Flash Card Answers

Extended Covered Perils on Basic Dwelling Policy

• Extended Covered Perils Include:

  • Windstorm or hail

  • Explosion

  • Smoke

  • Aircraft and vehicles

  • Riot or civil commotion

  • Volcanic eruption

  • Vandalism and malicious mischief

Deductibles for Volcanic Eruptions

• If 3 volcanic eruptions occur within 48 hours contributing to property damage:

  • Only 1 deductible will apply (all volcanic eruptions within a 72-hour period count as 1 occurrence).

Exclusions in Dwelling Forms

• Common exclusions in all 3 dwelling forms:

  • Earth movement

  • Water damage

  • Power failure

  • Neglect

  • War

  • Nuclear hazard

  • Intentional loss

  • Freezing of plumbing

  • Ordinance or law

  • Government action

Named Perils

• Example of named peril:

  • Gas stove explosion is classified as Internal explosion.

Coverage for Structures

• Policy that covers non-attached garage:

  • Coverage B – Other Structures.

Coverages of Dwelling Policies

• 5 Coverages Include:

  • Coverage A – Dwelling

  • Coverage B – Other Structures

  • Coverage C – Personal Property

  • Coverage D – Fair Rental Value

  • Coverage E – Additional Living Expenses

Basic Dwelling Policy Coverage

• Automatically Provides Coverage Against:

  • Fire

  • Lightning

  • Internal explosion

Replacement Cost Coverage

• Needed Insurance Amount for Replacement Cost in Broad and Special Forms:

  • Must be at least 80% of the replacement cost.

Insurance Purpose in Dwelling Policies

• Dwelling policies can insure:

  • Dwelling only

  • Contents only

  • Both dwelling and contents

Types of Coverage Available

• 3 Types of Coverage Available in Dwelling Policies:

  • Basic

  • Broad

  • Special

Automatic Increase in Insurance Endorsement

• Purpose:

  • To offset the effects of inflation.

Coverage for Contents

• Coverage that protects contents damaged by fire:

  • Coverage C – Personal Property.

Description of DP-3 (Special)

• Nature of DP-3 (Special):

  • Open-peril form covering all perils unless specifically excluded.

Falling Objects Peril

• Coverage for interior damage from falling objects:

  • Covers interior damage only if it results from exterior damage by the falling object.

Definition of Occurrence for Volcanic Activity

• All volcanic activity within 72 hours of each other constitutes 1 occurrence.

Units in Residential Dwellings Insurable

• Maximum of 4 units insurable by a Dwelling policy.

Broad Theft Coverage Addition

• Conditions for broad theft coverage addition:

  • Insured must be the owner-occupant of the dwelling.

Lawsuit Timeframe Against Insurer

• An insured may bring a lawsuit against the insurer within 2 years of a loss.

Coverage for Additional Living Expenses

• Coverage for temporary rental expenses due to fire damage:

  • Coverage E – Additional Living Expenses.

Most Limited Coverage Dwelling Policy Form

• Most limited coverage form:

  • DP-1 (Basic).

Open Peril Coverage on the Building

• Form providing open peril coverage on the building:

  • DP-3 (Special).

Coverage for Guest's Property

• Coverage of guest's property under Coverage C:

  • Covered only when at the insured location.

Pro Rata Personal Property Coverage During Move

• Coverage applies on a pro rata basis at both locations for 30 days while moving.

Replacement Cost Coverage Forms

• Forms paying for replacement cost of a dwelling:

  • DP-2 (Broad) and DP-3 (Special).

Broad Form Dwelling Policy

• Name of the Broad Form Dwelling Policy:

  • DP-2.

Characteristics of Ideally Insurable Risk

• Five characteristics include:

  1. Due to chance

  2. Definite and measurable

  3. Statistically predictable

  4. Not catastrophic

  5. Randomly selected.

Nature of Insurance Contracts

• Aleatory in Nature:

  • Unequal values exchanged between parties.

Pure Risk Definition

• Type of risk where there is only loss:

  • Pure risk.

Insurer's Consideration

• Consideration on behalf of the insurer:

  • A promise to pay in case of loss.

Acceptance in Insurance Contracts

• When acceptance typically occurs:

  • When the insurer approves a prepaid application.

