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The uncertainty of loss.
For example, when you drive your car, the risk is that you may become involved in an accident. |
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Something that increases the risk.
Drinking while driving is a hazard since it greatly increases the chance of an accident. |
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| Physical hazards that result from material or structural features of a risk, as opposed to human or mgmt factors, such as an oily rag left by the furnace. |
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| Circumstances of morals or habits that increase the probability of a loss from an insured peril, such as an insured previously convicted of arson. A dishonest person is a moral hazard. A person not paying their credit card bills timely is a moral hazard. |
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| Indifference to loss because of the existence of insurance. For example, an insured fails to repair faulty wiring, believing it is less expensive to pay insurance premiums than to pay an electrician. A careless person is a morale hazard. |
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| To restore to where you were financially prior to the loss. Not to profit from the loss. |
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| Based upon economics or an equity position. Insurable interest is required at time of loss in order to recover on a policy. |
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| Replacement cost (at time of loss) minus depreciation (based on age of the structure), if any, equals ACV. |
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| Failure to act as a reasonable person would in the same set of circumstances. |
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| Liability covers bodily injury (BI) and property damage (PD) to others caused by the negligent acts of the insured. Although fire policies do not contain any coverage for liability, all homeowner's policies do. |
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| Something occurring over a period of time, but still covered by the policy. |
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| A temporary insurance contract that may be verbal or written. A binder is deemed to include all usual terms of the policy for which it was given, plus endorsements. |
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| Guarantee of truth, such as a sprinkler or fire alarms or burglar alarms. |
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| The insurance company will require that the applicant tell the truth to the best of their knowledge on the application, these are "representations". Of course if the client knowingly lies, this is a "misrepresentation". Material misrepresentations may have the effect of voiding the policy, if discovered. |
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| The omission of a material fact. This may have the effect of voiding the policy. |
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| DEPOSIT PREMIUM/AUDIT (WORKER'S COMP AND CGL) |
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| The premium you pay is a deposit; you will be subject to audit annually and premium adjustments. |
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| States WHO is the insured, WHO is the insurer, WHAT the policy coverage is for, including limits. It does not have the premium listed on it. It does have the policy effective TIME and DATES. |
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| Basic principle of this law is that the larger the number of separate risks of a like nature combined into one group, the more predictable the number of future losses of that group within a given time period. |
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| No chance of gain, only chance of loss. You can only insure pure risk. |
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| You may gain, you may lose; investing in the stock market for example. You cannot insure speculative risk. |
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| Something added to the policy to modify its terms. |
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| Most jurisdictions permit courts to award compensatory damages to parties due to the negligent acts of others. May be either special, general, or punitive. |
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| Consist of medical expenses and lost wages. These are the costs a claimant incurs, sometimes called "out of pocket expenses". They are an exact and verifiable figure. |
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| Unlike special damages, which are determined by incurred expenditures, general damages do not directly relate to an expense or an amount of lost income. By paying for general damages, the insurer is attempting to compensate the injured party for his or her mental and physical distress, including pain and suffering, disfigurement, and loss of consortium. |
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| These are awarded when the injury was caused by the gross negligence of the defendent. Often, these awards are TRIPLE the amount of the general damages awarded and are sometimes not covered by insurance. "Gross negligence" is defined as willful and wanton negligence. For example, a defendent knew their product was faulty, but continued to sell it anyway. |
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| COMPLIANCE WITH THE PROVISIONS OF THE FAIR CREDIT REPORTING ACT |
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Definition
| No one may order a consumer investigative report without the applicant's written permission, in advance. This is called pre-notification. To prevent abuse in consumer reporting, there is a federal law called FCRA which requires pre-notification and post-notification. If the insurance company rejects an application or cancels a policy based on information they receive in one of these reports, they must advise the client of the specific reason for the rejection or cancellation and tell them which credit reporting agency supplied them with this negative information. The client then has the right to go to that consumer reporting agency (or to the insurer) and request a free copy of their credit report. If the information contained in the report is incorrect, the consumer reporting agency must correct it. The insurer has no obligation to correct any information on a consumer report. |
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