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Licensing > Chapter 2 - Property > Flashcards

Chapter 2 - Property Flashcards

1
Q

1st Party

A

Insured

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2
Q

2nd Party

A

Insurer

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3
Q

Accident

A

A sudden, unforeseen, unintended, and unplanned event from which loss or damage results.

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4
Q

Occurrence

A

An accident includes continuous or repeated exposure to the same general harmful conditions.

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5
Q

Cancellation

A

The termination of an insurance policy before its expiration date. Once cancelled, a policy provides no coverage. A policy may be cancelled by the insured or insurer.

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6
Q

Pro Rata Cancellation

A

A proportionate cancellation of insurance that refunds premium to the insured based on the precise number of days coverage was in effect. The earned premium is the premium charged and retained by the insurer for the number of days coverage was in place; the unearned premium is the premium refunded to the insured for the number of days coverage was not in place.

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7
Q

Short Rate Cancellation

A

A cancellation of insurance that incurs a financial penalty. Sometimes when the insured cancels the policy before its expiration date, a short-rate cancellation is issued. The insurer retains a portion of the unearned premium to cover costs.

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8
Q

Flat Cancellation

A

A cancellation of insurance that is retroactive to the effective date of the policy. No coverage is provided and the insurer must refund the policy premium paid by the insured.

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9
Q

Nonrenewal

A

The termination of a policy at the expiration of its term. The policy does not renew and no coverage is provided after the expiration date.

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10
Q

Proximate Cause

A

The primary cause of loss. If only one peril caused the loss, the proximate cause is the first event in the unbroken chain of events that resulted in loss. If more than two perils caused or contributed to the loss, the proximate cause is the peril having the most significant impact in generating the loss or damage.

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11
Q

Personal injury liability includes which of the following?

A. Medical payments

B. Libel and slander

C. Theft

D. Sickness and disease

A

B. Libel & Slander

Personal injury liability is the legal liability for injury other than bodily injury or property damage. Examples of personal injury include libel, slander, false arrest, invasion of privacy, and copyright infringement.

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12
Q

Hostile Fire

A

A fire that burns outside its intended boundaries, or becomes uncontrollable. Examples of a hostile fire include a wildfire or a fire that damages a home when a spark from a fire in the fireplace ignites a piece of furniture.

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13
Q

Friendly Fire

A

A fire that was intentionally set and stays within its intended boundaries (e.g., a fireplace) and results in smoke damage to the inside of a fireplace. Property insurance does not cover damage from a friendly fire.

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14
Q

Inherent Vice

A

A quality within property that causes it to damage or destroy itself. Examples include rust, rot and the fading of paint. Inherent vice is not covered by a property policy.

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15
Q

Binder

A

A legal agreement issued by an insurance company or a producer that provides temporary proof of insurance until the insurer is able to issue an insurance policy. Binders are issued for specific time periods (maximum of 60 days) and automatically end when the policy is issued. Binders contain the name of the insurer, the amount and type of insurance, and the perils insured against.

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16
Q

Arbitration

A

Process whereby a disputed claim is decided by a neutral third party. The disputing parties choose the impartial third party and agree in advance to accept the final decision of the arbitrator, who makes a decision after a hearing where both parties offer evidence.

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17
Q

Right of Salvage

A

The right of the insurer to take possession of damaged property after paying for its loss. The salvage belongs to the insurer.

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18
Q

Salvage Value

A

The amount for which property can be sold at the end of its useful life. In property insurance, the salvage value is the scrap value of damaged property.

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19
Q

Endorsement

A

A policy form that alters or adds to the provisions of a property and casualty insurance contract.

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20
Q

Hostile fire

A

i.e. wildfire, fire that begins with a spark from fireplace

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21
Q

Friendly Fire

A

Intentionally set, stays within its boundaries (i.e. smoke damage to inside of fireplace) NOT covered by property insurance

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22
Q

Inherent Vice

A

rust, rot, faded paint (NOT covered)

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23
Q

Binder

A

Temporary proof of insurance, 60 days MAX

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24
Q

Arbitration

A

neutral 3rd party decides outcome of claim

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25
Q

Right of Salvage

A

Insurer takes possession of damaged property, belongs to insurer

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26
Q

Salvage Value

A

Scrap Value

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27
Q

Endorsement

A

policy form with provisions to insurance contract

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28
Q

Accident

A

Sudden, unforeseen, unintended, unplanned, results in damage or loss

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29
Q

Occurrence

A

an accident w/continuous exposure to same harmful conditions

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30
Q

Cancellation

A

Termination of policy before expiration date

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31
Q

Pro Rata Cancellation

A

cancellation that results in earned premium or unearned premium

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32
Q

Short Rata Cancellation

A

cancellation that results in a financial penalty, insurer keeps portion of unearned premium

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33
Q

Flat Cancellation

A

cancelled back to effective date

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34
Q

Nonrenewal

A

policy does not renew

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35
Q

Proximate Cause

A

Primary cause of loss, if there are multiple perils it is the peril that resulted in loss

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36
Q

Deductible

A

Amount of each loss insured must bear

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37
Q

Concurrent Causation

A

When 2 perils simultaneously cause a loss, insurer must pay even if 1 is excluded

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38
Q

Concurrency/Concurrent Policies

A

More than 1 policy that covers same exposures, can cause coverage gap

39
Q

Definitions

A

words, terms, and phrases purposefully used in a policy to clearly lay out the intent of insurer to avoid coverage disputes.

40
Q

Bailee

A

Person or Organization that property has been entrusted with to repair, service or store (coverage excluded)

41
Q

Bailor

A

Person or Organization that entrusts property to a Bailee

42
Q

Primary Insurance

A

Coverage that responds to a loss before all other coverage

43
Q

Excess Insurance

A

provides protection ONLY after loss/damage exceeds limits

44
Q

Unoccupancy

A

A property with things (personal property) but no people (occupants)

45
Q

Vacancy

A

provision that limits or eliminates coverage for buildings w/o sufficient personal property to support intended occupancy or use.

