party (como si alguien choca mi carro y no tiene aseguranza)
An insurer cannot subrogate against its insured, however.
An insured may cancel at any time for any reason with out prior notice.
Additional Interest is
An additional interest is ANY PARTY other than the named insured who may have insurable interest in certain property at the time of loss with rights to file a claim.
BAILMENT is transfer of possession and Bailment involves:
Bailments involved NON-OWEND PROPERTY.
Examples: taking a car to a service garage.
A Bailee has INSURABLE INTEREST during the bailment period.
BLANKET VS SPECIFIC LIMITS
When a limit of insurance applies to a specific building or one item of property, such as a wedding ring, that limit is a SPECIFIC LIMIT.
When a limit applies to a group of items such as personal property or ALL buildings at a location #3
That is a BLANKET LIMIT.
A specific or blanket LIMIT is to be the
Is the Maximum that is payable for any covered loss. Recall that an insured’s payment on a covered loss will also be NO MORE than the amount of loss.
When a policy is Concurrent
When more than one policy covers a loss, and the policies cover the same property WITH SIMILAR TERM AND CONDITIONS, the policies are CONCURRENT.
Two policies are nonconcurrent when:
They cover the same property but with DIFFERENT TERMS AND PROVISIONS. Which may complicate loss settlement.
DECLARATORY JUDGMENT ACTION
what is the purpose of declaratory action
A declaratory judgment is a judgment of a COURT which determines the RIGHTS of parties WITHOUT ORDERING ANYTHING BE DONE OR AWARDING DAMAGES.
In the case of FRAUD at any time by the applicant or insured, the policy will be VOIDED and
In this instance, any premium paid to date of the policy will be returned. THE EFFECT IS THAT COVERAGE NEVER EXISTED.
CANCELATION is
A policy may also be CANCELED by the insured or the insurer. CANCELATION IS MID-TERM TERMINATION.
Note: Any unearned premium will be returned at a short-rate basis meaning 90%
NON-RENEWAL IS
Non-renewal is the END-OF-TERM TERMINATION.
WAIVER IS
Voluntary giving up a known right.
CONDITIONS SECTION
Duties of the insured in the event of loss are:
Give immediate written notice of any loss
Protect the property from further damage
Cooperate with claim adjusters
COMPLETE A SIGNED AND SWORN proof of loss within 60 DAYS of the loss.
PRO-RATA LIABILITY is
The policy will pay only its PROPORTION of covered loss when there is OTHER INSURANCE in force.
FRAUD
By the insured
By the insured at any time VOIDS the entire policy.
LOSS PAYMENT-
Losses are to be paid within
60 DAYS after the proof of loss is received and agreed to by the insurer.
ABANDONMENT of a property:
Abandonment of any property to the insurer is not allowed.
RIGHT OF APPRASIAL is
A standard property condition that offers a method to resolve a dispute over the loss amount without having to resort to a legal proceeding.
RIGHT OF SUBROGATION is
SUBROGATION =
(TRANSFER OF RIGHT OF RECOVERY)
UNDER Subrogation/transfer of right of recovery CLAUSE, the insurer is substituted the legal right that the insured has to recover losses from a responsible THIRD PARTY.
RIGHT OF CANCELATION is
The insured may cancel at any time, with a refund subject to COSTUMARY SHORT -RATES. 90%back
Note: the insurer may cancel with 5 DAYS prior notice WITH PROOF OF MAILING and FULL REFUND OF OVERPAYMENTS.
EXTENDED COVERAGE ENDORSEMENT includes
This Endorsement ADDS a group of 8 Perils, including:
WINDSTORM and HAIL, Riot and civil commotion, explosion and smoke, as well as aircraft and vehicles.
This Endorsement does NOT extend to common perils such as VANDALISM or COLLAPSE.
ELIGIBILITY FOR HOMEOWNERS INSURANCE
NOTES regarding Homeowners FORMS:
Dwellings in the course of contruction are eligible for:
HO-2, HO-3, or HO-5.
