Unit 3

Question 1

Property insurance

Answer 1

Covers Personal belonging
Loss caused by covered peril
First party loss- insurer pays insured

Question 2

Casualty Insurance

Answer 2

Casualty = Liability
Always pay the other guy
Third party loss

Question 3

Policy Sections

Answer 3

DICEE

Question 4

Declaration

Answer 4

Who what when where and how much

Question 5

Insuring agreement

Answer 5

Promise to pay and perils covered

Question 6

Conditions

Answer 6

Rules for the policy

Question 7

Endorsement

Answer 7

Changes to original policy

Question 8

Exclusions

Answer 8

Not covered

Question 9

Additional/Supplementary Coverage

Answer 9

Payment for additional expenses not normally covered

May have separate limit of insurance

Question 10

Insureds

Answer 10

Named insured
First named insured
Insureds
Additional insured

Question 11

Policy period and Territory

Answer 11

Period - when policy begins and ends

Territory- where loss must occur

Question 12

Cancellation

Answer 12

Occurs before policy end date

Co. Cancellation requires advanced notice

Full refund of unearned premium, pro rata

Question 13

Non renewal

Answer 13

Occurs at expiration date

co. must provide advance notice

Partial refund of unearned premium, short rate

Question 14

Other Insurance Provision

Answer 14

Multi policies insuring same loss

Primary/ Excess - primary policy pays first; excess pays what’s left

Extra share - ea. policy pays the same up to smallest policy limit

Pro Rata - ez. policy pays its share according to the total ins.

Question 15

Named insured Duties after Loss

Answer 15

PPC - MSP

Prompt notice to insure
Protect prop from further damage
Complete proof of loss
Make prop. available for inspection
Submit to examination under oath
Cooperate w/ Insurer

Question 16

Assignment

Answer 16

policy cannot abandon prop that

Question 17

Abandonment

Answer 17

insured cannot abandon prop that can be repaired and expect to be paid

Question 18

Salvage

Answer 18

insurer has right to salvage

salvaged prop can lower claim cost for ins co

Question 19

liberalization

Answer 19

extended coverage to insured

no additional premium charged
no action required by insured

Question 20

Suborgation

Answer 20

insurer has right to sue an at fault party for damages paid by insured

common when at fault does not have ins

Question 21

Binder

Answer 21

Temp ins

Usually given by agent

Can be cancelled by insurer

Not guaranteed to be issued

Auto ends once issued

Question 22

Financial Ratios

Answer 22

Loss Ratio - Compares co ops over a yr

Expense ratio - Cost doing business

combined ration - breakeven

Question 23

Rating a Risk

Answer 23

Judgement - No set rates; based on underwriter’s experiences

Manual ( class) - set rates for specific classes

Experience rating (Merit) - based on insured claim history. Increase or decrease premium

Question 24

Loss Costs

Answer 24

pure claims data

no operating expenses included

no profits included

Question 25

Rate components

Answer 25

Loss reserves(estimate of claim costs)

Claims handling costs

Operating expenses

Profit

Question 26

Fair Credit Reporting Act (FCRA)

Answer 26

All insurers and producers must comply

Notice to the applicant w/in 3 days after report requested

Max penalty $5k, 1 yr prison or both

Question 27

Terrorism Risk Insurance Program Reauth Act of 2015

Answer 27

Result of 9/11 Attacks on US

Congress re-enacted until 2020

Limits exposure of insurers in case of another terrorist attack

triggering event - $100 mill

Question 28

Gramm -Leach - Bliley Act ( 15 USC Section 206)

Answer 28

A consumer is anyone about whom info is collected

A cust. is someone who has an ongoing relationship

the opp to opt out must be offered when an account is established and annually thereafter

Question 29

Fraud and False Statements

Answer 29

It is illegal to make to make false statements

Fine, up to 10 yrs in prison

up to 15 yrs in prison if false statement jeopardize insurer