The Basics (Property & Casualty Insurance)

Question 1

Liability Policy Categories

Answer 1

DICEE

Question 2

DICEE

Answer 2

Dec/Insur. Agree/Cond/Endor/Excl

Question 3

Flat Cancellation

Answer 3

Policy cancelled on the effective date/entire premium returned

Question 4

Nonconcurrency

Answer 4

two or more policies covering the same property, but with non-identical coverages

Question 5

Pro Rata Loss

Answer 5

Multiple insurance companies pay a portion of loss based on a percentage

Question 6

Contribution by Equal Shares Loss

Answer 6

all insurers pay an equal amount, up to a max of the smallest policy limit

Question 7

Provisions

Answer 7

Duties and rights of the insured and insurer

Question 8

Loss Provisions

Answer 8

What the insurer and insured must do in the event of a loss

Question 9

Assignment Policy

Answer 9

Policy cannot be transferred between insureds without written consent

Question 10

Abadnonment

Answer 10

Insured cannot abandon property to the insurer and ask for full reimbursement

Question 11

Who has the right for Salvage?

Answer 11

The insurer

Question 12

Liberalization

Answer 12

Broadening and extending coverage with no additional premium

Question 13

Subrogation

Answer 13

After a pay out, the insurer can sue negligent parties on your behalf

Question 14

Binder

Answer 14

A temporary written or oral agreement of intermediate coverage

Question 15

Duties After Loss

Answer 15

PPC + MSC –> Prompt/Protect/Complete/Make/Submit/Cooperate

Question 16

Prompt…

Answer 16

Notice of Claim

Question 17

Protect…

Answer 17

Property from Further Damage

Question 18

Complete…

Answer 18

Detailed Proof of Loss

Question 19

Make…

Answer 19

Property Available for Inspection

Question 20

Submit…

Answer 20

to Examination Under Oath

Question 21

Cooperate…

Answer 21

with the Insurer During Investigation

Question 22

Measurement Ratios

Answer 22

Loss/Expense/Combined

Question 23

Loss Ratio

Answer 23

(amount of loss) / (earned premium) = percent loss

Question 24

Expense Ratio

Answer 24

(underwriting expenses) / ($ written premium) = cost of doing business

Question 25

Combined Ratio

Answer 25

(loss ratio) + (expense ratio). below 100 is a surplus

Question 26

Methods of Underwriting Ratings

Answer 26

Judgment/Manual/Experience

Question 27

Judgment Rating

Answer 27

Premiums created through judgment and experience

Question 28

Manual (class) Rating

Answer 28

Premiums based on a manual: (rate per unit) x (# of units) = premium

Question 29

Experience (merit) Rating

Answer 29

Worker’s Comp/Retrospective/Schedule

Question 30

Rate Components

Answer 30

loss costs, cost of handling claims, operating expenses, profits

Question 31

Bailee

Answer 31

Someone who has custody of someone’s belongings (like a dry cleaner)

Question 32

Coinsurance

Answer 32

The amount paid out by the insurer when the insured doesn’t have the minimum insurance necessary

Question 33

The Umpire

Answer 33

a third party appraiser, appointed to help the insurer and insured come to an agreement on value of loss

Question 34

Premium Pay Back when Insured Cancels Policy

Answer 34

Short-Rate

Question 35

Premium Pay Back when Insurer Cancels Policy

Answer 35

Pro Rata

Question 36

Policy Territory

Answer 36

Where the loss occurred

Question 37

Cancellations Occur When a Policy Ends:

Answer 37

Before expiration date

Question 38

Nonrenewals Occur When a Policy Ends:

Answer 38

On the expiration date

Question 39

Insurable Interest

Answer 39

Financial Risk of Loss, Must be Present at Time of Loss