Note: HO-2, HO-3, and HO-5 differ mainly in their PERILS APPROACH
HOMEOWNERS FORM
Are:
FORM.●HO ELIGIBILITY.●COVERAGE. HO 2. ●Individual Owner. ●Named-Named HO 3. ●Individual Owner. ●Open-Named HO 4. ●Renter. ●Personal Property HO 5. ●Individual Owner. ●Open-Open HO 6.●Condo/Townhouse.●Named HO 8.●Older/Renovated. ●Named
Coverage B- covers OTHER STRUCTURES like
Structures that are detached (detached garage), but on the same lot as, the Dwelling.
LIMIT IS AUTOMATICALLY 10% OF THE
DWELLING LIMIT.
Coverage C- covers PERSONAL PROPERTY like
Including property that is owned or used by an insured, ANYWHERE IN THE WORLD.
LIMIT IS AUTOMATICALLY 50% OF THE
DWELLING LIMIT.
Coverage D- covers LOSS OF USE-
Perdida de uso como un negocio o fabrica
If Coverage A or B Causes the structure to become unfit for use, then Coverage D pays from the date of direct loss until the dwelling can be repaired with REASONABLE SPEED.
LIMIT FOR COVERAGE D IS SET AT 30% OF THE
DWELLING LIMIT.
ADDITIONAL COVERAGES IN HOMEOWNERS FORMS (this coversges are AUTOMATICALLY PROVIDED).
If the policyholder desires higher limts:
PROPERTY REMOVED-
When an insured peril endangers covered property, this covers PROPERTY FOR DIRECT LOSS FROM ANY CAUSE, for up to 30 DAYS while removed
ADDITIONAL COVERAGES IN HOMEOWNERS FORMS.
If the policyholder desires higher limits:
Trees, Shrubs, and other plants-
Pays when damage by certain named perils, up to a maximum of $500 per tree, shrub, or plant.
ADDITIONAL COVERAGES IN HOMEOWNERS FORMS
If the policyholder desires higher limits:
COLLAPSE-
Covers when the Collapse is caused by certain named perils, including the use of DEFECTIVE Materials or Methods, but only if the Collapse occurs during the course of CONSTRUCTION, REMODELING or RENOVATION.
ADDITIONAL COVERAGES IN HOMEOWNERS FORMS
If the policyholder desires higher limits:
GLASS BREAKAGE-
But NO Coverage if the building has been VACANT FOR MORE THAN 60 CONSECUTIVE DAYS prior to the loss.
Some of the NAMED PERIL LIST; when a homeowners form uses the open-perils approach, the perils listed below are also covered, because they are NOT EXCLUDED.
Some of the list:
WINDSTORM or HAIL- but NOT for interior damage caused by RAIN, SNOW, SAND, or DUST Unless wind or hail first causes an opening in a roof or wall. FREEZING OF PLUMING, HVAC, or an appliance as long as HEATING IS MAINTAINED, or water is shut off and drained.
VANDALISM- But NOT if the building has been VACANT for more than 60 Days.
INSURED’S DUTIES AFTER LOSS are:
Protect property from further damage
Report the claim promply
Cooperate with the insurer while adjusting the claim/ Prove the Loss.
A proof of loss must be sent to the insurer WITHIN 60 DAYS of the insurer’s REQUEST.
CONDITIONS SECTION
LOSS SETTLEMENT-
Replacement cost settlement
If the loss is less than $2,500 and below 5% of the policy limit, the insurer will AUTOMATICALLY pay replacement cost settlement.
RIGHT OF APPRASIAL:
Who can demand an appraisal
Either the insured or the insurer can demand an APPRAISAL when there is a dispute over the amount of loss.
CONDITIONS SECTION
OTHER INSURANCE:
This is a PRO-RATA Loss-sharing clause.
For Example: if a policy limit was equal to half of the total coverage in force, then the policy would pay HALF of the covered loss.
CONDITIONS SECTION
ABANDONMENT
(Property to the insurer)
The insurer NEED NOT ACCEPT ANY PROPERTY ABANDONED BY AN INSURED.
FRAUD
(Committed by the insured):
Fraud committed at any time by the insured VOIDS the policy.
CANCELATION
By the insurer
The insurer only has the right to cancel if it provides 30 DAYS PRIOR NOTICE (but just 10 DAYS prior notice if cancelation is for NON-PAYMENT of premium).
Under Coverages A, B, C, the insurer has the rights to handle any SALVAGE:
If an insurer sells any salvage, the amount it receives REDUCES the NET CLAIM of the insured, without regard to the insurer’s selling cost.
