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Property & Casualty
Chapter 2 Questions
Question | Answer |
---|---|
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 |