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153 terms

P&C EXAM 2

STUDY
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Marine
imports and exports, domestic shipments, bridges, tunnels, piers, docks, pipelines, telephone lines, TV towers
InLand Marine
on land or air
Ocean Marine
on the water
Shipper's Losses
Cargo Owner
Loss: Damage to Cargo
Carrier's Losses
Vessel Owner
Loss: damage to vessel, freight, liability for cargo and other vessels, injury to crew, oil spills
Voyage Insurance
Type of Cargo Insurance - single trip; agreed value
Open Cargo
Type of Cargo Insurance - covers everything shipped within policy period
Open Cargo Valuation
Amount of Invoice + Frieght + % to cover additional expenses (10%)
Warehouse to Warehouse Clause risks
Natural disasters, civil authority, strikes by port workers
Warehouse to Warehouse Clause includes
Inland and Ocean Marine transit
Covered claues are written on an
all risk basis; pirates
exclude: war, strikes, civil commotion
Sue & Labor Clause
resonable measures taken by vessel owner to protect vessel
ie: thrown goods over-board to save ship
Maritime Law under Sue & Labor Clause
ship owner and all parties share in loss of property owner who suffered loss
Hull Insurance
covers physical damage to ship
Hull Insurance includes
machinery, boiler, fuel supplies
Hull Insurance excludes
cargo on ship
Hull Insurance covered casues of loss
perils of the sea, fire, lightning, earthquakes, barratry
Barratry -
misconduct by crew that is against ship's best interest
Collision Liability Clause
damage to other ships and their cargo
Protection and Indemnity
liability from operation of a vessel - damaged bridges and piers; injury to crew and passengers; damage to cargo
Inland Marine includes
railroad, truck, aircraft, US postal service
Shipper -
originator
Carrier -
Trasnporter
Common Carrier liability
safe deliviery of cargo entrusted to them
Common Carrier exceptions
acts of God, public enemies, public authority, fault of shipper
Bill of Loading
contract may limit liability to common carrier
Straight Bill
no limit to liability or recovery to common carrier
Bailor-
owner of personal property
Bailment -
another's personal property in temporary possession of someone else
Bailee-
party possesing the property in bailment
Inland Marine causes of loss
usually all risk - theft, breakage, damage
Filed Classes -
rates and forms field with the state, protect average customer
Non-filed classes -
smaller number of insureds, diverse exposures, flexibility with coverage
Bailee Liability -
warehouse owner's LL policy - covers liability while goods are stored in insured's warehouse
Bailee's Customer Policy -
covers goods of customer while in bailee's possession;
Bailee's Customer policy exsists to
persereve goodwill
Transit Coverage -
owner's property being shipped in their own vehicles
Trip - Transit Coverage -
very specific - occasional shippers
Annual Trip - Transit Coverage -
year round policy - frequent shippers
Theatrical Property includes
(Inalnd Marine) stage material, scenery, props, costumes for theatrical production
Film Coverage includes
(Inland Marine) film, video, sound recording equipment etc
Signs Includes
(Inland Marine) neons, fleurescents, automatic, mechanical signs
Physician's & Surgeon's equipment includes
(Inland Marine) materials, supplies, books of surgeons, doctors and dentists
also - office equipment, extra expenses, valuable records
Commerical Articles Coverage Form -
photographic equipment and musical instruments used for commerical purposes
users of equipment
Dealers of Coverage Form -
covers retail store and equipment of others while in possession of the bailee
Jeweler's Block -
coverage of damge to property and stock; small jewelers
Jeweler's Block Filed Policy -
$250,000 or more, wholesalers, manufacturers
Accounts Recievable Coverages -
pays for unrecovered recievables due to damged records - cost to reconstruct, interest on loans, amounts not collected
Contractor's Equipment =
largest class of inland marine
Contractor's Equipment Floater -
mobile equipment or tools on a job site
Scedule (Contractor Equipment Floater)
small to midsized contractor specifically lists equipment - includes rental reimbursement
Blanket (Contractor Equipment Floater)
larget contracts use broader version - includes rental reimbursement
Builder's Risk coveage
structures being built, temporary structures, materials, includes - flood, earthquake, theft
Wrap - ups
Builder's risk - puts all risks associated with construction on one policy - everyone splits set percentages of the premium
Advantages of Wrap - Ups
1. save money lumping coverages together - cost efficient
2. certainty that every contractor, laborer, worker is covered
Soft - Cost Endorsement
(included in Wrap - Up) expenses that occur after a driect loss - additional interest on borrowed funds, taxes, additional lease costs due to delayed construction
Law of Torts -
violation of a person's rights by another - torts, contracts or statues
Tort -
private or civil wrong
Tort Classifications (2)
1. intentional - assault, slander, libel
2. unintentional - negligence
Most common negligence
Auto
negligence
failure of a person to exercise the proper degree of care
Burden of Prood of negligence is on ...