46
Q

Burglary

A

stealing property via forcible entry

47
Q

Robbery

A

stealing property w/threat of bodily harm

48
Q

Theft

A

Broad, any act of stealing

49
Q

Mysterious Disappearance

A

cause of loss unknown

50
Q

Direct Loss

A

Loss that causes direct damage to property w/o an intervening cause
(fire damage, water pipe burst)

51
Q

Indirect/Consequential Loss

A

Loss that is not the direct result of a peril

a fire can cause a loss of income - no rent

52
Q

Named Peril

A

Only covers cause of loss or perils listed

i.e. fire or theft

53
Q

Open Peril (Special Form, All-Risk)

A

Covers all except exclusions

54
Q

Replacement Value

A

losses are covered at value, usually 80-90% to replace

55
Q

Actual Cash Value (ACV)

A

cost to repair - depreciation

56
Q

Agreed Value

A

specific value listed in policy at time of issuance

57
Q

Stated Value

A

Insurer pays lesser of the ACV of the property following a loss

58
Q

Valued Policy

A

Insurer pays full face value stated in Declarations page for a total loss, regardless of ACV

59
Q

Functional Replacement Value

A

cost to replace property w/similar property

i.e. Victorian home

60
Q

Market Value

A

the price a willing buyer will pay a willing seller for property

61
Q

Loss Settlement

A

specifies which loss valuation will be applied

62
Q

Appraisal

A

dispute resolution method, 2 appraisers 1 umpire, they compromise on amount of loss

63
Q

Other Insurance

A

each policy pays no more than its share of the loss

64
Q

Legal Action Against Us

A

no one can bring suit against insurer until all terms and conditions of policy are met

65
Q

Loss Payment

A

how payment is made by insurer, time frame for necessary documents/steps to be taken

66
Q

Abandonment of Property

A

insurer is not obligated to accept any abandoned property by insured

67
Q

Mortgage Clause

A

specifies how the policy protects the mortgagee’s financial interest

68
Q

No Benefit to Bailee

A

specifies that no coverage applies is loss payment benefits bailee

69
Q

D.I.C.E.

A

Declarations, Insuring agreement, Conditions & Exclusions

70
Q

What is on the Declarations page?

A

Who, What, Where, When & How Much

71
Q

What are the types of insured?

A

Named Insured, Insured, First Named Insured & Additional Insured

72
Q

What does the coinsurance penalty reduce?

A

It reduces the amount paid in a partial loss as total losses are paid based on the coverage limit on the policy.

73
Q

Liberalization Clause

A

Specifies that if the insurer broadens coverage with no increase in premium, that broadening of coverage will apply to existing policies without the need for an endorsement.

74
Q

Vicarious Liability

A

assigned to one party for the conduct of another, based solely on a relationship between the two

75
Q

Compensatory Damages

A

awarded to injured party for actual loss sustained

76
Q

Special Damages

A

compensatory damages for tangible expenses

i.e. bills, loss of earnings, cost to repair or replace property

77
Q

General Damages

A

compensatory damages for pain, suffering, mental anguish, disfigurement - losses that can’t be objectively calculated

78
Q

Bodily Injury Liability

A

is the legal liability arising from physical injury, including sickness, disease, and death caused by the acts or omissions of an insured.

(medical bills, lost wages, mental anguish, disfigurement, pain and suffering, etc.)

79
Q

Property damage liability

A

Pays for the legal liability arising from physical damage to tangible property, including loss of use of that property, caused by the acts of an insured.

(actual cost of repair or replacement of the damaged property, loss of use)

80
Q

Medical payments coverage

A

Pays for necessary medical, surgical, x–ray, dental, ambulance, hospital, professional nursing, and funeral expenses incurred by a third party on the insured’s premises regardless of fault.

81
Q

Personal injury liability

A

The legal liability arising from the wrongful conduct of the insured resulting in injuries to one’s mental or emotional wellbeing and not bodily injury or property damage.

82
Q

Accident

A

Sudden, unforeseen, unintended, and unplanned event which loss results.

83
Q

Negligence

A

Negligence is a tort and, specifically, the failure to use the same degree of care a reasonable and prudent person would use when given the same knowledge and set of circumstances.

84
Q

Contributory Negligence

A

A defense for negligence in which the claimant was also negligent to any degree.

85
Q

Comparative Negligence

A

involves fault on the part of all parties and the damages are reduced in proportion to the degree of negligence

86
Q

Absolute Liability

A

claimant does not have to prove fault in order to collect damages

87
Q

Comparative negligence

A

Involves fault on the part of all parties and the damages are reduced in proportion to the degree of negligence.

88
Q

Strict liability

A

Applies when a manufacturer is held liable whether or not its product was
defective in causing injuries.

89
Q

Excess Policy

A

pays a covered claim after the primary policies exhaust their limits or deny coverage.

90
Q

Pro Rata Loss Payment

A

loss payment provision requires each insurer to pay its share of a loss in proportion to the coverage of that policy as it relates to the total of all insurance on the risk.

91
Q

Limit of Liability

A

the dollar amount of coverage specified for a liability loss.

92
Q

aggregate limit

A

The maximum amount payable for loss per location or per person from all
occurrences within a policy period regardless of the number of separate accidents.

93
Q

Split Limit of Liability

A

the amount of coverage divided between bodily injury or property damage.

94
Q

Combined Single Limit

A

policy limit applied to either bodily injury or property damage as needed or in any combination.

Licensing (10 decks)

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