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CCNA > P&C Insurance > Flashcards

P&C Insurance Flashcards

1
Q

Risk

A

uncertainly or chance of loss occurring

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2
Q

Two types of risks

A

Pure risk: loss or no gain (only insurable), no chance of gain
Speculative risk: gain or loss (not covered)

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3
Q

Exposure

A

Asking how risky are you, that will determine premium. The riskier you’re the higher the premium

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4
Q

Hazard

A

Increases the chance of risk, hazard makes a risk riskier

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5
Q

Peril

A

the cause of a loss like fire or hail

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6
Q

Moral hazards

A

A sense of carelessness

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7
Q

Morale Hazard

A

Lying on purpose

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8
Q

Loss

A

the disappearance or reduction of value

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9
Q

Physical Hazard

A

Hazard you can see and touch

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10
Q

The law of large numbers

A

data that insurance companies have to make predictions on loss

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11
Q

Indemnity

A

to restore, put you take to where you where you were before, what the insurance company does for us

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12
Q

Indemnify

A

to make them whole again

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13
Q

Reinsurance

A

When insurance gets insurance to indemnify them, to help them out

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14
Q

Replacement cost

A

is going and buying something brand new at today’s prices. Wallas in roof are basically only thing that will get replacement cost

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15
Q

Cash Value

A

is the goodwill value, the used value

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16
Q

Certificate of Authority

A

Makes an ins company admitted and authorized, Admitted=authorized,

never certified

Ins is a state level thing, every state has their dept of ins

Cert of authority is needed to sell ins, just like producer needs ins license to sell ins

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17
Q

Mutual Company

A

people who buy policy become policy members and you are part owner of the company. Premium money is only saved for claims with the company. Leftover money will be distributed back to policyowners, dividends are not taxed, issue participating polices

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18
Q

Stock Companies

A

Owned by stock holders, issue non participating polices, dividends are taxed

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19
Q

Where are ins companies domiciled

A

Alien - outside of USA
Domestic - ins company started here, headquarted here, based here, and selling here
Foriegn - not headquartered but are selling in that state

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20
Q

law of agency

A

explains the relationship between the ins company and agent selling ins.

Agent represents the ins company

knowledge of the agent is knowledge of the insurer.

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21
Q

Broker

A

works with customer to find cheapest ins plan

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22
Q

Authority of the agent

A

Expressed Auth: is written contract that tells agent what they’re allowed to do. Read on contract what your authority is.

Implied: assumed by insurer. things you will do what is not typed in the contract. cannot write everything you can do in the contract.

Apparent/percieved: is assumed by customer from what the agent has told them (stationary, business card, letterhead)

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23
Q

Fiduciary (person of trust)

A

agent collect premium(money) and then submit to insurer.
Fiduciary = funds

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24
Q

Gramm Leach Braley Law

A

protects privacy, needs disclosures to give out info.

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25
Q

4 Elements of a contract

A

Ins policies are contracts,

Agreement - known as offer and acceptance, 1 person makes an offer and the other accepts it. offer = customer submits an app.
acceptance = insurer issues policy

Consideration- both parties must bring value. Consideration on the insured = application + premium. Consideration on the insurer= promise to pay for claim.

Competent parties - not under the influence, sound mind, legal age

Legal Purpose - cannot be against public policy, break the law

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26
Q

adhesion (contract)

A

insurer writes policy, customer has to buy entire policy. must stick to what they said in policy

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27
Q

Aleatory(contract)

A

Unequal exchange ( customer pays small premium, and ins pays out big claim)

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28
Q

Assignment

A

Assign you policy to someone else

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29
Q

Personal(contract)

A

Between the customer and insurer

30
Q

unilateral(contract)

A

1 sided promise, insurer promise to pay

31
Q

conditional (contract)

A

both parties have rules and duties they must follow. ways of behaving, obligations.

32
Q

reasonable expectations

A

if a agent says you’re covered then you are

33
Q

warranty

A

absolute true statements, guarantee. home and auto

34
Q

representation

A

life and health, can’t have warranties because you cant guarantee that its true but to best of knowledge its true

35
Q

misrepresentation

A

untrue statement

36
Q

concealment

A

hiding or withholding information on the application.

37
Q

fraud

A

lying or deceiving

38
Q

Material misrepresentation

A

INS would’ve made a different decision if they had a piece of info that was not given to them.

39
Q

co insurance

A

As long as you have 80 % of insurance e of the property’s value, the policyholder will agree to insure. 80 percent of rebuild

if the insured covers at least 80% for replacement/rebuilt (exam question) if yes then they will pay the full claim, answer is no is then:

Co-ins equation: did carry(amount of coverage) / should carry (80%)(put the number value x loss = claim payout

40
Q

insurance to value

A

means that if house is 250k to build then ins will pay 250k

40
Q

residual Markets

A

insurance mechanisms that provide coverage for individuals or businesses unable to obtain insurance through the standard or voluntary market. These markets serve as a last resort for those with higher risks or who have been rejected by private insurers.