injured party
Absolute / Strict Liability
imposed whether anyone is at fault - ultra hazardous activities
Punitive Damages -
punish defendants whose conduct is questionable or grossly negligent; high fines to make example of
Measurement of Losses in Negligent claims (3)
1. property - book value
2. Bodily injury -medical expense and loss of income
3. general damages - pain and suffering
Vicarious Liability -
one person becomes LL for negligent behavior of another - child/parent, employee/employer
Joint and Sereral Liability -
"Search for deep pockets" injured party may recover entrie amount of compensation from any negligent party who is able to pay - regardles of degree of party's negligence
Premises Liability -
owner or tennant may be held liable for damages if somone else is injured (tennants policy)
Operation Liability - AKA "operations in progress)
operations conducted away from premises
Product Liability -
manufacturers faulty product that injures someone or damages property
Negligence of Product Liabilty (2)
1. product is improperly made or designed
2. proper warning is not given to customer
Losses of Product Liabilitiy (3)
1. cost of defending against claims
2. payment for claims to injured
3. cost of recalling defective product
Commercial General Liability - (CGL)
used to cover business liability exposures
CGL Coverages - (3 parts)
A: bodily injury & physical damage
B: personal & advertisment injury
C: medical payments
CGL Coverage A: insuring agreement -
insurere pays damages on behalf of insured
CGL Coverage A: 6 Conditions - (required for insured to pay claim)
1.Legally obligated to pay damages
2. bodily injury / property damage
3. injury or damage to which conditions arent excluded
4. caused by occurrence
5. covered territory
6. occurs during policy period
1. Legally obligated to pay danages -
setteled by court or through insurance company - insurer will usually attempt to settle out of court
2. Bodily injury / property damage -
damage for care, death, pain and suffering / loss of use of property
3. injury or damage to which conditions apply -
anythign NOT excluded
4. Caused by occurrence -
accident - conditions or repeated exposure to the same harmful conditions
5. Covered Territory -
defined area of policy - usually US, Peurto Rico, Canada
can cover activities of a person temporarily pursuing insured's business interests (3-6 months)
6. Occurs during policy period
occurrence is triggered within policy period, can be reported after policy period
CGL Coverage A: Exclusions
1. intended injury
2. contract liability - (hold harmless agreement)
3. liquor liability
4. pollution
5. worker's compensation
6.aircraft, auto, water craft
7. war
CGL Coverage B: personal and advertising injury - includes:
1.false arrest, imprisionment
2. malicious prosecution
3. wrongful eviction, entry or violation of privacy by landlord
4.slander, libel
5. violation of privacy
6.copyright infringement
CGL Coverage B: Exclusions
1.breach of contract - "in stock"
2. failure of statement of quailtiy - "will grow hair"
3. intentionally stealing another's slogan or making a false claim
4. criminal act
5. wrongful description of price
6. email or domain named used to deciet competitors
CGL Coverage C -
payment for minor medical injuries- NOT liability insurance
CGL Coverage C: advantages
avoid potentional claimants, settle promptly,
CGL Coverage C: exclusions
1. insured
2. anyone hired to do work - worker's compensation
3. tenants
4. persons taking part in athletics
CGL - Named Insureds
1. individual
2. partneror joint venture
3. Corporation
4. LLC
5. Trust
CGL Named insureds - Individual
owner and spouse - business only NOT personal
CGLNamed insureds - partnership
members and spouses - business only
CGL Named insureds - corporation
execs, directors, stockholders
CGL Named insureds - LLC
members and managers
CGL Named insureds - trust
trust and trustees
CGL Insureds - Employees and Voluntary Wokers
ONLY property damage
CGL Insureds - other persons
1.real estate agents
2.legal representative (insured dies)
3.newly acquired organization - 90 days until end of policy period
CGL Conditions - bankruptcy
does NOT relieve insurer of duties; must still - pay claims, defend insured, make settlements
CGL Conditions - Duties of Insured
1. notify insurer of claim
2. information of claim and claimant
3. authorize insurer to act as legal council
4. assist insurer
5. NOT assume any obligation or payment without insurer's consent
Insurer does not renew =
written notice 30 days prior to cancellation
Premium Audit -
CGL's can be issued on estimated premium
determined after policy - settle up - more of less premium at the end of policy period
CGL is excess for -
1. fire
2.builder's risk
3. installation risk
4. fire insurance on premises rented to insured
5. air, water craft, auto
Contribution by Equal Shares -
each insurer contributes equally until limit is exhausted
Rating CGL Coverage (formula)
Rate x Rate Exposure = premium
Class Code -
rate depends on nature of business
numerical code representing the rating that best fits an organization's operations
Premium Base -
retail = sales
contracting = payroll
special events = # of tickets sold
Claims Made Forms -
occurrence based policies - (used to be the norm)
Negative of Claims Made Forms
long tail exposure - asbestos and pollution
hard to predict ultimate costs
impacts insurer capacity and solvency
Claims Made Trigger -
coverage must be triggered during policy period - notification (not settlement)
Retroactive Date -
date after which a claim must occur for it to be covered - NO retro date = inception of date of policy
Retroactive Date assists when..
