Insurance/Property And Liability Insurance Flashcards
What are the basic forms of homeowners insurance coverage?
Basic coverage
Broad coverage
Open coverage
What are the characteristics of basic coverage?
Protects the homeowner from losses associated with 12 named perils: Fire Vehicles Lightning Smoke Windstorm Vandalism or malicious mischief Hail Explosions Riots or civil commotion Theft Aircraft Volcanic eruptions
What are the characteristics of broad coverage?
Provides protection from losses associated with 18 named perils. The 12 perils covered in basic coverage post coverage for losses associated with:
Falling objects
The weight of ice snow sleet
Accidental discharge or overflow of water or steam
Sudden and accidental cracking, burning, bulging of appliances
freezing of plumbing, heating, air conditioning, fire sprinkler system, or appliance
sudden and accidental damage from artificially generated electrical currents
What are the characteristics of open perils coverage?
Provides protection from losses associated with all perils, except those that are specifically excluded. And open perils policy provides more comprehensive coverage than the basic and broad policies.
What is the general rule regarding insurance policies?
Basic and broad policies are “named peril” policies. Losses resulting from perils not specifically named are not covered. And “open perils” or “all risks” policy covers all perils except those that are specifically excluded
What are general exclusions for most homeowners policies?
Movement of the ground (earthquake, mud / landslide, and sinkhole)
Damage from rising water
War
Nuclear hazards
Power failure caused by uninsured peril
Intentional Acts
Neglect
What is the rule of thumb for covered losses?
Covered losses must result from something that is “sudden and accidental”. Losses associated with neglect and intentional Acts of the insured are not covered
What is an endorsement?
A supplement to an existing policy that provides additional coverage for perils excluded by a policy:
Sinkhole collapse Earthquake Sewage backup Refrigerated property coverage Floods, by purchasing a separate insurance policy from the national flood insurance program
What is coverage A?
Dwelling
Pays for repair and replacement for damage to the house and any attached structures
Losses are paid on a replacement cost basis (with materials of the same or similar quality at current material prices) no depreciation is taken
What happens if a homeowner doesn’t carry enough homeowners insurance?
Insured receives payment for partial losses, calculated as follows:
Amount of insurance carried / coinsurance requirement X amount of loss = insurance payment
Typically 80% of replacement cost
What is coverage B?
Other structures
Detached structures on the property, examples:
Detached garages
Greenhouses
Storage buildings
Typically the limit of this coverage is 10% of coverage A. Losses are insured on a replacement cost basis
What is coverage C?
Personal property
Includes tangible personal property (furniture, clothing, etc)
Typically coverage is 50% of coverage A
Losses insured on an actual cash value basis
Replacement cost endorsement can be purchased to enhance coverage
What is coverage D?
Loss of use
Pays for additional living expenses incurred when insured is unable to occupy the dwelling due to damages caused by an insured peril
What is covered in section II of most insurance policies?
Liability and medical payment coverage
What is coverage E?
Personal liability
Pays for claims from bodily injury and property damage to others arising out of the insured’s activities, premises or animals
Minimum coverage typically $10000 per occurrence
Will also pay for legal defense and settlement costs associated with claim
What is coverage F?
Medical payments to others
All necessary medical expenses without regard to liability for others arising out of the insured’s activities, premises or animals
Expenses must be incurred within 3 years of the accident
Limits vary, $1000 - $5000, $10000 upper limit
Doesn’t pay for anyone in insured’s household unless they are a residence employee
What sure limits and exclusions if coverage E and F?
Do not pay for injuries or damages:
That are expected it intended by the insured
From the insured’s business or professional activities.
From rental of the premises
Watercraft, motorized vehicles and aircraft
War/nuclear weapons
Transmission of communicable disease
Sexual molestation, corporal punishment, physical or mental abuse
Controlled substances other than legal Rx drugs
What is HO-2 broad form?
Provides coverage on a broad perils basis (18 named perils)
What is HO-3 special form?
Provides coverage on an “open perils” it “all-risks” basis?
Special form of homeowners insurance
If peril not excluded, then losses covered
Personal property/still provided on a named perils broad form basis
What is an HO-4 policy?
Renters
Provides coverage for renters or tenants
No dwelling/structure coverage
Provides:
personal liability
Personal contents (coverage C) on a broad perils basis
Min amount sold is $6000
Loss of use of the premises (equal to 30% of personal property coverage)
What is an HO-5 policy?
Comprehensive form
Provides coverage on an “open perils” or “all risks” basis
Comprehensive homeowners insurance
Similar to HO-3, with one major change, provides personal property protection on an open perils, instead of broad perils basis.