Risk Transfer Methods

• Ways individuals manage risk:

  • Avoidance, transfer, sharing, retention, reduction.

Document to Transact Insurance

• Required document for an insurance company to transact insurance:

  • Certificate of Authority.

Type of Insurer by Domicile

• Insurers classified by domicile:

  • Domestic, foreign, alien.

Outlining Agent Authority Types

• Three types of agent authority:

  • Express, implied, and apparent.

Understanding Warranties in Insurance Contracts

• Definition of warranty in an insurance contract:

  • An absolutely true statement that the policy validity depends on.

Offer in Insurance Contracts

• Time when offer is usually made:

  • When the insurance application is submitted.

Misrepresentation as Fraud

• When a misrepresentation becomes fraud:

  • When it is intentional and significant.

Elements of an Insurance Contract

• Four key elements:

  • Agreement (offer and acceptance)

  • Consideration

  • Competent parties

  • Legal purpose.

Hazards in Insurance

• Definition of hazards:

  • Conditions that increase the chance of a loss.

Unilateral Contract in Insurance

• Definition of a unilateral contract:

  • A one-sided contract where only one party makes an enforceable promise.

Peril in Insurance

• Definition of peril:

  • Causes of loss insured against in an insurance policy.

Definition of Risk

• Risk as a term in insurance:

  • Uncertainty of loss.

Authorized Insurer Definition

• Insurer holding a Certificate of Authority:

  • Known as Authorized or admitted.

Indemnity Provision in Policies

• Provision stating compensation limits:

  • Insured may only be compensated for the amount lost.

Reasonable Expectations in Insurance

• Meaning of reasonable expectations:

  • Coverage expectations based on sources beyond just policy language.

Types of Hazards in Insurance

• Three types of hazards:

  • Physical, moral, and morale.

Law of Agency Agents

• Who represents the principal in an agency relationship:

  • Agent or producer.

Tornado as an Example of Peril

• Tornado destroying property categorized as:

  • Peril.

Proximate Cause Losses

• If insured peril is proximate cause:

  • The loss is classified as a Direct loss.

Types of Property Losses

• Property insurance covers:

  • Direct losses only.

Insuring Agreement Outline

• Part of the insurance contract stating insurer obligations:

  • Insuring agreement.

Indirect Loss Definition

• Loss of income due to fire damage is:

  • Indirect or consequential loss.

Excess Policy Function

• When excess policy pays for a loss:

  • After the primary policy has paid its limits.

Underwriting Information Location

• Basic underwriting info is found in:

  • Declarations section of the policy.

Valid Policy Assignments in Property Insurance

• Requirement for valid policy assignments:

  • Prior written consent of the insurer.

Insurer's Payment Responsibility

• Determined by:

  • Limits of liability as stated in the insurance policy.

Conditions Section of the Policy

• Conditions section defines:

  • General rules/procedures agreed by insurer and insured.

Property Valuation Method

• Valuation method for non-restorable property:

  • Functional replacement cost.

Policy Duration Information

• Policy period noted on:

  • Declarations page.

Provision for Broadened Coverage

• Provision that applies when insurer broadens coverage:

  • Liberalization clause.

Split Limits Overview

• Type of limits separately stated for different coverages:

  • Split limits.

First Named Insured Definition

• First named insured is:

  • The person whose name appears first on the policy declarations.

Actual Cash Value Calculation

• Calculation for ACV:

  • Current replacement cost minus depreciation.

Underwriting Process Definition

• Process insurers use to determine policy issuance:

  • Underwriting.

Insurable Interest in Property Insurance

• When insurable interest must exist:

  • At the time of loss.

Subrogation in Insurance Context

• Insurer's right to seek damages after reimbursing insured:

  • Subrogation.

Direct and Indirect Loss Relationship

• Relation of direct losses to indirect losses:

  • Direct losses can cause indirect losses.

Open Peril Policy Definition

• Coverage that includes all causes of loss except excluded:

  • Open peril (or special) form.

Actual Cash Value Definition

• Definition of actual cash value:

  • Replacement cost at time of loss minus depreciation.

Impact of Higher Deductible on Premium

• Higher deductible effect on property policy premium:

  • A higher deductible lowers the premium.

