insurance terms

Question 1

Property Insurance

Answer 1

covers real property (structures) and personal property (moveable stuff) from covered causes of loss called perils

Question 2

Casualty Insurance

Answer 2

covers insured from non-property losses. AKA as legal liability to others

Question 3

Personal Lines

Commercial Lines

Answer 3

1.Insurance for families and individuals:AUTO HOMEOWNERS BOATS RECREATIONAL VEHICLES

2. Insurance for businesses: COMMERCIAL AUTO COMMERCIAL PROPERTY COMMERCIAL PROPERTY COMMERCIAL LIABILITY WORKER’S COMPENSATION

Question 4

risk
pure risk
speculative risk

Answer 4

Risk
Uncertainty of financial loss

Pure risk
Chance of loss only. Only risks that are covered by insurance

Speculative risk
Chance of loss or gain. Not covered by insurance

Question 5

1 perils
2 named peril
3 opene peril

Answer 5

Perils
common causes of loss such as fire, wind, lightning, and so on.

Named peril
specified peril that is listed on the policy

Opene peril
all risk: except the specifically excluded by the policy

Question 6

hazard-
1 physical hazard
2 moral
3 morale

Answer 6

Hazard
not causes of loss but things that increase the chance of a peril

Physical Hazard
Visisble characteristic

Moral Hazard
Dishonest tendencies

Morale Hazard
Attitude of carelessness

Question 7

direct los
indirect loss

Answer 7

Direct loss
immediate physical damage to property

Indirect Loss
Loss that happens but due to the use of the property. AKA consequential

Question 8

CALC

Answer 8

CALC
competent parties, Agreement, Legal purpose, consideration
Meaning of CALC
competent parties (18+ sane sober), agreement (offer and acceptance), legal purpose (transfer of risk is legal), consideration (exchange of values “premium”)

Question 9

REPRESENATION
MIS REP
MATERIAL MIS REP

Answer 9

Representations
information believed to be true, ex: answers by the insured

Misrepresentation
information that is not true

Material misrepresentation
info that is not true but would have caused the insurer to not issue the policy

Question 10

BINDER AND BINDER DETAILS

Answer 10

Binder
Temporary contract of insurance pending issue of the policy
Binder Details
Usually issued by the agent, may be writeen or verbal, good for up to 30 days in Texas, can be cancelled by insurer, does not guarantee a policy will be issued, ceases automatically if a policy is issued/declined

Question 11

4 PARTS OF A POLICY

Answer 11

Four parts of an insurance policy
Declarations, Insuring agreement, Conditions, Exclusions (DICE: Declarations, Insuring Agreement, Conditions, Conditions, Exclusions)

Question 12

DICE, DECLARATIONS

Answer 12

declarations page, sheet, or face of the policy. Tailors the policy to meet specific needs of an insured, contains the six P’s

Question 13

SIX P’S

Answer 13

Policy number, Parties (insurer, insured, mortagee or lien holder), Property description and location, Policy term (effective and expiration dates), Policy limits and deductibles, premium

Question 14

LIMITS

Answer 14

of liability: max amount of coverage agreed to be paid per loss aggregates: max amount of total of all claims paid per policy period (usually found only on commercial policies)

Question 15

1 DEDUCATABLE
2 PREMIUMUM

Answer 15

Deductable
aka: retention or retention limit. requires the insured to pay a specific amount or percentage of the loss. Insurer pays in excess of deductible, effect of adding deductible; reduces premium, reduces frequency of claims
Premium
consideration paid by the insured. each day that passes the insurer earns more of the premium , if policy is terminated prior to expiration date the unearned premium must be returned

Question 16

INSURING AGGREEMENT

Answer 16

contains the insurer’s promise to pay, includes the covered perils of a policy. Named, Open, and a combinatio of named and open PERILS

Question 17

CONDITIONS, DICE

Answer 17

Contains the duties and rights of the parties (ex: insured’s duties in event of a loss, insurer’s subrogation rights, mortagee rights. Also includes termination provisions, loss settlement, territory where coverage applies.

Question 18

AFTER A LOSS

Answer 18

After a loss
insured must provide insurer with prompt notification, cooperation with the insurer, submission of proof or sworn statement (within 91 days in TX), if required.
After a loss (property policies)
Property policies require insured to protect property from further damage and provide an inventory of damaged property

Question 19

INSURER Subrogation rights

Answer 19

If insurance company pays for the damages caused by someone else, then the insurer now has the right to go after the responsible party. the deductible is returned to the insured party if the insurer is able to collect from the at-fault party

Question 20

MORTAGE RIGHTS

Answer 20

Mortgagee (Lender): pay the premium/file a proof of loss, receive claim payment up to the insurable interest