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PNC Exam Review > Gontime > Flashcards

Gontime Flashcards

0
Q

What is indemnity

A

To restore, no better-no worse

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1
Q

What is insurance

A

Transfer of risk from insurer (1st party) to insured (2nd party)

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2
Q

What is covered property insurance?

A

Real property and personal property (things you can touch)

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3
Q

What is casualty insurance

A

Legal LIABILITY to others (3rd party) claimant for liability claim

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4
Q

What is a personal line

A

Type of insurance for families. Auto, home, boat, rv

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5
Q

What is a commercial line of insurance

A

For businesses; taxi or 18 wheelers, usaa bldg, customer in bldg, workers comp

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6
Q

What does an agent sell

A

Sell policies

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7
Q

What do actuaries set

A

They set rates

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8
Q

What is a risk?

A

Uncertainty of loss

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9
Q

What is a pure risk

A

Chance of loss only, son driving sports car

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10
Q

What is speculative risk

A

Chance of winning or loosing, slots and lottery

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11
Q

What risk does insurance only cover between pure and speculative

A

Pure risk only

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12
Q

What is the Law of Large Numbers

A

Actuaries estimating claims using the law

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13
Q

What is a peril

A

A cause of loss

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14
Q

What are named perils

A

Lists things that ARE covered

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15
Q

What is an open policy

A

Covers all except what’s specifically excluded

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16
Q

What is a hazard

A

Conditions that increase the chance of peril happening

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17
Q

List the different types of peril

A

Visible- dead tree in yard
Dishonest- arsonist
Morale- attitude of carelessness

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18
Q

What are the two types of loss

A

Direct- physical damage to property

Indirect- loss of use

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19
Q

What is an insurability interest/ financial interest

A

For an insurance policy to pay, there must be an insurance risk. Must exist at time of loss

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20
Q

Give examples of insurable interests

A

Buy a new car (auto loan) or a house (mortgage) or rental car

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21
Q

What is a tenant improvement

A

When you do work on a apartment you DO NOT own

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22
Q

What is a proximate cause

A

The first cause in an unbroken chain of events

*typically if proximate cause is covered, all resulting damage is too

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23
Q

What is CALC

A

Competent parties- 18,sane,sober
Agreement- offer and acceptance
Legal purpose- transfer of risk, must support public policy
Con$ideration- dollar value, exchange of values (premium=promise to pay)
Insured makes the offer

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24
Q

What is a representation

A

Believed to be true, answers to questions by insured

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25
Q

What is misrepresentations

A

Has no effect to be issued policy

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26
Q

What is material misrepresentation

A

Not true but would have caused insurer not to issue policy

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27
Q

What is concealment

A

Intentionally hidden

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28
Q

What happens when fraud occurs

A

Void the policy due to the concealment

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29
Q

What is a warranty

A

Written into the policy, promises insured will do, breach will void policy

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30
Q

What is a binder

A

Temporary contract, good for 30 days

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31
Q

Policy structure

A

Declarations-receipt
Insuring agreement- promises coverage
Conditions- rules (procedures) rights/responsibilities
exclusions- what’s not covered

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32
Q

What do declarations do

A

Tailors the policy

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33
Q

What are the 6 P’s

A

Policy #, parties involved! property description, policy term, policy limits and deductibles, premium

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34
Q

What is limit of liability

A

Maximum per loss

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35
Q

What is aggregate limit

A

Maximum per policy, found on commercial policies

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36
Q

What is a deductible

A

Retention or retention limit, insurer pays excess
If add to deductible you reduce premium
If increase deductible reduce frequency of claim

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37
Q

What is the premium

A

Consideration paid by insured is premium

Policy cancelled before expiration, insurer may pay back $ to unearned premium

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38
Q

What is an Insuring Agreement

A

uSAA promise to pay covered perils if covers liability, insurers pay for defense covered here

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39
Q

What are conditions

A

Contains duties and rights of the parties
Other procedures in conditions
-termination of procedures

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40
Q

What are the Insured duties after a loss

A

-prompt notification
-cooperation with USAA
-submission of proof or loss of sworn statement w/I 91 days
Protect property from further damage & inventory of damage property

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41
Q

What are USAA subornation rights

A

Insurer now has right to recover amount paid for loss from at-fault party

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42
Q

What are the rights of mortgagee

A

Pay premium, receive claim payment, receive cancellation notice
* nothing insured does, can prevent from collecting under policy

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43
Q

What are the 2 types of terminations

A

Cancellations
- before end of policy
Non-renewals
-occurs at end of policy period

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44
Q

What are cancellations

A

Insurers may cancel subject to state regs.

