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Dwelling Policy Non owner occupied [landlord insurance]
Dwelling Forms do not automatically cover personal liability
Coverage M
Medical Payments to Others
provides additional coverages for claim expenses, first aid expenses, and physical damage to the property of others.
medical payments to a third party for injury after an accident if the accident occurs on the insured location, as well as off the premises under certain conditions, regardless of fault or negligence
Coverage L
Personal Liability
residence premises as well as personal (non-business) activities worldwide resulting in bodily injury or property damage to a third party arising out of the insured’s negligence.
Coverages that can be added to any Dwelling Form
Other Coverages
Dwelling Under Construction
dwelling (Coverage A) while under construction. The premium is based on an average amount of insurance during construction
Broad Theft
none of the Dwelling Forms automatically cover theft of personal property or contents,
covers theft, including attempted theft, and vandalism and malicious mischief damage resulting from theft or attempted theft.
Glass or Safety Glazing Material
not included when vacant for more than 30 consecutive days.
breakage of glass or safety glazing material
included with DP-2 and DP-3 forms
No increase the limit of the insurance
DP-2 and DP-3 forms, coverage is provided for direct physical loss to covered property involving collapse of a structure
Fire Department Service Charge
no coverage in City Limits
$500 for the insured’s liability assumed by contract or agreement for fire department charges
Trees, Shrubs, and Other Plants
5% of the Coverage A limit, with no more than $500 for any one tree, shrub, or plant
DP-2 and DP-3 forms, coverage is provided for trees, shrubs, plants or lawns on the described location
for all WHARVES
Reasonable Repairs
insurer will pay the reasonable costs incurred by the insured for necessary measures taken to protect the property
property against direct loss from any cause while being removed from a premises endangered by an insured peril. In the case of the DP-1 the property is covered for 5 days while removed, and in the case of the DP-2 and DP-3 the property is covered for 30 days while removed
Improvements, Alterations, and Additions
tenant, and at their own expense make improvements
DP3 and DP2 don't lower the total benefits available for coverage C. DP1 does reduce
they may use up to 10% of the Coverage C limit of insurance for loss by an insured peril to such improvements
Debris Removal
E - Additional Living Expense
E limit of insurance
Coverage E limit of insurance is up to 20% of the Coverage A limit
Additional Living Expenses are deemed those sustained by an insured household in order to maintain its normal standard of living.
property described in Coverages A, B, or C by an insured peril, and is automatically
D - Fair Rental Vlaue
indirect loss coverage
20% of the Coverage A limit for each form
fair rental value of that part of the described location
secondary coverage
10% of the Coverage C limit for all forms
50% of Coverage A.
accounts, bank notes, coins and currency; birds, animals, and fish; watercraft other than rowboats or canoes; motor vehicles other than those used to service the described location or to assist the handicapped; electronic data processing tapes, wires, and records; and credit cards or fund transfer cards.
only DP2 and DP3 are the insurance limit increased .
detached from the dwelling, such as a detached garage, carport, outdoors storage building
dwelling including structures attached to the dwelling
DP 3 Special Forms = Open Perils
Personal property or contents are covered for the Broad Form (DP-2) perils
Losses to the dwelling and other structures are paid on a replacement cost basis, and losses to contents are paid on an actual cash value
dwelling and other structures are covered for all direct physical damage (open peril), except for perils specifically excluded.
Theft of property that is part of the dwelling or other structures are covered as long as the dwelling or other structures have not been vacant for more than 60 days.
DP 2
Broad Form= Named Perils
burglary damage peril includes damage to the covered property caused by the burglar, but not theft of property
dwelling and other structures are paid on a replacement cost basis, and losses to contents are paid on an actual cash value
FWA-SAFA-HA
Imagine a comet hitting an apartment building which caused the snow, ice and sleet start to tear apart and crack building which cause a discharge of water and steam which srews up the water heater and air conditioning and finally setting of the automatic sprinkler system that start electrical sparks.
