Unite 6: Residual Markets

Question 1

are state created insurance mechanisms to ensure there is a market for “hard-to-place risk” serving two major functions.

1. is that residual markets provide coverage for individuals and companies that are required either by contract or law to carry insurance.
2. is that residual markets foster, promote, and provide for a smoother functioning of a state’s economy.

Answer 1

Residual Markets

Question 2

2 main Functions:

1. The first function is that residual markets provide coverage for individuals and companies that are required either by contract or law to carry insurance.
2. The second major function is that residual markets foster, promote, and provide for a smoother functioning of a state’s economy. Examples for each would be useful:

Answer 2

Residual Markets Functions

Question 3

Florida motor vehicle owners are required to carry at least the minimum limits of $______ of Property Damage Liability and $_______ of Personal Injury Protection.

Answer 3

$10,000

Question 4

Florida created the _______________________ (FAJUA) as a market of last resort to ensure vehicle owners with poor driving histories with an opportunity to purchase the statutorily required insurance.

It is composed of ALL licensed companies in Florida that write auto insurance by a group of serving earners

It is available to

1) Florida Residents
2) Military nonresidents stationed in Florida
3) Nonresidents with autos registered in Florida
4) Subject to Florida No-­‐Fault Law

Answer 4

Florida Automobile Joint Underwriting Association (FAJUA)

Question 5

The banks and mortgage companies contractually require the home purchaser to acquire and maintain insurance to protect the home and their equity in it. Florida being heavily exposed to hurricanes does have some difficulty in the voluntary markets to provide coverage for coastal properties and some homes with significant loss histories.

Answer 5

Joint Underwriting Association which is Citizens Property Insurance Corporation,

commonly referred to as simply Citizens.

Question 6

is a residual market for individuals who cannot obtain automobile insurance in the private – competitive market.

Operates on behalf of all licensed Florida automobile insurance companies (i.e. private auto insurers) through a number of servicing carriers who operate as underwriting, servicing, and claims facilities for the FAJUA.

The private auto insurers share in the operating profit or loss of the FAJUA’s operations.

Licensed agents in Florida have access to the FAJUA after contracting with the FAJUA. The logistics of placing an insured with the FAJUA is similar to that of the private insurers.

Answer 6

Florida Automobile Joint Underwriting Association (FAJUA)

Question 7

ELIGIBLE PARTIES INCLUDE:

• Florida residents.
• Military non-residents stationed in Florida.
• Non-residents for automobiles registered in Florida
  or if subject to the Florida No-Fault Law.

Answer 7

Florida Automobile Joint Underwriting Association (FAJUA) Eligibility

Question 8

______________ Personal Auto coverages available include:

• Liability coverage with limits up to 100/300/50.
• Statutory PIP.
• Uninsured Motorist.
• Medical Payments.
• Physical Damage coverage.

Answer 8

Florida Automobile Joint Underwriting Association (FAJUA) Personal Auto coverages available

Question 9

___________ Business Auto coverages available include:

• Liability coverage with limits up to 100/300/50.
• Statutory PIP.
• Uninsured Motorist.
• Medical Payments limits of either $500, $1,000, or
  $2,000.
• Physical Damage coverage for vehicles under
  10,000 pounds.
• Comprehensive and Collision deductible options
  include: $250, $500, and $1,000.
• Higher limits are available if required by any law or
  regulation.

Answer 9

Florida Automobile Joint Underwriting Association (FAJUA) Business Auto coverages

Question 10

The Florida Residential Property and
Casualty Joint Underwriting Association (FRPCJUA)
and the Florida Windstorm Underwriting
Association (FWUA) were merged to form _______ in 2001.

Answer 10

Citizens Property Insurance Corporation AKA Citizens

Question 11

NEW ELIGIBILITY REQUIREMENT! Citizens must be ___% higher than the standard market.

Answer 11

20%

Question 12

__________ offered HO-2, HO-3, HO-4, and HO-6

Answer 12

Citizens Homeowner Forms

Question 13

__________ offered DP-1, DP-2, and DP-3.

Answer 13

Citizens Dwelling Fire Forms

Question 14

Citizens does not cover:

Answer 14

• Animal Liability

- Off-premises Theft

Question 15

_________________________ is available but there are very few other eligible endorsements.

Answer 15

The Replacement Cost on Contents Endorsement

Question 16

Standard Deductibles are

Answer 16

$1,000 All Perils / 2% Hurricane for all policies except those covering mobile homes.

Question 17

The Standard Deductibles for mobile home homeowners policy are:

Answer 17

$500 All Perils / 2% Hurricane.

Question 18

___________ policies are available for –

• condominium associations.
• homeowners associations.
• apartment buildings.

Answer 18

Citizens Commercial property

Question 19

________________ properties include:

(a) vacant or “unoccupied” properties.
(b) properties in disrepair.
(c) properties over fifty (50) years old unless the wiring, heating and roof have been updated.
(d) do-it-yourself construction.
(e) condemned, inaccessible or properties built over water.
(f) properties with excessive or unusual liability exposure.

Answer 19

Citizens Uninsurable residential

Question 20

________ Policies:
- Covers the perils of windstorm and hail.
- All building types are eligible.
- Coverage is only available in defined geographical
areas.

Answer 20

Citizens Wind Only Policies

Question 21

FAJUA operations are overseen by this group.

Answer 21

board of governors

Question 22

Coverage through the FAJUA is written by agents with ____________________.

Answer 22

appointments

Question 23

The maximum Citizens Coverage A - Dwelling limit for an HO-3 policy.

Answer 23

$700,000

Question 24

The standard deductibles in a Citizens Homeowners policy.

Answer 24

$1,000 All Perils & 2% Hurricane

Question 25

a market source for individuals and businesses for those residential and commercial property exposure uninsurable in the coluntary market.

Answer 25

Citizens Property Insurance Corporation

Question 26

The max Citizens Coverage A- Dwelling limit for an HO-3 policy.

Answer 26

$700,000

Question 27

The FAJUA offers Personal Auto and ______ Auto coverage.

Answer 27

business

Question 28

Which law maintains the right of Citizens’ insureds to select and maintain their agent of choice?

Answer 28

Consumer choice

Question 29

The FAJUA operates on behalf of all licensed FL automobile insurance companies through a number of ________ _________ who carry-out the company operations of underwriting, policy servicing, and claims administration.

Answer 29

servicing carriers

Question 30

Which standard PAP coverages are available in an FAJUA policy? (choose all that apply)

• Liability Coverages
• Uninsured Motorists Bodily Injury
• Personal Injury Protection
• Medical Payments

Answer 30

ALL OF THEM

Applicants with private passenger autos are eligible for Liability coverage with limits up to 100/300/50, PIP, UM coverage, Medical Payments coverage with $500, $1,000 or $2,000 limit, and Physical Damage coverage (Comprehensive and Collision combined) subject to a deductible of $250, $500 or $1,000.

Question 31

Your agency has provided an unconditional quote from an authorized insurer to a potential customer. Can you write her a Citizens policy?

• Yes, the quote from the authorized insurer is not a bar to obtaining a Citizen’s policy
• Yes, the quote from the authorized insurer is required before you can write a Citizen’s policy
• No, the quote from the authorized insurer is a bar to obtaining a Citizens’ policy
• The policy can be written but will be renewed to the preferred market company

Answer 31

No, the quote from the authorized insurer is a bar to obtaining a Citizens’ policy

NOTE: A Citizens policy cannot be written if a voluntary market offer/policy is available for the insured property.