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LA Property & Casualty Insurance > Property & Casualty Insurance Basics > Flashcards

Property & Casualty Insurance Basics Flashcards

1
Q

Property that is the subject of insurance

A

Insurable Interest

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2
Q

___ must exist at the time of a loss.

A

Insurable Interest

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3
Q

__ obtaining & reveiwing information for an application.

A

Underwriting

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4
Q

___ Evaluates applications to find if a policy should be issued & set the proper terms & conditions based on the determined risk.

A

Underwriter

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5
Q

__ a formula to show a quick analysis of the insurance performance for a certain period.

A

Loss Ratio

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6
Q

__ What is the loss ratio formula?

A

Incurred loss + Loss adjusting expense/earned premium

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7
Q

Incurred loss + Loss adjusting expense/earned premium =

A

Loss Ratio formula

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8
Q

__ is a specific cause of loss

A

Peril

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9
Q

What is a named Peril Policy?

A

A policy that covers only those perils listed or named in the policy.

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10
Q

What does open peril cover?

A

Any risk NOT specifically excluded

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11
Q

What are the types of losses?

A
  1. Direct Loss

2. Indirect Loss

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12
Q

___ physical damage to building and/or personal property or includes other damage where the insured peril was the proximate cause of loss.

A

Direct Loss

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13
Q

__ not direct damage but a result of the direct loss.

A

Indirect Loss

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14
Q

___ the method of pricing policies that the actuaries of the insurance comoany have applied per dollar of coverage.

A

Rate

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15
Q

___ may be created as a dollar per payroll or appraisal value

A

Rate

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16
Q

___ used when valid statistics are not available or when the individual risks are so unique that it’s impossible to have a large group with the same level of risk.

A

Judgement Rating

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17
Q

What is judgement rating commonly used for?

A

Ocean Marine Insurance

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18
Q

It’s the judgement of ___ to determine the risk & required rate.

A

Underwriter

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19
Q

__ is computing a rate for insurance that applies to all applicants in a certain risk class or risk level.

A

Class rating

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20
Q

___ are created by applying a list of charges and/or credits to a class rate to determine the proper rate for a particular risk.

A

Schedule ratings

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21
Q

What is an example of a schedule rating?

A

Discount for no claim

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22
Q

___ rate is affected by the insured’s own past loss experience.

A

Merit Rating

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23
Q

___ the final premium is determined by the actual losses during the policy period.

A

Retrospective Rating

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24
Q

___ is a single property insurance policy that covers several types of property or multiple people at one location or multiple locations

A

Blanket Insurance

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25
Q

___ is a property insurance policy that covers a certain kind of property for a certain amount of insurance.

A

Specific Insurance

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26
Q

Current replacement cost minus depreciation

A

Actual Cash Value

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27
Q

Current price to restore with like, kind, & quality

A

Replacement Cost

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28
Q

Replace with the same size & function but least expensive current construction methods or materials.

A

Functional Replacement Cost

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29
Q

Amount a typical buyer would pay.

A

Market Value

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30
Q

Value of a total loss agreed to when the policy is written.

A

Agreed value

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31
Q

the amount scheduled in a policy to be paid for a particular or total loss regardless of value

A

Stated Amount

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32
Q

claims of civil wrongful acts brought to court by alleged injured persons, usually unintentional

A

Torts

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33
Q

risk o loss for which a person or company may be held responsible.

A

Liability

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34
Q

the failure to do something that a normal, prudent person would’ve done.

A

Negligence

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35
Q

Action that began an unbroken chain of events that resulted in the loss.

A

Proximate Cause

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36
Q

What requirements must exist to create negligence?

A

Legal Duty
Breach of Legal Duty
Proximate Cause
Actual loss or damage.

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37
Q

an action or event that, in a natural and unbroken sequence, produce a loss.

A

Proximate Cause

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38
Q

What class does frame on building fall under?

