Underwriting Property and Liability Insurance

Question 1

Frame construction

Answer 1

A class of construction that has load-bearing components made of wood or other combustible materials such as brick or stone veneer

Question 2

Joisted masonry construction

Answer 2

A class of construction that has load-bearing exterior walls made of brick, adobe, concrete, gypsum, stone, tile, or similar materials’ that has floors and roofs of combustible materials; and that has a fire-resistance rating of at lest one hour

Question 3

Mill construction

Answer 3

A sub classification of joisted masonry construction that uses heavy timber for columns, beams, supports, and ties; has a minimum two-hour fire-resistance rating on bearing walls; and has an absence of floor joists

Question 4

Noncombustible construction

Answer 4

A class of construction in which the exterior walls, floor, and roof of a building are constructed of, and supported by, metal, gypsum, or other noncombustible materials

Question 5

Masonry noncombustible construction

Answer 5

Masonry construction or construction that includes exterior walls of fire-resistive construction with a fire-resistance rating of not lass than one hour

Question 6

Modified fire-resistive construction

Answer 6

A class of construction that has exterior walls, floors, and roofs of masonry or other fire-resistive material with a fire-resistance rating of at one to two hours

Question 7

Fire-resistive construction

Answer 7

A class of construction that has exterior walls, floors, and roofs of masonry or other fire-resitive material with a fire resistance-rating of at least two hours

Question 8

Fuel load (fire load)

Answer 8

The expect maximum amount of combustible material in a given area of a building, including both structural elements and contents, commonly expressed in terms of weight of combustibles per square foot

Question 9

Fire division

Answer 9

A section of a structure so well protected that fire cannot spread from that section to another, or vice versa

Question 10

Fire wall

Answer 10

A floor-to-roof wall made of noncombustible materials and having no open doors, windows, or other spaced through which fire can pass

Question 11

Parapet

Answer 11

A vertical extension of a fire wall that extends above a roofline

Question 12

Building codes

Answer 12

Local ordinances or state statutes that regulate the construction of building within a municipality, country, or state

Question 13

Occupancy

Answer 13

The type or character of use of the property in question

Question 14

Special hazards of the class

Answer 14

A characteristic typical of all occupancies in a given class that can cause or aggravate a loss. An example is the hazard of cooking, common to the restaurant class

Question 15

Special hazards of the risk

Answer 15

A condition that can cause a loss but that is not typical of an occupancy. An example is the use of a welding torch in an auto repair shop

Question 16

Protection

Answer 16

Measures taken to prevent or reduce the damage done by fire

Question 17

Public fire protection

Answer 17

Fire protection equipment and services made available through governmental authority to all properties within a defined area

Question 18

Local fire alarm system

Answer 18

A detection system, triggered by smoke or heat, that sounds a bell, siren, or another audible alert at the premises only

Question 19

Central station system

Answer 19

A private detection service that monitors the systems of multiple businesses and/or residences and that calls appropriate authorities or dispatches its own personnel when an alarm is activated

Question 20

Wet pipe sprinkler systems

Answer 20

Automatic fire sprinkler systems with pipes that always contain water under pressure, which is released immediately when a sprinkler head opens

Question 21

Dry pipe sprinkler systems

Answer 21

Automatic fire sprinkler systems with pipes that contain compressed air or another inert gas that holds a valve in the water line shut until an open sprinkler head releases the gas and allows water to flow through the previously dry pipe to the sprinkler head

Question 22

Pre-action sprinkler systems

Answer 22

Automatic fire sprinkler systems with automatic valves controlled by smoke or heat detectors

Question 23

Deluge sprinkler system

Answer 23

A type of sprinkler system in which all the heads remain permanently open; when activated by a detection system, a deluge valve allows water into the system

Question 24

Fire brigade

Answer 24

A fire service in which building personnel in establishments located far from municipal fire services respond to fire situations

Question 25

External exposure

Answer 25

A loss exposure outside the area owned or controlled by the insured

Question 26

Replacement cost

Answer 26

The cost to repair or replace property using new materials of like kind and quality with no deduction for depreciation

Question 27

Actual cash value

Answer 27

A method in valuing property which is calculated as the cost to replace or repair property minus depreciation, the fair market value, or a valuation determined by the broad evidence rule

Question 28

Coinsurance clause

Answer 28

A clause that requires the insured to carry insurance equal to at least a specified percentage of the insured property’s value

Question 29

COPE

Answer 29

Four interdependent elements that are analyzed by commercial property underwriters when evaluation submissions for property insurance; construction, occupancy, protection, and external exposures

Question 30

Vicarious liability

Answer 30

A legal responsibility that occurs when one party is held liable for the actions of a subordinate or associate because of the relationship between the two parties

Question 31

Breach of warranty

Answer 31

The failure to meet the terms of a promise or an agreement associated with a product

Question 32

Implied warranty of merchantability

Answer 32

An implied warranty that a product is fit for the ordinary purpose for which it is used

Question 33

Implied warranty of fitness for a particular purpose

Answer 33

An implied warranty that a product is fit for a particular purpose; applies if the seller knows about the buyer’s purpose for the product

Question 34

Negligence

Answer 34

The failure to exercise the degree of care that a reasonable person in a similar situation would exercise to avoid harming others

Question 35

Strict liability (absolute liability)

Answer 35

Liability imposed by a court or by a statute in the absence of fault when harm results from activities or conditions that are extremely dangerous, unnatural, ultra hazardous, extraordinary, abnormal, or inappropriate

Question 36

Credit scoring

Answer 36

A decision-making tool that uses credit report information to develop a predictive score on the creditworthiness of an applicant for additional credit

Question 37

Class rate

Answer 37

A type of insurance rate that applies to all insureds in the same rating category or rating class

Question 38

Experience modification factor

Answer 38

A factor that tailors manual rates to an insured’s experience based on the insured’s payroll and loss record of certain prior years

Question 39

Umbrella liability insurance

Answer 39

Liability insurance that provides excess coverage above underlying policies and may also provide coverage not available in the underlying policies, subject to a self-insured retention

Question 40

Excess liability insurance

Answer 40

Insurance coverage for losses that exceed the limits of underlying insurance coverage or a retention amount

Question 41

Drop-down coverage

Answer 41

Coverage provided by many umbrella liability policies for (1) claims not covered at all by the underlying policies and (2) claims that are not covered by an underlying policy only because the underlying policy’s aggregate limits have been depleted