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Property & Casualty

Chapter 2 Questions

QuestionAnswer
What are the 2 parts of a policy Core Components (DICE) and Other Components (LEAD)
Core Components (DICE) are Declarations, Insuring Agreement, Conditions, Exceptions
Other Components (LEAD) are Limitations, Exclusions, Additional Coverages, Definitions
What are the elements of a legal contract Competent parties, legal purpose, agreement, and consideration
Which principle of insurance restores the insured to the same economic condition that existed before the loss? Indemnity
Conditional Contract Both parties are obligated to perform certain duties and follow rules of conduct that make the contract enforceable
Aleatory Contract A contract with an unequal exchange of value between parties
Contract of Adhesion One party writes the contract without impute form the other party on a take-it-or leave it basis
Personal Contract A contract specific to the person insured at the time the contract is formed
Unilateral Contract A one-sided contract where only one party is legally bound to the contractual obligations
A warrant is defined as a statement in the application that is guaranteed to be true
Representation A statement made on the application that is believed to be true to one's knowledge
Misrepresentation A false statement on the application that renders the contract void if material to acceptance of the risk
Concealment Failure to provide or willful hiding of material facts pertinent to the issuance of a policy
Warranty A statement that is guaranteed to be true and coverage may hinge on the truthfulness of that statement
Fraud The intentional misrepresentation, deceit, or concealment of known material facts by a person with the intention of causing injury to another
Waiver The voluntary surrender of a known or legal right to advantage
Estoppel A legal principle that says that if a legal right is surrendered, the right cannot be enforced afterward
The Declaration page of a property insurance policy includes the who, what, where, when, and how much of the policy.
What are common exclusions to see on a property insurance policy? Ordinance or law, flood, and neglect
The duties and obligations of the insured are found under what part of the insurance policy? Conditions
Who receives the broadest coverage under the insurance policy? The named insured
An insurance policy that responds to a loss first is a Primary policy
First Named Insured A person, company, or organization whose name appears first on the Declaration page
Accident A sudden, unintended, and unplanned event that results in bodily injury or property damage
Occurrence Continuous or repeated exposure to the same generally harmful conditions that results in loss or damage
Primary Insurance Coverage that responds to a loss first
Excess Insurance Coverage that responds to a loss after the limits of other insurance policies are exhausted
Notice of Loss an initial written statement informing the insurer that a loss took place
Proof of Loss A sworn, formal, detailed statement about a loss that occurred
Which document informs an insurer that a loss has occurred Notice of Loss
A Liberalization Clauses serves the purpose of allowing the insurer to broadened coverage with no premium increase applies automatically to all policies
After a loss, the insured must provide a notice of loss to the insurer. The notice must be submitted: promptly
2 insurance polices cover the same loss. To pay the claim, each insurer pays a portion of the loss equal to the ratio of insurance written by each insurer compared to the total amount of applicable coverage. This describes: Pro Rata Liability
Policy Territory The place in which coverage applies. This is usually the United States, its territories and possessions, Puerto Rico, and Canada.
Duties in the Event of Loss The insured is required to provide prompt notice of a loss, protect property from further damage, cooperate with insurer investigations, and submit a formal proof of loss within a specified time
Assignment* important one to REALLY know The insured may not transfer their ownership of the policy to a new owner, unless the insured has the insurer's prior written consent
Other Insurance If another insurance policy also applies to a loss, this condition coordinates how the policies pay for the loss, such as each insurer paying its pro rata share or paying equal shares with the other insurer.
Arbitration if the insurer and insured disagree on the amount payable for a loss, the decision is made by other parties, known as arbitrators
Liberalization in the event that the insurer broadens coverage and the broadened coverage does not require an increase in premium, that coverage is automatically applied to the policy.
Subrogation if the insured has the right to recover damages from a third party for a loss that the insurer has already paid, the right of recovery is transferred to the insurer
Concealment or Fraud Misrepresentation or intentional omission of material information is reason for the insurer to void the policy from the beginning
Waiver or Change Only the insurer can make a waiver or change to the policy, and it must be made in writing
Created by: jcmartinez,jm4
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