insurance

Question 1

insurance and advantages

Answer 1

used to spread/shift the risk of loss to other parties

advantages:
- insurance company goes to court to defend you, saving you time and money

Question 2

insurance policy and the four basic elements

Answer 2

• an agreement for one party to take on the financial loss of another for a specific event (indemnity)

1. deductible - portion of the costs of defending or paying for a claim
2. coverage period - length of time when coverage is in place
3. perils covered - event that triggers the obligation of the insurer to pay or defend
4. limitation period - contractual or statutory agreement that a notice of claim must be made or legal action commenced

Question 3

two categories of insurance policies

Answer 3

1. liability insurance
   - protects against claims
2. property insurance
   - protects against loss or damages to property

Question 4

two methods to protect assets

Answer 4

1. judgment proof
   - taking steps to put ones assets beyond the reach of creditors - assets in spouse name or removing from corporation
2. incorporating a company - keeping minimal level of assets in a company

Question 5

duty to defend

Answer 5

insurers duty/obligation to pay for legal fees and other costs of defending a claim

Question 6

duty to indemnify

Answer 6

insurers duty/obligation to pay for claims

Question 7

subrogation

Answer 7

the rights held by insurance carriers to legally pursue third parties that cause an insurance loss

Question 8

waiver of subrogation clause

Answer 8

eliminates the insurers right to subrogation

Question 9

insurable interest

Answer 9

reasonable concern of a person to obtain insurance for any individual or property against unforeseen events

Question 10

Claims made policy

Answer 10

covers claims that are made during the policy period and not when work was done

Question 11

occurance policy

Answer 11

covers claims in which the insured event occurs during the policy period

Question 12

hybrid policies

Answer 12

occurrence takes place during policy period and claims made during that period

Question 13

material non-disclosure

Answer 13

breach of duty of the insured to provide al relevant information to the insurer when purchasing an insurance policy

Question 14

four types of insurance policies

Answer 14

1. builders risk (all risk) policy
2. commercial general liability policy
3. wrap up policy
4. errors and omissions (malpractice) policy

Question 15

builders risk policy

Answer 15

• property insurance which is designed to cover all damages to the insured property except those perils (events that cause damage to the insured - negligence, faulty design)

Question 16

commercial general liability policy

Answer 16

• liability policy to cover claims by others for loss arising out of physical injury or damage to persons property

Question 17

wrap up policy

Answer 17

liability policy that insures all direct participants in a construction project

Question 18

malpractice insurance - errors and omissions

Answer 18

liability insurance for professionals that covers claims made by third parties for loss or damage caused by negligence of the insured