Term
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Definition
| A valid offer and unconditional acceptance including a proposed offer and acceptance. (insured offers, isurer accepts = aggreement) |
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Definition
| Both parties must provide value. Insured value is premium. Insurer is promis to pay valid claims |
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Definition
| Parties entering agreement must have legal capacity.(i.e. cant be under the influence, legally insane, minors, coercsion) |
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Term
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Definition
| A unilateral contract is an contract for a promis in exchange for an act already performed or act for a promise. Premiums paid and insurer promises to cover |
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Term
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Definition
| Insurer drafts language and the insured must follow it. Because of this, and confusing unclear or ambiguous language may be decided by court in favor of insured in disputes. |
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Definition
| One party may recover more in value than he or she has parted with based upon a possible future event. |
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Term
| Misrepresentation vs Material Misrepresentation |
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Definition
Misrepresentation - An incorrect statement made by an applicant, not intending to be fradulent.
Material Misrep- Known to be untrue statement made at time of application in order to get accepted or to get lower premiums |
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Term
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Definition
A statement guaranteed to be true.
i.e. coverage will only be continued to a bank that hires full tiime guard. If occurence happens and guard is not there, will not be covered. |
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Term
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Definition
| The failure to disclose information is concealment, insured not allowed to withhold any info the insurer may need to know. Fraud is when an individual intentional tries to deceive another. Concealment is fradulent in nature |
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Definition
| The intenntional and and voluntary abandonment of a known right. i.e insurer doesnt cancel policy after insured fails to pay required premium it has engaged waiver by silence |
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Term
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Definition
| Stopps the insurer from denying a claim, based on the fact that the insured was given wrong information, relying on the wrong information in coverage. And financial hardship will fall on insured in coverage is denied |
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Term
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Definition
Declarations
Insuring Provision
Conditions
Exclusions |
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Term
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Definition
| PErsonalizes the policy. Provides assortment of info regarding property of exposures being insured. (i.e. Name and address, description of property, location, coverage limit, annual premium...) |
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Term
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Definition
| Insuring agreement or clause, summary of agreement between named insured and insurer. Describes nature of agreement. Identifies the promise made to insured |
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Term
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Definition
| Identifies the responsibilities of each of the parties to the contract. i.e. when a new risk is altered or added must inform insurer |
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Definition
| Covers the perils that are not covered in the insurance policy. |
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Term
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Definition
| Primary function is to obtain as much pertinent information as possible to decide whether to accept or reject an application. |
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Term
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Definition
Frame- Majority of structure made of combustible material (wood) and is consider least fire resistant
Masonry-Constructed with exterior walls that are fire resistive (brick) considered non combustible if structure including floors and roof are made of slow burning materials.
Fire resistive- Highest rating. Generally includes fire walls within the structure. Premium credits may be provided. |
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Term
| Sources of information(for underwriter) |
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Definition
Application-Primary source, what the insured fills out
Producer Information- Producing agent or broker provides info to an underwriter regarding opinions and recommendations on applicant.
Inspections- Visiting site to verify property existence as well as value detemrination, building types etc.
Consumer Report- Inspection of applicant. Could be credit report, interviews with neighbors or employers. |
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Term
| Producer Authority: Actual or Express Authority |
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Definition
| The type of authority the agent posses which is defined or contained in the agent contract or agreement. When in force the insurer is responsible or agents actions. (ie solicit appointments, select or reject risks in field, complete apps, collect premiums) Extended via contract |
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Term
| Producer Authority: Implied Authority |
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Definition
| This type is unwritten authority not specifically identified or stated in agency agreement. However is extension of an agents duties. (i.e implioed agent who solicits insurance is permitted to sign the application) |
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Term
| Producer Authority: Apparent Authority |
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Definition
| Type of authority public perceives agent has based on their actions. Not given to producer but public believes they possess |
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Term
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Definition
Independent Agents: Agents who operate own branch and are paid by insurer for selling policies.
Captive Agents: Direct writing insurers who work directly for the insurer.
