Chapter 3

Question 1

Property Insurance Policy

Answer 1

Provides protection against losses resulting from damage to or loss of insured’s property.

Question 2

4 Policy Sections that most Property Insurance Policies include….

Answer 2

1) Declarations
2) Insuring Agreement
3) Conditions
4) Exclusions

Question 3

2 Types of Property Insurance Policies

Answer 3

Named Peril and All-Risk Basis

Question 4

Named Peril

Answer 4

Policy covering named perils will specifically list the perils insured against.
(Specified in peril contract)

Question 5

All-Risk Policies (Basis)

Answer 5

Protect insured against any possible type of loss EXCEPT perils specifically excluded. (Open perils policies)

Question 6

Loss Settlement

Answer 6

Loss will be settled on Actual Cash Value or Replacement Cost basis depending on the contract.

Question 7

Mono-Line Policy

Answer 7

Cover’s insured’s property only, less any deductible.
(ie. dwelling policy)

Question 8

Multiple-Line Policy

Answer 8

Provides more than one “line of property.
(ie. package policies)

Question 9

Definitions

Answer 9

Located within the conditions section of the policy.
Includes: named insureds under policy, covered premises, policy territory, policy period.

Question 10

Endorsement

Answer 10

Additional attachment to policy which modifies standard coverage or alters existing coverage in policy in some fashion.
*Note: mostly effect at beginning of policy but some may be added during policy

Question 11

Liability Insurance Basics

Answer 11

Section B of Chapter 3

Question 12

Third Party Negligence

Answer 12

Person suffering injury who has right of legal action against insured.
*Note: Liability insurance contract is two-party contract that make claim payments to a insured third party.

Question 13

Tort

Answer 13

Wrongful act or omission that invades legally protected right.T

Question 14

Torts Classified As……

Answer 14

1) Unintentional Torts (negligence)
2) Intentional Torts (slander)
3) Libel or other forms of defamation and strict liability

Question 15

Negligence

Answer 15

Individual who has been reckless or careless that has failed to do something.
***Note: Known as a morale hazard; tort or civil wrong committed against another party

Question 16

2 Types of Negligence

Answer 16

Contributory & Comparative

Question 17

Contributory Negligence

Answer 17

Prevent an injured third party from recovering damages from insured if insured party was in any way responsible for the loss.

Question 18

Comparative Negligence

Answer 18

Amount of recovery by an injured third party will be arrived at in a court proceeding.
*Note: Court will determine what award damages are proportionate of each party

Question 19

Intervening Clause

Answer 19

Defendant possess no liability if injury to third party is caused by separate unrelated cause which interrupts series chains of events and begins new series

Question 20

Damages

Answer 20

Awarded when court determines a party has been injured.

Question 21

2 Types of Damages

Answer 21

Compensatory & Punitive

Question 22

Compensatory Damages

Answer 22

Award to injured party or compensation for loss suffered.

Question 23

CD can be referred to as special & general

Answer 23

Special: Compensatory that are tangible, specific, measurable, or economic $ amount.
General: Intangible types of loss that are non-economic or non-measurable that include pain and suffering, loss of consortium or mental anguish

Question 24

Punitive Damages

Answer 24

Additional damages awarded by court as punishment against party causing injury.
Note: awarded over and above any other damages awarded.

Question 25

Statue of Limitations

Answer 25

Unqualified defense to legal action will result if individual fails to commence legal action within particular states SOL

Question 26

Limits of Liability

Answer 26

Amount of coverage.
- maximum amount payable under insurance contract

Question 27

Liability Coverage Includes…

Answer 27

1) Combined Single Limit
2) Split Limits
3) Aggregate Limits

Question 28

Combined Single Limit

Answer 28

One amount which will be paid per occurrence for covered bodily injury or property damage of others

Question 29

Split Limit

Answer 29

Subdivided into a coverage limit for bodily injury per person and per occurrence and separate limit property damage

Question 30

Aggregate Limit

Answer 30

Provide max limit of liability for total amount of losses occurring during policy period

Question 31

Strict Liability

Answer 31

Imposed without regard to fault. Injured party will be awarded damages even though other party did nothing legally wrong to cause injury

Question 32

Vicarious Liability

Answer 32

Negligence of person engaged by an insured to perform work.