10 day advance notice, insured receives full refund of unearned premium without penalty, called pro rate

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45
Q

When can insured cancel

A

At any time

  • no advance notice required
  • insured may not get a refund
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46
Q

What are non renewals?

A

Insurer may nonrenew subject to state regulations

  • 30 day notice required
  • no adjustment in premium since goes to exp. date
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47
Q

When may insured renew

A

At any time (no rules)

-no advance notice required

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48
Q

What is the claims dispute resolution processes

A

Disagreements on value of the loss (appraisal) determines

If cannot be done, hire an umpire by both appraisers

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49
Q

What is an arbitration

A

Deals with disagreements on coverage issues

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50
Q

Where are the other insurance located

A

In the conditions section; when insured has more than one policy covering same loss

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51
Q

In other insurance, what is Pro Rata Liability

A

Proportionate total loss, big policy pays proportionately more
Policy limit 100,000, fire loss 40,000
Insurer A, 1/4 of limit; 25,000/100,000, 1/4 of 40,000=10,000 loss
Insurer B, 3/4 of limit; 75,00/100,000, 3/4 of 40,000= 30,000 loss

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52
Q

What is contributions by equal shares

A

All insurers share limit of lowest policy, split evenly.
Fire Loss= 40,000
Insurer A pays 1/2 of loss, 20,000
Insurer B pays 3/4 of loss, 20,090

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53
Q

What is primary and excess (other insurance)

A

Primary pays first, excess pays after primary limits are exhausted.
Policy A is primary- 40,000 loss
A pays 25,000 (until exhausted)
B pays remaining 15,000

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54
Q

What is coverage territory

A

Where applies, restrict to US (auto)

Worldwide=floaters

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55
Q

What are other common conditions (Assignments)

A

Insured May not transfer policy to another person unless given
Written consent

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56
Q

What is liberalization

A

Broadens or extends coverage, no additional premium charged

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57
Q

What legal action is taken against insurer

A

Insured May use within 2 years and one day of loss

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58
Q

What are the exclusions in DICE

A

Things that aren’t covered, flood, contraband, intentional acts
-have these bc they aren’t insurable or better covered somewhere else

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59
Q

What are endorsements

A

Changes to policy

*only authorized officer can change policy, insured can request change

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60
Q

What is Certificate of insurance

A

Verifies coverage, and it isn’t an insurance contract

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61
Q

What are the six Loss valuations

A 
Replacement
ACV 
value stated
Values stated policy (liquidated determined) 
Market value
Pair and set
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62
Q

What is a replacement cost

A

Today’s cost, with like and quality

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63
Q

What Is actual cost value

A

Replacement cost-depreciation

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64
Q

What is aggregate/stated value

A

antiques and classic care and artwork

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65
Q

What is value policy

A

Destroyed by fire, insured has right to demand policy limits as value, doesn’t apply to personal property

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66
Q

What is loss valuation

A

Negotiated amount determined by a buyer and seller

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67
Q

What is pair and set

A

Subtract value of what remains after the loss for value of the pair

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68
Q

What is total loss

A

Costs more to repair than to replace

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69
Q

What is partial loss

A

any loss that isn’t total loss.