Story from Uncle Bob
artificially generated electrical current.
household appliance
automatic fire protective sprinkler system
freezing of a plumbing
air conditioning
steam or hot water heating system
tearing apart
Collapse
Cracking
Accidental Discharge
or overflow of water or steam
weight of snow, ice, and sleet
Falling Objects
VMM = Vandalism and Malicious Mischief Endorsement
All Perils from DP1 included in DP2
ECE = Extended Coverage Endorsement
WHARVES
smoke
explosions
vehicles
vehicle peril does not include loss to a fence, driveway, or walk caused by a vehicle owned or operated by the insured.
riot
aircraft
hail
wind
DP 1
Losses are paid on Actual cash value = Replacement value - Depreciation
up to 5 boarders
No more than 4 units
Basic is the only for available for Manufactured homes only
Perils
FLIE
lightning
Internal explosion
fire
Personal Inland Marine Insurance
Personal Auto Policy
Home Owner's Policy
Home Owner's Liability Coverage; HO SECTION II
Same as the Dwelling exclusions.
Coverage F - Medical Payments to Others
No Covered
a. Any property that is covered under Section I. b. Damage caused intentionally by an insured who is 13 years of age or older. c. Damage to any property owned by an insured. d. Damage to property owned by or rented to a tenant. e. Damage arising out of business pursuits engaged in by an insured.
an insured or regular residents
No Fault
Payment is made regardless of negligence.
Additional Coverages
Damage to Property of Others
replacement cost, up to $1,000 per occurrence, for property damage caused by an insured to the property of others. Example: Damage caused by an insured to a borrowed lawn mower.
First Aid Expenses
first aid to others, incurred by an insured, for bodily injury that is covered under the policy. This does not cover first aid to an insured
Claim Expenses (Supplementary Payments)
insured’s actual loss of earnings up to $250 a day for assistance in the investigation or defense of a claim or suit; premiums on bonds required in a suit.
1. A person on the insured location with the permission of an insured. 2. A person off the insured location if the bodily injury: a. Arises out of a condition on the insured location or the ways immediately adjoining. b. Is caused by the activities of an insured. c. Is caused by a residence employee in the course of employment of the insured. d. Is caused by an animal owned by or in the care of an insured
pay necessary medical expenses that are incurred or medically ascertained within 3 years from the date of an accident causing bodily injury
Coverage E - Personal Liability
If there is a covered Occurance
bodily injury or property damage
2. Provide a defense, at the insurer’s expense, even if the suit is groundless, false, or fraudulent. The insurer may investigate and settle any claim or suit that the insurer decides is appropriate.
1. Pay up to the limit of liability for the damages for which an insured becomes legally liable, including prejudgment interest awarded against an insured.
Overview
Protection is provided for legal claims against the insured or family members from occurrences in and around the premises, personal activities, and pets, both on and away from premises. Coverage is intended to protect against non-business, non-automobile exposures.
Selected Property Endorsements
California Residential Property Insurance Disclosure Form
indicates the method of valuation
Workers’ Compensation Residence Employees Endorsement
a. Been engaged in such employment by the insured for no less than 52 hours b. Earned no less than $100 in wages.
Personal Property Endorsement
also called a Personal Article Floater
Newly acquired property of a class already insured is automatically covered. The insurer must be notified within 30 days (90 days for fine arts) of the acquisition of the property.
provided on an open-peril basis with certain exceptions for jewelry, furs, cameras, musical instruments, silverware, golfer’s equipment, fine arts, postage stamps and rare and current coins.
,
Guaranteed/Extended Replacement Cost Endorsement
Inflation Guard Endorsement
Increased Limit – Other Structures Endorsement
if the automatic amount equal to 10% of the dwelling coverage is inadequate for other structures
Mobile Home Insurance
Coverage C (Personal-Property) is generally written at 40% of Coverage A, instead of 50% under the Homeowners Policy.
Mobile Home Endorsement to or by writing a separate Mobile Homeowners Policy.
General Exclusions
Governmental Action
The destruction, confiscation, or seizure of property
Intentional Loss
Nuclear Hazard
War
Neglect
Power Failure
If an insured peril ensues on the described location as a result of the power failure, the ensuing loss would be covered.
will not pay for losses caused by the failure of power or other utility service if the failure takes place off the described premises
Water Damage
If a direct loss by fire or explosion resulting from water damage should occur the ensuing damage would be covered.
not pay for losses caused by flood, tidal water, water that backs up through sewers or drains, or water below the surface of the ground which seeps through basement walls.
Earth Movement
If a direct loss by fire, explosion, or breakage of glass or safety glazing material should ensue from earth movement, the policy would then pay only for the ensuing loss.