Direct Response Insurers: Distributed through mail,internet, mass media. NOT through agents or brokers |
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Term
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Definition
| Nonadmitted insurance. Think non traditional. Insurance on a hole in one contest |
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Term
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Definition
| The transfer of risk from applicant to insurer. |
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Term
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Definition
| Uncertainty concerning loss or financial loss |
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Term
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Definition
| Avoided, shared, reduced, retained or transferred. |
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Term
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Definition
| A peril is the cause of loss or the reason for a loss. (i.e. homeoners list perils as fire, lightning wind etc) |
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Term
| Hazard and the 3 types of hazards |
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Definition
| A hazard heightens the possibility of a loss arising. (i.e. Storing gas in basement) Physical hazards, Moral Hazards, Morale Hazards |
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Definition
| Physical items that increase the chance of a loss. (i.e stacks of newspapers in attic, gas stored in garage) |
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Term
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Definition
| Heightened chance of loss due to dishonest nature of insured. (i.e. someone who intentionally damages own property, uses illegal drugs, submits false info on application) |
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Term
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Definition
| Indifferent or careless attitude by insured. (i.e. insured who is aware brakes are not working properly and does not fix them) |
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Term
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Definition
| The initial amount of a covered loss for which the insured is responsible |
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Term
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Definition
| Not the principal cause of damage but is responsible for loss due to a domino effect. For coverage to apply damage must be proximate or original cause or within the unbroken chain of events that connects proximate cause to the loss |
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Term
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Definition
| Makes sure the client is whole again. Insured only entitled to claim payment if loss is incurred and prevents insured form profiting from policy. |
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Term
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Definition
| To insure property must have a economic or financial interest in the property. |
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Term
| Loss Settlement Provisions |
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Definition
Actual Cash Value
Replacement Cost
Market Value
Valued Policy Laws |
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Term
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Definition
| Method of loss valuation which states no matter how much coverage is purchased, the claim amount is limited to the amount of actual loss incurred. Replacement cost minus depreciation |
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Term
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Definition
| The amount needed today to replace damaged or destroyed propery covered under policy. Full cost to repair or replace damaged property. Also has functional replacemnt which is replaceing it with cheaper but functional items |
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Term
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Definition
| Market Value is best for dwellings that may be difficult to replace due to workmanship and materials. (i.e. old colonial homes) |
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Term
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Definition
| This is the max an insurer is responsible for per single loss. (200,000 dollar limit on house they will pay upto 200,000) This is per claim and resets following a loss. |
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Term
| Split limits vs Combined Single |
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Definition
Split is like 20/50/10 You get 20 per person. 50 total and 10 in property damage. and cant be mixed
Combined Single Limit is like a 50,000 dollar pool and can be paid to anything. |
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Term
| Accident vs occurence limits |
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Definition
Accidents are a one time unplanned or fortuitous happening that results in damage or injury (i.e. car skidding off road intoa fence)
Occurence is a unexpected and recurrent, repeated or perpetual exposure to a circumstance that over time causes illness or impairment (i.e. takeing a drug for your heart that causes side effects) |
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Term
| Cancellation: Short Rate/ Pro Rata |
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Definition
| This is a refund of premium. Short rate is when the insured cancells. Pro Rata is when the insurer cancells. ( 6 month premium is 600 cancels after 3 months in both instances receives 300 back) |
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Term
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Definition
| If a insurer decideds not to renew the contract must provide sufficent written notice to insured and sent to last known address |
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Term
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Definition
Vaccancy is a residence or building is emptied and unfurnished and there is no intent to return tpo property from insured
Unoccupancy means nobody is present but the building is furnished in some capacity and insured intends to return |
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Term
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Definition
Appraisal happens when it is understood coverage exists but not loss amount.
Arbitration occurs when the insured and insurer disagree on if there is coverage or not |
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Term
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Definition
| Written provision stating before a insured can assign a property insurance policy, must have written permission from insurer |
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Term
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Definition
| A temporary contract issured for specific period of time while actual policy is being produced by insurer |
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Term
| Pro Rata Liability Clause |
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Definition
| If 2 insurance companies insure same thing, they will pay proportionate amounts based on percantage of coverage. (i.e. Hartford carries $60,000 in coverage Aetna carries $40,000 on a 50,000 dollar claim Hartford would pay 30,000[60%] and Aetna 20,000[40%]) |
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Term
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Definition
| If two companies both insure a building, the first effective policy date is primary and pays upto its limit before second policy pays. (i.e Company A has 300,000 limit Company B has 900,000 limit. On a 350,000 claim Company A pays its 300,000 limit and company b covers the last 50,000. If its only a 250,000 claim then A covers whole claim) |
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Term
| Contribution by equal shares |
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Definition
| 2 Companies share equally the amount covered. If one has limits reach the other pays the rest. (i.e. Company A has 100,000 limit COmpany B has 200,000 Limit. On 100,000 claim both pay 50,000. On a 250,000 claim both pay 100,000 then Company B covers last 50,000) |
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Term
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Definition
| Insurance for insurers to avoid catastrophic loss. Can be Facultative, Automatic, Quota Share(Small company cant do coverage of more than 1 million, a client needs 5 mill coverage. Ceeds the last 4 million to another company) |
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Term
| Facultative (Reinsurance) |
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Definition
| The reinsurer decides what to insure based on a case by case basis |
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Term
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Definition
| The ceding insurer and reinsurer agrees in advance to automatically accept/send a portion of risk up to a aggreed limit. |
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Term
| Quota Share (Reinsurance) |
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Definition
| A ceding insurer agrees to pay certain percentage of premium (40%) in exchange for same percantage in coverage (40% of claims) |
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Term
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Definition
| This is the transfer of rights of recovery. Insured gives up right to go after third party who caused loss. This is given to insurer who may get some of its pay out back. |
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Term
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Definition
| A wrongful act or omission which invades a legally protected right. (Unintentional torts, intentional torts and strict liability) |
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Term
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Definition
An individual possesses a legal liability for damages to others if they have been negligent. To be negligent the person must