Popular Endorsements attached to many HO policies
EARTHQUAKE COVERAGE extends:
Extends the perils insured against to earthquakes, INCLUDING AFTERSHOCKS AND TREMORS.
DWELLING PROPERTY (DP) INSURANCE DP-3 SPECIAL FORM is for
Is for residential buildings that the individual owners do NOT RESIDE IN.
DP-3 OPEN PERILS APPROACH/ALL-RISK.
FARM OWNERS (FO) Coverage E- certain categories of farm property, including:
Farm Machinery tractors related equipment
Livestock
Hay in barns, grain in storages
Farm vehicles and trailers (excluding vehicles for highway use.
FARM OWNERS (FO) Coverage F is used for
Unscheduled Farm Personal Property
FARM OWNERS (FO) Coverage G is use to cover
Barns and Other Farm Structures
MAKEUP OF A COMMERCIAL PROPERTY POLICY
May also be called a Commercial Multi-peril policy.
Additional lines of Insurance such as:
Liability, Crime, Inland Marine are included in the policy the policy is called a Commercial Package Policy (CPP).
IF a insured is constructing a new building, a BUILDER’S RISK Coverage form can be added to an existing policy.
COVERAGES FORMS:
Buildings and Personal Property Coverage is:
Direct loss: coverage for buildings, personal property owned by the business and personal property of others in the insured’s care
Coverage Forms:
Builder’s Risk is used for:
DIRECT LOSS Coverage for buildings under CONSTRUCTION
Coverage Forms
Business Income And Extra Expenses.
Indirect Loss Coverage PAYS After a covered direct loss for:
Business Income. Net Income loss and continuing expenses.
Extra Expenses:Steps taken to reduce the business Income loss.
Losses are payable during the period of restoration
IN COMMERCIAL PROPERTY INSURANCE PROGRAM
Basic Causes of Loss Form includes 15 Name perils like:
fire, lightning, explosion, windstorm, or hail, smoke aircraft or vehicles, riot or civil commotion, VANDALISM, sprinkler leakage, sinkhole collapse, and volcanic action.
Coverages Section of the Building and Personal property Coverage form
This form covers DIRECT LOSSES to 3 categories of property:
●Buildings as described in the form
●PERSONAL PROPERTY owned by the insured, located on or within 100 feet of the premises
●PERSONAL Property of OTHERS in the custody of the insured, located on or within 100 feet of the premises.
EXCLUDED PROPERTY (not a complete list)
> Bridges, roadways, sidewalks, patios, and other paved surfaces
Underground pipes, flues, or drains (above ground plumbing is covered).
ADDITIONAL COVERAGES– automatically provided
Polution clean-up and removal-
Up to $10,000 extra limit covers the cost of:
extracting pollutants on insured’s PREMISES ONLY
DOES NOT INCLUDE DETOXIFICATION OF POLLUTANTS REQUIRED BY ORDINANCE.
Insured’s Duties in the event of Loss or Damage to covered property:
(COMMERCIAL)
PROVIDE a complete INVENTORY of damage and undamaged property.
SEND A SIGNED, Sworn proof of loss within
60 DAYS of the insurer’s REQUEST.
Tenants Improvements and Betterments (mejoras)
The Tenants policy will pay Only:
IF prompt repairs are made by the tenant.
Note: if the property is repaired on behalf of an other party (the landlord, for example), then the tenants insurer will pay NOTHING.
VACANCY
If vacant for more than 60 days prior to loss
There is no Coverage for any VANDALISM or glas breakage claim, and a 15%reduction in payment for loss caused by an other covered peril.
COINSURANCE- The Building and Personal Property form contains a standard coinsurance clause with an 80%-to-value requirement.
COINSURANCE FORMULA:
POLICYS LIMIT
÷ × Amount of loss=payout
Properties Full Value×80%
(×0.80)
EXAMPLE: a Commercial building valued at $200,000 is insured for $120,000. A covered loss of $40,000 occurs. DESREGARD DEDUCTIBLES, how much would the insured receive?
Answer: 12K. 120K.
÷ = ÷ =7.5 and 40K×7.5=30K.
200K × 0.80=160K. 160K.