Application Evaluation Responsibility

• Who evaluates applications for policies:

  • An underwriter.

Contract Addendums in Insurance Policies

• What are printed addendums changing policy terms called:

  • Endorsements.

Adding Additional Insureds to Policy

• How additional insureds are added:

  • By endorsement.

Per Occurrence Sublimit Definition

• Sublimit putting ceiling on claims from single accident:

  • Per occurrence coverage.

Two Types of Property Losses

• Types of losses individuals and businesses exposed to:

  • Direct and indirect losses.

Cancellation vs. Nonrenewal Definition

• Difference between cancellation and nonrenewal:

  • Cancellation: termination prior to expiration.

  • Nonrenewal: termination at expiration date.

HO Form Coverage for Historic Homes

• HO form covering historic homes of higher replacement cost:

  • HO-8 (modified homeowners).

Homeowners Liability Coverage for Suits

• Coverage responding to suits for bodily injury/property damage:

  • Coverage E - Personal Liability.

Coverage for Condominium Unit Owners

• HO Form covering condo unit owners:

  • HO-6.

Indirect or Consequential Loss Protection in Homeowners Policies

• Coverage for indirect loss under homeowners policies:

  • Coverage D – Loss of Use.

Exclusions in Homeowners Coverage

• Common exclusions in homeowners forms:

  • Land

  • Business-use structures

  • Animals/birds/fish

  • Aircraft

  • Rented property

  • Electronic data

  • Motor vehicles

Additional Homeowners Coverages Without Premiums

• Examples include:

  • Debris removal

  • Lawn/plants/shrubs/tree removal

  • Reasonable repairs

  • Fire department service charges.

Liability Coverages in Homeowners Policies

• Two liability coverages in homeowners policies:

  • Coverage E – Personal Liability

  • Coverage F – Medical Payments to Others.

Homeowners vs. Dwelling Policies

• Coverage included in homeowners but not dwelling policies:

  • Liability coverage.

Coverage Exclusions from Medical Payments

• Who is not covered under Coverage F – Medical Payments:

  • The insured or regular residents of the insured’s household (except residence employees).

HO-3 Policy Structure

• How are the dwelling and structures covered in HO-3:

  • On an open-peril basis.

Coverage Type in Section II of Homeowners Insurance

• Type of coverage provided in Section II:

  • Personal liability coverage.

Major Coverages of Homeowners Policy

• Key coverages within homeowners policies include:

  • Coverage A – Dwelling

  • Coverage B – Other Structures

  • Coverage C – Personal Property

  • Coverage D – Loss of Use.

Owner-Occupied Residences Coverage

• Number of owner-occupied residences per covered home allowed by homeowners policies:

  • 1-4 family residences.

Appraisal Request Conditions

• When appraisal is needed:

  • If there’s a disagreement on property loss value; either party can demand in writing.

Contents Broad Form Homeowners Policy

• Homeowners policy known as contents broad form:

  • HO-4.

HO-5 Coverage Overview

• Coverage provided by HO-5:

  • Covers dwelling, other structures, contents, and personal property.

HO-8 Applicability Scenario

• Applicable coverage when replacement coverage cost is unreasonable:

  • HO-8 modified homeowners form.

Most Limited HO Coverage Form

• Most limited HO coverage:

  • HO-8.

Removal Coverage Duration After Property Moved

• Removal coverage applies for how many days once property is moved:

  • 30 days.

General Coverage of Homeowners Policies

• General coverage scope of homeowners policies:

  • Cover dwellings as private residences, including dwelling, other structures, personal property, and liability coverage.

Replacement Cost Requirement Percentage

• Coverage requirement for forms HO-2, HO-3, and HO-5:

  • Must insure for at least 80% of replacement cost.

Mysterious Disappearance Definition

• Definition of mysterious disappearance:

  • Misplaced or lost property without knowledge of location, time, or cause.

Tenant Coverage HO Form

• HO form insuring a tenant in an apartment:

  • HO-4 (tenant broad form).

Reason for HO-4 Lack of Dwelling Coverage

• Why HO-4 does not provide dwelling coverage:

  • Written for tenants who do not own the dwelling.

HO-8 Coverage Writing Approach

• Typical coverage writing for HO-8 forms:

  • Written for market value of the property.