40
Q

Pro-rata(fair share)

A

If insured as multiple ins companies as insurers, each company will pay their fair share.

Pro rata equation: whatever company amt you’re looking for is on top(for ex. payout for comp a / companies added together x loss

Company I’m looking for # / all companies x loss

40
Q

4 Elements of Negligence

A

Duty of care
Proximate cause
Breach of duty
Loss or damage - victim

40
Q

Actuarial Department

A

gather info to determine the probability of loss

41
Q

Adverse Selection

A

is the principle that people will seek insurance more frequently for risks that are hard to insure. Some Insurers may charge a high premium or decline eins altogether

41
Q

Dwelling Policy

A

Typically purchased by landlords, for liability

42
Q

Tort

A

negligent act that could require compensation. only unintentional torts are insured. wrongful civil act

43
Q

Compensatory Damages

A

Special Damages: compensate someone for out-of-pocket, hospital expenses. anything u can put a specific number on it.

General Damages: compensate for pain and suffering.

punitive (punish) damages - teach someone a lesson to prevent an negligent offense.

44
Q

Liability

A

Vicarious- libility for others, dog, kids, employees

Strict- Defective products, tires, cars, ladder

Absolute - Hazardous activites, firework shows, swimming pools,

45
Q

Limits of Liability

A

Aggregate: max amount will pay out for all claims during policy period

Per occurrence: Max payment in a single accident or occurance

Combined Single: max payment for bodily injury and property damage combined

Per person: max amt payment for bodily injury to single person

Split Limits: max payments for different types of coverages divided into 3 seperate limits of liabilty

46
Q

Home owner polices - House
What is open and named peril?

Which polices are open and named peril?

A

Open peril will cover anything not excluded (best)

Named- policy that only covers what is named

Even numbers are named and odd are open perils

HO2(broad), 3(special, open peril) , 5 (Comprehensive, open peril) - for House

Ho 2 broad covers things inside Fire/light, windstorm hail, aircraft, riot, vechiles, volcanic eruption, explosion, smoke, VMM, falling objects, overflow of water, AC/HEAT, freezing plumbing, accidental damage from Artically generated elcetrical current

H0 3 is only open peril on the outside (like roof, walls,) and named peril in the inside

ho5 covers in and out of home open on inside and outside, and disappearance. comprehensive (best)

47
Q

Homeowner’s Policies - renters/contents only

what is Condo policy number?

What is modified?

A

Ho4 - (4 rent), no a or b coverage

Ho6 condo(upgrade) - owner of building will pay for your apt but it will be the cheapest base model. get this to upgrade your condo.personal property are settled on an ACV basis

Ho 8 modified - outdated old house not restored - market value(buy or sell house) is less than rebuilt. theft is only covered up to 1k on premise

48
Q

What are the different Homeowners coverage forms

A

Section 1: Coverage A- dwelling
B: other structures
C: Personal property(15500 for jewels and firearms)
D: loss of use

Section 2: liability coverage
Section E: Personal liability
Coverage F: liability to others

49
Q

what is the standard deductible

A

250

50
Q

Liberalization

A

If insurer makes policy better then existing policyholder automatically get the benefits

51
Q

Subrogation -

A

process where after insurer pays insured takes legal action against 3rd party.

52
Q

other insurance

A

efers to a clause found in many insurance policies that addresses how coverage will be coordinated if more than one insurance policy provides coverage for the same loss or claim.

53
Q

The Damage to Property of Others Additional Coverage

A

provides limited coverage for property damage for which the insured is liable, regardless of negligence. Though the coverage would exclude coverage for losses caused intentionally by an insured who is 13 years of age or older, intentional damage by insured children under the age of 13 would be covered.

54
Q

declarations

A

contain info specific to individual and property insured,

55
Q
A
56
Q

proximate cause

A

is the initial event that starts a chain of events leading to an outcome. It’s not always the last thing to happen, but it’s the one that sets everything else in motion. Without this initial event, the outcome wouldn’t have happened. So, it’s like the starting point of a series of events that lead to a result.

57
Q

occurence

A

is an accident that includes continuous or repeated exposure to the same general harmful conditions.

58
Q

salvage

A

the amount for which it can be sold at the end of its useful life, often determined by the property’s scrap value for insurance purposes.

59
Q

legal action against us(suit against us)

A

insurer cannot file against insured

60
Q

arbitration

A

resolve difference between insured and insurer

61
Q

Abandonment condition

A

the insurance company will not accept property abandoned by an insured. prevents the insured from relinquishing ownership

62
Q

Insurable interest

A

exist at time of loss

63
Q

conditions

A

Liberalization, subrogation, and other ins

64
Q

waiver

A

insurer give up a right that they had

65
Q

Estoppel

A

once right is given up cant reclaim it

66
Q

insuring agreement

A

is the insurer’s promise of protection to the insured, affirming that the insurer will indemnify the insured for covered losses. The perils insured against by the policy are specified in the Insuring Agreement.

67
Q
A

CCNA (2 decks)

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