Property and Casualty Insurance EXAM
Specific insurance
This type of insurance designates a particular item to be insured
Blanket insurance
This type of insurance covers more than one item of property at a single location or one
more items of property at multiple locations.
Speculative
possibility of both gain and loss. Not insurable.
Pure
only the possibility of loss. Insurable.
What are the 5 methods of managing or handling risk?
avoid, control, retain, and transfer risk.
Hazard
A condition or situation which increases the chance for loss
Physical Hazards
a hazard that arises from the condition, occupancy, or use of the property itself.
ex: skateboard left on the steps
Moral Hazards
when an individual through carelessness or by irresponsible actions can increase the
possibly for a loss.
ex: person who drives carelessly just because they know they are insured.
Morale Hazards
when a person might create a loss situation on purpose just to collect from the insurance
company.
,ex: Prearranged, faked theft of someone's old vehicle so they can get an insurance payout to
buy a new vehicle.
Replacement Cost
The amount of money it would take to replace a damaged or destroyed item with one of like
kind and quality AT THE TIME OF LOSS. No deduction for depreciation.
Actual Cash Value (ACV)
Replacement Cost, minus depreciation.
Pair and Set Clause
Loss to one item of a pair or set does not constitute loss to the entire pair or set.
Appraisal
A method of resolving disputes between insurers and insureds over the amount owed on a
covered loss.
-both parties select an appraiser
-the two appraisers select an umpire
-if the appraisers do not agree, the umpire is consulted
-the amount agreed on by 2 out of 3 is the amount that will be paid
Subrogation
An insurer's right to recover the amount of its loss payment from the third party who is legally
responsible for the loss.
Arbitration
this condition is similar to the Appraisal Condition but it is not limited to disputes over the
value of the loss. It may also be used to resolve other areas of disagreement between the
insured and the insurance company.
What does WC SHAVVER stand for?
Windstorm, Civil commotion, Smoke, Hail, Aircraft, Vehicles, Volcanic eruption, Explosion,
Riot
What does BIG AFFECT stand for?
Burglar damage, Ice & snow weight, Glass breakage, Accidental discharge, Falling objects,
Freezing of pipes, Electrical damage, Collapse, Tearing apart.
,Insolvency
A financial state that occurs if liabilities are greater than assets.
Law of Agency
Knowledge of the Agents is Knowledge of the Principal (Insurance Company)
Principal
Insurance Company
What is the ISO?
Insurance Services Office which is an organization established for the benefit of its member
insurance companies. This organization gathers statistics, provides loss costs, drafts policy
forms and coverage provisions and conducts inspections for rate making purposes.
Coinsurance Clause
Requires the insured to carry a minimum specified amount (generally 80%) of the
replacement cost value of the insured property in order for partial losses to be paid in full.
Estoppel
A legal bar to changing or denying a fact because of one's own previous actions or words to
the contrary.
ex: If an insurance company representative intentionally or unintentionally gives the
impression that a specific fact exists when it does not and a client relies on that impression
and is damaged a result.
Binder
A temporary contract of insurance, oral or written, offered by an insurer pending issuance of
the policy. Usually written for a period of 30-60 days and remains in force for that period or
until a permanent policy is either issued or denied by the insurer.
Warranty
A provision in a policy that pledges that a condition does exist or will exist at some time in
the future.
Deposit Premium
Tentative charge made at the beginning of certain policies and reinsurance agreements to be
adjusted when the actual earned charge has been later determined.
, Audit
Verification of books or accounts to determine their accuracy.
Occurrence
An accident, including continuous or repeated exposure to the same harmful conditions,
which result in bodily injury or property damage.
Special Damages
type of compensatory damages that reimburse the injured part for direct and specific
expenses involved in the loss. Such as medical expenses, funeral expenses and loss
wages.
General Damages
type of compensatory damages that reimburse the injured party for such things as pain and
suffering and disfigurement.
Punitive Damages
type of damages intended to punish the defendant and make an example out of her to
discourage others from behaving the same way.
Proximate Cause
An act, through an uniterrupted chain of events, that can be determined to be the immediate
or actual cause of a loss.
4 elements of negligence
1. The existence of a DUTY to act in a certain way
2. A FAILURE to live up to this duty
3. An actual INJURY must occur
4. The failure in duty must be the PROXIMATE CAUSE of the injury.
Negligence
An unreasonable or prudent act, A thoughtless or careless act or one committed out of
ignorance. It may be a non-act or omission, but it is NEVER an intentional act.
Casualty Insurance
Refers to coverage designed to address the liability of individuals and organizations resulting
from negligent acts in their personal, business, or professional roles.
