Basics
Authority given by the principal to the agent that is not formally written or spoken, allowing the agent to perform al usual and necessary tasks
Implied authority
what are the 3 elements of insurable interest? when must they exist?
1. financial
2. blood (relative)
3. business
-- AT THE TIME OF LOSS
what are the eligibility rules for business owner policies?
office buildings no more than 6 stories high and up to 100,000 sq ft
what type of losses do endorsements cover?
indirect (ex- living expenses)
what is actual cash value
replacement cost - depreciation
what is the term describing a contract that is contingent on an uncertain event (or loss) providing an unequal transfer of value between the parties?
Ex: people pay an insurance premium for years without having a loss, but some van have a loss and be reimbursed a great deal more than they have paid in premiums
aleatory contract
DP 1 endorsements? (extending coverage?)
- sorry novice here-
WHARVES-
windstorm, hail, aircraft (and falling parts), riot/civil, volcanic eruption, explosion, smoke
special form
owner occupied
coverage for dwelling other structures, and personal property
coverage type: open peril for dwelling and other, named peril for personal
HO- 3
what is a person who drives carelessly just because they know they are insured?
moral hazard
what is "an act, through an uninterrupted chain of events, that can be determined to be the immediate or actual cause of a loss"
proximate cause
(hint proximate means immediate, this is immediate cause leading to a loss)
example: there is a prearranged, faked theft of someone's old vehicle so they can get an insurance payout and buy a new car
This is an example what type of hazard?
Morale Hazard
what is loss ratio
Describe HO- 6
condominium unit owners-
dwelling use: owner occupied
coverage for: limited dwelling within unit
coverage type: named peril
what term describes the cost to replace damaged property w/less expensive or more modern equipment?
explanation: insurance policies legally bind the principle to perform their part of the agreement
Unilateral contract
4 elements of legally binding contracts
agreement (offer and acceptance)
consideration
competent parties
legal purpose
explain the 5 basic individual rate making approaches
1. judgement (if limited credible statistics, ocean marine insurance)
2. schedule (schedule of charges or credits to base rate- not common)
3. experience (insured past experiences, superimposed on class rating to adjust rate up or down)
4. retrospective (deposit premium required at inception, actual losses during period determine final premium)
5. merit (personal auto, based on factors that indicate probability of loss)
what is money paid for work or a service in workers comp?
remuneration
what are the missing 3 components of a property or casualty policy?
2. definitions
3. insuring agreement
4. additional coverage
7. exclusions/policy limits
1. declarations
5. conditions
6. endorsements
What is the term for depreciation in the value of a property d/t becoming outdated
obsolescence
5 characteristics of an ideally insurable risk
1. due to chance
2. definite and measurable
3. statistically predictable
4. not catastrophic
5. randomly selected
legal duty, standard of care, proximate cause, and actual loss or damage MUST be present to prove what...
negligence
describe coverage B in HO property coverage
- which coverage type is it not applicable?
covers other structures
- basic component of insurance equal to 10% of coverage A lowest
- no applicable in HO-4 or HO- 6
what are the 5 methods of managing risk
1. avoidance
2. reduction
3. retention
4. sharing
5. transfer