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Indiana Property and Casualty Insurance Exam/165 Q’s and A’s
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Indiana Property and Casualty Insurance Exam/165 Q’s and A’s
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Indiana Property and CasualtyInsurance Exam/165 Q’s and A’s
National Association of Insurance Commissioners (NAIC) - -is an association
of all of the state insurance commissioners active in insurance regulatory
problems and in forming and recommending model legislation and
requirements. The NAIC does not directly MAKE laws, as laws are made at
the state level. They do work on suggesting standards for states to adopt
with the goal of a standardizing the insurance industry throughout the United
States of America.
-State Guaranty Association - -is established by each state to support
insurers and protect consumers in the case of insurer insolvency, guaranty
associations are funded by insurers through assessments. All authorized
insurers are legally required to participate in the State Guaranty Association
for any state they are authorized to do business in regardless of where their
corporate office is.
-Consideration - -something of value exchanged for something else of value
-The Insuring Agreement (Insuring Clause, Insurance Provision) - -is the
portion of the insurance policy in which the insurer promises to make
payment to or on behalf of the insured. It states the scope and limits of
coverage. The insuring agreement is usually contained in a coverage form
from which a policy is constructed. In other words, it is the insurance
company saying, "We ensure to INSURE you under these conditions for this
amount.
-Notice of Claim - -A provision that spells out an insured's duty to provide
the insurer with reasonable notice in the event of a loss.
-Reinstatement - -is the act of putting a lapsed policy back in force by
producing satisfactory evidence of insurability and paying any past-due
premiums required. Most states have reinstatement laws requiring an insurer
to allow for a policy to be reinstated upon request of the policy owner within
a specified period of time.
-Proof of loss - -a sworn statement that must usually be furnished by the
insured to an insurer before any loss under a policy can be paid
-Industrial Insurer - -Insurance is also sold through a special branch of the
industry known as home service or "debit" insurers.
,These companies specialize in a particular type of insurance called industrial
insurance, which is characterized by relatively
small face amounts (usually $1,000 to $2,000) with premiums paid weekly.
-Pure Risk - -a risk that presents the chance of loss but no opportunity for
gain
-Speculative Risk - -a situation in which either profit or loss is possible
-Law of Large Numbers - -A principle stating that the larger the number of
similar exposure units considered, the more closely the losses reported will
equal the underlying probability of loss.
-Moral Hazard - -is the effect of personal reputation, character, associates,
personal living habits, financial responsibility, and environment, as
distinguished from physical health, upon an individual's general insurability.
-Morale Hazard - -is hazard arising from indifference to loss because of the
existence of insurance.
-Adverse Selection - -is selection "against the company." Tendency of less
favorable insurance risks to seek or continue insurance to a greater extent
than others. Also, tendency of policy owners to take advantage of favorable
options in insurance contracts.
-Absolute Liability - -exists when a person subjects another party to a
dangerous or hazardous condition present on their property, including the
idea of harboring a wild animal on the premises. When a victim is hurt in an
absolute liability situation, they do not have to establish negligence to collect
money damages.
-Actual Cash Value - -replacement cost minus depreciation
-Additional insured - -Additional insured is a third party who is usually
added to a commercial policy because they also have loss potential.
-Aggregate Limit - -The aggregate limit is the limit the policy will pay for all
covered loss in a policy period regardless of the total number of claims
brought by any number of claimants. The aggregate limit resets to the
original amount on the anniversary of the policy.
-Appraisal - -The appraisal clause of a property contract is a condition in the
property policy that addresses a situation in which the insured and the
insurer cannot agree on the value (amount) of the loss.
, -Arbitration - -settling a dispute by agreeing to accept the decision of an
impartial outsider
-Bill of Laden - -a shipping contract that contains all shipping information
between the consignor (person sending the goods) of the goods, carrier and
consignee.
-Binders - -A binder is temporary coverage which allows that coverage to be
put in force by agents who have a binding authority from an insurance
company. A binder is the acknowledgment that immediate coverage is in
effect pending the future issuance of a policy.
-Blanket limit - -Blanket limit policies cover multiple locations
simultaneously under a single policy with one limit that applies to all
locations and all business personal property at all the insured locations
-Bond Penalty - -the face amount, or limit, of a surety bond.
-Broad form perils - -offer coverage on all of the thirteen perils included in
the SFP while creating and adding a new set of nine perils
-Builders Risk (BR) - -policies will pay for direct physical loss of or damage
to covered property at the premises described in the Declarations caused by
or resulting from any Covered Cause of Loss while a building is under
construction or being renovated.
-Business Personal Property - -covers personal property (items not land or
affixed to land) and includes the contents of the insured building.
-Children (Attractive Nuisance Doctrine) - -is a situation which draws the
attention and possible injury of a child.
-Civil Authority Prohibits Use - -additional Living Expenses and Fair Rental
Value are covered for up to two weeks if the prohibited use of the insured
residence was the result of direct damage to neighboring premises by a
covered peril.
-Claims Made Form - -a new coverage trigger and policy form of coverage in
the 1980's.
-Coinsurance/Insurance To Value - -The Coinsurance or Insurance To Value
clause is found in a replacement cost policy and it requires the insured to
have in force a minimum specified amount of the replacement cost value
(expressed as a percentage, usually an 80% minimum) of the insured
property in order for partial loss claims to be paid in full. The clause does not
apply to total loss claims, only to partial loss situations.
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