AR Property & Casualty flashcards

31 cards. Read the term and the definition here. The deck at the top of this page is optional.

Arkansas Insurance Commissioner

Appointed by the Governor, this official heads the Arkansas Insurance Department, issuing licenses and enforcing state insurance statutes and regulations.

Producer continuing education

Arkansas resident producers must complete 24 credit hours every two years, including 3 hours of ethics, in order to renew a license.

Reporting administrative action

An Arkansas producer must notify the Insurance Commissioner within 30 days after another state takes an administrative action against the producer's license.

Rebating

Offering any inducement not stated in the policy, such as cash or gifts, to persuade a buyer to purchase insurance; an unlawful trade practice.

Fiduciary premium handling

Premiums collected by a producer belong to the insurer or the insured and must be held in trust, separate from the producer's own funds.

Arkansas guaranty association

Pays covered claims of policyholders of insolvent member property and casualty insurers, within statutory caps, and is funded by assessments on insurers.

Unlicensed insurance activity

Soliciting, negotiating, or selling insurance without a license is prohibited and subject to cease-and-desist orders, monetary fines, and criminal penalties.

Examination authority

The Arkansas Commissioner may examine the books and records of insurers and producers, and the examined insurer generally pays the examination costs.

Risk

Uncertainty about a potential loss; in insurance it is the chance of financial loss, measured by the frequency and severity of exposures.

Peril versus hazard

A peril is the cause of loss, such as fire or windstorm; a hazard is a condition that increases the chance or severity of that loss.

Moral hazard

A condition of dishonesty or poor character in the insured that increases the likelihood of an intentional loss, such as arson for insurance proceeds.

Principle of indemnity

Insurance restores the insured to approximately the same financial position held before the loss, never allowing a profit from the recovery.

Subrogation

After paying a loss, the insurer acquires the insured's legal right to recover the amount paid from the negligent third party who caused it.

Aleatory contract

An insurance contract in which the amounts exchanged are unequal and depend on chance, since the insured pays premiums for a conditional promise.

Contract of adhesion

A policy prepared by the insurer and offered on a take-it-or-leave-it basis, so ambiguities are construed against the party that drafted it.

Apparent authority

Authority a producer appears to have based on the insurer's representations, which binds the insurer even when no actual authority was granted.

HO-3 special form

Covers the dwelling and other structures against open perils and personal property against named perils; the most widely used homeowners form.

Coverage D loss of use

Pays additional living expenses and fair rental value when the residence cannot be lived in because of a covered loss.

HO-4 renters policy

Covers the tenant's personal property and personal liability; the building itself is insured by the landlord, not by the tenant.

Replacement cost versus ACV

Replacement cost pays the price of new property today with no depreciation deducted; actual cash value subtracts depreciation from that replacement cost.

Commercial property coinsurance

Requires insurance equal to a stated percentage of value, often 80%; a lower limit reduces recovery by (carried divided by required) times the loss.

Flood insurance

Flood is excluded by homeowners policies; coverage is bought separately from NFIP, with residential maximums of $250,000 on the building and $100,000 on contents.

DP-3 dwelling form

Provides open-peril coverage on the dwelling of non-owner-occupied or otherwise ineligible risks; liability must be added by endorsement.

Ordinance or law exclusion

Excludes the extra cost to repair or rebuild to current building code; limited coverage can be added by endorsement to property forms.

Claims-made trigger

Covers claims first reported during the policy period, subject to an agreed retroactive date; extended reporting periods can lengthen the reporting window.

CGL Coverage B

Personal and advertising injury coverage for offenses such as libel, slander, false arrest, wrongful eviction, and infringement of advertising ideas.

Combined single limit

One dollar amount applies to all bodily injury and property damage arising from a single accident, instead of separate per-person and per-accident limits.

Uninsured motorists coverage

Pays the insured for bodily injury caused by a driver who has no liability insurance, whose insurer is insolvent, or who leaves the scene.

Exclusive remedy rule

Statutory workers compensation benefits are the employee's sole remedy against the employer for work injuries, replacing negligence lawsuits with no-fault benefits.

Umbrella policy

Provides excess limits above required underlying policies and can drop down to cover gaps over a self-insured retention.

Self-insured retention

A dollar amount the insured pays out of pocket before an excess or umbrella policy responds to a loss not covered by underlying insurance.