Unit 3- Property Insurance

Property Insurance

Provides payment to the insured person if his or her property is damaged or destroyed by an accident covered by the insurance policy.

First party losses

this type of loss is a property loss.

-the only party is the insured.

Causality policies

Protect an individual or business when it is found legally liable for negligent acts or omissions that cause injury or property damage to others.

Third party losses

this type of loss is a liability loss.

-the first party is the insured

-the second party is the insurance company

-the third party is the person who suffered injury or damages.

Declarations

who, what, when, where, and how much

Insuring Agreement

The section of an insurance policy containing the insurer's promise to pay, the description of coverage provided and perils insured against.

Conditions

rules of conduct, duties and obligations required for coverage

Endorsements

add, modify, or take away coverage

Exclusions

items not covered

Defintions

Clarifies terms used in the policy

Additional/supplementary coverage

-Payment for additional expenses not normally covered

-May have separate limit of insurance

Named insured

A person, corporation, partnership, or other entity identified as an insured party in an insurance policy's declarations page.

First-named insured

The individual whose name appears first on the policy's declaration

Insureds

-Named insured and resident spouse

-Resident family members

-Any person who borrows a covered auto with the permission of any insured

Additional Insured

a person or party who is added to the named insured's policy by an endorsement

Policy period

A period of time a policy is in effect.

Policy Territory

Where a loss must occur

cancellation

The termination of an in-force insurance policy by either the insured or the insurer prior to the expiration date shown in the policy.

Nonrenewal

A termination of a policy by an insurer on the anniversary or renewal date.

Deductible

Amount you must pay before you begin receiving any benefits from your insurance company

Other Insurance

defines how the policy will respond if there is other valid insurance written on the same risk

Nonconcurrency

Situation that exists when the same property is covered by more than one policy, but the policies are not identical as to the extent of coverage provided.

Primary Insurance

attaches immediately upon the occurrence or loss

Excess Coverage

pays whatever is not paid by the primary policy up to the amount of the loss or excess coverage limit, whichever is less

Pro rata

proportionate

contribution by equal shares

each insurer shares equally in the loss until the share paid by each insurer equals the lowest limit of liability under any policy, or until the full amount of the loss is paid

Duties after loss condition

- prompt notice of claim to agent or insurer

- protect property from further damage

- complete detailed proof of loss

- make property available for inspection

- submit to examination under oath, if required

- cooperate with insurer during claims investigation procedure

assignment

The act of transferring to another all or part of one's rights arising under a contract.

Abandonment

Insured cannot abandon property that can be repaired and expect to be paid as if the loss was total

salvage

(v.) to save from fire or shipwreck; (n.) property thus saved

Liberalization

A property insurance clause that extends broader legislated or regulated coverage to current policies, as long as it does not result in a higher premium.

Subrogation

the right for an insurer to pursue a third party that caused an insurance loss to the insured

Insurable Interest

Any financial interest in life or property such that, if the life or property were lost or harmed, the insured would suffer financially.

Underwriting

the process of selecting, classifying, and pricing applicants for insurance

application

Primary source of underwriting information

Binder

A temporary written or oral agreement to provide insurance coverage until a formal written policy is issued.

Loss ratio

Compares companys operations year over year

Earned Premium

The amount of the premium for which the policy protection has been given.

Incurred Losses

The losses that have occurred during a specific period, no matter when claims resulting from the losses are paid.

expense ratio

Cost of doing buisness

Underwriting Expenses

costs to acquire and keep policies

Written Premium

gross amount of premium income received from insureds

combined ratio

loss ratio + expense ratio

Judgement Rating

detremined by the induvidula risk

manual (class) rating

set rates for specific risk classes

Experience Rating

Method of determining the premium based on the insured's own past loss experience.

Rate Components

Loss costs, claims handling costs, operating, expenses, profit

lost costs

Pure claims data; no operating expenses included; no profits included

Fair Credit Reporting Act

Act that protects privacy of background information and ensures that information supplied is accurate.

Notice to Applicant

must be issued to all applicants for life or health insurance coverage. This notice informs the applicant that a report will be ordered concerning their past credit history and any other life or health insurance for which they have previously applied. The agent must leave this notice with the applicant along with the receipt.

Consumer Rights

feel that info in their files is wrong and may dispute the info.

Terrorism Risk Insurance Act (TRIA)

Federal law designed to ensure that insurance coverage for terrorism losses under commercial line policies will be available and affordable; it requires insurers to pay a specified amount for terrorism losses in a given calendar year; once that limit is reached, the federal government will reimburse insurers 85% of insured losses that exceed the limit.

Act of terrorism to be certified by the Secretary of the Treasury in concurrence with Secretary of State and Attorney General of the United States.

Gramm-Leach-Bliley Act (GLBA)

A U.S. law that requires banks and financial institutions to alert customers of their policies and practices in disclosing customer information.

Consumer

A company that collects info on

Customer

has an ongoing relationship with a financial institution

Fraud and False Statements

-it is illegal to make false statements

-if guilty:

-fine, up to 10 years in prison, or both

- up to 15 years in prison if false statements jeopardize insurer