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Insurance: Personal Lines, Texas
Terms in this set (86)
Liability that arises from an extremely dangerous situation. Absolute liability is often found in cases involving explosives. Also known as "strict" liability. For ex. , you are absolutely liable if you keep a wild animal as a pet.
A sudden & unexpected event, occurring at a specific time & place.
Actual Cash Value (ACV)
The cost to replace an item of property @ the time of loss, less an allowance for depreciation. Often used to determine amount of reimbursement for a loss (Replacement cost minus Depreciation).
A person, firm, or corporation other than the Named Insured on a policy, or a lender named in a mortgage clause, who is protected against loss by the terms of the policy.
Additional Living Expenses
A coverage designed to reimburse the insured for an increase in living expenses necessitated by loss to the dwelling. This Indirect Loss must be the result of Direct Loss by a covered Peril.
Represents the insurance company and acts for the company in working on agreements as to the amount of a loss and the liability of the company.
A company that meets the state insurance department 's standards and is authorized by the Director to do business in the state.
An individual appointed by an insurance company to solicit, negotiate, effect, or countersign insurance contracts on its behalf.
A type of policy limit found in liability policies that limits coverage to a specified total amount for all losses occurring within the policy period.
An insurance company incorporated in a country other than the United States.
Property coverages that are closely associated w/ & frequently sold w/ fire insurance: Dwelling Buildings & Contents form, Earthquake insurance, Sprinkler Leakage, etc.
Insurance protecting the insured from loss arising from any Peril other than those specifically excluded by name. This contrasts with Named Peril Insurance, which names the Peril or Perils insured against.
A questionnaire that is filled out by an agent & the prospect seeking insurance. The form contains rating & underwriting information. The applicant is expected to make representations by answering questions to the best of his knowledge (truthfully).
If the insured & insurer can't agree on the amount of loss, either may demand an appraisal. If demanded, each will select an appraiser, who jointly will select an umpire. The appraisers will appraise the loss and either agree or submit differences to the umpire. Agreement by any 2 of the 3 will be binding. Each party will pay its own appraiser & share equally the expenses of the appraisal & the umpire.
A structure belonging to the insured structure, such as a tool shed. These structures are provided for in the Homeowners policy & the other Dwelling policies. This coverage is often called Other Structures or Out Buildings.
There are some applicants that underwriters don't care to insure, but because of state law or otherwise, must be provided protection. To become authorized, a Casualty company must agree to participate in the Assigned Risk Pool & take its turn providing Auto insurance to high-risk drivers. Also known as the auto insurance "plan."
A survey of the financial records of the insured conducted to determine exposures, limits, etc., which are needed to calculate the premium. The initial premium is only a deposit.
A person who has temporary custody of property belonging to another person. An. ex. of a ___: the dry cleaners.
Bailee's Customers Policy
insurance obtained by a bailee, to cover loss or damage to customers' property in the _____ custody, w/out regard to liability.
___ & other temporary insurance contracts may be made orally or in writing. Each ___ is deemed to include all usual terms of the policy for which it was given plus endorsements. Life or Disability insurance utilizes conditional receipts instead of binders.
Blanket Position Bond
Fidelity bond that specifies a single limit of Liability applicable to each employee involved in a loss.
Usually defined to include bodily harm, sickness, disease, including required care, loss of services & resulting death.
An obligation of the insurance company to protect one against financial loss caused by the acts of others.
One who represents an insured in the solicitation, negotiation, or procurement of contracts of insurance,and who may render services incidental to those functions. ____ may also be licensed as agents.
As it is defined in Crime insurance policies, the unlawful taking of property by forced entry into the premises, or exit from the premises, while the premises are closed for business. there must be visible evidence of forced entry or exit.
Termination of contract of insurance in forced mid-term (rather than at the renewal date) by voluntary act of the insurance company or insured, effected in accordance with provisions in the contract or by mutual agreement.
A type of insurance that is primarily concerned w/ losses caused by injury to persons & legal liability imposed upon the insured for such injury or damage to property of others.
