Exam (elaborations)
MN INSURANCE EXAM PROPERTY
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MN INSURANCE EXAM PROPERTY
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MN INSURANCE EXAM PROPERTY & CASUALTYEXAM
Declarations - ANSWER Policy includes the identity and address of the name
insured, the policy term or period, the amount of insurance or limits of liability, the
policy premium, and any applicable deductibles. Will also include either a property
description or a schedule of coverage parts, and a list of any endorsements.
Conditions - ANSWER Set provisions, rules of conduct, duties and obligations for the
parties. A number of common insurance conditions describe such things as the
policy period and territory. It also includes the insured's obligation to provide proof of
loss, how settlements are handles when other insurance is involved, and the right of
each party to cancel the policy.
Exclusions - ANSWER May describe property, perils, hazards, or losses arising from
specific causes that are not covered by the policy.
Limitations - ANSWER May eliminate or reduce coverage, but only under certain
circumstances or when specified conditions apply.
Abandonment - ANSWER The insured cannot simply abandon the property to the
insurance company in exchange for the full-insured value.
Salvage - ANSWER If the insurer pays a loss on behalf of the insured, the insurer is
entitled to the salvage to reduce the claim
Subrogation Clause - ANSWER Used when the insurer has paid a covered claim on
the behalf of the insured that is caused by another party. The insurance company is
entitled to the insured's right of recovery from the negligent party. This is sometimes
called the "Transfer of Right of Recovery Against Other to Us"
Vacany - ANSWER The building is void of contents and people. The building is
simply not being used. In most cases the insured can purchase Vacancy permit
coverage restored for an additional premium.
Unoccupancy - ANSWER The premises are void of people.
Named Peril - ANSWER This form lists the specific perils to be covered in the policy.
Open Peril - ANSWER Does not list the perils but provides broader coverage.
Definition of the Insured - ANSWER Those that have insurable interest in the
property who would suffer a financial loss if the property were damaged by an
insured peril can be considered an insured. In personal insurance, this can include
family members without listing their names on the declarations page of the policy.
Additional insureds such as a lien holder.
, Insurable Interest - ANSWER Before a person can obtain an insurance policy, they
must have this in the property being insured. A person is deemed to have this in
property when he has a lawful, substantial, economic interest in the preservation of
the property. The term "person" includes an individual, company, insurer,
association, organization, reciprocal, partnership, or any other legal entity.
Risk - ANSWER Possibility that a loss might occur and is the reason that people buy
insurance.
Peril - ANSWER Actual cause of a loss (fire, windstorm, hail)
Hazard - ANSWER Any condition that increases the possibility of a loss
Moral Hazard - ANSWER A condition of morals or habits that increases the
probability of a loss from peril.
Morale Hazard - ANSWER Hazard arising out of an insured's indifference to loss
because of the existence of insurance.
Pure Risk - ANSWER A situation where there is only the possibility of a loss.
Example would be catastrophic medical expenses, liability law suit, damage to
property by fire. This type of risk is insurable.
Speculative Risk - ANSWER A situation where either profit or loss in possible.
Example would be betting on a horse race or investing in real estate. This type of
risk in not insurable.
Static Risk - ANSWER These factors are historical factors that do no frequently
fluctuate. They result from "static" or "unchanging" environment. Example would be
an area that may only flood every 100 years. This type of risk is insurable.
Dynamic Risk - ANSWER This is associated with chance. Example would be a new
and fatal virus spontaneously erupting into society. This is not insurable.
Waiver - ANSWER Generally defined as the voluntary or intentional relinquishment
of a know right. An example would be an insured who fails to report a claim in a
timely manner. There are two types; Expressed and Implied.
Expressed Waiver - ANSWER Occurs when the insurer the insurer or its
representatives purposely gives up known right under the contract.
Implied Waiver - ANSWER May result from some kind of neglect on the part of the
agent or adjuster.
Replacement Cost - ANSWER The current cost to purchase new, the item that was
lost, with no deduction or depreciation. The full value will be paid up to the limit of the
policy less any deductible.
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