* adjuster will verify if co insurance requirement is met before they pay a partial loss on building*

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70
Q

What is coinsurance

A

Insured to carry a minimum amount of insurance (insurance to value) 80%,

  • never pay more than limit bought.
  • Minimum not carried, partial losses are not paid in full (penalty applies)
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71
Q

What is vacant

A

Empty bldg, insured penalized after 60 days

-May not be covered for losses such as vandalism but still covered in fire insurance

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72
Q

What is abandonment

A

Insured cannot abandon partially damaged property and expect to be paid for its full value

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73
Q

What is salvage value

A

Total losses

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74
Q

What is casualty insurance

A

Most common is casualty coverage is Liability

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75
Q

What is liability

A

Legally responsible, third party coverage

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76
Q

What is civil liability

A

Actions brought by injured parties, can be covered by liability insurance

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77
Q

What is a tort

A

A tort is a civil wrong.

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78
Q

What is An unintentional tort

A

Negligence

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79
Q

What is an direct liability

A

Insured is wrongdoer

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80
Q

What is vicarious liability

A

Insured is responsible for actions of wrongdoer

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81
Q

What is contractual liability

A

Insurer assumes another’s liability under written agreement

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82
Q

What is absolute liability

A

Liability without fault, child drowns in pool, wild animal escapes cage, pit bull bites neighbor

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83
Q

What is strict liability

A

Product defect claims

84
Q

What is negligence

A

Failure to do something that should be done that results in a LOSS

  • reasonable prudent person rule
  • would not be texting, driving, while in car and driving
85
Q

What are the elements of negligence

A

Legal duty- owe obligation
Breach of duty- failure to comply
Actual loss- another suffers loss
Proximate cause- breach of duty is direct cause

86
Q

What are the types of injuries and damages

A

BI- inc pain and suffering
Property damage-loss of use (fix of truck,rental vehicle)
Personal injury- persons character or reputation

87
Q

What is the duty to defend

A

If claim would’ve been true, then it would be covered

Applies to frivolous claims

88
Q

What is an accident

A

Sudden and unexpected

specific time an place proven

89
Q

What is an occurrence

A

Event happens over time, Continuous or repeated exposure

Results in injury or disease

90
Q

What are compensatory damages

A

Special- monetary damages

General- non-economic losses

91
Q

What are punitive damages

A

Punish wrongdoer due to gross negligence

* usually not covered by insurance

92
Q

What is admitted

A

Authorized insurer- certificate of authorityb

93
Q

What is non-admitted

A

Unauthorized insurer, not required to have CoA, only sell surplus lines

94
Q

What is a CoA

A

Issued by TDI, is an insurance company license

95
Q

What is surplus line insurance

A

In Texas, agent must have surplus lines to sell surplus lines insurances

96
Q

What are the surplus lines conditions

A

Coverage only placed with unauthorized carrier after a diligent search of authorized or admitted insurers.
*before can be non-admitted, you must check if they can be on admitted side

97
Q

What is a domicile

A

Domestic-state
Foreign-in another state
Alien-in another county

98
Q

What are stock insurers

A

Owned by shareholders
Dividends paid to stockholders if a profit is made and are taxable
Dividends are not guaranteed

99
Q

What are mutual insurers

A

Policyholders.
Participating dividends are partial return of premiums and are not taxable
Dividends are not guaranteed.

100
Q

What is self insurance

A

Business sets up claims savings account, to pay for property damage or risk

101
Q

What is a govt insurance called

A

Residual market;

Def and state govt provide insurance not available by other insurance companies

102
Q

What is the FAIR program

A

Home insurance, People that are subject to fire, inner city crime areas.

103
Q

Who regulates the insurance business

A

State regulation

104
Q

What and who falls under federal regulation

A

Applies, but only to extent that such business is. to regulated by law

105
Q

What are the sources of underwriting information

A 
Credit report
Consumer investigative
Inspection report
Insurance application
MVR
Photos
106
Q

What is the fair credit reporting act

A

To protect when adverse action resulting in review of credit

107
Q

What do underwriters do

A

Use credit history and other sources of info to eval risk.

