RMIN 5540 FINAL EXAM 3 QUESTIONS AND ANSWERS
Nuclear Verdict - CORRECT ANSWER✅✅✅When awarded losses were much higher than expected.
Reasons auto claims are skyrocketing - CORRECT ANSWER✅✅✅Cars are computerized and more
expensive to fix after crashes, technology in basic car parts like bumpers and windows, cars being
totaled due to supply chain issues, and we know more about dangers of injuries.
Foreign DIC (difference in conditions) - CORRECT ANSWER✅✅✅Type of policy that covers gaps in
policies bought in other countries that are written in other languages. This policy would provide
coverage if the local policies don't provide all the needed coverage.
Price Per Million - CORRECT ANSWER✅✅✅Gets let expensive as you move up in the tower because
the policy is less likely to be used.
Premium/How many millions - CORRECT ANSWER✅✅✅Formula for price per million on layers.
Rate Relativity - CORRECT ANSWER✅✅✅Refers to the cost of the layer in comparison to the layer
below.
Layer 2 price per million (above layer) / Layer 1 price per million (below layer) - CORRECT
ANSWER✅✅✅Formula for rate relativity.
Standard Insured Retention (SIR) - CORRECT ANSWER✅✅✅Sometimes the umbrella policy is
broader than the primary policies and will drop down to the __________________________ and
provide coverage up to a $25,000 limit. The excess policy does not typically do this.
Worldwide - CORRECT ANSWER✅✅✅Standard coverage territory for an umbrella policy.
Included in the limit - CORRECT ANSWER✅✅✅$1,000 deductible vs $1,000 SIR with $10,000 limit.
The deductible is _____________________ and the SIR is not. Therefore, remember SIR/deductibles in
claims calculations.
, Follow Form, Stand Alone (Self-Contained) - CORRECT ANSWER✅✅✅Excess policies typically don't
provide broader coverage than primary policies and usually are _______________________ or
_______________________ policies or a combination of both.
Follow Form - CORRECT ANSWER✅✅✅Follow terms and conditions of underlying and most follow
terms and conditions of underlying so long as they do not conflict with their own t&cs.
Self-Contained Excess (Stand Alone) - CORRECT ANSWER✅✅✅Does not consider coverage provided
in u/l policies. Therefore, gaps can occur. Some policies will specifically state that they will provide
excess limits over reduced or exhausted limits for specific occurrences even if not provided in the stand-
alone policy. This ignores the underlying policies if you make it to its attachment point.
Attachment Point - CORRECT ANSWER✅✅✅Where the policy sits in the tower. AKA, how much
coverage is provided below the policy that would have to be used in order for the policy to apply.
Specific Aggregate and Excess - CORRECT ANSWER✅✅✅AKA "Stop Loss." Commonly used over self-
insured WC plans, but can be used for any type of Liability. Requires that the insured retain a specific
dollar amount in the form of an SIR which is much higher than a deductible.
Specific Excess - CORRECT ANSWER✅✅✅Requires a single loss to exceed a per occurrence
retention.
Aggregate Excess - CORRECT ANSWER✅✅✅Requires that the cumulative costs of all losses exceed
an aggregate retention.
Quota Share (Shared Layers) - CORRECT ANSWER✅✅✅Split pro rata. Example: 25 M po 50 M means
split 50%/50% each insurer carrying 25 M in coverage excess of underlying policies.
Aggregate - CORRECT ANSWER✅✅✅Umbrella and excess layers have ____________________
limits.
Limits are exhausted - CORRECT ANSWER✅✅✅The duty to defend ends when the layers...
Nuclear Verdict - CORRECT ANSWER✅✅✅When awarded losses were much higher than expected.
Reasons auto claims are skyrocketing - CORRECT ANSWER✅✅✅Cars are computerized and more
expensive to fix after crashes, technology in basic car parts like bumpers and windows, cars being
totaled due to supply chain issues, and we know more about dangers of injuries.
Foreign DIC (difference in conditions) - CORRECT ANSWER✅✅✅Type of policy that covers gaps in
policies bought in other countries that are written in other languages. This policy would provide
coverage if the local policies don't provide all the needed coverage.
Price Per Million - CORRECT ANSWER✅✅✅Gets let expensive as you move up in the tower because
the policy is less likely to be used.
Premium/How many millions - CORRECT ANSWER✅✅✅Formula for price per million on layers.
Rate Relativity - CORRECT ANSWER✅✅✅Refers to the cost of the layer in comparison to the layer
below.
Layer 2 price per million (above layer) / Layer 1 price per million (below layer) - CORRECT
ANSWER✅✅✅Formula for rate relativity.
Standard Insured Retention (SIR) - CORRECT ANSWER✅✅✅Sometimes the umbrella policy is
broader than the primary policies and will drop down to the __________________________ and
provide coverage up to a $25,000 limit. The excess policy does not typically do this.
Worldwide - CORRECT ANSWER✅✅✅Standard coverage territory for an umbrella policy.
Included in the limit - CORRECT ANSWER✅✅✅$1,000 deductible vs $1,000 SIR with $10,000 limit.
The deductible is _____________________ and the SIR is not. Therefore, remember SIR/deductibles in
claims calculations.
, Follow Form, Stand Alone (Self-Contained) - CORRECT ANSWER✅✅✅Excess policies typically don't
provide broader coverage than primary policies and usually are _______________________ or
_______________________ policies or a combination of both.
Follow Form - CORRECT ANSWER✅✅✅Follow terms and conditions of underlying and most follow
terms and conditions of underlying so long as they do not conflict with their own t&cs.
Self-Contained Excess (Stand Alone) - CORRECT ANSWER✅✅✅Does not consider coverage provided
in u/l policies. Therefore, gaps can occur. Some policies will specifically state that they will provide
excess limits over reduced or exhausted limits for specific occurrences even if not provided in the stand-
alone policy. This ignores the underlying policies if you make it to its attachment point.
Attachment Point - CORRECT ANSWER✅✅✅Where the policy sits in the tower. AKA, how much
coverage is provided below the policy that would have to be used in order for the policy to apply.
Specific Aggregate and Excess - CORRECT ANSWER✅✅✅AKA "Stop Loss." Commonly used over self-
insured WC plans, but can be used for any type of Liability. Requires that the insured retain a specific
dollar amount in the form of an SIR which is much higher than a deductible.
Specific Excess - CORRECT ANSWER✅✅✅Requires a single loss to exceed a per occurrence
retention.
Aggregate Excess - CORRECT ANSWER✅✅✅Requires that the cumulative costs of all losses exceed
an aggregate retention.
Quota Share (Shared Layers) - CORRECT ANSWER✅✅✅Split pro rata. Example: 25 M po 50 M means
split 50%/50% each insurer carrying 25 M in coverage excess of underlying policies.
Aggregate - CORRECT ANSWER✅✅✅Umbrella and excess layers have ____________________
limits.
Limits are exhausted - CORRECT ANSWER✅✅✅The duty to defend ends when the layers...
