Chapter 10 - Other Coverages Flashcards
Self-Insured Retention
The deductible for umbrella
$1,000 for personal
$10,000 for commercial
What is the purpose of an Umbrella Policy?
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.
What are special features of umbrella policy?
Worldwide coverage
Personal injury - discrimination, humiliation, mental anguish, etc
What are the Special and Professional Liability Insurance?
Errors and Omissions Directors and Officers Liability Fiduciary Liability Liquor Liability Employment Practices Liability Medical Professional Lawyers Professional
Errors and Omissions
When a product an agent sales in his/her knowledge, skill, and advice
Necessary in the insurance business
Surplus lines
Coverages that cannot be purchased through authorized insurers with the state
Stamping Office
Oversees surplus lines in Texas
Non-admitted
Surplus lines
Admitted company
Authorized to do business in Texas
What are surety bonds?
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.
Bid Bond
When a contraction bid is submitted, the obligee usually requires a bid bond
Performance Bond
Guarantees construction according to plan or contract
Payment Bond
If a contractor does not pay bills incurred for the project, this bond is discharged so liens are not placed against the project
Maintenance Bond
Guarantees the contractor will remedy any unsatisfactory work or replace defective materials
Judicial Bonds
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.
Aviation Insurance
Aircraft Hull - covers damage to the aircraft itself
Aircraft liability - provides bodily injury and property damage excluding or including passengers.
Ocean Marine Coverage
Hull Insurance
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
Ocean Marine Coverage
Cargo Insurance
Provides coverage for items being transported by ship
What does a voyage form cover?
A single shipment
What does a open cargo form cover?
Provides continuous coverage until cancelled
Freight insurance
Used when shipping cargo that incurs an indirect loss
What is protection and indemnity
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)
Implied Warranties of Ocean Marine Policies
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
On maritime policies what does average mean?
Average refers to loss
General Averages vs Particular Average
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)
National Flood Insurance
Purchase from government
Flood insurance can be obtained from any licensed PCA
Only approved communities agreeing to use sound flood control measures are eligible
What losses does flood insurance cover?
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
What is the waiting period on flood insurance?
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
Boat Owners
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
Texas Windstorm Association
Written for windstorm, hurricane, hail and fire loses.
Market Assistance Programs
Assist customers who are unable to obtain property insurance.
Is a referral service.
