Property and Casualty insurance exam With Complete Solution

Property and Casualty insurance exam With Complete Solution Insurance - The transfer of risk through a legal contract Property - Covers real property and personal property against damage or loss resulting from covered causes of loss called perils casualty - covers non-property losses (3rd Party) Personal lines - Insurance for families and individuals Commercial Lines - Insurance for Business Risk - Uncertainty of financial loss Pure Risk - Chance of loss only (insurance only covers) Speculative Risk - Chance of loss or gain law of large numbers - as the number of homogenous loss exposures increases, the more accurate claims can be predicted from the group Perils - causes a loss Named Peril - lists the perils that are covered open peril - cover all perils except those specifically excluded by the policy hazard - Are not causes of loss but are things that increase the chance of a peril happening. Physical Hazard - something you can physically look at Moral Hazard - dishonest tendencies morale hazard - attitude of carelessness Direct Loss - immediate physical damage to property indirect loss - loss that happens after the direct loss but due to the loss of use of the property. Also called consequential proximate cause - the first cause in an unbroken chain of events Elements of a legal contract - Competent parties, Agreement, Legal Purpose, consideration Binder - temporary contract of insurance. Pending issue of the policy, good for 30 days DICE - 4 major parts to an insurance policy Declarations - 6 P's policy number, parties, property description, policy term, policy limits, premium Insuring Agreement - Promise to Pay, Perils, Liability Conditions - Rules of the Game, Insured's duties in a loss, Insurer's subrogation rights, mortgagees rights Exclusions - Contains property and perils not covered. Direct Liability - Insured is the wrongdoer Vicarious Liability - insured is responsible for actions of wrongdoer contractual liability - insured assumes another's liability under a written agreement Absolute Liability - liability w/o fault strict liability - product defect claims