In property insurance, a clause under which the insured is required to carry a certain % of the RC of the property in order to have RC coverage & partial losses paid in full. __________ on personal lines policies is 80%. The ____ clause is also called the 80% clause.
In Property insurance, a clause under which the insured shares in losses to the extent that she is underinsured at the time of loss.
Doctrine that a defendant is liable only for the amount of damages allocated to that defendant in direct proportion to the defendant's percentage of fault ( if not 51 % or more at fault, defendant is not held liable).
Competitive State Fund
A state fund writing Worker's Compensation insurance to competition w/ private insurers.
Comprehensive Personal Liability
nonbusiness Liability exposure of individuals who are insured under this policy. The most common Personal Liability exposures arise out of the residence premises and activities of individuals & family members. Comprehensive Personal Liability coverage first became available as a separate policy. Eventually it was incorporated into Homeowners policies.
Any form of insurance which is required by law. In many states, for ex. automobile bodily injury liability insurance is compulsory for all owners of automobiles.
The withholding of material facts by an applicant for insurance, which materially affects an insurance risk or loss. May void the policy.
The portion of an insurance contract that sets forth the rights and duties of the Insured & the insurance company.
Indirect losses that occur as a "consequence" of a direct loss. Includes Time-Element coverages, such as rental value.
A characteristic of a legal contract: the thing of value exchanged for the performance promised in the contract. In insurance, the applicant's answers and the policy premium paid constitute the _____.
Liability that an insured person or business incurs because of the actions of others (family or employees). Also called Vicarious Liability.
A legal agreement between two parties promising a certain performance in exchange for a certain consideration. To hold up in court, contracts must contain four required elements; Consideration, Offer, Acceptance and Legal Purpose (remember the acronym COAL). Parties to the contract must also have Legal Capacity.
The signature of a licensed agent, which, in most states, must appear on the policy to validate the contract.
A coverage provided in many Property contracts that reimburses the insured for expenses involved in removing debris produced by a loss from a Peril insured against.
Declarations Page (Dec Sheet)
A portion of the insurance contract information such as the name & address of the insured, the property insured, its location & description, the policy period, the amount of insurance coverage, applicable premiums, & supplemental representations by the insured.
Usually, a dollar amount or percentage the insured must pay on each loss to which the ___ applies. the insurance company pays the remainder of each covered loss up to the policy limits.
Decrease in the value of the property over a period of time due to use, wear & tear, & obsolescence.
Loss that is a direct result of a Peril, such as fire.
An insurance company that sells its policies through licensed agents who represent the insurer exclusively, rather than through independent local agents, who represent several insurance companies. ____ writing producers are also called "Exclusive" or "Captive" producers.
the return of part of the premium paid for a participating policy.
Domestic Insurance Company
An insurance company formed under the laws of the state in which the insurance is written.
That portion of the premium for which policy protection has already been given during the now-expired portion of the policy term.
The date on which an insurance policy or bond goes into effect and from which protection is furnished.
A document, agreed to by both parties, that is attached to the policy & modifies or changes the original policy in some way. No change to a policy may become effective until approved by a company officer.
Errors & Omissions
A Professional Liability coverage that protects the insured against liability for committing an ___ or ___ in performance of professional duties.
Causes, conditions, or property listed in the policy that are not covered & for which no benefits are payable.
The loss record of an insured , a class of coverage, or an insurance company.
Extended Coverage Endorsement (ECE)
A specific endorsement, attached to a standard Fire policy, usually providing coverage for windstorm, hail, explosion, riot, civil commotion, aircraft, vehicular damage, volcanic eruption and smoke damage.
___ Access to Insurance Requirements. A program established by law that makes Property insurance available and affordable to insureds who might otherwise be uninsurable because of "Environmental Hazards."
A class of bonds that guarantees an employee's honest discharge of duty.
A person who occupies a position of special trust & confidence. For ex. one handling or supervising the affairs or funds of another. Insurance producers are considered to be fiduciaries.
Financial Responsibility Laws
State laws that require owners or operators of autos to provide evidence that they have the funds to pay for automobile losses for which they may become liable. Insurance is the usual method for providing this evidence to the state.