Ordinance or Law
example, remodeling necessary to make a building compliant with the Americans With Disabilities Act
Coverages that can be added to any HomeOwner Form
D - Loss of Use
indirect loss
D limit of insurance
HO-8, it is 10% of the Coverage A limit
HO-4, it is 30% of the Coverage C limit
HO-2, HO-3, and HO-5 is 30% of the Coverage A
the shortest time required to repair or replace the damage
will extend even beyond the policy expiration date, and payments do not affect the policy’s liability limit
non rented dwellings
Civil Authority Prohibits Use
prohibits the insured from the use of the residence premises as a result of direct damage to neighboring premises by a peril insured against, the insurer would cover the loss as provided in 1., and 2., for no more than 2 weeks.
Fair Rental Value
less any expenses that do not continue, such as an electric bill, etc.
property loss covered by Section I
necessary increase in living expenses required to maintain the household’s normal standard of living.
C - Personal Property
roomers or boarders
Articles separately described and specifically insured in this or other insurance. b. Animals, birds, and fish (pets) including guard dogs. c. Motor vehicles or motorized land conveyances, unless exempt from motor vehicle registration and used to service the insured’s residence or assist the handicapped. d. Aircraft and aircraft parts. e. Credit cards and fund transfer cards. (Unauthorized use of cards is covered.) f. Property of a roomer, boarder or tenant. g. Radio equipment permanently installed in an auto. h. Windstorm damage to personal property contained in the building unless the opening is caused by a covered peril. i. Committed by an insured. j. Watercraft, trailers, and campers while away from the residence premise. NOTE: It would cover theft of an insured’s camera stolen by a visitor
C limit of insurance
Personal property with special limits are:
\na. $200 on money, bank notes, bullion, coins, medals, etc. b. $1,500 on securities, deeds, evidences of debt, manuscripts, passports, tickets and stamps. c. $1,500 on watercraft, including their trailers, furnishings, equipment, and outboard motors. Loss from wind or hail is excluded unless in a fully enclosed building. d. $1,500 on trailers not used with watercraft. e. $1,500 for loss by theft of jewelry, watches, furs, precious or semiprecious stones. f. $2,500 for loss by theft of silverware, gold ware, pewter ware, etc. g. $2,500 for loss by theft of firearms. h. $2,500 on property used for business while on the residence premises. i. $500 on business property off the residence premises. j. $1,500 for loss to electronic apparatus including accessories, antennas, tapes, records, discs, etc while in or upon a motor vehicle or other motorized land conveyance. k. $1,500 for loss to electronic apparatus and accessories used primarily for business.
new principal residence is covered automatically for up to 30 days without the 10% limit.
student’s property when away at school
Secondary residence
coverage is limited to 10% of Coverage C or $1,000 whichever amount is higher
50% of the Coverage A
anywhere in the world
It would cover theft of an insured’s camera stolen by a visitor
newly acquired principal residence for 30 days
property of a guest or servant
household and personal property
B - Other Structures
B limit of insurance
10% of the Coverage A limit for all forms
cannot be used for mercantile or manufacturing business
rent a private garage to another for garage purposes
clear space from the dwelling detached from the dwelling, such as a detached garage, carport, outdoors storage building
A- Dwelling
A limits of Insurance
qualify for replacement cost, the amount of insurance at the time of the loss must equal or exceed 80% of the replacement cost
Does not Apply
Vandalism and malicious mischief if dwelling has been vacant for more than 60 days.
land, including land on which the dwelling is located
Does Apply
building equipment and outdoor equipment located on the described location are considered as dwelling
residence premises including structures attached to the dwelling
HO-8 (Modified Form)
Owner's premises
market value
of the dwelling, and losses to the contents are paid on an actual cash value basis.
For example older home
Replacement Value would be much higher than Market Value
older Home where replacement value and market value are disproportionate
Could create a Moral Hazard
HO-6 (Unit-Owners Form) Broad Form
personal property while anywhere in the world.
real property for which the insured is responsible under the association’s agreement
condominium unit-owner
HO-5 (Comprehensive Form) Open Peril
Open Peril
HP 4 Renter's Form
Losses are paid on an actual cash value
'Content Only' Broad Form - Renter's Form
contents and personal property.