Amount Paid Under Coverage D Determinants

• Amount insurer pays under Coverage D defined by:

  • Amount of coverage on the dwelling.

Theft Coverage Limits Under HO-8

• Theft coverage limits under HO-8 form:

  • Cover losses from theft up to $1,000, with no coverage for theft off premises.

Guest's Property Coverage in HO-8

• Guest property theft coverage under HO-8:

  • Only while property is on the insured premises.

Special Form HO Policy

• HO form known as a special form:

  • HO-3.

Homeowners Policy Coverage Types

• Available coverage forms in homeowners policies:

  • HO-2, HO-3, HO-4, HO-5, HO-6, and HO-8.

Coverage Amount for Personal Property in HO-3

• Insurance amount coverage for personal property under HO-3:

  • At least 50% of the Coverage A limit (except for HO-4 and HO-6).

Underinsured Motorist (UIM) Coverage Applicability

• When UIM coverage applies:

  • When at-fault motorist has insufficient auto insurance for bodily injuries to another motorist.

Coverage for Injury While Driving Own Car

• Coverage for insured injured while driving their car:

  • Part B: Medical Payments.

Categories of Uninsured Motor Vehicles

• Four categories include:

  1. No insurance or liability bond

  2. Insurance less than required by financial responsibility laws

  3. Hit-and-run incidents

  4. Denied coverage or insurer insolvent.

Garage Coverage Form Insured Parties

• Garage Coverage form insures:

  • Auto dealers, service stations, auto repair shops.

Comprehensive Coverage for Auto Damage

• Coverage for damages from collision with a deer:

  • Other Than Collision (Comprehensive).

Exclusions in Liability Section of Personal Auto Policy

• Excluded losses from liability section include:

  • Intentional injuries, damage to owned or transported property, public conveyance use, and unauthorized vehicle use.

Split Limits in Auto Policies

• Indicated by split limits in auto policies:

  • Bodily injury per person, bodily injury per accident, and property damage per accident.

Geographical Region of Auto Policy Coverage

• Out-of-state coverage applies to:

  • Any U.S. state or territory and Canada.

Split Limits of 30/50/25 Explanation

• Maximum payout for injuries to one person in a single accident for split limits of 30/50/25:

  • $30,000.

Combined Single Limit in Personal Auto Policies

• Definition of combined single limit:

  • A single limit covering both bodily injury and property damage in one accident.

Auto Medical Payments Coverage Endorsement

• Modifies policy by adding medical payment coverage to:

  • Commercial auto policy.

Liability Provided in Business Auto Coverage Form

• Liability section coverage in business auto:

  • Pays for injury or property damage to third parties.

Physical Damage Coverage in Personal Auto Policy

• Available coverages in physical damage section:

  • Collision and other-than-collision.

Newly Acquired Auto Definition

• Definition of a newly acquired auto:

  • A vehicle acquired by the insured during the policy period.

Personal Auto Coverage for Travel Expenses

• Coverage paying for travel expenses while involved in settlement:

  • Part A: Liability.

Equivalent Combined Single Limit Calculation

• Equivalent combined single limit for a liability limit of 40/60/20:

  • $80,000.

Uninsured Motorist Coverage Activation Conditions

• Applicable scenarios for uninsured motorist coverage:

  • When the other party is legally liable yet uninsured.

Limit of Liability for Part D Coverage in Auto Policy

• Limit applicable for Coverage for Damage to Your Auto:

  • The lesser of the actual cash value of the vehicle or the amount required to repair or replace.

Definition of "You" in Personal Auto Policy

• What "you" refers to in a personal auto policy:

  • The named insured and spouse (if resident of the same household).

Property Damage Coverage Limit for Split Limits

• Coverage for property damage in accident for split limits of 30/50/25:

  • $25,000.

Auto Coverage for Hit-and-Run Accidents

• Applicable coverage type in hit-and-run accidents:

  • Uninsured Motorist Coverage.

Medical Payments After Accident Timeframe

• Time period for medical payments coverage under Personal Auto Policy:

  • 3 years post-accident.

Garage Liability Coverage Parts

• Two parts of Garage Liability Coverage:

  • Garage Operations – Covered Autos

  • Garage Operations – Other than Covered Autos.