Overinsurance
Specific insurance
This type of insurance designates a particular item to be insured
Blanket insurance
This type of insurance covers more than one item of property at a single location or one
more items of property at multiple locations.
Speculative
possibility of both gain and loss. Not insurable.
Pure
only the possibility of loss. Insurable.
What are the 5 methods of managing or handling risk?
avoid, control, retain, and transfer risk.
Hazard
A condition or situation which increases the chance for loss
Physical Hazards
a hazard that arises from the condition, occupancy, or use of the property itself.
ex: skateboard left on the steps
Moral Hazards
when an individual through carelessness or by irresponsible actions can increase the
possibly for a loss.
ex: person who drives carelessly just because they know they are insured.
Morale Hazards
when a person might create a loss situation on purpose just to collect from the insurance
company.
,ex: Prearranged, faked theft of someone's old vehicle so they can get an insurance payout to
buy a new vehicle.
Replacement Cost
The amount of money it would take to replace a damaged or destroyed item with one of like
kind and quality AT THE TIME OF LOSS. No deduction for depreciation.
Actual Cash Value (ACV)
Replacement Cost, minus depreciation.
Pair and Set Clause
Loss to one item of a pair or set does not constitute loss to the entire pair or set.
Appraisal
A method of resolving disputes between insurers and insureds over the amount owed on a
covered loss.
-both parties select an appraiser
-the two appraisers select an umpire
-if the appraisers do not agree, the umpire is consulted
-the amount agreed on by 2 out of 3 is the amount that will be paid
Subrogation
An insurer's right to recover the amount of its loss payment from the third party who is legally
responsible for the loss.
Arbitration
this condition is similar to the Appraisal Condition but it is not limited to disputes over the
value of the loss. It may also be used to resolve other areas of disagreement between the
insured and the insurance company.
What does WC SHAVVER stand for?
Windstorm, Civil commotion, Smoke, Hail, Aircraft, Vehicles, Volcanic eruption, Explosion,
Riot
What does BIG AFFECT stand for?
Burglar damage, Ice & snow weight, Glass breakage, Accidental discharge, Falling objects,
Freezing of pipes, Electrical damage, Collapse, Tearing apart.
,Insolvency
A financial state that occurs if liabilities are greater than assets.
Law of Agency
Knowledge of the Agents is Knowledge of the Principal (Insurance Company)
Principal
Insurance Company
What is the ISO?
Insurance Services Office which is an organization established for the benefit of its member
insurance companies. This organization gathers statistics, provides loss costs, drafts policy
forms and coverage provisions and conducts inspections for rate making purposes.
Coinsurance Clause
Requires the insured to carry a minimum specified amount (generally 80%) of the
replacement cost value of the insured property in order for partial losses to be paid in full.
Estoppel
A legal bar to changing or denying a fact because of one's own previous actions or words to
the contrary.
ex: If an insurance company representative intentionally or unintentionally gives the
impression that a specific fact exists when it does not and a client relies on that impression
and is damaged a result.
Binder
A temporary contract of insurance, oral or written, offered by an insurer pending issuance of
the policy. Usually written for a period of 30-60 days and remains in force for that period or
until a permanent policy is either issued or denied by the insurer.
Warranty
A provision in a policy that pledges that a condition does exist or will exist at some time in
the future.
Deposit Premium
Tentative charge made at the beginning of certain policies and reinsurance agreements to be
adjusted when the actual earned charge has been later determined.
, Audit
Verification of books or accounts to determine their accuracy.
Occurrence
An accident, including continuous or repeated exposure to the same harmful conditions,
which result in bodily injury or property damage.
Special Damages
type of compensatory damages that reimburse the injured part for direct and specific
expenses involved in the loss. Such as medical expenses, funeral expenses and loss
wages.
General Damages
type of compensatory damages that reimburse the injured party for such things as pain and
suffering and disfigurement.
Punitive Damages
type of damages intended to punish the defendant and make an example out of her to
discourage others from behaving the same way.
Proximate Cause
An act, through an uniterrupted chain of events, that can be determined to be the immediate
or actual cause of a loss.
4 elements of negligence
1. The existence of a DUTY to act in a certain way
2. A FAILURE to live up to this duty
3. An actual INJURY must occur
4. The failure in duty must be the PROXIMATE CAUSE of the injury.
Negligence
An unreasonable or prudent act, A thoughtless or careless act or one committed out of
ignorance. It may be a non-act or omission, but it is NEVER an intentional act.
Casualty Insurance
Refers to coverage designed to address the liability of individuals and organizations resulting
from negligent acts in their personal, business, or professional roles.
Overinsurance