108
Q

What are consumer rights under fair credit reporting act

A

Required to give written and verbal disclosure at time of app.
Consumer request copy of report (from credit bureau)
May challenge accuracy of reports contents

109
Q

What is the terrorism risk insurance act

A

Fed govt reimburses insurance companies for terrorism losses covered in some (commercial insurance) policies

110
Q

Who certifies that they can pay for losses under terriorism assurance act

A

Secretary of State, secretary of treasury, and attorney general
Will not pay more than $100 billion in aggregate

111
Q

How is the terrorism risk assurance act applied

A

Must be injurious to life, property or infrastructure
Resulted in. U.S.
Produce $5 million in damage

112
Q

What is Gramm Leach Bliley Act

A

Req financial institution to provide customer with notice if t hey share non-public info to third parties
Allows customer to opt out-instruct insurance company to not share with others
Also forced to develop uniform licensing laws

113
Q

Who passes state regulations

A

State legislature passes statutes and publishes laws

114
Q

What is the Texas insurance code

A

All laws on particular laws

115
Q

What is commissioners duties

A

2 year term, February 1st of each odd year, no financial interest in company

116
Q

What are the powers of commissioner

A 
Issues insurance and licenses and certifications of authority,
Conducts examinations (audits)
117
Q

What are powers of commissioner

A

Issues cease and desist, imposes penalties following hearings, approves insurance policy forms sold within state
Approves rates for regulated lines of insurance

118
Q

When are investigations done by commissioner

A

Once every five years
Insurer pays for audit and receives premium tax credit
New insurers examined every years or as necessary

119
Q

What is the guarantee association

A

Protects claimants and policyholders in The event of insurers insolvency
Composed of all insurers authorized to transact business within the state

120
Q

What is guarantee assoc.

A

Governed by board, 5 insurers and 4 public

121
Q

What is the assessment of guaranty association

A

Amounts they pay is based upon their share of market in Texas, result in fine if not payed

122
Q

What is the financial strength ratings

A

Private companies (not TDI) that publish these ratings

123
Q

Who are the private companies that publish ratings

A

A.M. best
Moody’s
Standard and Poor’s
Fitch

124
Q

What is rate regulation

A

Use and file in tx

TDI could eventually decline rate increase and order company to pay refund

125
Q

What is agent regulations

A

Agents represent their companies
Eval customers needs and recommend appropriate coverages
Bind risk

126
Q

What are the licensing requirements

A

18 years of age, pass exam, fingerprints, notify change of address w/I 30 days

127
Q

Who is a resident agent

A

Licensed to sell in tx,

128
Q

Who is a nonresident agent

A

Does not live in tx, allowed to sell in tx

129
Q

What is a temp license

A

90 days, no renewal, required to have a agent sponsor, no test

130
Q

What is an emergency license

A

90 days, agent has died or is disabled, renew 1 time, no test required

131
Q

What is a insurance service rep

A

Salaried, no commissions, only does quotes and explains coverages,
Does not bind coverage or collect premiums, unless told to be supervising agent gives expressed authority

132
Q

What is a limited lines agent

A

Sells one type of insurance,

133
Q

Who is a risk manager

A

Does not permit licensee to receive commissions from sale of insurance

134
Q

Who is a managing general agent

A

Appoints and supervise property and casualty agents who sells insurance, not licensed to sell, agents do actual selling.

135
Q

Business and financial entities

A

One partner must be licensed before business can apply for license.
Banks must be separate and distinct from bank ops, to avoid coercion.

136
Q

What is a license renewal

A

2 years
If lapses, may renew within 90 days- subject to a 50% fee
Must apply for new license if expired for one year or more

137
Q

CE

A

2 ethics hours, 4 years of records, 30 hours, 50% in classroom

138
Q

What is termination of appointment

A

Must be reported to TDI,provide reason for termination, LOA doesn’t result in loss of license

139
Q

Who can take away license

A

Commissioner

140
Q

What are fiduciary responsibilities

A

Misappropriation of funds, subject to state fines

Mixing (commingling) is prohibited

141
Q

What is conversion

A

Bringing $ for one purpose then converting to a different use

142
Q

What are the disciplinary actions

A

Cease and disorder
Suspend or revoke license
Levy fine- $25,000
20 days to request hearing, TDI must give 10 day advance notice of hearing

