Property and Casualty in Iowa Insurance

Licensing Requirements

-at least 18

-Resident of IA

-pass examination

-file a uniform license application

-not committed an act that is grounds for denial

-good character and competency

-submit letter of clearance if from another state

Producer License

type of license required to sell insurance

maintaining your producer license requirements

provide written notification within 30 days of name change, address change, or prosecution of a criminal act

How many credits are required every 3 years for insurance licensure?

36 CE credits, 3 of which must be ethics

what is "twisting" as a producer?

misrepresenting policy provisions or giving incomplete info

what is "rebating" as a producer?

illegal practice of giving consumer part of your commission if they insure with you

what is a "domicile?"

refers to the legal address of an insurance company

where are domestic companies domiciled?

In your state

where are foreign companies domiciled?

domiciled outside of the state of iowa but within the united states

where are alien companies domiciled?

outside of the u.s.

Define a mutual company

owned by policy holders that have voting rights

Define risk management

process of treating and managing loss exposures in an effort to reduce loss from occurring

what are the four steps of risk management?

1- identify and analyze loss exposures

2- examine the alternative risk management techniques

3- select the best risk reduction techniques

4- monitor the plan

Define risk

the exposure or uncertainty of loss

define pure risk

has no opportunity for financial gain

define speculative risk

includes the loss and no loss outcomes of pure risk, but adds a third possible outcome - that of financial gain.

define exposure

the possibility of loss

define hazard

any condition or exposure that increases the possibility of loss

what are the three types of hazards?

Physical (actual physical hazard), Moral (bad practices or bad behaviors), Morale (carelessness or absentmindedness)

Define peril

cause of loss

Define loss

the reduction in the value of an asset. there are direct and indirect losses (result of a direct loss)

define proximate cause

the uninterrupted chain of events from the occurrence of an act or covered peril to the resulting injury or damage

define insurance

method of spreading risk of loss from one to many. risk transfer.

define underwriting

refers to the broad range of duties and functions performed by producers and company underwriters during risk selection

define insurable interest

the interest one has in property or life that may cause the possibility of financial loss. basic requirement of the insurance contract

define the principal of indemnity

the concept of making one whole by restoring or reimbursing one to the extent of his or her loss

define earned premiums

they represent the portion of the policy premium that has not been used in the course of the policy term

Define rating

process by which an insurer determines a price for the exposure

define property insurance

covers property (real and/or personal)

define liability insurance

covers an insured's legal liability that results from the insured's negligence

property policies consist of two parties (insurer and insured) who is the third party brought in on a liability claim?

the claimant - who says the insured did something wrong

define cause of loss

the perils of a property policy

what are the 3 types of forms used when writing property insurance?

basic, broad, and special

what is covered on a basic property form?

fire, lightning, explosion, windstorm, hail, smoke, aircraft, vehicle, riot, vandalism, sprinkler, sinkhole collapse, volcanic action

what is covered on a broad form for property insurance?

everything on a basic form plus water damage, weight of snow, falling objects

what is covered on a special form in property insurance?

everything on the basic and broad forms plus special/open peril coverage

define specified peril/named peril coverage

policy form that specifically lists the perils insured against in the policy

define blanket insurance

a single amount of coverage applicable to all locations

define specific insurance

provides a single amount for a specific location

define policy limits

the maximum amount of money the insured can recover in the event of a loss

define reporting forms

used to vary the amount of coverage in force to reflect the fluctuations in property

define deductible

the amount of eligible policy expenses that must be incurred and paid by the insured before the insurers policy will pay benefits

define actual cash value - ACV

replacement cost minus deprecation

define replacement cost

the cost to replace with like kind and quality at todays replacement cost without any deduction for deprecation

define functional replacement cost

replace damaged property with a functional equivalent

define coinsurance

the provision that requires an insured to carry insurance coverage equal to a specified percentage of a property's actual cash value in return for a reduced rate

what is the equation to calculate coinsurance?

multiply building value times 80%, insert the above amount as the denominator, use amount carried by the insured as the numerator, apply this fraction/percentage and multiply by the loss amount, subtract the deductible from the final settlement amount

define torts and list the two kinds

legal wrongs, intentional and unintentional

liability insurance is triggered by an ____________^<_

occurrence

define occurrence

an accident, including continuous or repeated exposure to the same harmful conditions

what are the four primary elements of negligence?