Options in the Building and Personal Property form
REPLACEMENT COST is
The amount neccessary to replace damaged property with NEW property of LIKE KIND and QUALITY without DEDUCTION for DEPRECIATION.
Options in the Building and Personal Property form AGREED AMOUNT (or AGREED VALUE)-
The COINSURANCE Clause is NEGATED, and covered losses will be paid up to the policy limit.
DISCUSSION 1: Adjusting Losses to (Stock-in-sight) VS (Stock-out-of-sight )
Stock that remains in-sight after a loss would be adjusted and ultimately proved with a PHYSICAL Inspection of the actual damage.
>Stock that’s completely damaged in a loss would need to be adjusted and proved with the insured’s RECORDS that applied to the date of the loss, such as Warehouse receipts, purchase orders, and Bank Statements.
LATENT DEFECTS (Hidden Flush) The Broad and special Causes of loss forms cover Collapse caused by latent defects in building materials or methods, BUT:
ONLY IF the Collapse occurs during the course of CONSTRUCTION, remodeling or renovation.
Note: NO Coverage if defective materials are the SOLE cause of the collapse.
BUILDER’S RISK COVERAGE FORM
This form is used to a cover a NEW Building while it is under construction.
There are two uinique conditions:
The COINSURANCE CLAUSE in the form requires the LIMIT to be set at 100% of the expected COMPLETE VALUE.
>The WHEN COVERAGE CEASSES condition AUTOMATICALLY cancels coverage 60 DAYS after the building is occupied in whole or in part, or is put to its intended use.
Business Income and Extra Expenses Coverage form, this form insures INDIRECT LOSSES, also Known as (Loss of Use) or time element losses-
Coverage is TRIGGERED when the insured suffers a DIRECT LOSS caused by a covered peril, and this LOSS TEMPORARY SUSPENDS the firm’s operations, either partially or completely.
DISCUSSION: Calculating the Limit of Insurance for Business Income-
The Business Income form has a COINSURANCE CLAUSE requiring the insured to set a limit if a chosen percentage of Net Income Plus Operating Expenses of the 12 MONTHS FOLLOWING THE INCEPTION DATE OF THE POLICY.
COMMERCIAL PROPERTY ENDORSEMENTS
Manufacturers Selling Price Endorsement-
This Endorsement INCREASES THE LOSS SETTLEMENT FOR UNSOLD STOCK beyond that provided in the Building and personal property Coverage form – by setting it at the
FULL RETAIL/SELLING PRICE.
. BUSINESS-OWNERS POLICY (BOP)
The BOP forms include two main coverages sections: SECTION II: Liability Insurance-
This Section includes Supplementary Payments section describing amounts the insurer will pay IN ADDITION TO THE LIMITS OF INSURANCE.
Note: including actual Loss of earnings up to $250 a day because of time off from work.
. INLAND MARINE
Inland Marine policies, often called (FLOATERS), are designed to insure moveable and personal property. FIXED Property such as Statues and Signs. However:
However, Inland marine policies are typically NOT used to insure Buildings, other Structures, or Vehicles Licensed for roadway use.
IMPORTANT TERMS USED IN CRIME INSURANCE
THEFT is
An act of unlawful taking. Theft may take the form of Burglary, Robbery, or Larceny
IMPORTANT TERMS USED IN CRIME INSURANCE
BURGLARY is
Involves illegal entry or BREAKING in, without CONFRONTATION with a victim.
IMPORTANT TERMS USED IN CRIME INSURANCE
ROBBERY is
Involves CONFRONTATION with a Person and the threat or use of HARM or VIOLENCE against another person.
IMPORTANT TERMS USED IN CRIME INSURANCE
LARCENY is
Involves an act of unlawful taking that is neither Burglary nor Robbery.
Examples include Embezzlement and Shoplifting.
IMPORTANT EXCLUSIONS IN CRIME INSURANCE
Are:
Losses that are discovered by SHORTAGES OF INVENTORY ALONE, with no other evidence of physical damage, will not TRIGGER Coverage.
. FLOOD INSURANCE
TYPICALLY, there is a 30-DAY waiting period from Date of Purchase before flood insurance goes into effect.
. FLOOD INSURANCE
Coverage Section 1.- BUILDINGS, Coverage is limited in:
Basements regardless of the Zone or the Date of construction.