HP 3
Special Form = Open Peril
HP 3 contains HP 2
Broad form: contents and personal property
HP 2 Broad Form
Does not cover
loss to a fence, driveway or walk caused by a vehicle owned or operated by the insured.
VMM
excludes loss for vandalism occurring after 60 days of vacancy
Wharves
Wind, hail, aircraft, riot, vehicles, explosion, and smoke (WHARVES), and volcanic eruption
contents and personal property
actual cash value
Structures;
replacement cost basis
Broad Form =Named Peril
Owner's premises, dwelling and other structures
Common Policy Conditions Page legal obligations and duties of the insured and insurer
Common Policy Declaration Page
a. The insured and the insurer. b. The inception and expiration date. c. A description of the business. d. The premium charge for the coverage parts included in the policy.
Minimum Requirement
California Amendetory endorsements
Non renewal insurer 60 before expiration date
Over Under 60 days insurer can not cancel without state cause
Under 60 days insurer can cancel for any reason
Two or more Coverage/Modules
Policy Conditions - six conditions
30 days prior for any other allowwagle reason
10 days prior for non payment of premiums
Declaration Page-stating premium charges andcoverage limits
Coverage Parts
Boiler and Machinery Equipment Breakdown
Farmer Coverages
Commercial inland Marine
Commercial Crime
General Liability CGL
Commercial Automobile
Commercial Property Coverage
7 Forms
1) Building and Personal Property Coverage Form. 2) Commercial Builders Risk Coverage Form. 3) Condominium Association Form. 4) Condominium Unit-Owners Coverage Form. 5) Business Income Coverage Form. 6) Extra Expense Coverage Form. 7) Legal Liability Coverage Form.
Causes of Loss Forms contains the exclusions
Earthquake Form
Special Form
Broad Form
Basic Form
Aggregate Limits
The maximum amount payable for loss (per location and/or per person) from all occurrences within a policy period
fully restores on the anniversary date.
Per Person Limit
maximum amount that the coverage will pay for loss to any one person regardless of the overall policy limits.
Per Occurrence Limit
most the coverage will pay for a loss arising out of any one occurrence
Slander
oral falsehood that damages another’s reputation
Libel
printed matter tending to unjustly injure a person’s reputation
Certification of Insurance
Includes the effective date, name of the insurer, name of the insured, and limits of liability.
Arbitration
Third party settles disagreements between claimant and the insurer
Notices of loss
Vicarious Liability
Employers are absolutely liable for employees work related injuries regardless of fault
liability on one person for the actionable conduct of another (Such as: employer and employee)
Gross Negligence
A willful, or reckless disregard of the consequences affecting the life or property of another.
Medical Payments Coverage
expenses incurred by invitees and licensees on the insured’s premises. Payments are made regardless of fault or negligence, and payment is not an admission of fault.
Punitive Damages
general damages as a punishment for extreme conduct by a negligent party, as in the case of gross negligence
General Damages
Compensation to an injured party for pain, suffering, mental anguish, disfigurement
Specific Damages
Compensation to an injured party for actual or known expenses such as bills, loss of earnings, or costs of repairing or replacing damaged property. Specific damages do not include pain and suffering
Attractive Nuisance
Some properties attract and are a threat to children
Advertising Injury Liability
Legal liability arising from the misappropriation of advertising ideas or style of doing business; infringement of copyright, title or slogan
Personal Injury Liability
defamation
false arrest,
slander (spoken),
Libel (in print),
Property Damage Liability
Damage to tangible property, including loss of use of that property caused by the insured’s negligence
Accident
unplanned event which occurs suddenly and at a definite place.
Bodily Injury Liability
liability arising from physical injury, including sickness, disease, and death caused by the negligent or purposeful acts or omissions of an insured.
Occurrence.
An event that results in an insured loss
Trespasser
person on the premises without the owner’s permission. It is not necessary to warn of hidden dangers.
Licensee
A property owner has a lesser duty than to an invitee
Invitee
The property owner must warn of hidden dangers
Defenses
Strict Liability
If a claimant can prove that a product caused the injury, the manufacturer will be held liable whether or not the product was defective.
Absolute Liability
Claimant does not have to prove anything. (Employers are absolutely liable for employees work related injuries regardless of fault.)
