1.
2. (BTC) Casualty insurance - ANS-covers insured's non-property losses.
3. Legal liability to others- 3rd party.
4. covers injury to other people and damage to other peoples property.
5. (BTC) Commercial Lines - ANS-Insurance for businesses:
6. commercial auto, commercial property, commercial liability, workers compensation
7. (BTC) Law of Large Numbers - ANS-insurers employ people called actuaries to estimate
claims using a mathematical concept known as the law of large numbers
8. as the law of homogeneous (similar) loss exposures increases, the more accurate the
claims can be predicted from the group.
9. (BTC) Personal Lines - ANS-Insurance for families and individuals:
10. auto, homeowners, boats, recreational vehicles
11. (BTC) Property Insurance - ANS-Covers insured's real property (structures) and
personal property ( moveable stuff) against damage or loss resulting from covered
causes of loss called perils
12. (BTC) Pure risk - ANS-chance of loss only
13. (BTC) Risk - ANS-Uncertainty of financial loss, pure risk and speculative risk
14. (BTC) Speculative risk - ANS-Chance of loss or gain
15. INSURANCE COVERS PURE RISK ONLY
16. "Buying insurance does not eliminate the risk, but it reduces the financial loss exposure
to the insured"
17. Appraisal - ANS-Deals with disagreements on the value of the loss
18. -basic process
19. each selects a competent appraiser-each party pays for their disinterested appraiser
20. appraisers select an umpired- shared cost
21. appraiser and umpire determine resolution (binding)
22. Arbitration - ANS-Deals with disagreements on coverage issues
23. Basic Terms and Concepts (BTC): Insurance - ANS-The transfer of risk through a legal
contract - From insured (customer) - 1st party.
24. -to insurer (insurance company) 2nd party
25. Based upon principle of indemnity - to restore to pre-loss condition, no better, no worse
26. Binder - ANS-Temporary contract of insurance pending issue of the policy.
27. -usually issued by the agent
28. -may written or verbal
29. -good for up to 30 days in Texas**
30. -can be canceled by the insurer
31. -does not guarantee a policy will be issued
, 32. -ceases automatically if a policy is issued/declined
33. Cancellations - ANS-Insurer may cancel subject to state regulations
34. -10 day advanced noticed to the insured
35. -insured receives a full refund of the unearned premium-called short rate cancellation
36. Insured may cancel at any time
37. -no advanced notice is required
38. -Insured may not get a complete refund of the unearned premium-called a short rate
cancellation
39. "Insurance Co. may cancel at any time for non-payment of premium, fraudulent claim or
increase of hazard w/out 10 day advanced notice.
40. Certificate of Insurance - ANS-Document issued by the agent or company
41. -verifies coverage
42. -lists: insureds name, effective date of insurance, type of insurance, $ amounts of
coverage
43. Not an insurance contract
44. Conditions "rules of the game" diCe" - ANS-contains the duties and rights of the parties:
45. -insured's duties in the event of a loss
46. -insured's subrogation rights
47. -mortgagee's rights
48. Other provisions in conditions
49. -termination provisions
50. -loss settlement provisions including other insurance clauses and dispute resolution
processes
51. -territory where coverage applies
52. Contribution by equal shares - ANS-all insurers share equally up to the limit of the lowest
policy: then, remaining insurers share accordingly until all limits are met or the loss is
paid
53. Contribution by Equal shares solutions - ANS-total cost of fire loss = 40k
54. insurer A pays 20k
55. insurer B pays 20k: payments are split evenly
56. "up to the policy w/ the lowest limit other policy pays the difference"
57. Coverage Territory - ANS--where coverage applies
58. -policies may list a specific territory: US, Canada, PR, Guam
59. -other policies may indicate the territory is worldwide or simply not state a specific
territory thereby implying the territory is anywhere
60. Declarations "Dice" - ANS--May also be called the declarations page, declarations sheet,
or face policy, "information sheet"
61. -Purpose-tailors the policy to meet the specific needs of an insured
62. -contains the 6 Ps
63. Deductible - ANS-Also called a retention or retention limit
64. Requires the insured to pay a specific amount or percentage of loss
65. Insurer pays in excess of deductible
66. -reduces premium
67. -reduces frequency of claims
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