Note: SPECIFICALLY COVERED in basements, HOWEVER ARE:
•Food Freezers and the Food in them
•Portable and Window air conditioners
. FLOOD INSURANCE
Coverage Section 2.- Personal Property that is inside a covered building
•Artwork and Furs, up to $2,500
(Pieles)= furs
ILLINOIS MINE SUBSIDENCE INSURANCE
Illinois law requires all insurance companies writing property insurance in Illinois must:
Must provide coverage for mine subsidence IF IT IS DESIRE.
Note: in the 34 Illinois counties where underground coal mining HAS BEEN or is BEING Conducted, the LAW REQUIRES this Coverage to be included in both residential and commercial policies, Coverage may be rejected by the insured.
. BONDS
Bonds are:
PROMISES THAT ARE INSURED.
Note:bonds differ from insurance in five fundamental ways:
•A Bond DOESN’T Protect the party BUYING the Bond; IT PROTECTS THE PARTY REQUIRING IT.
. CONSTRUCTION TECHNIQUES
How much concrete would be needed for a 12-inch-thick slab that is 27 feet Wide and 20 feet Long?
Answer: Since each cubic yard of a 1-foot slab covers 27 cubic feet, and the slab to be poured is to cover an area of 540 feet (27×20), then calculate cubic Yards by ÷ 540 by 27 which equals 20.
27×20=540
÷
27= 20 cubic yards
Cubic feet = 3×3×3= 27 it is why we divide by 27
. RAFTERS AND RIDGES
Calculating the Length of the Ridge in a Hip Roof
FORMULA:
Ridge Length= Length of the roof - Width of the roof.
Example: For a hip roof that is 44 feet long and 24 feet wide, how long will the Ridge be?
Answer: Ridge = L- W. Ridge =44-24= 20 feet.
DETERMINING THE # OF RAFTERS NEEDED FOR A GABLE ROOF.
Example: For a Gable Roof that has a ridge length of 160” and rafters to be spaced 16” on center, how many rafters would be required?
Answer: 160” divided by 16 equals 10, and then you must add another rafter at the far end of the ridge.
11 rafters would be needed for each side of the roof. Since there are two sides to a gable roof,
11 times 2 equals 22.
160”÷16”=10 +1=11 ×2= 22
. TRUSSES
A truss is an engineered and manufactured roof support member with interior framing members.
TRUSSES ARE NOT TO BE ALTERED IN ANY WAY
without written approval from a Register design Professional or engineer.
. STAIRS AND STEPS
State building codes typically limit the rise of the steps to 7.5 INCHES.
. DEPARTMENT OF INSURANCE
DIRECTOR:Illinois insurance Law gives the Director the specific Powers to:
CONDUCT INVESTIGATIONS, EXAMINATIONS, and HEARINGS of any licensee to determine whether that licensee has violated the law.
●make a request to the Attorney General to ENFORCE AN ORDER made by the Director or to further investigate any licensee.
According to the Illinois insurance code (Article XLV. PUBLIC ADJUSTERS), adjusting a claim for loss or damage covered by an insurance contract MEANS: “applying the loss circumstances to policy provisions. And
NEGOTIATING VALUES, DAMAGES, OR DEPRECIATION.
. OBTAINING A PUBLIC ADJUSTER LICENSE
Each Person Desiring a License MUST:
Fully complete, sign, and submit to the Illinois Department of Insurance an individual Application PA-1 along with a $250 check.
Note: Licenses that LAPSE may be re-issued within 12 MONTHS of the original due date of renewal, but the fee is double the unpaid renewal fee.
OBTAINING A PUBLIC ADJUSTER LICENSE
A License will be issued, if the Director is satisfied that the applicant SUBMITS THE FOLLOWING DOCUMENTS:
The proposed “Public Adjuster Contract” and the PROPOSED RATE SCHEDULE OF CHARGES (must submit two copies along with a cover letter)
PUBLIC ADJUSTER DUTIES AND FEES
Changes:
A licensee must inform the Director of a change of address, legal name, or information submitted on the PA-1 application within 30 DAYS of the change.
PUBLIC ADJUSTER DUTIES AND FEES
Cotracts:
A Public Adjuster MUST maintain a signed contract with each insured for SEVEN YEARS after completion of the transaction.
