CO Property & Casualty flashcards

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

Insurable interest

A financial interest in the person or property insured such that loss would cause monetary detriment; required at policy inception for life insurance and at time of loss for property insurance.

Indemnity principle

The principle that a loss payment should restore the insured to approximately the pre-loss financial position, no better and no worse; actual cash value embodies indemnity.

Utmost good faith

The insurance principle requiring both parties to disclose material facts; material misrepresentation or concealment may allow the insurer to void the policy.

Aleatory contract

A contract in which the amounts exchanged by the parties are unequal and depend on an uncertain event, as with insurance premiums versus claim payments.

Contract of adhesion

A policy drafted by the insurer and offered on a take-it-or-leave-it basis; because the insured has no bargaining power, ambiguities are construed against the insurer.

Subrogation

The insurer's right, after paying a loss, to step into the insured's shoes and recover from the responsible third party, preventing double recovery by the insured.

Pure risk

A risk that involves only the possibility of loss or no loss, with no chance of gain; insurance is designed to handle pure risks.

Law of large numbers

A statistical principle holding that as the number of similar exposure units increases, actual loss experience becomes more predictable and approaches expected losses.

Actual cash value

The indemnity valuation equal to replacement cost minus depreciation; it pays the depreciated value of damaged property rather than the cost of new property.

Replacement cost

A valuation that pays the cost to repair or replace damaged property with new property of similar kind and quality, without deducting depreciation.

Coinsurance clause

A property provision requiring the insured to carry a minimum percentage of property value; payment equals carried limit divided by required limit, times the loss.

HO-3 special form

A homeowners form covering the dwelling and other structures on an open-peril basis and personal property on a named-peril basis.

HO Coverage C special limits

Dollar caps in homeowners policies that restrict coverage for categories such as money, jewelry, silverware, firearms, and business property, regardless of the overall Coverage C limit.

Mortgagee clause

A provision protecting a lender's interest in insured property; the lender receives loss payments to the extent of its interest and is entitled to notice of cancellation.

Business income coverage

Commercial property coverage that pays lost net income and continuing expenses during the period of restoration after a covered loss, often after a 72-hour waiting period.

Inland marine coverage

Coverage for movable property, property in transit, and property of others, often written on floater forms that follow the property.

Occurrence CGL form

A commercial general liability form that covers injury or damage occurring during the policy period, regardless of when the claim is later reported.

Claims-made CGL form

A liability form that covers claims first made during the policy period; a retroactive date excludes coverage for acts occurring before that date.

Combined single limit

An auto liability limit expressed as one total dollar amount per accident that can be allocated among bodily injury and property damage claims.

Business auto symbols

Numbered designations in the business auto coverage form that identify which autos are covered, such as symbol 1 for any auto.

Workers compensation exclusive remedy

The rule that statutory workers compensation benefits are the employee's exclusive remedy against the employer for work-related injury, generally barring tort suits.

Umbrella policy

A policy providing excess limits over underlying insurance and, subject to a self-insured retention, dropping down to cover gaps in underlying coverage.

Negligence elements

The four elements a claimant must prove in a negligence action: a duty owed, breach of that duty, proximate cause, and actual damages.

Premises liability invitee

A person invited onto premises for the owner's benefit, such as a customer; the owner owes the highest duty to inspect and warn of hazards.

Colorado Division of Insurance

The state agency within the Department of Regulatory Agencies (DORA) that regulates insurers, producers, and insurance transactions in Colorado.

Colorado Commissioner of Insurance

The official appointed by the Governor to head the Colorado Division of Insurance and enforce the state's insurance laws.

Producer appointment

An insurer's authorization filed with the Colorado Division of Insurance that allows a licensed producer to act on the insurer's behalf; it must precede solicitation.

Colorado CE requirement

Colorado producers must complete 24 hours of continuing education every two years, including 3 hours of ethics, to renew their licenses.

Colorado cancellation notice

For property and casualty policies, Colorado requires 10 days' written notice of cancellation for nonpayment of premium and 30 days' notice for other reasons.

Colorado auto minimum limits

Colorado requires bodily injury liability limits of at least $25,000 per person and $50,000 per accident, plus $15,000 property damage liability.

Colorado FAIR Plan

A residual-market program that provides basic property insurance to Colorado applicants who cannot obtain coverage from voluntary-market insurers.

Colorado comparative negligence

Colorado uses modified comparative negligence: a plaintiff's damages are reduced by their percentage of fault, and a 50% or greater share bars recovery.