Key Concepts Flashcards
Length of Time to inform of Agent/Agency change of details
Thirty (30) days to notify the department IN WRITING. This includes: Name changes Residence Address Principal business street address Mailing Address Contact Telephone number Business email address
Length of Time to keep Records
5 years = all insurance records
Funds for premiums, return premiums or other funds belonging to others are trust funds received by license in Fiduciary capacity in separate account must be kept for 3 years.
Diversion/Misappropriation
$300 or less MIsdemeanor 1st Degree
$301 to less than $20,000 Felony 3rd Degree
$20,000 to less than $100,000 Felony 2nd Degree
More than $100,000 Felony 1st Degree
Essential Elements of Legally Binding Contract
- Offer & Acceptance
- Consideration
- Legal Object
4 Competent Parties
Example of Offer & Acceptance
Farmer submitting application.
Corporation accepting application.
When is insurance contract legally binding
Once agent signs application.
Type of entities participating in Crop Insurance
Individual, corporation, partnership, joint-operators-co-owners, estates, trust, county, state, municipal office, agent entities and associations, clubs, tax-exempt agencies
Contract is composed of these 4 sections
- Declaration
- Insuring Agreement
- Exclusions
- Conditions
What is contained in Declarations of Crop Insurance Contract?
Declaration statements include:
- Name of Insured
- Identification of the Insured
- Location of the property
- Identification of property insured.
What is the Insuring Agreement?
Statements by a company whereby they promise to pay for a loss if it results from a covered peril. An All-Risk policy will cover loss by any peril except those that are specifically excluded.
What are Exclusions?
Statements by a company where they state what they will not do.
Exclusions are a basic part of the contract and understanding of the contract requires complete knowledge of the exclusions.
What are Contract Conditions?
Part of the contact that spells out IN DETAIL the duties and rights of both parties.
List 6 Legal Characteristics of an Insurance Contract
- Personal
- Unilateral
- Adhesion
- Aleatory
- Utmost Good Faith
- Indemnity
Explain Personal Contract
Insurance applies to production but risk is transferred to the company from the individual.
Explain Unilateral Contract
Only one of the parties is legally bound to do anything. The Insured makes no promises that he can legally be required to keep - insurance contract is a conditional contract, if the insured violates certain conditions of contract he may be prevented from collecting but he cannot be required to keep conditions.
Explain Contract of Adhesion
Prepared by one of the parties (company) and accepted or rejected by the other (the insured).
If contract is not about provisions then courts have held any ambiguity in the contract should be interpreted in the favor of the insured BECAUSE COMPANY HAS RIGHT TO DRAW UP CONTRACT
Why is Doctrine of “Presumption of Intent” important in areas of Insurance?
Insurance policies are contract of adhesion and insured must accept or reject the terms as they are written.
What is “Presumption of Intent”?
Courts have ruled that a person is bound by the terms of a written contract, which he signs or accepts, whether he reads the contract or not.
Court assumes insured has read his contract and agreed with terms as written.
May an individual make a profit through insurance?
Under terms of policy, the insurance company promises to reimburse the insured his financial loss up to the amount of insurance he has purchased - no more.
In other words, individual should not be permitted to make a profit through insurance.
3 Insurance Principles supporting no financial gain
- Insurable Interest - Only insure what you have interest in
- Subrogation - lose right to collect from 3rd party for damages to crop
- Apportionment - Cannot collect more than actual value of loss
Explain Aleatory Contract
Insurance arrangement which payouts to the insured are unbalanced. Until insurance results in a payout, insured pays premiums without receiving anything but coverage. When payouts occur can far outweigh sum of premium paid by insured.
A contract of Utmost Good faith is
considered void when concealment must involve a material fact which would have changed the underwriting basis of policy.
Explain Contract of Indemnity
Agreement between two parties, in which one party agrees to pay for potential losses or damages caused by the other party.
When may a contract be voided?
- Concealed information
- Misrepresented material facts
- Committed fraud
Misrepresentation of material facts may void policy even though misrepresentation was unintentional
3 facts about Fraud
- Contracts may be voided
- Claim for indemnity will be denied
- Premium will be due
Actuarial Table
What is it?
Where is it filed?
What does it show?
Form & related material for crop year approved by the corporation.
On file for public inspection at county
Production guarantees, coverage levels, premium rates, prices for computing indemnities, insurable & uninsurable acreage, related information regarding insurance in county
Define County
County shown on the application and any additional land located in a local producing area bordering on the county, as whose on the actuarial table.
Define Crop Year
Period within which the crop is normally grown and shall be designated by the calendar year in which crop is harvested.
Feasible to Replant
When the remaining growing season is considered sufficient for a crop to reach maturity.
What is Fire Department Service charge?
Pay up to $X for year obligation assumed by contract or agreement for fire department charges incurred when the fire department is called to save or protect the unharvested crop.
Define Harvest
Individual crop sessions
Define Insurable Acreage
Land classified as insurable by the corporation and shown as such on the county actuarial table.
Define Insured
Person who submitted the application accepted by the corporation.
Define “Office for the County”
Corporation’s serving the county shown on the application for insurance or such office may be designated by the corporation.
Define Person
Individual, Partnership, Association, Corporation, Estate, Trust, Other business enterprise or legal entity, state, political subdivision of a state or any agency thereof
Define Share
Interest of the insured as landlord, owner-operator or tenant in the insured crop at the time of seeding as reported by insured or as determined by the corporation, whichever corporation shall elect for purpose of determining indemnity provided.
- Share shall not exceed harveston it
- Calendar date for end of insurance period
- Date entire crop or unit is destroyed determine by corporation
Describe Tenant
Person who rents land from another person for a share of the crop or proceeds there from
Define Unit
Identifiable tract of land as determined by corporation guidelines, on which is grown an insurable crop
Define Transit Coverage
While the harvested crop is being transported to first place of storage not to exceed 100 miles. Policy is extended to cover loss caused by: 1 Fire & Lightning 2 Windstorm 3 Collision 4 Overturn 5 Collapse of bridges/docks/culvert (Does NOT include cotton & tobacco) This is excess over any valid & collectable insurance.
Life of Contract - Cancellation & Termination Rules
Contract is valid for the crop year specified on application and may not be cancelled for such crop year. Only exception is mutual consent for unavoidable causes.
Either party may cancel insurance for any corp year by giving a signed notice to the other on or before the cancellation date preceding such crop year.
Notice of Damage or Loss
Fifteen (15) day notice before harvest is required where probable loss exists and crop will be harvested.
Immediate notice is required if loss occurs less than 15 days prior to harvest. A 10 foot wide strip length of field shall remain intact fifteen (15) days from date of notice or until released or by corporation by written consent to the insured to harvest respresentative sample
Why does 15 day notice exist?
Brought into existence because of isolated heavy loss in a non-loss area.
Provision:
1 protects farm from higher premium
2 lowers coverages to to losses used by fraudulent claims
3 provides an avenue to help curb these isolated heavy loss situations
