Important Concepts (CH7)

Question 1

Characteristics of insurance policies

Answer 1

1. Indemnity
2. Utmost good faith
3. Fortuitous losses
4. Contract of adhesion
5. Exchange of unequal amounts
6. Conditional
7. Nontransferable

Question 2

self-contained policy

Answer 2

all the provisions needed to make up an insurance policy are contained in one document

Question 3

modular policy

Answer 3

a policy that consists of several different documents, none of which by itself forms a complete policy

Question 4

Advantages of modular policies

Answer 4

1. Minimal coverage gaps
2. Consistent terminology
3. Fewer forms are required
4. Simplified underwriting

Question 5

pre-printed forms

Answer 5

most insurance policies are assembled from them. Usually referred to as contracts of adhesion

Question 6

Manuscript forms

Answer 6

custom forms developed for one specific insured, or small group of insureds with unique needs. Not considered contracts of adhesion as insured/insurer work together to develop the policy language

Question 7

standard forms

Answer 7

forms accompanied by portfolios or endorsements that apply necessary state variations or customize coverage

Question 8

non-standard form

Answer 8

often referred to as a company specific form. All manuscript forms are non-standard.

Question 9

endorsements

Answer 9

form part of the policy. Can be a sentence, paragraph, or set of paragraphs. Handwritten endorsement supersedes a computer-generate or typewritten one

Question 10

insurance application

Answer 10

a documented request for coverage, usually kept by the insurer for evidence if a problem arises

Question 11

Policy provisions

Answer 11

1. Declarations
2. Definitions
3. Insuring Agreements
4. Conditions
5. Exclusions
6. Miscellaneous Provisions

Question 12

Insuring agreements

Answer 12

promise to make payment

Question 13

conditions

Answer 13

qualifications on promise to make payment. Outlines steps the insured needs to take to enforce the policy

Question 14

DICE

Answer 14

a systematic review of all the categories of P&C policy provisions:
Declarations
Insuring Agreements
Conditions
Exclusions

Question 15

collateral source rule

Answer 15

legal doctrine that provides that the damages owed to a victim should not be reduced because the victim is entitled to recover money from other sources, such as an insurance policy