No-Fault Concept
modified no-fault
no-fault concept, limited immunity is provided from tort action
pure no-fault
tort system is completely abolished for bodily injuries caused by auto accidents.
Statutory Law (enactment of legislatures)
Statute of Limitations
length of time in which a person may file suit.
Comparative Negligence
Damages are reduced in proportion to the degree of negligence.
Common Law (judicial or court decisions)
Intervening Cause
disrupted chain of events, thus freeing the defendant from liability.
Assumption of Risk
plaintiff who consciously exposes himself to danger assumes some risk of possible injury.
Contributory Negligence
Prevents recovery for damages caused by a negligent party if the claimant was also negligent
Intentional wrong
Criminal
Unintentional Torts / Civil wrong
negligence
proximate cause
tortfeasor’s breach of duty is actually what caused the injury or damage
Occurrence of injury or damage.
Another party actually must suffer an injury or damage. Standard of Care.
Breach of the duty to act.
does not act in a reasonably prudent manner toward another
Duty to act
act in a reasonably prudent manner toward another
Self Regulation
NAIC
developing guide lines
Legislation
Unfair Practices
Unfair Claim Practices
Failure to acknowledge act promptly on claims
Unfair Method of Competition
Using a Name that its not it true Nature
Defamation of another Insurer
Name misrepresents terms
Boycott, monopoly, intimidation, discrimination and cooking the books
Insruance Commissioner
overseeing marketing practices
Determine the insurer reserves
cannot write or change law
He can enforce the law
supervising Licensing
elected to a 4 year term and may only run twice
CCR California Administrative Code and Regulation
issued by the commissioner
Insurance code
Are created via State legislation and then to the Governor.
Changes are made by amending an existing section
McCarran Ferguson Act of 1945
States will regulate it's insurance providers
Property Insurance Principles
Hazards
Legal Hazard.
likelihood that a loss will occur because of court actions.
Regulations that force insurance companies to cover risks that they would otherwise not cover, such as including coverage for alcoholism in health insurance.
Morale Hazard.
insured's indifference to loss because of the existence of insurance.
Attitude of insured to think “Its insured so why should I worry about safety of my house/property/own health.
Moral Hazard.
morals or habits that increases the probability of loss from a peril.
Purchasing insusrance for gain; Arson
Physical Hazard.
Any hazard arising from the material, structural, or operational features of the risk itself
smoking is a physical hazard that increases the likelihood of a house fire and illness.
Losses
Loss Reserve.
Funds a company is required by law to set aside to cover claims
Loss Ratio
Expense Ratio
dividing an insurer’s total operating expenses by total earned premiums
dividing paid losses plus loss reserves by total earned premiums.
Consequential Loss (or Damage).
not directly caused by a peril insured against
Direct Loss (or Damage).
direct consequence of a particular peril.
Concurrent Causation.
two or more perils act together (concurrently) or in a sequence to cause a loss.
Open Perils
damage to property arising from any cause except those that are specifically excluded.
Named Perils
Perils specifically covered on property insured.
Peril.
Actual cause of a possible loss (fire, theft, rain, etc.)
Types of Insurance
Personal or Commercial Lines
Property Policies, Casulty Policies and Package Policies
Property Insurance
indemnifies a person with an interest in physical property for its loss or the loss of its income producing abilities
Casualty Insurance
Legal liability for losses caused by injury to persons or damage to the property of others.
Types of Insurers
Lloyd’s of London.
group of high-net worth individuals who share in the risk of the insured. Each group of individuals, known as syndicates, are responsible for the amount of insurance they write on different classifications of risk.
Risk Retention Groups
group-owned insurer who assumes and spreads the liability risks of its members. b. They are an insurance company
Reciprocal Insurance Company
exchange of insurance is affected through an Attorney-In-Fact. Each subscriber assumes a part of the risk of all other subscribers. If premiums collected are insufficient to pay losses, an assessment of additional premium can be made.
insurer is unincorporated, and is an aggregation of individuals, firms, and business corporations, which exchange insurance on one another. Each member is known as a subscriber.
Fraternal Benefits Societies
social organizations that engage in charitable and benevolent activities that provide insurance, primarily life insurance to its members.
Mutual Insurance Company
non-assessable, meaning they cannot charge members a pro rata share of loss and expense at the end of the policy period
Profits are returned to policyholders as nontaxable dividends.
