Second section

Question 1

What is the underwriters function ?

Answer 1

Reviewing applications for insurance.. risk selection process

Question 2

What is the loss ratio formula?

Answer 2

(Incurred loss + loss adjusting expense) ➗ earned premium = loss ratio

Question 3

What is the difference between class, schedule, and judgement rates?

Answer 3

Class - practice of computing a price per unit of insurance that applies to all applicants processing a given set of characteristics (types of dwellings of a given type of construction / drivers by gender or age)

Schedule- rates developed by applying a schedule of charges and credits into some base rate to determine the appropriate for an individual exposure

Judgement- when credible statistics are lacking or when the exposure units are so varied that it is impossible to a construct a class. Ocean marine insurance “A” rated

Question 4

How are indirect and direct loss related?

Answer 4

Direct losses mean direct physical losses to building or physical properties

Indirected are losses as a result of direct loss. Like the time it takes to repair something

Question 5

What type of insurance provides coverage for multiple classes of property at one location ?

Answer 5

Blanket insurance

Question 6

Explain the actual cash value method of valuation

Answer 6

Payment of a full policy amount in the event of a total loss without regard to actual value or depreciation

Question 7

What information is included in a policy’s declarations?

Answer 7

Basic underwriting information : name, address , amount of coverage and premiums , and description of insured locations

Question 8

What are additional or supplementary payments?

Answer 8

Provides additional amount of coverage for specific loss expense, at no additional premium

Ex. Protects property from further loss

Question 9

What is included in the conditions section of a policy ?

Answer 9

Inspections , changes to a policy, return of premium, liberalization clause

Question 10

What does the exclusion section of a policy specify?

Answer 10

Restricts some of the broad terms used in an agreement .. can exclude people except a spouse , property , and perils

Question 11

What is the difference between cancellation and non renewal ?

Answer 11

Cancellation is the termination of a policy prior to expectation date.
No renewal is the termination by expiration date

Question 12

What is the difference between vacancy and Inoccupancy?

Answer 12

Vacancy is when no people have been living or working and no property has been stored (usually 60 days)

Unoccupancy- some property is stored but nobody has been living or working in the space

Question 13

Why does an insurance company discourage abandonment ?

Answer 13

They want to protect the property from further loss

Question 14

Define subrogarion

Answer 14

Insurer’s legal right to seek damages from third parties after it has reimbursed for a loss

Question 15

What is salvage?

Answer 15

The amount of money realized from the sale of damaged merchandise

Insurer can salvage the damaged property in an insured loss to recover part of a paid loss

Question 16

What is the purpose of the terrorism risk insurance act?

Answer 16

provides for a transparent system of shared public and private compensation for certain insured losses resulting from a certified act of terrorism.

Question 17

The party of a property policy that shows the amount of insurance , premium, and policy term is…?

Answer 17

Declarations

Question 18

What would modify the original insurance contract by either adding or removing coverage?

Answer 18

Additional coverage form

Question 19

What would be named on the declarations page of a property or liability policy?

Answer 19

All insureds