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Fundamentals and Insurance > Property and Liability Insurance (Lesson 3) > Flashcards

Property and Liability Insurance (Lesson 3) Flashcards

1
Q

What does property insurance protect

A
  • financial protection for losses on house, condominiums, automobiles, boats, and other property assets
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2
Q

What does liability insurance protect

A
  • financial loss associated with legal action, due to property damage, personal injury, or loss of income
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3
Q

What type of liability does homeowners or automobile insurance protect against

A
  • Property and liability
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4
Q

What are the three basic forms of coverage offered by homeowners policys

A
  • Basic coverage
  • Broad coverage
  • Open coverage
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5
Q

What is basic coverage for HO

A
  • Protects the homeowner from losses associated with 12 named perils
  • Fire, vehicles, lighting, smoke, windstorm, vandalism or malicious mischief, hail, explosions, riots or civil commotion, theft, aircraft, and volcanic eruption
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6
Q

What is broad coverage for HO

A
  • Provides protection from losses associated with 18 named perils
  • Includes the 12 named perils plus losses associated with these 6 additional perils
  • Falling objects
  • weight of ice, snow, sleet
  • accidental discharge or overflow of water or steam
  • sudden accidental cracking, burning, bulging of appliances
  • freezing of plumbing, heating, air conditioning, fire sprinkler system, or appliance
  • sudden and accidental damage from artificially generated electrical currents
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7
Q

What is open perils coverage for HO

A
  • Provides protection from losses associated with all perils, except those that are specifically excluded
  • More coverage than the basic and broad
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8
Q

Are movement of the ground covered (earthquake) under a policy usually under HO

A

No

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9
Q

Is damage from rising water covered usually from HO

A

No

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10
Q

Are nuclear hazards covered under normal HO

A

No

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11
Q

Are intentional acts and neglect covered under HO

A

No

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12
Q

What is an endorsement for HO and what does it cover

A
  • Some perils that the standard HO doesn’t cover can be covered by purchase of endorsement
  • Supplement to an existing policy that provides additional coverage
  • Perils that would be covered with an endorsement are:
  • Sink hole collapse
  • Earthquake
  • Sewage backup
  • Refrigerated property coverage
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13
Q

What does section 1 of property insurance include

A
  • Coverage A: Dwelling
  • Coverage B: Other Structures
  • Coverage C: Personal Property
  • Coverage D: Loss of use
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14
Q

What does Coverage A: Dwelling cover

A
  • pays for repairs and replacement for damage to the house and any attached structures
  • also covers building materials on the premises
  • Losses paid on a replacement cost basis
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15
Q

What is replacement cost

A
  • Amount necessary to repair or replace the dwelling with materials of the same or similar quality at current market price
  • does NOT account for depreciation
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16
Q

What is the coinsurance coverage formula

A

(Amount of insurance / Coinsurance requirement ) x amount of loss - deductible

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17
Q

What does Coverage B: Other Structures cover

A
  • Detached structures on the property
  • Detached garages
  • greenhouses
  • storage buildings
  • Insured on a replacement cost basis
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18
Q

What is the limit usually for coverage B

A
  • usually 10% of Coverage A
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19
Q

Is property used for business on your property covered by homeowners insurance

A

No

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20
Q

What does Coverage C: Personal property cover

A
  • includes tangible moveable property owned by the insured
  • Insured on Actual cash value basis (replacement cost endorsement can be purchased)
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21
Q

What is typically the limit for Coverage C

A
  • 50 % of Coverage A
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22
Q

What is usually the limit on coverage for money, coin collection, bank notes

A

$200

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23
Q

What is usually the limit on coverage for securities, bills, evidence of debt airline tickets, manuscripts

A

$1,500

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24
Q

What is usually the limit on coverage for jewelry, watches, gems, precious metals, and real furs

A

$1,500

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25
Q

What is usually the limit on coverage for water craft, trailers, and equipment

A

$1,500

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26
Q

What is usually the limit on coverage for firearms

A

$2,500

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27
Q

What is usually the limit on coverage for silverware, goldware, pewter ware

A

$2,500

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28
Q

Are animals, birds, and fish usually covered under a HO

A

No

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29
Q

Are motorized land vehicles used off premises usually covered under HO

A

No

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30
Q

What does Coverage D: Loss of use cover

A
  • will pay for additional living expenses incurred when the insured is unable to occupy the dwelling due to damages caused by a covered peril
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31
Q

What is typically the limit for Coverage D

A
  • 30% of Coverage A for HO-2, HO-3, HO-4, and HO-5 policies
  • HO-6 is 50% of Coverage C
  • HO-8 has 10% of Coverage A
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32
Q

What does section II of the HO include

A
  • liability and medical payment coverage
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33
Q

What does Coverage E: Personal Liability cover

A
  • Pays for claims that result from bodily injury and property damage to others when the insured or members of the insureds resident family are responsible
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34
Q

What is the minimum coverage for Coverage E

A
  • typically $100,000 per occurrence
  • Insurer will also pay for legal defense and settlement costs associated with a claim
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35
Q