What is an HO-6 policy?
Condominium owners form
Provides coverage for condos
Coverage for inside structure of their unit and all its contents (outside structure owned by association)
Broad perils coverage, similar to HO-2 and HO-4
Amount of personal property coverage is 6000
Loss of use (coverage D) limited to 50% if the coverage C limit
What is an HO-8 policy?
Modified coverage form
Modified form policy
Provides repair cost coverage (instead of replacement)
Provides “functional replacement cost” coverage
Typically insures older homes that may be quite expensive to repair if insurance is required to use original construction materials and workmanship
What is after insurance Part A?
Liability coverage (bodily injury and property damage) to others where insured is responsible.
Minimum coverage varies from State to State
Split limit policy:. Bodily injury per person, bodily injury per accident and property damage are all separately listed (50/100/50)
Combined single limit:. Fixed amount of coverage regardless of type, max coverage per accident
What is part B auto insurance?
Medical payments coverage
Extends to injured insured or occupants of the insured’s car, regardless of who caused accident
Two groups of insured persons:
Insured and family members of insured - medical payments coverage if hurt while driving a covered auto, or as passenger in covered auto, it if insured as pedestrian when stuck by auto
Other person’s who occupy insured’s covered vehicle - medical payments coverage, does not extend to a non-owned auto driven by insured
Part B coverage limits are significantly less than liability limits
What is part C auto insurance?
Uninsured motorist coverage
Referred to as be UM/UIM coverage
If uninsured/underinsured party at fault, pays for property damage/bodily injury of insured
What is part D auto insurance?
Coverage for damage to the insured’s vehicle
Collision: pays if with auto damaged in accident with another vehicle or an object (fence, tree, etc). Also covers single car accident involving rollover
Comprehensive: pays to repair/replace a vehicle that is stolen or damaged in an incident that is not a collision. Defined as “other than collision coverage”
What perils are not considered collisions?
Fire Theft Vandalism Weather related Running into animals Riots Falling objects
What is part E auto insurance?
Duties age an accident or loss
Insured contractually required to:
1) give notice immediately to insurance company: time, place, circumstances and names and addresses of claimants and witnesses
2) protect auto/equipment from further loss
3) . File written proof of loss with insurance Co within policy time constraints
What is part F auto insurance?
General provisions
Insured is covered driving in sent US state and Canada, not covered in Mexico
What are the categories of legal liability?
Torts (civil wrongs)
Breach of contract
Criminal offenses
What does liability insurance cover?
Certain classes of torts, does NOT cover breached of contract or criminal offenses
What are the types of torts?
Intentional interference: intentional criminal acts are not covered. Slander (defamation/harm caused by verbal statement) and libel (defamation by written statement) ARE usually covered under personal liability polices
Strict and absolute liability: occurs as a result of legislation, one party legally liable regardless of who is responsible for injury. (Ex workers compensation). Strict liability has few defenses, absolute liability the responsible party has no defense
Negligence: an act or failure to act with appropriate care and bodily injury or property damage results, “prudent man” standard met if reasonable person in same situation would have performed same acts
Direct negligence: directly attributable to an individual
Vicarious liability: individual held responsible for negligent acts performed by someone else (parents/children or employer/employees)
What is the concept Res ispa loquitor?
The act speaks for itself
A doctrine of the law of negligence, ex a plane crash, permits for the use of reasonable evidence when a specific explanation is not available. It does not have to be proven
What is negligence per se?
The act itself constitutes negligence, thereby relieving burden of proof (drunk driving)
What is the burden of proof?
Initially born by injured party, standard of proof in most civil cases is the preponderance if evidence (more than 50%)
What forms can tort damage take?
Bodily injury: may lead to medical expenses, loss of income, pain and suffering, mental anguish and/or loss of consortium (marriage)
Property damage: usually measured by the actual monetary loss caused by the act
What are the damages for bodily injury?
Special: compensate for measurable losses (loss of limbs)
General: intangible losses (pain and suffering)
Punitive: punishment for the act
What are the defenses available for negligence?
Assumption of risk: not available in all states; injured party fully understood and recognized dangers involved and voluntarily chose to proceed
Negligence on the part of the injured party; Contributory (evidence that injured party did not look out for his own safety, often results in entire action failing) Comparitive negligence (amount of damage adjusted to reflect injured party’s proportion of contribution to the cause of injury
“Last clear chance” rule:. Claimant who is endangered by his own negligence may recover if the defendant has a “last clear chance” to avoid accident and failed to do so
What are two important factors when deciding on personal liability insurance?
Earning power and Net Worth; judgements can be perfected by levy and seizure
