Property An Casualty Insurance

Question 0

Property insurance

Answer 0

Covers risks which the insured will suffer financial loss when something he or she owns is damaged, destroyed, or stolen. The basics include, fire, inland marine, and ocean marine insurance

Question 1

Liability insurance

Answer 1

Covers the insureds actions towards others and legal responsibility if those actions cause injury or property damage to another person. Can either be exposed by law or contract

Question 2

Insurance service office (ISO)

Answer 2

Provides statistics and advice regarding property and casualty policy forms

Question 3

California workers compensation inspection rating bureau (WCIRB)

Answer 3

A consulting firm that provides insurers with statistics and advice regarding workers compensation issues

Question 4

Expense, and expense ratio

Answer 4

An insurance policy’s share of a companies salaries, taxes, operating coat and fees.

Expense ratio= operating expense
Over
Total premiums

Question 5

Loss, loss ratio

Answer 5

The amount of reduction in the value of an insureds property causes by an insured peril.

Loss ratio= incurred losses
Over
Total premiums received

Question 6

Combined ratio

Answer 6

The relationship of expense to loss

Combined ratio=
Loss ratio + expense ratio
Over
Earned premium

Question 7

Causes if loss

Answer 7

Called perils. Perils covered by property insured include fire, lightning, explosion, windstorm, vandalism, and theft

Question 8

Extended coverage (EC)

Answer 8

Most property insurance is written in a named peril bases, loss or damage caused by fire, lightning, wind, hail and other perils

Question 9

Concurrent causation

Answer 9

When two perils, one covered and one not, act concurrently to cause a loss.

Question 10

Cancellation

Answer 10

The termination if coverage before an insurance policy has reached it’s expiration date. Requires a 5 day notice by mail

Question 11

Short rate cancellation

Answer 11

The insured pays a small penalty to cover the costs and expenses associated with terminating a policy before the exoneration date.

Question 12

Flat cancellation

Answer 12

A policy may sometimes be cancelled as of it’s effective day and no premium is charged. May come from either the insured or the insurer

Question 13

Pro-rata cancellation

Answer 13

The premium is adjusted based on the exact amount if time that the policy has been in force

Question 14

Non-renewal

Answer 14

Generally occurs when the insurer decides not to renew a policy

Question 15

Lapse

Answer 15

Occurs when the premium for a policy is not paid on time

Question 16

Unearned premium

Answer 16

The unused portion of a policy premium when the contract is cancelled

Question 17

Earned premium

Answer 17

The amount of premium that has been used up while the insurance was in force

Question 18

Ratings

Answer 18

Judgment rating
Class rating
Merit rating
Manual rating

Question 19

Rating guidelines

Answer 19

Class rates
Manual rates
Individual rates
Merit rates 
Judgement rates

Question 20

Types of merit rates

Answer 20

Retrospective

Schedule

Question 21

Prior approval rules

Answer 21

For rates this means that the rates may not be used until approved by the department or until a designated time period has passed after filing without diss approval notice

Question 22

File and use rules

Answer 22

Rates may be put into use as soon as they are filed with the state department if insurance. Eventually it will be reviewed and either approved or rejected

Question 23

Open commitment

Answer 23

Regulating rates. They can encourage and reply in competition to lead to fair and adequate rates for different lines of property and casualty coverage

Question 24

Rating organization

Answer 24

Gather and analyze statistical data for rate making purposes. Calculate rates for lines wishing their jurisdiction and file then with the state regulatory authorities

Question 25

Bureaus

Answer 25

Try own and receive services from the organization but have no right to manage it. Gather, pool and analyze statistics from all the member companies

Question 26

California rating law

Answer 26

Advisory organizations are required to file copies if their constitution or bylaws, lists if members or subscribers and other information with the state department of insurance

Question 27

Excess and surplus lines insurance

Answer 27

Provides lines if property coverage that are not available through authorized state insurers. The insurance offered by a surplus lines broker is standard coverage

Question 28

Surplus lines broker

Answer 28

A person licenses by a state department if insurance to solicit and place insurance with non-admitted carriers. Only found in the property and casualty field.

Question 29

Claims

Answer 29

Process and files claims

Question 30

First party claims

Answer 30

Occur when an insured makes a claim against the insurer for a direct loss if property. Associated with property and casualty insurance. Insured May be reimbursed or paid on an indemnity basis

Question 31

Third party claim

Answer 31

Occur when someone not listed in the actual contract makes a claim against the insured. Associated with liability insurance. The insurers role is to defend the insured legally or settle the claim

Question 32

Subtogation

Answer 32

A legal process related to the concept if indemnity that allows the insurer to collect from a third party liable to the insured. Only palms when a third party causes a loss or was primarily responsible for it through negligence

Question 33

Arbitration

Answer 33

A method of settling disputes between insured and insurer. May be used to handle disagreements between insurance companies or liability cases involving a third party.

Question 34

Loss reserve

Answer 34

Are funds that insurers are required by law to set aside to cover contract obligations or claims and potential loss exposure.

Question 35

Assignment of policy

Answer 35

Found in most insurance contracts, states that the policy can only be assigned to another individual or entity with the written consent of the insurer

Question 36

Loss cost rating

Answer 36

The practice of developing prospective loss cost estimates for the future based on analyzing past kiss data to determine incurred losses

Question 37

Endorsements

Answer 37

A modification to the insurance contract through a written amendment that is attached to the policy. This can change the declaration page, insuring agreements, exclusions or conditions of the contract

Question 38

Insureds right to cancel

Answer 38

An insured May cancel an Insurance policy at any time by informing the insurer in writing if the date the cancellation is to take effect

Question 39

Assignment of policy

Answer 39

States that the policy can only be assigned to another individual or entity with the written consent of the insurer. Only exception would result from the death of the insured party

Question 40

Supplementary payments

Answer 40

Payments above and beyond the liability limits of a policy as described on the declaration page

Question 41

Severability condition

Answer 41

States that insurance applies separately to each insured person as if he or she was the only person insured. Does not increase the limits of insurance

Question 42

Liberalization

Answer 42

Minimizes the need for a company to issue endorsements or new policy insurance coverage during a policy term

Question 43

Commercial policies

Answer 43

Insurance on buildings and business personal property are the major coverages

Question 44

Homeowners policies

Answer 44

Insurances on the dwelling and personal property are considered major coverage types

Question 45

Loss payments

Answer 45

Are the amount an insurer will pay for a loss.

Question 46

Replacement cost

Answer 46

The insurer agrees to pay only a stayed dollar amount for a specific loss, with no allowance for depreciation

Question 47

Guaranteed replacement cost

Answer 47

The insurer will pay whatever it takes to replace a loss even if the amount exceeds the limits of the policy

Question 48

Valued policies

Answer 48

Expresses on it's face an agreement that the item insured shall be valued at a specific sum

Question 49

Non-concurrent policies

Answer 49

Policies written to cover the same property on a different basis

Question 50

Mortgage clause

Answer 50

Establishes the right of the mortgage to receive payment for losses and advance notice of cancellation.

Question 51

No fault insurance

Answer 51

Laws allow auto accident victims to collect medical and hospital expenses, as well as lost wages directly from their own insurance companies no matter who was at fault for the accident

Question 52

Pure no fault insurance

Answer 52

It eliminates the right of an injured party to sue the other party for damages. The injured party collects for damages from his or her own policy