1. Have a legal duty is owed to the public
2. A breach of stated duty occurs and is unintenntional. (standard of care)
3. Some sort of injury or loss must occur.
4.The act or failure to act must be the cause of loss. |
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Term
| Defenses against negligence (5) |
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Definition
1.Contributory Negligence
2.Comparative Negligence
3.Assumption of risk
4.Intervening Cause
5.Statute of Limitations |
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Term
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Definition
| Common law defense saying any injured party who was any way responsiblew for the loss can not receive compensation for damages. |
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Term
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Definition
| Determined in court and damagaes are paid proportionally. (i.e. third party breaks arm in touch football game and totals 10,000 in loss. After hearing in court it is determined he was 80% at fault. Is only paid 2,000[20%]) |
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Term
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Definition
| If the injured third party assumed the risk of injury voluntarily then the insured is absolved of any liability |
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Term
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Definition
| Defendent not liable if an injury to a third party is caused by a seperate unrealed cause which interrupts a series of chain events and begins new series. Must be fortuitous and unexpected |
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Term
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Definition
| If individual fails to commence legal action within a particular statue of limitations they will be unable to receive damages. |
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Term
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Definition
| "It speaks for itself" states that the elements of duty of care and breach can sometimes be inferred from the very nature of an accident or other outcome, even without direct evidence of how any defendant behaved. |
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Term
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Definition
| The at first blush phrase. Non calculated instinctive response. Not worried about insurance fault (i.e. John hits Steve. First thing John says when he gets out of car is "Oh my gosh im so sorry i wasnt paying attention") |
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Term
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Definition
| "at first face" or "at first appearance" It is used in modern legal English to signify that on first examination, a matter appears to be evident from the facts. |
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Term
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Definition
| These damages represent a combined total monetary loss suffered and are awarded as compensation for the loss. Special damages are measurable (medical expenses, property damage loss of earnings) General and intangible (pain and suffering, mental anguish) |
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Term
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Definition
| Additional damages awarded by court as punishment, usualy meant to teach a lesson to defendent and warning to general public. Punitive damages are NOT covered under liability policies |
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Term
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Definition
| Imposed without regard to fault or regardless of if anyone was at fault. So injured party will be awarded damages despite other person doing nothing legally wrong (i.e. dog bites neighbor) |
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Term
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Definition
| Insured may be liable for those who are extended through them. (Parent is liable for any acts minor children permorm, employers liable for acts employees perform) |
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Term
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Definition
| Involved in investigation, adjustment, negotiation and trial prep of claims arising from insurance policy. |
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Term
| Adjusters Settlement Power |
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Definition
| Adjuster is entrusted with the duty and responsibility to determine the amount of loss. Often has power to settle or adjust the loss and make payment to claim. Any duty discussed to adjuster is binding to insurer. In insurer says adjuster may write a check for damages and does so, this is binding to the insurer. |
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Term
| Adjusters Duty: Reporting to insurer |
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Definition
Information communicated is considered privlaged information. Usual consits of 3 reports.
Preliminary Report- provides info regarding intital details of claim and possible settlement info.
Interim reports- Provides more information and progress of settlement process. May also raise questions and ask for assistance
Final Report-Describes losses that have been settled. |
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Term
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Definition
| Investigating the claim, determining legal laibility, verify if damages qualify for loss payment, determining fair loss payment according to contract, negotiating a settlement. |
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Term
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Definition
Staff- Those employeed by insurer to handle claims on behalf of employer
Independent- Adjusters self employed that work for many companies and are paid a fee.
Public Adjuster- Adjuster who handles claims on behalf of a client(insured not insurer) |
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Term
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Definition
Documentary/Demonstrative: Physical things you can show but not in real time, pictures of skid marks, conditions of road.
Physical: Things you may show in real time. Injuries sustained, broken putter.
Oral: Witness testimony. "he hit him"
Dem: Here is an xray of my arm
Phys: Look at my broken arm / touch it
Oral: "I have a broken arm" |
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Term
| Non Waiver VS Reservation of Rights |
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Definition
Non Waiver: Primarily used when a insured's right to coverage is questioned or when loss is a large amount and will take a longer period of time to settle. Its requested the insured signs it understanding insurer is not waving its rights (ie to deny coverage).