you switch from claim based and might need to file a claim during the policy but occurred before the policy inception
Extended Reporting Period -
"Tail" extends period in which a claim can be filed - Does NOT extend coverage
Extended Reporting Period is __________ days
60; unless purchased supplemental extended period which is indefinite
Aggregate Limit -
most insurer will pay during any policy period - when exhausted no more claims are paid or legal defense until next policy period
General Aggregate Limit (Sub Limit) -
most insurer will pay for coverage A, B and C combined
Each Occurrence Limit -
most an insurer will pay for single occurance / one person's claim
Employee Theft -
direct loss money, securities, property due to forgery or theft; acting alone or in collusion
employee -
currently on payroll or employment ended in the last 30 days
Employe Theft - Exclusions
1. partner / owner
2. employee - if insured knew of fraudulent or dishonest behavior before or during employment
Partner Theft -
loss amount exceeding partner's ownership percentage times insured's total assets deteremined as of the day immediately preceeding the date of discovery or may be excluded in full
Forgery or Alteration Coverage -
direct loss resulting from forgery or alteration of a check, draft, promissory note, written promise
Forgery -
signing another person's name with the intent to decieve - handwritten, electronic or mechanical
NOT signature of one's own name - with or without permission
Computer Fraud -
unathorized entry, deletion or alteration of data; transferring money or securities without account owner's permission
Money Orders & Counterfeit Currency Fraud Coverage -
loss from the good faith acceptance in exchange for merchandise, money, money order or counterfiet currency
Client or 3rd Party Coverage -
direct loss of money, securities or property sustained by a client resulting from forgery or theft; can include employee
Client or 3rd Party Coverage - Exclusions
1. employee and client collusion
2. client
Inside Promises Coverage -
third party theft, distruction or disappearance of money, securities or property
Premises -
interior portion of a building occupied by insured, used in conducting business
Banking Premises -
interior portion is the extended by or night depository chute or safe maintained by bank
Property Coverage -
resulting from robbery or safe burglary; damage to property or premises
Outside Premises Coverage - Transit Coverage
being conveyed outside the premises from one person to another; custody of employee, owner, authorized person
Property Coverage - While-In-Transit
resulting from robbery; taken while temporarily in the home of an employee or partner
Mail & Carrier Exclusion
no coverage for money, securities, property while in the mail or custody of a carrier for hire
Crime - General Exclusions
1. act of partners
2. government action
3. indirect loss
4. legal expenses
5.nuclear war
Money -
currency, coin, bank notes or bullion; ISO includes travelers checks, checks, register and money orders held for sale in public
Securities -
negotiable or non-negotiable instruments representing money or property; tickets, tokens and stamps
Property -
tangible property; ISO includes "that which has intrinsic value"
Discovery -
knowledge acquired by specific individuals (officers or risk managers) which would now cause a reasonable person to believe a covered loss occurred
Discovery Form (Crime) -
cover losses were discovered during the policy period; does NOT matter if it occurred prior to inception of policy
Loss Sustaied Form (Crime) -
covers losses that are sustained during policy period; must be discovered no later than one year after the policy period
Valuation (Crime) - Securities
valued as of the close of business the day it is discovered
Valuation (Crime) - Property
insuer's options - chooses cheapest cost
1. replacement cost
2. repair property
3. actual cash value
Equipment Breakdown -
AKA: Boiler and Machinery
covers loss due to accidental breakdown of most equipment; damage to equipment and other property
Equipment Breadown - includes
1. undre BPP - steamboilers, generators, pumps, turbines, engines, air conditioners, refrigerating items
2. plus - electrical breakdown, mechanical breakdown, steamboiler explosions
Breakdown -
some sort of physical loss of equipment due to pressure, mechanical failure, electrical failure
Equipment Breakdown - Covered Equipment
built to operate under pressure or vacuum, generate power, communicate and computer equipment
Equipment Breakdown - Property Damage
property insured owns, insured's possesion of another's property - must reside at premises named in declarations
Equipment Breakdown - Expediting Expenses
payment for extra cost to maek temporary repairs and speed up permanenet repairs; overtime, good for business that doesn't have retail space
Equipment Breakdown - Spoilage Damage
payment for losses of perishable goods due to breakdown; includes expenses associated with reducing losses
Equipment Breakdown - Utility Interruption
coverage for shut down of equipment due to failure of utility service - electricity, AC, communication, gas, sewer, water, steam
Biggest Flaw in Equipment Breakdown -
Coverage overlap
Equipment Breakdown - Insurance Limits
policy is written with one overall limit
Equipment Breakdown - Sub Limit
limit amount for specific losses
ie: ammonia - $25,000
hazardous substance - $25,000
Equipment Breakdown - Sub limit
consequential loss - reduction in value if undamaged parts; main equipment is damaged or destroyed