legal duty to act or not act, standard of care that breaches that legal duty, proximate cause, actual loss

common law

unwritten body of law developed from past cases

define damages as an insurance term

amounts paid by insurers due to a loss or injury to satisfy a court judgement

define limit of liability

a specific amount indicated in a dollar figure that limits an insure's exposure to loss

describe the 2 primary types of liability coverage

bodily injury - bodily injury, sickness, or diseases sustained by a person, including death

property damage - physical damage to tangible property including loss of use

define per person limits

limits the amount of coverage for each person, regardless of the overall or aggregate limit

define aggregate limit

limits the amount of coverage to a maximum overall limit for the policy period

define per occurrence limits

limits the amount of coverage for each occurrence, regardless of the number of persons injured

define split limits

specify different amounts of coverage for different types of losses. the financial law in iowa is 20,000/40,000/15,000 meaning 3rd party BI/BI liability/property damage per incident

define combined single limit

combines both bodily injury and property damage into one single limit of protection

define binders

temporary insurance contracts

define short rate cancellation

insured requested cancellation and a penalty is charged against the premium

define pro rate cancellation

the insurer requested cancellation and the unearned premium will be returned to the insured

define flat rate

no premium exchanged and no coverage provided

define certificate of insurance

a document issued by an insurance agency to evidence that a customer's insurance coverage is in effect

define abandonment

prohibits the insured from abandoning the property to the insurance company and claiming a total loss

define salvage

property saved by the insurer to reduce its loss after a claim

define theft

unlawful taking of property from a known place. does not cover mysterious disappearance. burglary = theft plus a person illegal breaking in and entering, robbery = theft plus threat of bodily harm made by thief.

define unoccupancy vs vacant

unoccupancy = contents left in home, but no people, vacancy = no contents and no people

define dec page

personalizes the policy, usually the first page. lists insured name and address, policy term, type and amount of insurance, policy forms, deductible, etc

define the definitions portion of a policy

defines terms listed within the policy

define conditions as found in a policy

the rules, duties, provisions, and obligations of the insured and insurer

define exclusions as found in a policy

eliminate coverage for specific occurrences that are deemed uninsurable or not calculated into the premium

define endorsements

used to change a policy's original terms, conditions, or coverage

concurrent coverage

policies written on the same coverage

define primary coverage

pays first

define excess coverage

pays after primary

define pro rata coverage

pro rates loss payments among policies that are concurrent

define subrogate

substitute one person or party in for another with regard to a legal right or claim

define express authority

authority expressly defined in an agents agreement

define implied authority

not specifically defined in an agents agreement, but is an extension of those duties

define apparent authority

the authority the public perceives the agent to have

what are the four primary elements of a contract

agreement, consideration, competent parties, and legal purpose

define representation vs misrepresentation

representation is oral or written statements made by applicant to secure insurance.

misrepresentations are false statements made by the applicant in an attempt to secure insurance

define warranty

a statement of promise that would void the policy if untrue

define waiver

intentional and voluntary relinquishment of a known right

define Estoppel

stops an insurer from citing its standard policy defenses because of the actions or inactions of the insurer and/or the agent

iowa motor vehicle financial responsibility law

person must be financially responsible in the case of a liability case

what is the required amount of liability for bodily injury

20,000 per person and 40,000 per accident

what is the required property damage liability amount?

15,000

define uninsured motorist

pays for BI caused by a motorist with no insurance who is at fault

define underinsured motorist

pays for bodily injuries caused by a motorist whose insurance is inadequate

Define stacking

in the same type of accidents coverage limits would be the sum of the uninsured and underinsured motorist coverage limits for all autos injures in a policy

iowa automobile insurance plan or assigned risk plan

provides coverage to those who are not able to secure it.

aftermarket auto parts notice requirement

insured must be aware of this before signing the policy

says that in a loss the insurance will get what they can for parts but may not be the original type/brand put on car

cancellation of auto nonpayment of premium and other reasons: how many days must a written notice be given?

10 days for nonpayment, 30 for all other reasons

define coverage a

provides coverage for the dwelling including structures attached to the dwelling

define coverage b

provides coverage for other structures on the dwelling location but separate from the dwelling

define coverage c

provides coverage for personal property that would be usual to the occupants of a dwelling

what are some general exclusions from all property policies?

earth movement, law, water damage, power failure, neglect, war, nuclear hazard, intentional loss, government action