ROR: advises an insured that the insurer will continue the investigation of the claim but may deny coverage if it finds that its position has been compromised or damaged due to late report |
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Term
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Definition
General: When settlement results in immediate payment they party signs general release which prevents them from taking further leagal action in return for consideration
Open Ended/Scheduled payment: Where general and special damages are paid immediately but claim stays open for any additional special damages. |
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Term
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Definition
| The transfer of rights of recovery. (jerry gets 200,000 from hartford due to injury, jerry cant go after third party for additional compensation, the insurance company now has right to make claim against third party) |
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Term
| Alternative Dispute Resolutions |
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Definition
Appraisal: Insured and insurer cant agree on value of loss, each hires appraiser. Two appraisers select an umpire. present their appraisal values the umpire chooses and the decision is binding.
Arbitration: Unlike appraisal its not just loss but wether something like coverage exists. Arbitration brings in a neutral uninterested third party to decided.
Competetive Estimates:Each party gets competetive estimates from shops to narrow down a price range
Mediation: Non binding. Neutral third party leads discussion and negotiations between parties
Negotiation: ...Negotiations.... |
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Term
| Eligibility requirements for HO |
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Definition
1: One to four family dwelling, no more than 2 roomers per family.
2:May be dwelling under construction
3:May be seasonal dwelling
4:May be co-owners of duplex
5:Life estate arrangement(parents transfer to child, continue to live)
6:May be tenant who rents and premises for dwelling purposes |
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Term
| Definition of an insured-homeowners policy |
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Definition
| The named insured in the declarations, any family or resident relatives living in the household. Any person under age 21 who is in care of the insureds. Anyone who has temporary possesion of insureds animal or watercraft. A student enrolled in school full time and was resident of the household before moving to school provided student is under 24 and relative. Or 21 and in your care or care of another insured |
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Term
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Definition
1-The residence premises
2-Vacant Land other than farmland
3-Individual or family burial/cemetary plot
4-Any premises acquired by insured during policy used for non business purposes
5-Any part of premises not owned by insured where any insured is temporarily residing
6-Any premises temporarily renting and not used for business |
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Term
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Definition
Section 1: Covers value of real and personal property (Coverages A,B,C,D)
Section 2: Covers personal liability (Coverages E,F) |
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Term
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Definition
A) Dwelling (House/Main structure)
B) Other structures ( Detached garage, fence, shed)
C) Personal Property (Anything you can physically take out of your house [not the structure])
D) Loss of use
E) Liability and
F) Med pay |
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Term
| Personal Liability Coverage |
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Definition
| Coverage protects an insured if a legal suit is brought against themas a result of legal responsibility Bodily injury or property damage to others. |
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Term
| Medical Payments to Others |
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Definition
| Coverage F states insurer will pay necessary medical expenses incurred within 3 years of an accident causeing bodily injury to others arising from an insured location or personal activites of insured. |
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Term
| Watercraft Liability (the 4 not covered) |
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Definition
Inboard Owned (personal watercraft as well jet skis, wave runners)
Inboard Rented over 50 HP
Outboard Owned over 25 HP
Owned or Rented sailing vessel 26 feet and over |
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Term
| Homeowners Endorsements(7) |
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Definition
Business Pursuits
Home Day Care Business
Permitted Incidental Occupancies
Personal Injury
Watercraft
Home Business
Limited Fungi, Wet or dry rot, or bacteria |
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Term
| H.O Endorsements -Business Pursuits |
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Definition
| Insureds home must primarily be for residential purposes. However allows liability coverage for stated business activities only. Only covers employees |
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Term
| H.O Endorsements-Home Day Care Business |
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Definition
| Specific liability arising from operation of a day care. Specifically excludes liability from sexual molestation or abuse, corporal punsihment injury from use of saddle animals and aircraft, motorized land vehicles or watercraft. |
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Term
| H.O Endorsements-Permitted Incidental Occupancies |
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Definition
| This endorsemnt negates homeowner policy exclusion which excludes liability coverage for incidental business activites on the premises. |
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Term
| H.O. Endorsements- Personal Injury |
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Definition
| Ammends section II of policy to include liability as a result of personal injury on part of insured. Will not cover personal injury resulting from contracts or violation of penal law |
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Term
| H.O. Endorsements-Watercraft |
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Definition
| watercraft liability is provided for all boats owned or operated by an insured except if the watercraft is used for business. |
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Term
| H.O. Endorsements-Home Business |
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Definition
| Provides coverage for certain types of businesses at the residence as long as owned by insured. Business must be operated out of insured delling or structure on premesis |
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Term
| H.O. Endorsements-Limited fungi,wet/dry rot, bacteria |
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Definition
| Pays for removal, replacement and air testing anything involving fungi, rot or bacteria |
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Term
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Definition
| Homeowner Borad Form- Broad form peril policy protecting insured from named perils (firel, lightning, vandalism) plus loss by theft. |
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