A

Class 1

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39
Q

What class does Joisted Masonry fall under?

A

Class 2

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40
Q

What class does noncombustible construction type fall under?

A

Class 3

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41
Q

What class does masonry noncombustible construction fall under?

A

Class 4

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42
Q

What class does modified fire resistive construction type fall under?

A

Class 5

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43
Q

What class does fire resistive construction type fall under?

A

Class 6

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44
Q

What are the types of construction?

A 
Frame
Joisted Masonry
Noncombustible
Masonry Noncombustible
Modified Fire Resistie
Fire Resistive
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45
Q

Exterior walls that are masonry with a rating of 2 hours or less?

A

Modified Fire Resistie (Class 6)

46
Q

Supporting walls are masonry, roof, and floors and are metal/concrete.

A

Masonry Noncombustible (Class 4)

47
Q

the exterior support walls, roof, & floors are wood or other similar combustible materials & maybe covered with siding or veneer of wood, vinyl, brick, or stucco.

A

Frame (Class 1)

48
Q

the exterior support walls are of masonry material such as brick, adobe, concrete, stone, or a similar material, but roof & floors are combustible materials (wood, etc.)

A

Joisted masonry (Class 2)

49
Q

a metal structure

A

Noncombustible (Class 3)

50
Q

What are the types of injuries or losses.

A

Bodily Injury
Property Damage
Personal Injury
Advertising Injury

51
Q

holds that if the injured party contributed to the injury in any way through his own negligence then he has no right to recover damages.

A

Contributory Negligence

52
Q

if an individual is aware of the risks involved & still chooses to expose him/herself to those risks the he/she has no right to recovery.

A

Assumption of Risk

53
Q

a cause that sets in motion a new chain of events, so the original case is not the proximate cause.

A

Intervening Cause

54
Q

a state law that sets a time limit in which an injured person may file a suit in court.

A

Statue of Limitations

55
Q

What are the categories of Liability?

A 
General
Absolute
professional
Advertising
Personal
Vicarious
Strict
56
Q

___ liability use & maintenance of premises or operations in business.

A

General

57
Q

___ liability imposed on defendants engaged in hazardous activities such as harboring wild animals, using explosives.

A

Absolute

58
Q

___ liability nonbusiness activities of individuals & families

A

Personal

59
Q

___ liability from business dealings serving others (law, real estate, insurance, etc.)

A

Professional

60
Q

___ liability from acts of libel, slander, defamation.

A

Advertising

61
Q

___ liability responsibility of another (children, employees, etc.)

A

Vicarious

62
Q

___ liability from defective products (dangerous toys, medicines, etc.)

A

Strict

63
Q

contains insured’s name, address, amount of coverage, & premiums, &a description of the insured’s location.

A

Declaration

64
Q

contains clarification of the terms used in the policy.

A

Definitions

65
Q

contains the insurer’s promise to pay & a description of coverage provided & perils covered.

A

Insuring Agreement (clause)

66
Q

additional amount of coverage for specific loss expense at no additional premium.

A

Supplementary Coverage

67
Q

rules that insured & insurer agree to follow under terms of the policy.

A

conditions

68
Q

What category would inspections be in a policy?

A

condtions

69
Q

addendums to a contract that are used to change the policy’s original terms, conditions, or to add or delete coverage.

A

Endorsements

70
Q

___ can be added anytime, must be in writing, attached to the policy, & signed by insurer.

A

Endorsements

71
Q

___ is anyone covered under the policy, whether named or not.

A

Insured

72
Q

In ___ insurance, the name first on the Declaration page are the only one’s who may cancel, ask for change, pay premiums, etc.

A

Commercial

73
Q

___ defines the location where coverage will be provided.

A

Policy Territory

74
Q

___the insured is financially responsible for before the insurer provides coverage.

A

Deductible

75
Q

___ refers to other insurance written on the same risk but not on the same coverage basis.

A

Non-concurrency

76
Q

___ the formula for sharing loss with other insurance based on comparing each policy’s limit to the total coverage & each pays that percentage of the loss.

