Unit 3 P&C

Property Insurance

Covers damage to the insured's property.

Casualty Insurance

Covers legal liability for injury or damage to others.

First Party

The insured.

Second Party

The insurance company.

Third Party

A claimant or injured party.

Declarations, Insuring Agreement, Conditions, Endorsements, Exclusions.

What does DICEE stand for?

Declarations

Page containing insured's information, coverages, limits, deductibles, and policy period.

Insuring Agreement

The insurer's promise to provide coverage.

Conditions

Rules and duties required under the policy.

Endorsements

Changes made to a policy.

Exclusions

Perils, property, or losses not covered.

Named Insured

Person or business named on the policy.

First Named Insured

Primary insured with additional responsibilities.

Additional Insured

Person or entity added by endorsement for coverage.

Policy Period

The time coverage remains in force.

Territory

The geographic area where coverage applies.

Cancellation

Termination of a policy before expiration.

Nonrenewal

Decision not to renew a policy at expiration.

Unearned Premium

Refunded premium for unused policy time.

Pro Rata Cancellation

Cancellation with full refund of unearned premium.

Short Rate Cancellation

Cancellation with penalty when initiated by insured.

Flat Cancellation

Policy canceled from inception with full refund.

Deductible

Amount paid by insured before insurer pays.

Primary Insurance

Coverage that pays first.

Excess Insurance

Coverage that pays after primary insurance limits are exhausted.

Other Insurance

Two or more policies covering the same loss.

Nonconcurrency

Policies covering the same property with different coverages.

Pro Rata Liability

Insurers pay based on their share of total coverage.

Contribution by Equal Shares

Each insurer pays equal amounts until its limit is reached.

Assignment

Transfer of policy rights with insurer consent.

Abandonment

Insured cannot force insurer to take damaged property.

Salvage

Insurer's right to recover damaged property after payment.

Liberalization

Broadens coverage automatically without additional premium.

Subrogation

Insurer's right to recover from a responsible third party after paying a claim.

Insurable Interest

Financial interest in property being insured.

At the time of loss.

When must insurable interest exist in property insurance?

Underwriting

Process of evaluating risk and determining acceptability.

Binder

Temporary insurance coverage until a policy is issued or declined.

Yes.

Can a binder be oral?

No.

Does a binder guarantee a policy will be issued?

Loss Ratio

Incurred losses divided by earned premiums.

Expense Ratio

Underwriting expenses divided by written premiums.

Combined Ratio

Loss ratio plus expense ratio.

Underwriting profit.

Combined Ratio below 100%

Underwriting loss.

Combined Ratio above 100%

Judgment Rating

Premium determined by underwriter experience and judgment.

Manual Rating

Premium determined using established rate classifications.

Experience Rating

Premium based on insured's prior loss history.

Loss Costs

Estimated claim expenses excluding company overhead and profit.

Loss costs, claims expenses, operating expenses, and profit.

What are the four components of rates?

Fair Credit Reporting Act (FCRA)

Protects consumer credit information and reporting practices.

FCRA Notice Requirement

Applicant must be notified a report is being ordered.

FCRA Consumer Rights

Consumers may dispute inaccurate information.

FCRA Penalties

Up to $5,000 fine, 1 year imprisonment, or both.

Terrorism Risk Insurance Program Reauthorization Act.

TRIPRA

TRIPRA Event Trigger

$200 million certified terrorism event.

80%.

Federal Share Under TRIPRA

20%.

Insurer Share Under TRIPRA

Gramm-Leach-Bliley Act

Requires protection of consumer financial information.

Consumer (GLBA)

Anyone about whom information is collected.

Customer (GLBA)

Person with an ongoing relationship with a financial institution.

GLBA Opt-Out Requirement

At account opening and annually thereafter.

Fines, imprisonment, or both.

Penalty for Fraud and False Statements