NY Property and causality Flashcards
Risk
Uncertainty concerning financial loss
Actual cash value
Replacement cost minus depreciation
Replacement cost
Amount of money it costs to replace an item at the time of loss
Indemnity
Restoring the insured to the financial position prior to the loss
Limit of liability
The maximum amount the insurer will pay under that policy for any 1 loss
How much does an extension of coverage cost once co insurance is satisfied?
0 if co-insurance is satisfied
Coinsurance
Requirement of insured to carry a minimum specified amount as percentage of replacement cost of a partial loss
Pair and set Clause
Loss to one item of a pair or set that doesn’t constitute a total loss of the set
When an insured and insurer cannot agree on the value of an item two appraisers are hired to determine the value
Appraisal
Risk Management
Avoidance - avoid the risk Assumption of risk- assuming responsibility of the risk Transfer -pay insurance premium Sharing- deductible Reducing -preventative procedures
Pro Rata Liability
Two insurers share different percentage of liability
Equal shares
Two parties split the liability
Assignment
Rights and coverages re assigned if approved by the insurer
Subrogation
The process by which two insurance companies determine the fault and pays a claim of the insured.
Arbitration
A process for insurance companies to settle difference when one company subrogates against another
Cancellation
Terminating the policy for non payment or increased during the policy period
Non renewal
Terminating a policy after the specified period due to increased risk, deterioration of property
Vacancy
A building which is unfurnished and not used for dwelling or business
Unoccupied
A building that is furnished but not used as a dwelling or business
Right of salvage
Insurers have right to the property after it’s been paid
Abandonment
Insurance has the right to waive “right of salvage”
A section of an insurance policy that indicates the general rules or procedures that the insurer and insured agree to follow under the terms of the policy.
Conditions page
The following are all part of the conditions page
Inspection
Changes to the policy
Liberalization clause
Return of the premium
Loss ratio
Formula used to compare premium income to loss
Incurred losses + loss adjusting expense \ earned premium
Endorsement
Anything that modifys the original contract
Ex:adding or removing coverage
Duties after loss
- Protect the damaged property from further damage
- prepare an inventory
- cooperate with insurer
- notify the police
- submit signed sworn proof of loss
Judgement rating
Used when credible statistics aren’t available
Ocean marine insurance
Also know as “A” rated
Schedule rating
Applying a schedule of charges and credits that lead to a base rate to determine individual exposure
Used less frequently due to ISO
Experience rating
Premium is determined upon the insureds loss history
Retrospective rating
Self-rating system in which actual losses determine the final premium
Subject to a minimum and maximum
Merit rating
Not determined on actual loss but rather records that indicate risk
Contract of adhesion
Insurance contracts underwritten by insurers and offered to potential insured on a “take it or leave it” basis.
No negotiating
Warranty
A statement guaranteed to be true
Elements of a legal contract include
- Agreement-offer and acceptance
- Consideration
- competent parties
- legal purpose
Aleatory contract
An exchange of unequal amounts or values
Risk Retention
Planned assumption of risk through the use of deductibles,co payment or self pay
What are three goals of risk retention?
- Reduce expenses and improve cash flow
- Increase control of claim settling and reserving
- Funding losses that can’t be insured
Express authority
Authority a principle intends to grant an agent through a contract
Reinsurance
A method insurers use to protect against catastrophic losses
Aggregate limit
The maximum LIMIT of coverage available under a liability policy for 1 year
When are aggregate policies restored?
Anniversary date of the policy
Short rate refund
Insurer imposes a (10%) penalty on the refund of unearned premium
Flat cancellation
Policy cancelled upon its refund date (no penalty)
Pro rata refund
Mid term cancellation (no penalty) calculated
365 days- days used= days to refund
Premium / 365= cost per day
Day
Days to refund x cost per day= total refund
Strict liability
Applied in product liability cases.
Manufacturer sells a product that has an “implied warranty” that it is safe
Business is liable regardless of fault or negligence
Terrorism risk insurance act
Nullifies any provision in P&C that excludes coverages for losses under the act of terrorism
Hired auto and non-owned auto liability endorsement provides coverage to insured
For the use of hired and non- owned autos