UNACCEPTABLE CONDUCT of Public Adjusters
Not a complete list:
• Proposing or attempting to propose a contract while a loss-producing ocurrence is continuing, while the fire department or any of its representatives are engaged at the damage premises, or BETWEEN THE HOURS OF 7PM and 8AM.
UNACCEPTABLE CONDUCT of Public Adjusters
Not a complete list:
Acting as a company adjuster or independent adjuster on the same claim.
>Representing that Public Adjuster services are REQUIRED.
>Providing legal ADVICE or engaging in the unauthorized practice of law.
>Failing to fulfill child support obligations.
VIOLATIONS BY THE PUBLIC ADJUSTERS
If it is found by the Director that a violation has been committed:
The applicant or licensee has 30 DAYS to make written demand for a hearing before the Director to determine the reasonableness of the Director’s Action.
VIOLATIONS BY PUBLIC ADJUSTERS
The Director may suspend a license for up to 5 years.
Note: if your license has been revoked or denied for the above violations is ineligible to apply for a new license for 5 years.
VIOLATIONS OF PUBLIC ADJUSTERS
In addition to or instead of a denial, suspension, or revocation of a license, a person may, after hearing, be subject to fines of up to:
$10,000 per Violation and a maximum penalty of $100,000.
The Public Adjusters Contract With Each Insured Must (not a complete list):
Be in writing, on a form approved by the Director, containing the following information in at least 10-POINT TYPE
VOIDING THE CONTRACT
Any Public Adjuster contract that is VOIDED by the Insured
The Public Adjuster must then return anything of value given by the insured under the CONTRACT WITHIN 15 BUSINESS DAYS
Retaining Records of Transactions With Insureds for SEVEN YEARS Public Adjuster must maintain:
A complete file for every transaction with an insured for seven years after the termination of the contractor with an insured, and these files must be made available for inspection by the Director at any time.
There are privacy protections regarding these files:
The information in these claim files may be obtained upon request by the INSURED, the writing INSURER, the Department of Insurance, and the Internal Revenue Service, BUT
NOT BY CONTRACTORS OR OTHER PARTIES.
Any Funds Received, Accepted, or Held on Behalf of an Insured Toward Settlement of a Claim MUST BE DEPOSITED IN :
A NON-INTEREST-BEARING ESCROW OR TRUST ACCOUNT IN AN FDIC-INSURED FINANCIAL INSTITUTION.
CONTINUING EDUCATION REQUIREMENT
To be able to renew a Public Adjuster license:
Must complete a minimum of 24 hours of APPROVED continuing education courses (classroom or online) from approved education provider, including 3 hours of classroom ethics instruction, DURING EACH TWO-YEAR LICENSE PERIOD.
Actual Cash Value Clause: When loss settlement under a policy of Fire And Extended Coverage (that is a Homeowners policy) is on ACTUAL CASH VALUE basis:
PART 919 of the Illinois improper Claim Practices Rules, requires the company to determine actual cash value as “replacement cost of property at the time of loss, less depreciation, if any.
CLAIMS SETTLEMENT PRACTICES OF INSURANCE COMPANIES
Apraisal Clause: when an insured requests use of the appraisal clause in the policy, and the insureds FULL Amount of appraised loss is UPHELD, then ALL of the appraisal costs:
SHALL BE PAID BY THE INSURER.
CLAIMS SETTLEMENT PRACTICES OF INSURANCE COMPANIES
Insurer’s Notice of Cancellation:
When a policy is canceled, it is terminated in the MIDDLE OF THE POLICY TERM.
Illinois laws affecting certain property losses under residential or commercial insurance policies
LOSS BY FIRE OR EXPLOSION:
No insurer shall pay a claim for loss by fire or explosion to a structure located in Illinois where the amount recoverable for loss to the structure under a policy EXCEEDS $25,000.
ILLINOIS SMOKE DETECTOR ACT
This Act requires smoke detectors to be installed in every dwelling unit, “within the immediate vicinity of every room used for sleeping purposes “.
THE PHRASE IMMEDIATE VICINITY MEANS WITHIN 15 FEET.
ILLINOIS INSURANCE GUARANTY FUND
Surplus Lines insurance companies, regardless of ownership or domicile are:
NOT members of the Fund; they do not pay into, nor are their policies guaranteed, by the GUARANTY FUND.
