Unit 11 - Crime and Other Insurance Coverages

Question 1

Burglary (breaking and entering) is covered under crime insurance policies, but only if what requirements are met?

Answer 1

Defined as taking property from inside the premises by a person unlawfully entering or leaving the premises.

In order to pay out a claim, the following must be true,

1) There must be evidence of forcible entry (camera footage doesn’t count)
2) Business must be closed

Question 2

Bonds

Answer 2

Bonds involve a contract between three parties (Obligator, Obligatee, Surety). Bonds are not an insurance contract. The sum money paid on a loss from a bond is called the PENALTY.

Question 3

Bond penalty

Answer 3

The sum money paid on a loss from the bond.

Question 4

Obligator

Answer 4

The party making a promise under a bonding agreement (i.e. principal). An example would be a CONTRACTOR.

Question 5

Obligatee

Answer 5

The party receiving a promise under a bonding agreement. An example would be a customer.

Question 6

Surety

Answer 6

The party (bond company) that guarantees fulfillment of the obligor’s promise.

Question 7

Suretyship

Answer 7

Bonding contract guaranteeing a principal’s promise.

Question 8

Performance bond

Answer 8

A contract bond used by contractors to guarantee that work will be completed to specifications of the signed agreement.

Question 9

Payment bond

Answer 9

A contract bond that guarantees that bills for labor and materials will be paid by the contractor.

Question 10

Fiduciary bond

Answer 10

A judicial bond that guarantees the performance of fiduciaries entrusted with the property or money or others; the bond binds the principal and surety jointly.

Question 11

Fidelity bond

Answer 11

A judicial bond that will protect an employer against a dishonest employee.

Question 12

Hull coverage

Answer 12

Coverage under the Ocean Marine policy for the ship structure itself and all onboard equipments; comprehensive and collision for the ship (most similar to auto insurance part D coverage)

Question 13

Barratry peril

Answer 13

A peril specific to ocean marine insurance that covers any illegal act by the master (i.e. captain) or crew to defraud the owners of the ship or cargo.

Question 14

Inchmaree clause peril

Answer 14

A peril specific to ocean marine insurance that protects the owner of the ship from loss resulting in negligence by the captain or the crew, as well as defects in the ship’s hull or machinery.

Question 15

Hangarkeepers liability

Answer 15

Aviation bailee insurance covers the insured’s liability for damage to aircraft stored for safekeeping (like garagekeeper insurance)

Question 16

Umbrella Liability Insurance

Answer 16

Worldwide liability insurance that provides a high combined single limit (CSL) to protect against catastrophic losses; usually provides broader coverage than underlying policies.

Question 17

What are the two basic components of Umbrella liability coverage?

Answer 17

EXCESS… When the loss is also covered by another insurance, the underlying policy pays FIRST and the umbrella provides EXCESS coverage.

PRIMARY… When the loss is excluded by underlying insurance, the umbrella provides primary coverage. In this situation, the insured will need to pay a self-insured retention (SIR) retained limit, which acts like a deductible.