Policyholders choose a Board of Trustees or Directors
owned by its policyholders
Stock Insurance company
receive taxable stock dividends
electing directors and officers
owned by stockholders
Elements of an Insurance Contract
Insurance types of Contracts
Utmost Good Faith
Contract requires that each party is entitled to rely upon the representations of the other without attempts to conceal or deceive
Unilateral Contract
only one party to the contract, the insurer, makes any enforceable promise
Personal Contract
Insurance policies are usually not transferable unless the insurer agrees to do so.
Conditional Contract
conditions which must be met by both parties before the contract is legally enforceable
conditions for both the insurer and insured are spelled out in the policy form.
Contract of Adhesion
Most insurance policies are contracts of "adhesion," because the terms are drawn up by the insurer and the insured simply "adheres."
Courts will favor the Adherer when in doubt
Aleatory Contract
Un equal pay out: relative low premium compared to total cost that maybe paid out by the Insurer.
Anatomy of a Contract
Competency
Must have a working brain
Consideraton
Insurer: promises to pay the covered loss
Insured: promises to pay the premium
Legal Purpose
no Crack contracts
Agreement
offer made by one party has been accepted by the other
Insurance Policy
describes the rights and obligations of both parties.
legally binding contract between two parties
Business Model
Claims Handeling
Rating Bureaus
Insurance Services Office (ISO)
is the advisory organization that develops forms for the standard market.
evaluates policy holder's risk
Sales & Marketing
Actuarial
statistician
Other Legal Principles in Insurance Law
Misrepresentation
oral or written statements that do not truly reflect the facts
Representation
correct to the best of his or her knowledge and belief.
Warranty
A statement made on an application for most kinds of insurance that is warranted as true in all respects.
Estoppel
example, if an insurer allows an insured to violate one of the conditions of the policy, the insurer cannot at a later date void the policy because the condition was violated.
Waiver
giving up or surrendering a right or privilege that is known to exist.
Fraud
Deceipt, trickery or misrepresentation
Concealment
failure to disclose a material fact
Valuing Insurance Coverage
Specific Insurance
describes specifically the property to be covered. This is in contrast to a policy which covers on a blanket basis
Blanket Insurance.
covers, in a single contract, either multiple types of property at a single location or one or more types of property at multiple locations.
Agreed Amount Clause.
insurer agree that the amount of insurance carried will automatically satisfy the coinsurance clause.
Open Policy.
not agreed upon, but is left to be ascertained in case of loss.
Valued Policy
states that in the event of a total loss, a specific amount will be paid,
fine arts, antiques, and furs.
Stated Amount
agreed amount of insurance which is shown on the policy
Market Value.
based on what they would sell for under current market conditions.
such as stocks and bonds
Actual Cash Value
replacement cost of lost or damaged property at the time of the loss, less depreciation
Replacement Cost
replacing property without a reduction for depreciation
Insurance Policy Structure
Conditions
Policy Period and Territory
Concealment or Fraud
Endorsements
form attached to the policy which alters provisions of the contract to make it better fit
Exclusions
of Perils
Definitions
term used in the contract are defined.
Insuring Agreement
states the perils insured against, the persons and/or property covered, their locations and the period of the contract.
Declarations
The Who, what when, where, how much is the premium and period of the term
Marketing and Distribution Systems
Managing General Agent
Most Managing General Agents today focus in the Excess and Surplus insurance markets.
E & S lines
Any type of coverage that cannot be placed with an insurer admitted to do business. E&S lines markets for policies unable to be placed in conventional markets due to a shortage of capacity.
members are entrusted to write both admitted and excess and surplus lines insurance by insurance companies who have delegated underwriting authority to them.
Insurance Solicitor Salesman
insurance salesperson who contacts potential customers and handles clerical responsibilities but has no authority to make insurance contracts.
Insurance Brokers
A person who, for compensation and on behalf of another person, transacts insurance other than life insurance with, but not on behalf of, an insurance company
A broker may not charge a policy fee; only an insurer may require a policy fee.
Direct Mail
A marketing system that does not use an agent. Policies are usually marketed directly from the insurer’s home office.
Direct Writer
An insurer that deals directly with the insured through a salaried representative or a captive agent, as opposed to an insurer that contracts with an agent.