Combustion, sufficient to produce a spark, flame, or glow, that is hostile (not in a place where it is intended to be). An ex. of a friendly fire is a fire in your fireplace or the flame on your gas stove.
10 Contract the indemnifies an insured for the loss caused by the destruction of the insured property resulting from fire. 2) The field of insurance that provides policies on the insured property for a variety of Perils, including Fire.
Protection that follows moveable property, covering it wherever it may be, rather than applying only @ a fixed location, such as a Personal Articles Floater (PAF).
Insurance designed to reimburse property owners for loss due to flood or to flood-related erosion. Administered through the Federal Insurance Administration, but marketed through independent agents.
An intentional misrepresentation or false statement intended to deceive the insurer and induce it to part with something of value or to surrender a legal right. May void a policy.
General agent (GA)
An individual appointed by an insurer to administer its business in a given territory. A GA is responsible for building the agency and service force. Compensation is on a commission basis, although there may be additional expense allowances. Often called a Managing General Agent (MGA).
Anything that increases the seriousness of a loss or increases the likelihood that a loss will occur (risk) due to a Peril. A ___ is something that increases the risk. Risk is defined as the chance of a loss. For ex. improperly stored combustible materials, worn tires, intentional abuse to insured property, unsafe structural changes.
In Ocean Marine & Aviation insurance, insurance against physical damage to plane or ship.
Imports & Exports
A category of the Inland & Ocean Marine Nationwide Definition, which is made up of risks eligible for Marine insurance.
Improvements & Betterments
Additions or changes made by an insured to a building that may or may not be owned by him. Cost arising from these changes may enhance values and thereby require special insurance consideration.
Insurance is designed to restore the policyholder to the same financial condition enjoyed prior to a loss. the intent is to cover the amount of the actual loss only & to avoid paying amounts that allow someone to profit from a loss situation. This is known as the Principle of ____.
Loss that is a result or consequence of a Direct Loss.
A condition or defect that exists within property from the beginning. A tendency of the property itself. An Ex. of ___ ___ is the tendency of milk to sour. Insurance policies usually exclude ___ ___.
Inland Marine Insurance
A form of insurance originally designed as an extension of Marine coverage to insure transportation of goods over land. Today, it covers, in addition to goods in transit, a variety of portable property.
Instrumentalities of Transportation & Communication
A category of the Nationwide Definition that includes several different classes of Inland Marine, including bridges, tunnels, pipelines , etc.
Acceptability of an applicant for insurance to the insurance company.
A service device that protects people against certain types of financial losses by transferring pure risk from individuals to an insurer, who agrees, for a consideration, to indemnify or pay a specified amount for losses suffered by the insured. ___ involves the pooling of a large number of individual risks. Funds to cover individual losses are raised by collecting small amounts of money (premiums) from a broad base of buyers.
Common title for head of state dept. of insurance (called "Director" in some states). Insurance is regulated by state law. The ______ job is to protect the insurance buying public by administering state insurance laws & regulations. The ___ doesn't make the laws, he/she enforces them.
A contract, a legal document, which establishes the terms of agreement between the insurer and insured.
the party to an insurance arrangement to whom, or on behalf of whom, the insurance company agrees to indemnify for losses, provides benefits, or render service.
The insurance company assuming risk & agreeing to pay claims or provide services.
The section of an insurance policy that states which policies will be indemnified, what property is covered, & which perils are insured against. Also known as the Insuring Clause.
ISO (Insurance Services Office)
An organization, made of member companies, that analyzes statistics collected from members & then establishes & files standard rates for many lines of insurance. Also develops & files standardized policy forms on behalf of members.
A voluntary action to rid the ship of cargo in order to prevent further damage or peril.
Law of Large Numbers
An insurance company bases its rates on a homogeneous group. Risks are not usually considered insurable unless the insurer has a large enough base of previous loss experience to be able to accurately project future losses. It is the __ _ __ ___ that makes accurate predictions of similar risk possible.
Broadly, any legally enforceable obligation. The term is most commonly used in a pecuniary 9money-related) sense.
Insures the individual for financial losses that may arise out of the person's responsibilities to others imposed by law or contract.