P&C terms to know

Question 1

Declarations Page

Ch 3

Answer 1

Contains basic underwriting information; insured’s name, address, amount of coverage and premiums and a description of the insured locations

Question 2

Insuring Agreements

Ch 3

Answer 2

Contains the insurer’s promise to pay and a description of coverage provided and perils covered

Question 3

Conditions

Ch 3

Answer 3

Rules that insured and insurer agree to follow under the terms of the policy. For example:

-Inspections may be made by the insurer at any time.

Changes to the policy must be in writing and must be signed by the insurer.

Question 4

Exclusions

Ch 3

Answer 4

States what perils are not insured against and what persons are not insured

Question 5

Covered by a basic property insurance policy

Ch 4

Answer 5

• Fire,
• Lightning,
• Removal,
• Internal Explosion

Question 6

Basic Form DP 00 01

Ch 4

Answer 6

• Coverage A – Dwelling
• Coverage B – Other Structures
• Coverage C – Personal Property
• Coverage D – Fair Rental Value

Question 7

Gramm-Leach-Bliley Act.

Ch 1

Answer 7

The federal law that removed the barriers between commercial banking, investment banking, and insurance was the

Question 8

Employee theft coverage

Ch7

Answer 8

Covers losses from theft of covered property by employees. The policy covers money, securities and property other than money and securities. It can be written on scheduled, position or blanket basis. The coverage is actually a fidelity bond.

Question 9

Commercial general liability includes three major liability coverages:
( Ch 7)

Answer 9

Coverage A – Bodily Injury and Property Damage Liability

Coverage B – Personal and Advertising Injury Liability

Coverage C – Medical Payments

Question 10

Burglary

Ch7

Answer 10

Taking property from inside the premises by a person illegally entering.

Question 11

Robbery

Ch7

Answer 11

Taking property from the care of a person by a threat to cause bodily harm or committing an unlawful act witnessed by the person.

Question 12

Theft

Ch7

Answer 12

Any unlawful taking of property including burglary or robbery.

Question 13

Collision insurance covers

Ch 6

Answer 13

• Collision coverage pays for direct and accidental loss due to upset or collision of the vehicle with another object. Collision coverage would provide protection for an insured auto due to collision with another vehicle, collision with another object such as a bridge or tree, and upset or overturn of the vehicle subject to a deductible.

Question 14

Other than collision - (comprehensive) coverage

Ch 6

Answer 14

Other than collision provides coverage for any direct and accidental damage to the vehicle other than collision.

• Some of the more common other than collision coverage perils include:
• fire;
• theft;
• explosion;
• earthquake;
• windstorm;
• missiles;
• falling objects;
• hail or water; flood;
• vandalism/malicious mischief;
• riot and civil commotion;
• glass breakage;
• contact with birds or animals.

Question 15

Apparent authority.

Ch 2

Answer 15

The insurance companies give apparent authority to a producer when they indicate by their actions they are giving authority. It becomes apparent by the insurer’s actions and expectations that the producer indeed has authority to sell products for that company. Apparent authority is conferred onto a producer when the insurer gives the producer a rate book and access to software to quote new policies that weren’t mentioned in his contract. This is important to note because the insurer is not allowed to let producers quote without being liable for that same producers actions toward a client.

Question 16

Implied authority.

Ch 2

Answer 16

the law implies that a producer has authority to do the things necessary to function as an insurance agent of the insurer in order to do what he has expressed authority to do, like help the client complete an application or collect the first month’s premium. He would have to do those things to accomplish selling the policies he has express authority to sell. Implied authority is inherent to the nature of sales contracts and the expectations therein. Implications are those things that are understood as part of the job but are not specifically spelled out, point-by-point, in the contract.

Question 17

Express authority

Ch 2

Answer 17

when a producer is given authority to do certain things on behalf of the insurance company because those functions were expressed orally or in writing, usually in a written contract between the insurer and the producer in clearly definitive terms.

Question 18

the McCarran-Ferguson Act.

Answer 18

The law that says the federal government has the right to regulate insurance only to the extent it is not regulated by state law is _________.

Question 19

Risk

Answer 19

The uncertainty or chance of a loss occurring. An insurance policy’s main intent is to indemnify a party with insurable interest in a financial loss of a person or some property. Indemnification is to make whole or to restore a person back to where they were before the financial loss. So that insurers can bear the losses they absorb and make a profit, they must design products that indemnify only (cover only up to what the insured actually lost) and they must not sell products that may reward a person for their losses with more than they lost.

Question 20

PURE RISK

Answer 20

INSURABLE – no opportunity for financial gain, only loss is suffered in a pure risk and these are the types of risks that an insurer can create a policy product to protect.

Question 21

Speculative risks

Answer 21

NOT INSURABLE – opportunity for financial gain, loss or reward is possible. An example of this may be going to Harrah’s casino and betting on black. Your chance of hitting it big is equal to your chance of losing it all. This would be a speculative risk and these are uninsurable because no insurer wants these odds on each product that they sell.

Question 22

Hazard

Answer 22

a situation increasing the odds of a loss or a circumstance that increases risks or exposure to risks. Three main classes of hazards exists in the insurance industry:

Question 23

Inside the premises–Theft of Money and Securities –

Answer 23

provides coverage for loss of money and securities from inside the premises resulting from theft. Stock or merchandise is excluded. Included is damage to the exterior resulting from an actual or attempted theft.

Question 24

Inside the premises–Robbery or Safe Burglary of Other Property –

Answer 24

Robbery or Safe Burglary of Other Property – loss or damage to other property inside the premises resulting from actual or attempted robbery of a custodian, safe or vault, or safe burglary. Coverage includes building damage from an actual or attempted robbery or safe burglary or damage to the safe. There is a $5000 per occurrence limit for precious metals, precious or semi precious stones, or furs.