143
Q

What penalties and fines may arise resulting from disciplinary actions

A

Misappropriating or converting $

Convicted of felony= If licensed, notify commish w/I 30 days

144
Q

What if you fail to comply with fines

A

Agents-$1,000 per violation, $5,000 max

Insurers- up to $25,000

145
Q

What is twisting

A

Misrepresentation

146
Q

What is defamation

A

Financial condition

147
Q

What is disparagement

A

Services

148
Q

Unfair trade practices- testimonials

A

Genuine true, must be current opinion

149
Q

What is boycott, coercion and intimidation

A

Force someone to do something

150
Q

What is the false use of stats

A

Verifiably true, source must be i.d.

151
Q

What is unfair discrimination

A

Race religion or country of origin is not allowed

152
Q

What is unfair claims practices

A

Unless the claim is a fire loss of income claim

153
Q

What time requirements do adjusters must me

A

15 days to acknowledge the claim or start the investigation
15 business days to except or deny the claim
Five business days to write the check
Requirements may be modified if arson or weather related catastrophe is involved

154
Q

What are covered autos

A

Owned vehicles or private passenger auto’s pick up trucks and vans
size requirement is 25,000 pounds or less only
for personal use not business
the exceptions are farm vehicles

155
Q

Covered autos non-own vehicles

A

Borrowed vehicles
rented vehicles
and temporary substitute vehicles
And rentals and these are all covered under liability only

156
Q

Trailers hitched to insured vehicles

A

Automatically covered for liability only

157
Q

Persons injured and Who are covered

A

Resident spouse and the name insured

158
Q

Who is a Resident family member

A

Blood marriage or adoption

wards or foster children

159
Q

Any person driving with the church permission who are they

A

Permissive user’s with spouses permission

160
Q

What do Part A third-party cover

A

Pays legal obligations
bodily injury or property damage
Pays all claims handling cost without limits
Does not cover the insureds injuries or damage

161
Q

What do bodily injury cover

A

Medical expenses
lost wages
pain and suffering

162
Q

What is property damage

A

Damage to another vehicle-pay for rental as well
damage to a building
damage to wall or fence

163
Q

What is the Texas motor vehicle safety responsibility act

A

Requires proof of ability to satisfy a liability claim against a person as a result of an accident
Meet requirements in Texas-by auto liability insurance or bond, deposit money with the state $85,000,
self-insure for $1 million

164
Q

What are the limits of liability for Texas, split limit

A

$30,000 for bodily injury per person
$60,000 for bodily injury per accident covers all people in the vehicle
$25,000 for property damage per accident

165
Q

What is the combined single limit

A

$85,000 per accident

166
Q

What is a supplementary payment-bonds

A

Premiums up to $250

Loss of earnings up to $200 per day

167
Q

Is defense a supplementary payment

A

Difference is not a a supplementary payment

168
Q

What are the exclusions for liability

A

Does not apply to family members for use of a vehicle without permission

169
Q

What does livery mean

A

Means delivery for a fee or taxi

170
Q

What is a courier

A

Property for a fee

171
Q

Is prearranged racing covered as an exclusion

A

No it is not covered

172
Q

Lost cause intentionally by insured not covered

A

Road rage

173
Q

What exclusions not normally covered under motorized vehicles

A

Motorcycles or autos with fewer than 4 wheels

174
Q

Other insurance clause

A

Just borrows Mary’s car and is in an accident Mary is primary Jess is excess

175
Q

What is Out of state coverage

A

Insured will pay higher
Liability limits purchased by the insurer
Limits required by the state in which the insured is traveling

176
Q

What is The first parties medical payments

A

The insured occupying an auto or as a pedestrian is covered

The insurers guess passengers with permission is covered

177
Q

Up to what amount is the medical payments coverage

A

Paid regardless of fault up to three years

178
Q

Are medical expenses covered

A

Medical and funeral expenses are covered, $500 per person is minimum limit

179
Q

What is PIP

A

Insured occupying as a pedestrian, first party

Pays regardless of fault up to three years

180
Q

What does PIP pay

A

Medical funeral expenses,
80% of lost wages or essential services
A person cannot collect both