Exclusive Agent
A person under agreement to represent a single insurer, or a group of insurers, having common ownership.
Independent Agent
A person who enters into agency agreements with more than one insurer
Renew of End a Policy
Pro Rata Cancellation
refund proportional to days not used.
Short Rate Cancellation
In effect, the insured has paid more for each day of coverage than if the policy had remained in force for the full term.
Insured’s Right To Cancel
client may cancel at any time be letting the insurer know in writing of the date of cancellation is to take effect
Cancellation
60 or more days, the insurer may cancel the policy for nonpayment of premium by giving 10 days written notice, and 30 days written notice for the
Substantial change in property, making it uninsurable.
Material misrepresentation by the insured.
Grossly negligent acts or omissions
Conviction of a crime for an act that increases any hazard insured against
Flat Cancellation
cancelled upon its effective date. no charge
Lapse
Due to non payment of premiums
Insurer most give 10 days notice
Resicission
Termination by the insurer when material misrepresentation has been made by Insured.
Risk Management
Underwriting
protect the insurer against adverse selection by selecting risks that fall into the normal range of expected losses.
Adverse Selection
occurs when insureds select only those coverages that are most likely to have losses
Insurable risk
Insurance company must be able to calculate the chance of loss and to be able to calculate the chance of loss
Losses must not be catastrophic to many members of the group at the same time
homogeneous group of risks large enough to make losses predictable (Law of large numbers)
Loss causes a hardship
Loss must be accidental
loss must be definable
Law of Large Numbers
the more insured members the more predictably the risk
Ways to Deal with Risk
Reduction
Avoidance
Retention
Keeping your risk
Transfer
buying insurance products
Sharing
Pooling the risk with other who share the same type of risk
Pure Risk
no chance of winning; ex. chances of crashing your car and needing to replace it / maybe Insurable
Speculative Risk/not insurable
Las Vegas
Admitted vs Non-admitted Insurers
Domicile of Insurers
Alien Insurer – An insurer organized under the laws of any jurisdiction other than a state of the United States
Foreign Insurer – An insurer not organized under the laws of this state, but in one of the other states within the United States
Domestic Insurer – An insurer organized under the laws of this state
Standard form used; covers average risks
Surplus Lines of Insurance
Must hold an individual surplus line broker license
High Risk: for those types of insurance that cannot be obtained from admitted insurers.
Non-admitted Insurer – An insurance company not authorized to transact insurance in California
Not subject to financial solvency regulations
Admitted Insurer – An insurance company - whether domestic, foreign or alien - authorized to transact insurance in California by the California Department of Insurance.
Who
Insurer
Salvage.
Property taken over by an insurer to reduce its loss.
Other Insurance Clause
what is to be done in case any other contract of insurance covers the same property and/or hazards.
Liberalization Clause
if policy or endorsement forms are broadened by legislation or ruling from rating authorities and no additional premium is required
Subrogation Clause
clause prevents collecting from both the insurer and a third party.
insurer the right to pursue any course of action, in its own name or the name of a policyowner, against a third party who is liable for a loss which has been paid by the insurer.
Pay for covered losses • Provide a legal defense against liability claims • Give advance notice of cancellation and return unused premiums
Insured
Unoccupied
vacant with furniture in the home.
Vacant
neither occupants nor contents
Important Clauses
Coinsurance Clause
encourage the insured to purchase and maintain insurance to value
[Amount of Insurance Carried/ 80% of Insurance Required] times [Amount of Loss] = amount paid out
Loss Payable Clause
Morgage Clause
loss reimbursement shall be paid to the mortgagee as the mortgagee's interest
Abandonment Clause.
prohibits the insured from abandoning partially damaged property to the insurer in order to claim a total loss.
Rights and Duties
Cooperating with the insurer after a loss.
Notifying the police if the claim is for a theft
Submitting claims
Taking reasonable steps to protect property from further damage
Prompt notice of loss or damage
What
Insuring Agreement (or Clause)
Portion of an insurance contract which states the perils insured against, the persons and/or property covered, their locations and the period of the contract.
Insurable Event
event, whether past or future, which may damnify a person having an insurable interest,
Social devices for reducing or transferring risk
Indemnify
to make loss whole
Claim
demand made by the insured
Proximate Cause
effective cause of loss
Exposure
used for determining the premium
.
loss