Underinsured Motorist Coverage Difference

• Coverage difference between insured’s UIM limits and at-fault driver's insurance limits.

Rented Vehicle Classification

• Type of auto rental classification:

  • Hired auto.

Transport Expenses Coverage After Theft

• Time coverage begins for theft of a covered vehicle:

  • After 48 hours of theft occurrence.

Insured Parties Under Part A of Personal Auto Policy

• Who is considered insured under Part A:

  • Vehicle owner, family members, or any person using the covered auto with permission.

Numerical Symbols Activity in Auto Policies

• Purpose of numerical symbols in auto policies:

  • Define the type of vehicle insured for specific coverages.

Definition of Covered Auto

• What constitutes a covered auto:

  • A vehicle specifically mentioned in the policy declarations.

Commercial Auto Insurance Coverage Forms

• Coverage forms in commercial auto insurance include:

  • Business Auto Coverage Form, Business Auto Physical Damage Coverage Form, Garage Coverage Form, Motor Carrier Coverage Form.

Coverage under Commercial General Liability (CGL)

• Coverage A of the CGL form provides protection for:

  • Injuries or death to third parties or damage to third-party property.

Property Under Inland Marine Insurance

• Type of property covered under Inland Marine insurance:

  • Property that is portable on land, including means of transportation and communication.

Commercial Inland Marine Policies Transporting Property

• Who transports property for hire under inland marine policies:

  • Common carriers.

Claims-Made Liability Form Date

• Date signifying earliest coverage under claims-made form:

  • Retroactive date.

Monoline Policy Definition

• What is a monoline policy:

  • Policy consisting of declarations, conditions, endorsements, and attachments for a single line of insurance.

Coverage for Money Theft from Messenger

• Required coverage for crime policy to address money theft:

  • Outside the Premises coverage.

Occurrence Form Trigger Explanation

• What the occurrence form trigger is based on:

  • Date of injury or damage.

Single Accident in Equipment Breakdown Coverage

• Definition of single accident in Equipment Breakdown coverage:

  • All accidents occurring at a single location, simultaneously, from the same cause.

Personal vs. Advertising Injury Definition

• Difference between personal injury and advertising injury:

  • Personal injury involves individuals; advertising injury pertains to business-related nonphysical injuries.

Shared Loss Obligations in Other Insurance

• What the insurer owes when other insurance parallels a Commercial Property policy:

  • A share of the loss.

Aggregate Limit in Coverage Context

• What the aggregate limit stipulates for coverage:

  • Maximum amount an insurer will pay for all losses during a policy period.

Commercial Package Policies (CPP) Cancellation Authority

• Who may cancel a CPP in writing:

  • The first-named insured.

Commercial Property Coverage Forms

• Three forms available for commercial property coverage:

  • Basic, Broad, and Special.

Legal Liability Coverage Form Scope

• What is covered under the Legal Liability Coverage Form:

  • Property in the insured’s care, custody, or control.

Broadest Coverage in Commercial Crime Form

• Broadest coverage offered in Commercial Crime policies:

  • Theft coverage.

Coverage Triggers in Commercial Crime Policies

• Two triggers for coverage in Commercial Crime policies:

  • Discovery Form and Loss Sustained Form.

Coverage Parts in Commercial Package Policy (CPP)

• Possible coverage parts in a CPP:

  • Commercial property, general liability, crime, equipment breakdown, auto, inland marine, and farm.

Commercial Floater Definition

• What is a commercial floater:

  • An Inland Marine policy for covering movable commercial property.

Advertising Injury Form Coverage Definition

• Types of perils covered by the Advertising Injury Form:

  • Libel, slander, defamation, violation of privacy, copyright infringement.

Components of a Commercial Policy

• Components that make up a Commercial Policy:

  • Policy cover, policy declarations, interlines endorsements, lines of insurance forms, common policy conditions, causes of loss forms, endorsements.

Supplementary Payments in Liability Insurance

• How supplementary payments are handled in liability insurance:

  • Paid in addition to limits of liability.

Interline Endorsements Purpose

• Purpose of interline endorsements in CPPs:

  • To eliminate redundancy and reduce policy endorsements.