A

Pro Rata

77
Q

___ is when each policy will pay equally until one hit it’s limit, then the other until it hits its limit

A

Contribution by Equal Shares

78
Q

___ is maximum amount of insurance the insured can collect for a loss.

A

Policy Limits

79
Q

___ an accident is sudden, unplanned, & unexoected event, not under the control of the insured, resulting in injury or damage that was unintended.

A

Occurence

80
Q

___ is a limit in a liability policy on the payment for all claims that are from a single accident.

A

Per Occurence

81
Q

___ is maximum amount available for payment of bodily injury to a single person in an accident.

A

Per Person

82
Q

___ is maximum coverage available under the liability policy during a policy year regardless of the number of claims.

A

Aggregate Limit

83
Q

___ seperately state limits for different coverage.

A

Split Limit

84
Q

___ may be stated on per person, occurence, policy basis or between bodily injury & property damage.

A

Split Limits

85
Q

___ a single $ limit of liability applying to the total damages for bodily injury & property damage.

A

Combined Single Limit

86
Q

___ the insured agrees to maintain a minimum amount of insurance on the property to receive full coverage.

A

Co-insurance

87
Q

___ if the clause required $100,000 & only $50,000 was purchased, the policy would only pay 50% of a partial loss, less the deductible.

A

Co-insurance

88
Q

___ is the transfer of legal rights.

A

Assignment

89
Q

Can an insured assign their rights in a policy without permission of the insurer?

A

No

90
Q

___ is giving up property to others or no one.

A

Abandoment

91
Q

___ if the insurer improves coverage (usually because of legislation or regulation) without cost, it’s immediate.

A

Liberalization

92
Q

___ is an increase in cost, it will happen with proper notice of the increase in premium at the next renewal.

A

Liberalization

93
Q

___ once an insurer pays a claim to the insured if there is a third party responsible, the insurer receives the right to persue a claim against the third party

A

Subrogation

94
Q

___ a promise to defend the insured in any lawsuit involving the type of liability insured against until the limit is paid for a claim.

A

Duty to Defend

95
Q

___ amount received from the sale of the damaged property.

A

Salvage

96
Q

It’s ___ to pay value or cost for repai/replacement; take all or part at agreed or appraised value; or repair/replace/rebuild property with like kind & quality.

A

insurer’s option

97
Q

___ have a secured financial interest in the property.

A

Third-Party Provisions

98
Q

Who would Third-Party Provisions be set for?

A

Mortgage Company or Lender

99
Q

What is included in a standard mortgage clause?

A

Loss payment
Policy Cancelation
Loss Payable Clause
Loss Payee

100
Q

___ is made payable to both the mortgagee (lender) & insured.

A

Loss Payment

101
Q

___ mortgagee must also be given prior written notification.

A

Policy Cancelation

102
Q

___ explains the interest of a secured lender in personal property.

A

Loss payable clause

103
Q

___ general term for the interest of a secured lender for property.

A

Loss payee

104
Q

___ is a person/ organization in temporary custody of property (holding, storing, etc.)

A

Bailee

105
Q

Is the bailee coered by the insured’s policy while the bailee has possession of the insured’s property?

A

No

106
Q

What is the Louisiana valued policy law?

A

if a loss occurs the insurer must pay loss at the valued amount.

107
Q

___ a non-profit association to help consumers if their insurer becomes insolvent.

A

Louisiana Insurance Guaranty Association (LIGA)

108
Q

Who is obligated to pay unpaid claims prior to determining an insurer’s inslvency?

A

LIGA

109
Q

___ temporary contracts of insurance issued to place insurance in effect prior to policy issue.

A

Binder

110
Q

___ is a federal program to share risk of terrorism acts.

A

Terrorism Risk Insurance Act of 2002

LA Property & Casualty Insurance (11 decks)

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