Chapter 10 - Other Coverages

Question 0

Self-Insured Retention

Answer 0

The deductible for umbrella

$1,000 for personal
$10,000 for commercial

Question 1

What is the purpose of an Umbrella Policy?

Answer 1

Provides catastrophic liability coverage

Provides higher limits of liability

Broader coverage

Drop down coverage

Insured must maintain a minimum limit of liability for underlying coverage.

Question 2

What are special features of umbrella policy?

Answer 2

Worldwide coverage

Personal injury - discrimination, humiliation, mental anguish, etc

Question 3

What are the Special and Professional Liability Insurance?

Answer 3

Errors and Omissions
Directors and Officers Liability 
Fiduciary Liability
Liquor Liability
Employment Practices Liability
Medical Professional
Lawyers Professional

Question 4

Errors and Omissions

Answer 4

When a product an agent sales in his/her knowledge, skill, and advice

Necessary in the insurance business

Question 5

Surplus lines

Answer 5

Coverages that cannot be purchased through authorized insurers with the state

Question 6

Stamping Office

Answer 6

Oversees surplus lines in Texas

Question 7

Non-admitted

Answer 7

Surplus lines

Question 8

Admitted company

Answer 8

Authorized to do business in Texas

Question 9

What are surety bonds?

Answer 9

Principle - (contractor) the party who has agreed to fulfill the obligation guaranteed by the surety

Obligee - (customer) the party the bond is written for. The bond is payable to the obligee of the principle does not perform the task satisfactory

Surety - guarantees fulfillment of the principle to the obligee with financial backing A surety expects no losses.

Question 10

Bid Bond

Answer 10

When a contraction bid is submitted, the obligee usually requires a bid bond

Question 11

Performance Bond

Answer 11

Guarantees construction according to plan or contract

Question 12

Payment Bond

Answer 12

If a contractor does not pay bills incurred for the project, this bond is discharged so liens are not placed against the project

Question 13

Maintenance Bond

Answer 13

Guarantees the contractor will remedy any unsatisfactory work or replace defective materials

Question 14

Judicial Bonds

Answer 14

Fiduciary Bonds - intended for individuals appointed by the court to handle the affairs of another person due to death or disability

Court Bond - (litigation bond) if a principal loses a court action and wishes to appeal, the court requires this bond for court costs and damages of suit is lost again.

Question 15

Aviation Insurance

Answer 15

Aircraft Hull - covers damage to the aircraft itself

Aircraft liability - provides bodily injury and property damage excluding or including passengers.

Question 16

Ocean Marine Coverage

Hull Insurance

Answer 16

Covers damage to the ship, including collision

The collision clause or running down clause pays for damage if the covered ship runs over another vessel and is liable to the other vessel

Question 17

Ocean Marine Coverage

Cargo Insurance

Answer 17

Provides coverage for items being transported by ship

Question 18

What does a voyage form cover?

Answer 18

A single shipment

Question 19

What does a open cargo form cover?

Answer 19

Provides continuous coverage until cancelled

Question 20

Freight insurance

Answer 20

Used when shipping cargo that incurs an indirect loss

Question 21

What is protection and indemnity

Answer 21

Provides full marine legal liability insurance
Pays for death, personal injury, and legal liability of the ship owner

Ship owner liability to seaman - Jones Act - unseaworthy vessels, wages, maintenance and cure for sick employee
Ship owner liability to dockworkers
Ship owner liability to passengers and visitors
Cargo liability (cargo damages through negligence)
Liability for other property (bridges and ships)

Question 22

Implied Warranties of Ocean Marine Policies

Answer 22

Warranties are stipulations in policy that if breached can void coverage

Legality - enterprise must be legal
Seaworthiness - proper equipment, competent crew, correct load of cargo, and in compliance with good maritime practice
Change in voyage - if a ship embarks on a different voyage than the one underwritten, the risk may not be the same as agreed upon by the insurer

Question 23

On maritime policies what does average mean?

Answer 23

Average refers to loss

Question 24

General Averages vs Particular Average

Answer 24

General Average - partial loss sacrificed voluntarily and deliberated for the benefit of all. The loss is shared by all ship, freight and cargo owners

Particular Average - partial loss where there is no requirement to share the loss among all interests such as cargo that endangers other cargo (spoiling food)

Question 25

National Flood Insurance

Answer 25

Purchase from government

Flood insurance can be obtained from any licensed PCA

Only approved communities agreeing to use sound flood control measures are eligible

Question 26

What losses does flood insurance cover?

Answer 26

Overflow of inland or tidal water
Rapid accumulation of surface waters
Inundation of normally dry lands
Mudslide

Covers only direct losses.

Covers building and contents

Excludes money and valuable papers

Question 27

What is the waiting period on flood insurance?

Answer 27

Policies written on annual basis
Payment must be made in full with a new application before coverage is effective

30 day waiting period before coverage takes effect with the following exceptions:
When insurance is purchased in connection with a loan
When a community first enters program
When purchasing new property
After a policy is in effect, there is a 5 day waiting period for policy changes on an existing policy with payment in full

Question 28

Boat Owners

Answer 28

Provides personal liability, medical payments, uninsured motorist and physical damage to boat, motor or trailer.
All risks policy

Warranties:
Pleasure use
Seaworthiness
Layup period
Navigational limits

Excludes:
Wear and tear/mechanical breakdown
Loss during service or repair
Business pursuits
Liability arising out of waterskiing or parasailing
BI or PD while being towed behind a vehicle

Question 29

Texas Windstorm Association

Answer 29

Written for windstorm, hurricane, hail and fire loses.

Question 30

Market Assistance Programs

Answer 30

Assist customers who are unable to obtain property insurance.

Is a referral service.