What does Coverage F: Medical payments to others cover

A
  • Pays all necessary medical expenses without regard to liability for others arising out of the insureds activities, premises, or animals
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36
Q

When must medical expenses incur to be covered under Coverage F

A

3 years

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37
Q

Does coverage F pay for medical expenses incurred by the insured or a member of the insureds household

A
  • No unless the member of the household is a residence employee
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38
Q

What are some injuries and medical payments that Coverage E and Coverage F not pay for

A
  • expected or intended expenses
  • insureds business or professional activities
  • loss from rental on premises
  • expenses arising out of ownership of watercraft, ATV, and aircraft
  • expenses from war or nuclear weapons
  • expenses from communicable disease
39
Q

What does the HO-2 cover

A
  • Board Form coverage
  • Coverage on a board perils basis (18 named perils)
40
Q

What does the HO-3 cover

A
  • Special form coverage
  • Provides coverage on an open perils or all risks basis
  • Personal property coverage under an HO-3 policy is still provided on a named perils basis
41
Q

What does the HO-4 Cover

A
  • Renter policy
  • provides coverage for renters and tenants
  • does not cover the dwelling or other structures
  • provides personal liability coverage
  • Personal property covered on a broad perils basis
  • Minimum $6,000 personal property coverage
  • Provides loss of premises coverage equal to 30% of personal property coverage
42
Q

What does the HO-5 cover

A
  • Comprehensive from coverage
  • Coverage on an open perils or all risk basis
43
Q

What does HO-6 cover

A
  • Condominium Owners form
  • Coverage for inside structure of the unit and all of its contents
  • Broad perils coverage
  • Minimum $6,000 personal property coverage
  • Loss of use is limited to 50% of the coverage C limit
44
Q

What does HO-8 cover

A
  • Modified Coverage Form
  • Provides repair cost coverage for damage to property
  • Functional replacement cost coverage
  • Typically older homes that may be quite expensive to repair
45
Q

HO-2 (Open/Broad)

Coverage A: Dwelling

Coverage B: Other Structures

Coverage C: Personal Property

Coverage D: Loss of Use

A

Broad Form

Coverage A: Broad

Coverage B: Broad

Coverage C: Broad

Coverage D: Broad

46
Q

HO-3 (Open/Broad)

Coverage A: Dwelling

Coverage B: Other Structures

Coverage C: Personal Property

Coverage D: Loss of Use

A

Special Form

Coverage A: Open

Coverage B: Open

Coverage C: Broad

Coverage D: Broad

47
Q

HO-4 (Open/Broad)

Coverage A: Dwelling

Coverage B: Other Structures

Coverage C: Personal Property

Coverage D: Loss of Use

A

Renters

Coverage A: N/A

Coverage B: N/A

Coverage C: Broad

Coverage D: Broad

48
Q

HO-5 (Open/Broad)

Coverage A: Dwelling

Coverage B: Other Structures

Coverage C: Personal Property

Coverage D: Loss of Use

A

Comprehensive From

Coverage A: Open

Coverage B: Open

Coverage C: Open

Coverage D: Open

49
Q

HO-6 (Open/Broad)

Coverage A: Dwelling

Coverage B: Other Structures

Coverage C: Personal Property

Coverage D: Loss of Use

A

Condominium

Coverage A: Broad

Coverage B: N/A

Coverage C: Broad

Coverage D: Broad

50
Q

HO-8 (Open/Broad)

Coverage A: Dwelling

Coverage B: Other Structures

Coverage C: Personal Property

Coverage D: Loss of Use

A

Modified Coverage

Coverage A: Basic

Coverage B: Basic

Coverage C: Basic

Coverage D: Basic

51
Q

What does the PAP cover

A
  • Part A Liability Coverage
  • Part B Medical Payments
  • Part C Uninsured Motorist coverage
  • Part D Coverage for damage to insureds automobile
  • Part E Duties after an accident or loss
  • Part F General provisions
52
Q

What does a 50/100/50 mean for Coverage A

A
  • $50,000 of bodily injury coverage for person
  • $100,000 of bodily injury coverage per accident
  • $50,000 of property damage coverage
53
Q

What does a combined single limit policy have

A
  • has a fixed amount of coverage that the insurance company pays whether the loss is attributable to bodily injury or property damage
54
Q

What does part B Medical payments cover

A
  • provides coverage for medical expenses sustained in an accident
  • medical payments coverage is extended to the injured insured or occupants of the insured regardless of fault
55
Q

What are the two groups of insured persons that part B covers

A
  • the insured and members of the insureds family and
  • other persons who occupy the insureds covered automobile
  • No difference of coverage between the two
56
Q

Does coverage extend to a person hurt in a non owned automobile driven by the insured

A

No

57
Q

What does Part C Uninsured motorist coverage cover

A
  • Coverage for uninsured or underinsured motorists
  • If under insured or uninsured party is at fault this coverage will pay the property damage or bodily injury of the insured
58
Q

What is Part D Coverage for damage to the insureds automobile

A
  • Comprehensive and collision coverages are designed to repair and replace the insureds automobile when it is damaged
59
Q

