Chapter 13: Other types of Property & Casualty Insurance

Question 1

what is an Umbrella/Excess Liability Policy and coverage provided

Answer 1

*provides coverage for non-business liability of individuals
1. higher limits of liability over the limits of the required underlying policies
2. could provide liability coverage that is broader than underlying coverage

Question 2

what is underlying coverage and SIR in Umbrella

Answer 2

SIR- Self Insured Retention; only applies if the loss is paid by the Umbrella policy when the underlying policy does not provide coverage (the loss is excluded)

Question 3

Professional Liability & who needs it

Answer 3

provides liability coverage for litigation that claims failure to meet what would be considered professional standard
*medical professions, accountants, layers, architects, consultants, engineers, funeral directors, insurance agents, realtors

Question 4

Directors and Officers Liability (D&O)

Answer 4

protects corporate officers and members of corporation’s board of directors from allegations of “wrongful acts” which are not in best interest of corporation
*also provides coverage to reimburse the corporation

Question 5

Employee Benefits

Answer 5

protection to a person or organization who become legally obligated to pay because of an act/error/omission in the administration of employee benefits

Question 6

Employment Practices Liability (EPLI)
*what is it, why is it important, 3 exposures it protects

Answer 6

covers businesses against claims made by employees that their legal rights as employees of the company have been violated; important b/c employment practice liability coverage is excluded from all other primary personal and commercial insurance policies
1. discrimination acts
2. sexual harassment
3. hostile work environment; abuse

Question 7

what conditions must be met before coverage can be placed in the surplus lines market

Question 8

what are the 3 parties to a surety bond

Answer 8

1. Principal (obligor)
2. Obligee
3. Surety (Guarantor)

Question 9

what 3 criteria do bond underwriters use to determine if they will provide a bond to a principal

Question 10

Contract bonds

Answer 10

guarantee that contractors will carry out their contractual obligations

Question 11

3 types of contract bonds

Answer 11

1. Bid Bond
2. Performance Bond
3. Maintence Bond

Question 12

Bid Bond

Answer 12

contractor bidding on a contract will enter into the contract and furnish all required bonds; surety will pay obligee the difference between the amount of bid and bid that is accepted should contract be unable to actually enter into the contract

Question 13

Performance Bond

Answer 13

contactor will complete the project in accordance with all plans and specification of the contract

Question 14

Maintenance Bond

Answer 14

Contractor will correct all defects in workmanship/materials for a specified period of time

Question 15

Aircraft Hull coverage

Question 16

what are the Major Coverages under Ocean Marine Insurance

Answer 16

1. Hull
2. Cargo
3. Freight
4. Protection & Indemnity (P&I)
5. Perils
6. Implied Warranties
7. Loss Adjustment

Question 17

what is Protection and Indemnity (P&I)

Answer 17

legal liability of ship-owner from bodily injury & property damage to third parties; liability for bodily injury to passengers, ship visitors, and crew; property damage caused by a collision to other ships/structures, loss of cargo cause by the ship-owners negligence

Question 18

Who is eligible for Flood Insurance

Answer 18

communities

Question 19

how is WYO different than Government

Question 20

What is the purpose of Flood Insurance

Answer 20

1. provide individuals and business property owners to purchase coverage from catastrophic effects of flood at reasonable rates
2. incentive to communities to reduce future flood losses by proper floodplain management

Question 21

What is the standard deductible on a flood policy and how does it differ from other property policies

Answer 21

standard deductible of $1,000; applies separately to building and contents ($1,000 for building and $1,000 for contents)

Question 22

Limits of Flood Insurance and how they differ between the Emergency Program and Regular Program

Answer 22

Emergency- no additional limits

*see chart pg. 11

Question 23

What is a Risk Retention Group (RRG)
*characteristics, forms

Answer 23

*insurer formed by several organizations to cover liability losses for those organizations
1. members must be involved in a similar or related business
2. owned by its members
3. must have RRG in its name
4. chartered or licensed as insurance company in at least one state
*provides most forms of liability insurance EXCEPT WC

Question 24

What are Risk Purchasing Groups

Answer 24

group that maintains as one of its purposes the purchase of liability insurance on a group basis; purchases insurance only for its member’s liability exposures
*does not bear any risk
*can offer better rates for same coverage

Question 25

What is Federal Crop Insurance (FCIC or RMA)

Answer 25

insure wheat yields against loss by drought, flood, hail, frost, insects, diseases and all natural hazards for a premium based on the past loss history of the particular area

Question 26

What is Boatowners/Personal Watercraft

Answer 26

multiline contract that provides coverage for both property & liability; only applies to losses that occur w/n navigational limits that are defined in the application and the policy

Question 27

What is Recreational Vehicles

Answer 27

provides automobile coverage on these types of vehicles, tailoring the coverage to meet the needs of the recreational vehicle owner

Question 28

What is Mobile Home Policy

Answer 28

provide coverage pm the mobile home, other structures, personal property and additional living expenses; personal liability and medical payments to others is also included

Question 29

What is the FAIR plan? what does FAIR stand for?

Answer 29

Fair Access to Insurance Requirements
*no property owner is denied basic property insurance w/o impartial evaluation of the individual exposure
*basic property coverage; fire, extended coverages, vandalism, malicious mischief
*insures risks that are marginal and normally not acceptable in regular market