Property Covered Under Builder's Risk Coverage

• What type of property is covered under Builder’s Risk Coverage Form:

  • The building, temporary structures, foundations, fixtures, equipment, and materials within 100 feet.

Commercial Liability Policy Insured Entities

• Entities that can be insured under a General Liability policy:

  • Sole proprietors, partnerships, and corporations.

CGL Coverage Types

• Three liability coverages in Commercial General Liability (CGL):

  • Coverage A – Bodily injury and property damage

  • Coverage B – Personal and advertising injury

  • Coverage C – Medical payments.

Claims-Made Form Purpose

• Purpose of a claims-made form:

  • To cover for bodily injuries or property damage reported during the policy period.

Employee Theft Coverage in Crime Policy

• Employee theft coverage covers:

  • Losses resulting from theft by employees.

Occurrence Policy Definition

• Definition of liability policy covering claims during policy period:

  • An occurrence policy.

Interline Endorsements in CPP Purpose

• Objective of interline endorsements in CPPs:

  • Minimize redundancy and endowment of policy endorsements.

Medical Payments Under CGL Coverage

• Types of expenses in Coverage C – Medical Payments in CGL:

  • Medical, surgical, hospital, or funeral expenses for third parties due to insured's business operations.

Businessowners Policy Definition

• Definition of a businessowners policy:

  • Package policy combining both property and liability coverage.

Business Liability Coverage Functions

• Coverage provided by business liability coverage form:

  • Bodily injury, property damage, personal injury, advertising injury, and medical expenses.

Businessowners Policy Similarities to Homeowners

• Businessowners policy is mostly similar to:

  • Homeowners Insurance.

Businessowners Policy Type Description

• Businessowners policy classification:

  • Prepackaged, stand-alone policy.

Businessowners Policy Maximum Medical Expense Period

• Maximum time for necessary medical expenses coverage under businessowners policy:

  • 1 year.

Exclusions from Businessowners Policy Coverage

• Types of businesses excluded from businessowners coverage:

  • Auto sales/service, large banks, bars/grills, amusement venues, manufacturing.

Businessowners Policy Premium Payment Structure

• Premium for businessowners policy payment style:

  • As one indivisible premium.

Coverage Territory in Businessowners Policies

• Coverage territory included in businessowners policies:

  • U.S. territories, possessions, Puerto Rico, and Canada.

Businessowners Policy Cancellation Process

• When can an insured cancel a businessowners policy:

  • At any time with written notice.

Businessowners Policy Eligibility Criteria

• Types of businesses qualifying for coverage under businessowners policy:

  • Small to medium size businesses.

Workers Compensation Insurance Parts

• Two main parts of workers compensation insurance:

  • Part I is workers compensation

  • Part II is employers liability.

Second Injury Fund Definition

• What is a second injury fund:

  • A program addressing additional benefits for employees with previous injuries.

Workers Compensation Insurance Primary Purpose

• Primary purpose of Workers Compensation insurance:

  • To provide benefits for employee injuries arising from employment.

Employers Liability Insurance Purpose

• Purpose of employers liability insurance:

  • Protects against situations outside state workers compensation law.

Monopolistic State Fund vs. Competitive Market

• Difference explained:

  • In monopolistic funds, insurance is mandated through state-operated entities; in competitive markets, purchased from authorized insurers.

Four Types of Workers Compensation Benefits

• Benefits offered by Workers Compensation insurance:

  • Medical payments

  • Disability income

  • Rehabilitation expenses

  • Death benefits.

Exclusive Remedy Meaning

• Meaning of exclusive remedy in this context:

  • Injured employees cannot pursue claims outside of workers compensation framework.

Residual Markets Objective

• Purpose of residual markets:

  • To cover risks typically non-insurable in standard markets.

Deductible in Liability Umbrella Policies

• Specific deductible term in liability umbrella policies:

  • Self-insured retention (SIR).

Minimum Umbrella Policy Coverage

• Minimum additional coverage provided by umbrella policies:

  • $1 million.

Surety Bonds Parties Overview

• Parties involved in a surety bond:

  • Principal (or obligor), obligee (or insured), and guarantor (or surety).

Umbrella Policy Coverage Type

• Type of coverage offered by umbrella policies:

  • Excess coverage over primary policy.

