Chapter 4

Question 1

Define disappearing deductible

Answer 1

A dollar amount deducted from the amount of loss that is reduced as a loss increases and then disappears entirely to provide full coverage when the loss reaches a certain specified figure. Disappearing deductible plans are principally associated with fire policies.

Question 2

How do intermediary develop market knowledge?

Answer 2

Researching market trends
Understanding market conditions
Selecting appropriate insurers

Question 3

Define excess insurance

Answer 3

Insurance that does not participate until all other similar insurance on the same subject is exhausted or until the loss exceeds a previously agreed-upon amount. Where there are two policies on a risk and both contain a provision that they are “excess to all other insurance”, the program is resolved by the general guiding principles. This is usually interpreted so that each contributes pro rata to the loss

Question 4

Define following form

Answer 4

Excess liability insurance, subject to terms and conditions of the primary policy

Question 5

Define managing general agent (MGA)

Answer 5

An independent business operation given authority by a number of insurance companies to solicit business on behalf of such companies
Responsibilities include recruiting training and supervising agents

Question 6

Define warranty

Answer 6

Statement or stipulation or promise in an insurance contract, the breach of which may nullify the contract

Question 7

Define environmental impairment liability insurance (EIL)

Answer 7

Specialized insurance policy that covers liability and sometimes cleanup cost associated with pollution

Question 8

Define manuscript wording

Answer 8

Policy wording that does not conform to the standard wording in general use within the insurance industry, and that is unique to the policy involved