Chapter 3 Flashcards
Property & Liability Basics
Property Insurance Policy
Provides protection against losses resulting from damage to or loss of insured’s property.
4 Policy Sections that most Property Insurance Policies include….
1) Declarations
2) Insuring Agreement
3) Conditions
4) Exclusions
2 Types of Property Insurance Policies
Named Peril and All-Risk Basis
Named Peril
Policy covering named perils will specifically list the perils insured against.
(Specified in peril contract)
All-Risk Policies (Basis)
Protect insured against any possible type of loss EXCEPT perils specifically excluded. (Open perils policies)
Loss Settlement
Loss will be settled on Actual Cash Value or Replacement Cost basis depending on the contract.
Mono-Line Policy
Cover’s insured’s property only, less any deductible.
(ie. dwelling policy)
Multiple-Line Policy
Provides more than one “line of property.
(ie. package policies)
Definitions
Located within the conditions section of the policy.
Includes: named insureds under policy, covered premises, policy territory, policy period.
Endorsement
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
Liability Insurance Basics
Section B of Chapter 3
Third Party Negligence
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.
Tort
Wrongful act or omission that invades legally protected right.T
Torts Classified As……
1) Unintentional Torts (negligence)
2) Intentional Torts (slander)
3) Libel or other forms of defamation and strict liability
Negligence
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
2 Types of Negligence
Contributory & Comparative
Contributory Negligence
Prevent an injured third party from recovering damages from insured if insured party was in any way responsible for the loss.
Comparative Negligence
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
Intervening Clause
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
Damages
Awarded when court determines a party has been injured.
2 Types of Damages
Compensatory & Punitive
Compensatory Damages
Award to injured party or compensation for loss suffered.
CD can be referred to as special & general
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
Punitive Damages
Additional damages awarded by court as punishment against party causing injury.
Note: awarded over and above any other damages awarded.
Statue of Limitations
Unqualified defense to legal action will result if individual fails to commence legal action within particular states SOL
Limits of Liability
Amount of coverage.
- maximum amount payable under insurance contract
Liability Coverage Includes…
1) Combined Single Limit
2) Split Limits
3) Aggregate Limits
Combined Single Limit
One amount which will be paid per occurrence for covered bodily injury or property damage of others
Split Limit
Subdivided into a coverage limit for bodily injury per person and per occurrence and separate limit property damage
Aggregate Limit
Provide max limit of liability for total amount of losses occurring during policy period
Strict Liability
Imposed without regard to fault. Injured party will be awarded damages even though other party did nothing legally wrong to cause injury
Vicarious Liability
Negligence of person engaged by an insured to perform work.
