Other Coverages and Options (CH 10)

Question 1

Deductible

Answer 1

Dollars or percentage of expense that will not be reimbursed by the insurer

Question 2

Directors and Officers

Answer 2

A type of Professional Liability insurance sold to individual board members who may be sued by the shareholders.

Question 3

Errors and Omissions

Answer 3

Also known as E&O. A type of Professional Liability Insurance sold to every other profession other than medicine: lawyers, therapists, social workers, members of the clergy, insurance agents.
This insurance protects the insured against liability for committing an error or omission in performance of professional duties.

Question 4

Malpractice

Answer 4

A type of professional Liability Insurance sold to members of the medical profession: doctors, nurses, dentists.

Question 5

Professional Liability Insurance

Answer 5

The type of policy sold to the professional to cover attacks upon their expertise. Three types are: Malpractice, Errors and Omissions, directors and officers.

Question 6

Retention Limit

Answer 6

In an umbrella policy, the amount the insured must pay for a loss not covered by an underlying policy before the Umbrella will begin to cover losses.

Question 7

Subrogation

Answer 7

The transfer to the insurance company of the insured’s right to collect for damages. After paying a claim, the company stands in the place of the insured in suing the negligent party, thus preventing the insured from collecting twice.

Question 8

Surety Bond

Answer 8

A written agreement (not insurance) that involves three parties or partners who are known as: the Principal, the Obligee, the Surety.

Question 9

Territory

Answer 9

Defines exactly where on our planet a loss must occur for coverage to apply. If the loss occurs outside of the defined territory, there is no coverage.

Question 10

Umbrella, Commercial

Answer 10

Provides very high limits of coverage to be excess over primary business policies, and covers certain accidents not covered by the primary policies subject to a Retention Limit.

Question 11

Umbrella, Personal

Answer 11

Coordinates its protection with two other policies: Homeowners and Auto. The Homeowners or Auto Insurance are primary; the umbrella policy is excess. Umbrellas are meant to be involved with catastrophic lawsuit exposures.

Question 12

Umbrella Policy

Answer 12

An umbrella policy is liability insurance. It deals only with the exposures of loss from being sued.

Question 13

3 Characteristics of an umbrella policy

Answer 13

1. Monoline policy
2. Excess Liability policy
3. Involvement with catastrophic lawsuit exposures

Question 14

Professional Liability- Consent to Claims Settlement

Answer 14

In professional liability policies, the insured controls the consent to settle clause instead of the insurer. The insurer cannot settle a claim without the permission of the named insured professional because the professional’s reputation or ability to practice could be at stake.

Question 15

Fiduciary Liability

Answer 15

A person holding the funds or property of another in a position of trust, and could be held liable in a lawsuit filed by a person harmed by the fiduciary’s improper management of the funds.

Question 16

Liquor Liability

Answer 16

purchased by tavern or nightclub owners who could be sued and held liable for the actions of an intoxicated person that they served alcohol to for contributing to the intoxication.

Question 17

Employment Practices Liabilty

Answer 17

Purchased by employers who may be sued for unfair or discriminatory hiring and firing practices, a hostile work environment, or sexual harassment.

Question 18

Principal

Answer 18

the party who promises to perform the obligation and purchases the bond at the request of the obligee as required under the terms of the obligee

Question 19

Obligee

Answer 19

The party who receives the benefit from the bond. If the principal defaults on the obligation, damages are payable by the surety to the obligee.

Question 20

Surety or Guarantor

Answer 20

The insurance company that provides the bond in consideration for the premium paid. The surety joins with the principal to guarantee the fulfillment of the obligation, and agrees to pay damages to the obligee if the principal defaults.

Question 21

Jettison

Answer 21

voluntarily throwing the cargo of a ship overboard in order to save the ship from sinking

Question 22

Four implied warranties exist in Ocean Marine Coverage. If any are breeched, coverage could be declined or policy voided

Answer 22

• Vessel seaworthiness
• Voyage for legal purpose
• Route to be traveled is specific
• Cargo is packed properly

Question 23

National Flood Insurance

Answer 23

only available in designated flood zones.

not provided to a community that is unwilling to adopt flood-control measures.

Question 24

Boatowners Policy

Answer 24

a watercraft policy with rates and rules for smaller, trailerable, open cockpit type vessels (less than 26 ft in length). Personal watercraft such as jet skis can be insured with a boatowners policy.`

Question 25

Yacht Policy

Answer 25

written as a type of Ocean Marine Insurance and available for vessels 26 ft or more in length. Many are insured to have coverage for the hull, medical coverage for passengers, BI and PD liability and Then Jones Act for the crew, if any.
Coverage is often restricted by navigational limits.

Question 26

Recreational vehicles

Answer 26

policy that can cover All Terrain Vehicles (ATV); Mopeds; Scooters; Dune Buggies; Golf carts; Segways; and all 3 wheeled vehicles that are not designed for public roads.
Many carriers will permit these to be insured on the PAP while some prefer this specialized type of policy.