What does collision coverage pay for

A
  • pays for damaged caused by another vehicle in an accident or an object such as a fence, tree, garage, door, lake, etc
  • Also covers damage in a single car accident
60
Q

What does comprehensive pay for

A
  • helps pay to repair or replace a vehicle that is stolen or is damaged in an incident that is not a collision
  • defined as other than collision coverage
61
Q

What do vehicles that are financed require to have for coverage comprehensive or collsion

A

Both

62
Q

What are the requirements for Part E Duties after an accident or loss

A
  • After a loss the insured is required to fulfil a number of obligations before the loss can be settled
63
Q

What must an insured do immediately after a loss for PAP

A
  • give notice immediately to the insurance company of the time, place and circumstances of the occurrence along with names of individuals
  • Protect the auto and equipment from further loss
  • file written proof of loss with the insurance company consistent with time constraints set forth in the policy
64
Q

What does Part F General Provisions of a PAP cover

A
  • covers the insured driving in any US state and Canada but the same policy does not cover Mexico
65
Q

What are the categories of a legal liability that individuals are exposed too

A
  • torts (civil wrongs)
  • breach of contracts
  • criminal offenses
66
Q

What does liability coverage cover

A
  • torts and not breaches of contract and criminal offenses
67
Q

What are the three general types of torts related to liability

A
  • intentional interference
  • strict and absolute liability
  • negligence
68
Q

What is an intentional interference

A
  • act committed against another that causes injury
  • Intentional criminal acts are not covered by slander and libel are usually covered
69
Q

What is slander

A

defamation or harm caused by a verbal statement

70
Q

What is libel

A
  • defamation caused by a written statement
71
Q

What is strict and absolute liability

A
  • occurs as a result of legislation in which one party is held legally regardless of who is responsible of injury

Ex: Workers compensation laws

72
Q

Under strict and absolute liability does a responsible party have a defense

A
  • Strict few defenses
  • Absolute none
73
Q

What is negligence

A
  • an act or failure to act with appropriate care and bodily injury or property damage results from such action or inaction
74
Q

What is the prudent man standard

A
  • if a responsible person confronted with the same circumstances would have preformed the same acts
75
Q

What is direct negligance

A

acts or omissions directly attributable to an individual

76
Q

What is Vicarious liability

A
  • an individual is held at least partially responsible for negligent acts performed by someone else
  • EX: Parents held responsible for children
77
Q

What does Res ispa loquitur

A
  • the act speaks for itself
  • permits the use of reasonable evidence when a specific explanation of negligence is not available
  • EX: If a plane crash there was negligence it does not have to be proven
78
Q

What is Negligence per se

A
  • the act itself constitutes negligence thereby relieving the prove negligence
  • EX: Drunk driving
79
Q

What is burden of proof

A
  • initially borne by the injured party
  • standard of proof in most civil cases is the preponderance of the evidence
80
Q

(Damages of Bodily Injury)

What is special damages

A
  • compensate for measurable loss such as loss of limb
81
Q

(Damages of Bodily Injury)

What is general compensate for intangible losses

A
  • pain and suffering
82
Q

(Damages of Bodily Injury)

What is punitive damages

A
  • amount assessed against the negligent party as punishment for the act
83
Q

What is the collateral source rule

A
  • Holds that damages assessed against a negligent party should not be reduced simply because the injured party has other sources of recovery available such as insurance
84
Q

(Defenses to Negligence)

Assumption of the risk

A
  • injured party fully understood and recognized the dangers that were involved in an activity and voluntary chose to procced
85
Q

(Defenses to Negligence)

Negligence on the part of the injured party

A
  • contributory negligence in which there is evidence that the injured party did not look out for his own safety
  • Comparative negligence in which the amount of damage is adjusted to reflect the injured party’s proportion of contribution to the cause of the injury
86
Q

(Defenses to Negligence)

Last clear chance

A
  • states that a claimant who is endangered by his own negligence may recover if the defendant has a last clear chance to avoid the accident and failed to do so
87
Q

What does a PLUP provide

A
  • provides additional layer of protection after the underlying liability limits on a homeowner policy or personal auto policy have been exhausted
88
Q

What to important factors should be considered when deciding liability insurance for an individual

A
  • Earnings power
  • Net worth
89
Q

A PLUP will not be issued without

A
  • the PLUP carrier insisting on certain levels of underlying liability coverages for both home and auto
90
Q

How much coverage does a PLUP policy usually provide

A
  • $1 million or more
91
Q

What liabilities are not covered under a umbrella policy

A
  • Criminal acts and intentional acts
  • Slander and libel are the exception
92
Q

What does a Commercial Package policy cover

A
  • loss of assets from various perils and some liability
  • Coverages similar to HO, include basic, broad, or open perils
93
Q

Does a CCP cover against flood or earth movement

A

No

94
Q

Acts that expose a company to product liability include

A
  • Manufacturing a harmful product - Selling a defective product - Packaging the product inappropriately - Providing insufficient directions or warning for use

Fundamentals and Insurance (10 decks)

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