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Terms in this set (90)

What year was the McCarran-Ferguson Act Enacted?
1945
What type of reinsurance contract involves two companies automatically sharing their risk exposure?
Treaty , Under treaty reinsurance, each party automatically accepts specific percentages of the insurer's business
What are the three types of agent authority?
Express, Implired & Apparent Authority
Who is a mutual insurance company owned by?
Policyholders
Which type of insurance company allows their policyowners to elect a governing body?
Mutual Insurance Companies
A stock insurance company is owned by
its shareholders, an incorporated company that has its capital divided into shares and is owned exclusively by its' shareholders
What is a policy where policyowners are entitled to receive dividends
participating insurance policy (the policyowner receives dividends deriving from the company's divisible surplus)
What is another term for Consequential Loss?
Indirect Loss
A contractual term for a person who is responsible for unintentional acts that may cause death or harm to a person or property is known as
Liability
D has a single family home located at a permanent residency. The type of coverage that D has is considered to be
Specific, (one single property at one fixed location)
What is Vicarious Liability
When a person is legally responsible for the actions of another
The stated maximum that an insurer will pay on a loss that is listed in the declarations is known as
Limits of Liability, (the stated maximum amt of coverage that the insurer will pay on a loss which is shown in the declarations of the policy)
What limit of liability pays for bodily injury, death, and property damage for losses and does not have separated, split category limits?
Combined Single Limit
What limit of liability refers to the most money an insurer can pay to a policyholder during a specified period?
Aggregate
What limit of liability refers to the maximum amount the insurer will pay for all claims resulting from a single occurence, no matter how many people are injured, how much property is damaged, or how many different claimants may make claims?
Per Occurence
The clause that states an insured must pay a certain amount of partial losses if they do not carry the minimum specified amount of replacement cost value is known as
Coinsurance/Insurance to Value (requires the insured to have a minimum amount of replacement cost value (usually 80%). In the event of partial losses, the insurer would apply the coinsurance equation to pay a claim. In the event of total loss the insurer will pay whatever the property is actually insured for.
When a person acts careless and causes unintentional damage to another- failing to use care that a reasonable prudent person would have used in a given situation is,
Negligence/Neglilgent
Coverage plan for more than one property at one or more locations under one contract,
Blanket Coverage
An event or mindset that greatly increases the change that a peril will actually occur is known as
Hazard
An unintended, unforeseen redution or destruction of economic value is known as
Loss
What provides benefits that are the exact amount of money to replace destroyed property at the time loss occurred
Replacement cost
What is an immediate, specific cause of loss
Peril
What liability applies to a business that manufactures products?
Strict Liability (if a product is defective the business is liable for all damages and no negligence need be proven)
What is a guaranteed statement commonly only used in commercial policies when the insurer gives a discount on coverage in exchange for total honesty?
Warranty, (a warranty is a fact sworn to be absolute truth)
What is a third party added to a contract because they have loss potential?
Additional Insured
B has a property policy and would like to know perils are covered. B should read the:
Insuring Clause, (states the obligations that are being assumed/promised by both parties. The insuring agreement also indicates whether perils are named or open)
J has a policy and wants to know what his rights and duties of the policy will be, and what rights and duties the insurer has. J should read the:
Conditions, (set forth and describe the rights and duties of BOTH parties/ the conditions also protects the company from loss due to hazards that were within control of the insured.)
What is annual liability losses for the insured capped at under TRIPRA?
$100 billion
If an insured hides information and fails to disclose a known material fact to the insurer it is known as
Concealment, falure to disclose a known fact that is being hidden by an applicant. The insurer must prove concealment was intentional to void a contract.
Under the Gramm-Leach-Biley Act, customers must receive a notice every ____ for as long as the customer relationship lasts.
year (non-affiliated third parties)
In a property insurance contract, the declarations state
the premium amount (it states the names of parties, the length of coverage, premium amount, description of coverage and property and lists all endorsements)
Statements made by an applicant for property insurance which, in the opinion of the applicant, are true to the best of his or her knowledge are called,
Representations (statements made by the applicant to be of their best knowledge and belief. A material misrepresentation however is a fact that would change underwriting and may void coverage.)
A required part of a contract that stipulates the insured must make premium payments on time in exchange for coverage by the insurer is known as:
Consideration
In property insurance, an offer is made
When the policy had been applied for, acceptance takes place when the insurer has approved coverage and premium has been paid.
What is maximum amount payable under additional coverages in a homeowners policy for Loss Assessment?
$1,000 (charged to the insured owner of a condo or tenant in a building when communal property is damaged by a covered peril and the insured is assessed a share of the loss amount to pay)
The part of a homeowners policy that will pay the medical expenses of an injured person when the insured is not legally liable to pay but feel a moral responsibility is
Coverage F, no-fault coverage
Section II of a homeowners policy provides
both personal liability and medical payments to others coverage
According to the conditions of the homeowners policy, the insured must submit a signed proof of loss form to the insurance company
within 60 days of the insurer's request (the conditions in section require the insured submit a signed and written proof of loss within 60 days of the insurance company request for it)
The homeowner policy will pay up to what maximum amount, without deductible, for credit card, forgery, and counterfeit money loss?
$500 without deductible for credit card, forgery, and counterfeit money loss under additional coverages
Homeowners coverage that provides for loss when the insured dwelling is not habitable due to a covered loss is found in
Coverage D (Loss of Use, applies when a covered peril renders the dwelling inhabitable)
What is the standard deductible of a Dwelling Policy
$500
What are the three forms of Dwelling Policies?
