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P&C > Unit Three Basics of Property and Casualty Insurance > Flashcards

Unit Three Basics of Property and Casualty Insurance Flashcards

1
Q

What does property insurance cover?

A

It covers “my stuff” meaning buildings (real property) and personal belongings know as “first party loss”

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2
Q

What is casualty insurance?

A

Liability insurance it always pays the other guy never me 

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3
Q

Who is the first party 

A

The insured

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4
Q

Who is the second party?

A

The insurer

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5
Q

Who is the third-party?

A

The other guy

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6
Q

List the policy sections (DICEE)

A

Declarations
Insuring agreement(s)
Conditions
Endorsements
Exclusions

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7
Q

What is in the declarations section?

A

The name of the insured(s) a current address a legal description of the insured property the policy deductibles and the term of coverage are contained. This information is used to help determine the premium cost of the policy.

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8
Q

What is in the insuring agreement section?

A

The covered perils or risks assumed by the insurer and makes reference to the contractual agreement between the insurer and the insured. It’s summarizes the major promises of the insurance company as well as states what is covered. 

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9
Q

What is in the conditions section? 

A

The policy, provisions rules of conduct duties and obligations required for coverage.

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10
Q

What is in the endorsements section? 

A

Changes to the original policy that were added, modified or taken away and are still a part of the legal contract

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11
Q

What is in the exclusions section?

A

Items not covered by the policy

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12
Q

What is additional/supplementary coverage?

A

Provides payment for certain additional expenses. Depending on the policy, this coverage may have separate limits of insured and may be paid in addition to the maximum limit of liability.

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13
Q

What is listed in the definition section?

A

It clarifies the meanings of certain terms used in the policy

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14
Q

Who is in the named insured section? 

A

The person business or other entity named in the declarations to which the policy is issued 

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15
Q

Who is listed in the first name insured?

A

The person listed first on the declaration page where there is more than one name insured. This is typically used when there are multiple partners in a business 

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16
Q

How would you add resident relatives to your insurance policy?

A

Insureds-by definition

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17
Q

How would you add additional insured to your policy?

A

Added by endorsement 

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18
Q

What does policy period mean

A

When the policy begins and ends

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19
Q

What does policy territory mean?

A

Where a policy must occur

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20
Q

What does unearned premium mean?

A

If the insured had paid premiums in advance for future months and canceled their policy before it ends the company must return the unused premium

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21
Q

What does prorated basis mean?

A

That the insured will receive a portion of the premium back, depending on when the policy is canceled

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22
Q

What is a flat rate cancellation?

A

When a policy is canceled on the effective date by either the insurer or the insured

23
Q

When does nonrenewal occur?

A

At the expiration date 

24
Q

What is deductible?

A

Amount of loss paid by the insured. The higher, the deductible, the lower, the premium.

25
Q

What is the concept of indemnity?

A

To restore the insured to their original pre-loss condition - no better and no worse 

26
Q

What is the concept of indemnity?

A

To restore the insured to their original pre-loss condition - no better and no worse 

27
Q

What is non-concurrency 

A

The result of two or more policies covering the same property, but providing different or non-identical coverage

28
Q

Sum up Primary insurance and excess coverage?

A

Excess pace, what is not covered by primary?


29
Q

What is pro rata?

A

Each insurer liable for portion of loss 

30
Q

How do you calculate pro rata?

A

Policy limit of one company/policy limit of all companies x LOSS

31
Q

What is contribution by equal shares?

A

Each policy pays the same up to the smallest policy limit

32
Q

What are the duties after a lost?

A

•Prompt notice of claim to the insurer
•Protect the property from further damage
•Complete detailed proof of loss
•Make the property available for inspection
•Submit to examination under oath if required
•Cooperate with the insurer 

33
Q

What does the assignment condition specify?

A

A policy cannot be transferred without written consent from the insurer.

34
Q

What provision allows illegal representative to have a policy transferred in their name if the first owner died

A

Transfer of rights

35
Q

What is abandonment?

A

Insured cannot abandon property that can be repaired and expect to be paid as if the loss was total 

36
Q

What is salvage and who has the right to it?

A

Salvage property can lower the claim cost for the insurance company and the insurer has the right of salvage not the insured 

37
Q

What is liberalization?

A

• extended coverage to insured
• no additional premium charged
• no action required by insured

38
Q

What is subrogation?

A

Insurer has the right to sue an at-fault party for damages if they have no insurance and the insurer how to pay the insured 

39
Q

What is insurable interest?

A

Risk of financial loss such as blood love or money
May present at the time of application must be present at the time of loss

40
Q

What is underwriting?

A

The process of evaluating the risk and exposures of potential clients 

41
Q

Who ultimately decides whether to accept or reject the application for insurance

A

Underwriters

42
Q

What is a binder?

A

temporary insurance

43
Q

Who can give a binder and who can cancel a binder?

A

Usually given by the agent verbally or in writing
The company cancels the binder

44
Q

Does a binder guarantee a policy will be issued

A

No

45
Q

When does a binder end?

A

Automatically ends if a policy is issued by the underwriter or if canceled by the insurance company

46
Q

What are the three ways to assign rates?

A

Judgment
Manual
Experience rating

47
Q

How is judgment rating determined?

A

There are no set rates in based upon underwriters experience

48
Q

How is manual rate determined?

A

Set rates for specific risk classes

49
Q

How is experience rating determined?

A

Modification factor based on loss experience
Increases or decreases premium
Usually a three-year period

50
Q

What is the fair credit reporting act?

A

Guidelines All insurers and producers must comply while pulling a customers personal information

•MUST send notice to the applicant within three days after reporting was requested

•if not the maximum penalty - $5000, 1 year in prison or both

51
Q

What does TRIPRA(TRIA) stand for?

A

Terrorism risk insurance program reauthorization act of 2019

52
Q

What does Gramm-Leach-Bliley Act (GLBA) protect?

A

The confidentiality of personal information 

53
Q

Since it is illegal to make false statements, if guilty, what happens

A

-fine, up to 10 years in prison or both
-up to 15 years in prison, if false statements jeopardize insurer

54
Q

Since it is illegal to make false statements, if guilty, what happens

A

-fine, up to 10 years in prison or both
-up to 15 years in prison, if false statements jeopardize insurer

P&C (20 decks)

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