Property and Casualty ch 2

Question 1

In order for insurance contracts to be legally binding, they must include 4 elements

Answer 1

1. Agreement (offer and acceptance)
2. Consideration
3. Competent parties
4. legal purpose

Question 2

Representations vs Waranties vs Concealment

Answer 2

Reps - Statements believed to be true to the best of ones knowledge, but not guaranteed to be true
Warranty- an absolutely true statement which the validity of the insurance policy depends on
Concealment - The intentional withholding of information (Not telling the insurance provider of a condition that exists)

Question 3

Binder

Answer 3

Temporary agreement issued by an agent providing temporary coverage until a policy can be issued. If it is determined that a policy will not be able to be written, the binder will also expire on that day.

Question 4

Every property and casualty policy is comprised of the following components: (7)

Answer 4

• Declarations
• Definitions
• Insuring agreement
• Additional coverage
• Conditions
• Endorsements
• Exclusions and policy limits

Question 5

Declarations

Answer 5

Section that covers basic information: Insured’s name, address, amount of premiums and coverage

Question 6

Defintions

Answer 6

Part of the agreement that clarifies terms used in policy

Question 7

Insuring agreement

Answer 7

The part of the contract that establishes the obligation of the insurance company to provide coverage. It also lists renewal dates

Question 8

Additional Coverage

Answer 8

Provision in an insurance company that provides additional amount of coverage for specific loss at no additional premium

Question 9

Conditions

Answer 9

The part of the insurance contract that general rules or procedures that the insured and insurance company have agreed to. (Inspections, Changes to the policy, Return of premium)

Question 10

Exclusions

Answer 10

Part of the contract that lists what is not covered under certain circumstances. (Earth movements, water damage is the example given in video for a property coverage)

Question 11

Appraisal

Answer 11

If there is a disagreement on the value of any property loss, either party can make a written demand for an appraisal. Each company selects an appraiser - if they cannot come to agreement they will hire an umpire

Question 12

Other insurance

Answer 12

Is a provision in an insurance policy that defines how the policy will react if there is other valid insurance written on the same risk

Question 13

Pro Rata

Answer 13

A provision found of some insurance policies that states how the sharing of loss will happen between the two insurance companies