Lightning Facts Chapter 2&3 Flashcards
Proximate Cause
The primary cause of loss. If only one peril caused the loss, the proximate cause is the
first event in the unbroken chain of events that resulted in loss. If more than two perils
caused or contributed to the loss, the proximate cause is the peril having the most
significant impact in generating the loss or damage.
Concurrent
Causation
A principle holding that when two perils simultaneously cause a loss (i.e., they are both
considered the proximate cause of loss), the insurer must pay the loss even if one of the
perils is excluded by the policy.
occurrence
an accident and includes continuous or repeated exposure to the same general
harmful conditions.
pro rata
If an insurer cancels an insurance policy before its expiration date
endorsement
a policy form that alters or adds to the provisions of a property and casualty
insurance contract.
direct loss
causes damage without an intervening cause
indirect loss
occurs as the consequence of a direct loss
named perils policy
specifically lists the covered perils
open perils policy
covers all perils except those specifically excluded
replacement value
cost to replace with property of like kind and quality,
at current pricing, without a deduction for depreciation.
Actual cash value
replacement value of property minus depreciation.
valued policy
requires the insurance company pay the total scheduled limit of insurance for a
total loss.
specific limit
insures a single item on a single policy for a single
limit of insurance.
scheduled limit
insures one or more items on a single policy and
each item is insured at a scheduled limit of insurance.
blanket limit
insures multiple items of property on a single policy
with one limit of insurance applying to all insured property.
declarations page
describes basic information about the policy; i.e., the who, what, where,
when, and how much.
Insuring Agreement
insurer’s promise to pay the insured.
conditions section
states the obligations of the insurer and the insured, as well as any other
conditions of coverage.
subrogation provision
states the insured’s obligation to transfer to the insurance company its
right of recovery against any party causing a loss after it accepts payment from the insurer for a
loss.
exclusions section
Perils that are NOT covered by the policy
Additional coverages
automatically included in property policies without an additional
premium and include items such as debris removal, collapse, and fire department service
charges.
Coinsurance
property policy provision that requires the insured maintain a certain
limit of insurance coverage in order to avoid a penalty in the event of a partial loss.
tort
a wrongful act, other than a breach of contract or a crime that violates a duty or the
rights of another and for which compensation may be sought from the responsible party.
intentional tort
a deliberate act that harms another and for which the injured party is
permitted by law to sue the wrongdoer.
Liability insurance
provides coverage for most unintentional torts and excludes intentional torts.
Vicarious liability
assigned to one party for the conduct of another, based solely on a
relationship between the two.
Compensatory damages
awarded to an injured party for actual loss sustained.
Special damages
compensatory damages for tangible expenses such as bills, loss of earnings,
and the costs to repair or replace damaged property.
General damages
compensatory damages for pain, suffering, mental anguish, disfigurement,
and similar types of losses that cannot be objectively calculated.
Bodily injury liability
the legal liability arising from physical injury, including sickness, disease,
and death caused by the acts or omissions of an insured. Bodily injury liability expenses include
medical bills, lost wages, mental anguish, disfigurement, pain and suffering, etc.
Property damage liability
pays for the legal liability arising from physical damage to tangible
property, including loss of use of that property, caused by the acts of an insured. Property
damage liability expenses include the actual cost of repair or replacement of the damaged
property as well as the inability to use damaged property (loss of use).
Medical payments coverage
pays for necessary medical, surgical, x–ray, dental, ambulance,
hospital, professional nursing, and funeral expenses incurred by a third party on the insured’s
premises regardless of fault.
Personal injury liability
is the legal liability arising from the wrongful conduct of the insured
resulting in injuries to one’s mental or emotional wellbeing and not bodily injury or property
damage.
accident
sudden, unforeseen, unintended, and unplanned event from which loss or
damage results.
Negligence
a tort and, specifically, the failure to use the same degree of care a reasonable and
prudent person would use when given the same knowledge and set of circumstances.
Contributory negligence
a defense for negligence in which the claimant was also negligent to
any degree.
Comparative negligence
involves fault on the part of all parties and the damages are reduced in
proportion to the degree of negligence.
absolute liability
claimant does not have to prove fault in order to collect damages.
Strict liability
applies when a manufacturer is held liable whether or not its product was
defective in causing injuries.
excess policy
pays a covered claim after the primary policies exhaust their limits or deny
coverage.
pro rata loss payment provision
requires each insurer to pay its share of a loss in proportion to
the coverage of that policy as it relates to the total of all insurance on the risk.
limit of liability
the dollar amount of coverage specified for a liability loss.
aggregate limit
maximum amount payable for loss per location or per person from all
occurrences within a policy period regardless of the number of separate accidents.
split limit of liability
the amount of coverage divided between bodily injury and property
damage
combined single limit
the policy limit applied to either bodily injury or property damage as
needed or in any combination.