Nonadmitted Insurers Clarification

• Nonadmitted insurers permitted to conduct business in a state:

  • Surplus lines insurers.

Surety Bonds Purpose Explanation

• Objective of surety bonds:

  • To guarantee specific duties and obligations of the principal.

National Flood Insurance Issuance Locations

• Where National Flood Insurance can be issued:

  • Participating flood-prone areas only.

NFIP Program Purpose

• Purpose of National Flood Insurance Program (NFIP):

  • To bridge coverage gaps left by private insurers for floods.

Surplus Lines Insurer Sales Conditions

• When insurance can be sold through a surplus lines insurer:

  • If the coverage cannot be obtained through an authorized carrier.

Comprehensive Liability Coverage Requirement

• Coverage needed for total liability exposure:

  • Commercial General Liability (CGL) and Professional Liability.

Medical Professional Liability Coverage

• Type of liability coverage needed by medical doctors:

  • Medical malpractice coverage.

Professional Liability Coverage Explanation

• Protection provided by Professional Liability coverage against:

  • Errors and omissions.

specialized Professional Liability Insurance Examples

• Types include:

  • Medical malpractice, agents/brokers errors and omissions, directors/officers liability.

Insurance Agent Definition

• Who is an insurance agent:

  • A person authorized to sell, solicit and negotiate insurance contracts.

Misrepresentation Types Explained

• Type of misrepresentation that leads to policy switch:

  • Twisting.

Authorized Insurer Definition Confirmation

• Insurer approved to conduct business in a state, meets financial criteria:

  • Authorized or admitted status.

Fraud Misrepresentation Conditions

• Conditions for a misrepresentation to be considered fraud:

  • Intentional and material.

Producer Misrepresentation Consequences

• Illegal act of representing a policy favorably when not true:

  • Misrepresentation.

License Types Representation Clarification

• Type of licensee representing the insurance company:

  • The agent.

Defamation in Insurance Context

• Malicious criticism of another insurer is termed:

  • Defamation.

Exclusion from Producer Licensing Requirements

• Who can be excluded from insurance licensing requirements:

  • Insurance company officers, directors, or employees not transacting insurance.

Producer Change of Address Notification Requirement

• Who must be notified of a producer's address change:

  • The Department of Insurance (Commissioner/Director/Superintendent).

Certificate of Authority Definition

• What is a Certificate of Authority:

  • Document empowering an insurer to become admitted.

Fiduciary Responsibility Definition

• Requirement for agents regarding collected insurance funds:

  • Fiduciary responsibility to account for and remit promptly.

Classification of Insurers by Domicile

• Three types classified by domicile:

  • Domestic, foreign, alien.

Insurer Examination Costs Responsibility

• Who bears costs for insurer examination:

  • The insurer undergoing examination.

Controlled Business Legality Definition

• Legal standing of controlled business:

  • When commissions from controlled business do not exceed totals from all other business.

Offering Free Tickets Misconduct Explanation

• Guilt incurred by an agent in offering free tickets for policy purchase:

  • Rebating.

Cease and Desist Order Purpose Explanation

• Objective of a cease and desist order:

  • To prevent further law violations in insurance transactions.

Discrimination in Insurance Pricing Definition

• Charged different rates due to insignificant factors termed as:

  • Discrimination.

Cease and Desist Order Issuance Conditions

• Order issued when unfair competition or practices occur:

  • Cease and desist order.

Nonresident Agent Definition

• Who qualifies as a nonresident agent:

  • Agent residing and licensed in another state but authorized to transact insurance here.

Common Penalties for Insurance Statutes Violations

• Penalties for violating insurance statutes include:

  • Cease and desist orders, fines, license suspension or revocation.

Commissioner or Director Examination Timing

• Examination timing for insurers by the regulator:

  • Whenever necessary, at least every few years.

Foreign Insurer Definition Confirmation

• Type of insurer formed under another state's laws:

  • Foreign.

Producer License Renewal Prerequisites

• Requirements for renewing a producer's license:

  • Complete continuing education hours and pay a renewal fee.

Certificate of Authority Issuance Scope

• To whom can a Certificate of Authority be issued:

  • To insurers authorized to transact business in that state.

Authorized Insurer Description

• Insurer holding Certificate of Authority:

  • Termed as authorized or admitted.