181
Q

What are the PIP limits

A

$2500 per person minimum

May be rejected in writing

182
Q

What is uninsured and Underinsured motorist coverage

A

First party coverage
Property damage up to $250 deductible applies
Person has no insurance you must pay the deductible

183
Q

Who is an uninsured motorist

A

The hit-and-run
Or physical contact with other vehicle must occur
Runs you off the road it doesn’t hit you is not a hit-and-run

184
Q

What is in Under insured motorist

A

Excess coverage over at fault drivers insurance

185
Q

What are the available limits

A

Minimum split limits 30/60/25
$85,000 combined single limit
Maximum cannot exceed limit purchased for liability

186
Q

Must Um/uim be included

A

Must be included in all liability policies issued in Texas, unless insured rejects the coverage in writing

187
Q

What are the physical damage coverages?

A

Damage to ensured vehicles, non-owned vehicles (rental cars)

188
Q

What physical damage coverage is covered in collision

A

Collision with another vehicle or object

upset of the vehicle; which is an overturned vehicle

189
Q

What is comprehensive coverages

A 
Earthquake and flood (auto) 
glass breakage (missile) 
contact with the bird
190
Q

What are some physical damages exclusions

A

Sound video equipment permanently installed, $1500 if permanently installed
Personal property in the car
customized equipment

191
Q

What are the most common exclusions

A 
Wear and tear 
mechanical or electrical breakdown 
road damage to tires 
war (nuke)
freezing
192
Q

What are some free coverages

A

Limited to $20 per day up to $600 maximum per loss

If a theft loss there is a 48 hour waiting period

193
Q

What is a loss settlement

A

Settled in actual cash value, you must depreciate the claim if in a wreck

194
Q

What are the exceptions to newly acquired vehicles

A

Liability will extend until the end of the policy. And replaced for 14 days

195
Q

What Are the duties of an insured following a loss

A

Notify the police of a hit-and-run and notify the police promptly after vehicle is stolen

196
Q

What are the general provisions for territory

A

United States and its territories and possessions
Canada, Puerto Rico and Guam
no coverage in Mexico

197
Q

What are the provisions for cancellation

A

Insurer gives you 60 days for a new policy to get to know you
and may cancel with 10 day notice

198
Q

What if cancellation is more than 60 days

A

Insurer can cancel with a 10 day notice for nonpayment of premiums, drivers license suspended or revoked, fraudulent claim, vehicle registration is suspended or revoked.

199
Q

What is a dwelling policy eligibility

A

Tenant usually occupied, no farms

mobile homes by endorsement and the wheels must come off

200
Q

What is a monoline policy

A

It’s a type of insurance, property only, no liability unless endorsed, no theft coverage unless endorsed

201
Q

What is dwelling policy coverage A

A

Additions attached to it, screen doors and windows, outdoor equipment, materials and supplies used for repairs or construction

202
Q

What is dwelling policy coverage B

A

Other apart structures-limit is 10%, detached buildings, fences, detached garage, utility shed

203
Q

What is dwelling policy coverage C

A

Personal property-the contents of the insured, insureds custody (houseguests), students property at a dormitory

204
Q

What is dwelling policy coverage C

A

Personal property not covered-business equipment stored on premises, pets, motor vehicles, accounts, bills, currency, property of renters

205
Q

What is dwelling policy coverage D

A

Fair rental value, loss of rental income caused by a covered peril

206
Q

What is dwelling policy coverage E

A

Additional living expenses, motel bills, restaurant bills, laundry costs, due to loss of the use of the dwelling caused by a covered peril

207
Q

What are other coverages for dwelling policies-free

A

Debris removal clean up after covered loss, property removal (30 days)
fire department service charge $500
Trees, shrubs, and other plants
Up to $500 per plant
Perils such as fire and vandalism are covered

PNC Exam Review (1 decks)

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