Section 3 Flashcards
Declarations page
States the who, what,when,where & how much
Insuring agreements
States the promise to pay and the perils covered
Conditions
States the rules for the policy
Endorsements
States the changes to the original policy
Add- on
Exclusions
States the items not covered
Named Insured
The person, business, or other entity names in the declarations to which the policy is issued
The first-named insured
The person listed first on the deck page when there is more than one named insured
Additional insured
Another individual or business may be listed as an additional insured by endorsement
Policy territory
States that a loss will not be covered unless it occurred within the territory. Typically includes USA, Canada & PR
NOT MEXICO
Deductible
The amount that must be paid out of pocket by the policy owner before an insurer pays any expenses.
Purpose of deductible
It’s to prevent small insurance claims and overuse of insurance claims
Indemnity
To restore the insured to their original pre-loss condition — no better or worse
Other insurance
Defines how reimbursement will occur when more than one of multiple policies covers the same loss or claim
Primary Insurance
Attaches immediately upon the occurrence or loss
Excess coverage
Pays whatever is not paid by the primary policy up to the amount of the loss or excess coverage limit, whichever is less
Pro Rata
One method of preventing overpayment of a claim.
Pro Rata Method
Policy limit of company divided by policy limit of all companies x loss
Duties after loss
Lists the named insureds responsibilities after a property insurance loss.
Included in the duties after loss condition
Prompt notice of claim to the insurer or agent
Protect the property from further damage
Complete detailed proof of loss
Make the property available for inspection
Submit to exam under oath
Cooperate with the insurer as required
POLICE REPORT IS NOT A CONDITION
Liberalization
States that if the insurer broadens coverage under a policy form or endorsement without requiring an additional premium then all existing similar policies or endorsements will be construed to contain the broadened coverage.
Subrogation
Insurer has the right to sue an at fault party for damages the insurer had to pay to the insured.
Common when at fault party does not have insurance.
Insurable interest
Legitimate risk of financial loss in the person or thing being insured.
May be present at the time of application and MUST be present at the time of loss
Binder
A binder is a temporary oral or written statement made by the agent that gives the insured immediate coverage for a specific time.
When no cancellation notice is sent, the expiration date of the binder is 30-90 days
FCRA - Fair Credit Reporting Act
All insurers and producers must comply
Notice to the applicant within three days after report was requested
Maximum penalty — $5,000 1 year in prison or both
TRIPRA- Terrorism Risk Insurance Program Reauthorizarion Act of 2015
This federal law defines acts of terrorism and imposes certain obligations on insurers.
An act of terrorism must be certified by who?
The secretary of the treasury, in consultation with the secretary of Homeland security & the US attorney general
Short rated basis
When an insured cancels a policy before the expiration date, the insurer is entitled to retain a larger percentage of the unearned premium. There is a surcharge or a penalty for early cancellation, and it is applied on a short rated basis.