Basic, Broad, Special
The maximum amount paid by a Commercial Building and Business Personal Property Form for pollution cleanup or removal is:
$10,000 maximum and it must be reported within 180 days to be covered.
Under a BOP policy, the limit paid on damage to an attached outdoor sign is
$1000
Who can qualify for BOP
small to medium sized concerns
What are the four main elements of a Commercial Package Policy?
Common Declarations, Conditions, Coverage Parts, and Interline Endorsements
What is the Doctrine of Concurrent Causation?
If two perils cause loss simultaneously and one peril is covered but the other one is not, the policy must pay the loss.
What is the standard deductible for a Business Owner Policy?
$500
A larger business with varied property and casualty insurance needs is likely best served by
a Commercial Package Policy
What is a contractors' maximum payroll to be eligible to purchase BOP?
$300,000
The fire department service charge maximum in a Builder's Risk policy is
$1,000
The additional coverage of the Commercial Building and Business Personal Property Form protects property removed to protect it for further loss for up to how many days?
30
Under the BOP, what additional coverages do not require a deductible?
Fire department service charge, fire extinguisher recharge expense, extre expense, business income & civil authority
When does Business Income coverage begin?
72 hours after a covered lost happens (and runs until that point in time when the loss should have been repaired or rebuilt to the same quality as before in within a time reasonable to accomplish such repair or rebuilding)
What coverage concept is an optional extension of coverage available to the insured to cover newly acquired locations up to $100,000?
Extra Expense
What perils apply to outdoor property under a BOP?
Fire, Lightning, Explosion, Riot, Civil Commition & Aircraft
In the Flood Program, which entity specifies the flood control measure that certain communities must adopt to be eligible for flood insurance?
FEMA , (Federal Emergency Management Agency)
At what horsepower minimum for an outboard and inboard motor levels are a Watercraft policy required?
More than 50 HP outboard and 25 HP inboard.
What is the principle of indemnity?
To make the insured whole after a loss, (restore a person to the financial position they were before loss occured. because of indemnity an insured shall never profit from a loss.)
What is the event that makes a CGL policy respond to a claim?
A Coverage Trigger, (If the exposure to loss happened before the retroactive date, there is an occurence trigger. On the other hand, if the exposure to loss happens on or after the retroactive date there is a claims made trigger.)
The anniversary date upon which an insured switches from an Occurence form CGL to a Claims Made form, without a break in coverege, is called:
The Retroactive Date
What is the length of time for a midi-tail under the Basic Extended Reporting Period of a CGL?
5 Years (to bring the claim payment after the initial claim report which must take place within the first 60 days (the "mini-tail") after a claims made policy terminates
Do the payment of Supplementary Benefits in a CGL reduce the liability limits of a CGL?
Never. (Supplementary or additional payments are paid in addition to liability limits of the CGL policy and the payments do not reduce the policy limits in any manner.
How long does the Supplemental Extended Reporting Period Endorsement extend the midi-tail to?
Unlimited duration
A vehicle which is being used by an insured for a short period of time, which is not owned by the insured, and is being used because the auto of the insured is out of service due to a breakdown is called
A temporary substitute auto.
The Personal Auto Policy will cover the insured in any of the following territories,
50 States of the United States of America, Puerto Rico, and Provinces of Canada
J has Part D on his auto policy and just had his car stolen. How long will it take before his transportation expenses will be paid per his policy?
48 Hours
Can common law defenses be used to defeat Workers Compensation claims brought by employees?
No.
The face amount of a Surety bond is called the
penalty
The deductible that must be paid in an Umbrella policy is known as
Self-Insured Retention
The minimum split limits of liability required by Texas law are
30/60/25
Personal Injury Protections and Medical Payments are considered to be what type of coverages?
No fault
What is the maximum book of business a TX Lloyds is allowed?
10 times the net assets of the underwriters
What provides for the property of customers?
Bailee Customers Policy (a bailee customers policy covers customers' property held by a service provider)
How many days in advance must an insurer in TX file a policy form with the commissioner for approval?
60
The part of the condition section of the policy that states covered property losses are settled as to the type of coverage that the insured purchased is which of the following?
Loss Settlement Provisions
Personal Injury Protection pays for what percentage of the loss of income?
80%
The maximum aggregate limit of Medical (Professional) Liability Insurance through the JUA is
$3,000,000
Property damage may be written on uninsured/underinsured motorist coverage with a deductible of
$250
The Insurance Commissioner must give how many days notice prior to holding a hearing regarding an agent's unfair or deceptive practice?
30
The maximum the Texas Property and Casualty Guaranty Association will pay per claim is
$300,000
What is the alccohol concentration required to qualify as intoxicated in Texas?
0.08
The medical payments will pay what limit, per person, for medical and funeral expenses?
$500
What is the definition of FAIR
Fair Access to Insurance Requirement
In order to be an eligible surplus lines insurer in Texas, an insurance company must
Have at least $15 million dollars in capital and surplus
The name of the financial responsibility law in Texas is
Motor Vehicle Safety Responsibility Law
What is the official name for the Joint Underwriting Association?
Texas Medical Liability Insurance Underwriting Association
What is the minimum number of underwriters required to form a Texas Lloyds?
10
What kind of insurance is usually written through surplus lines insurers?
High Risk
A temporary agent's license issued by the Commissioner of Insurance is valid for up to _ days.
90
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