DE Property & Casualty flashcards

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

Certificate of authority

License issued by a state insurance department that authorizes an insurer to transact insurance in that state as an admitted carrier.

McCarran-Ferguson Act

1945 federal law confirming that states primarily regulate insurance and granting insurers a limited antitrust exemption for activities regulated by state law.

Rebating

Giving any part of the premium or commission, or anything of value not stated in the policy, to induce a purchase; treated as an unfair trade practice in most states.

Fiduciary duty

Producers hold premiums in trust for the insurer or the insured, must account for the funds, and may not commingle premiums with personal money.

Actual cash value

Settlement amount equal to the replacement cost of the damaged property minus depreciation taken to the date of loss.

Coinsurance clause

Property provision requiring the insured to carry at least a stated percentage of value; carrying less reduces the loss payment proportionally.

Moral hazard

A hazard arising from the insured's dishonest or fraudulent tendencies, such as intentionally causing a loss in order to collect insurance.

Subrogation

The insurer's right to pursue recovery from the negligent party after paying the insured, which prevents the insured from collecting twice for one loss.

Special form (open peril)

Property coverage insuring risks of direct physical loss unless the cause is specifically excluded, with the burden on the insurer to prove an exclusion applies.

Mortgagee clause

Endorsement protecting a lender's interest in insured property by giving the lender loss payment, notice of cancellation, and the right to submit proof of loss.

Pair and set

Valuation rule settling a loss to part of a set as a fair proportion of the value of the whole set, or by repairing or replacing the damaged part.

Ordinance or law exclusion

Bars payment for costs of complying with building codes after a loss, including demolition and increased construction cost, unless coverage is added by endorsement.

Negligence

Failure to exercise the care a reasonable person would use; must be proven with duty, breach of duty, proximate cause, and actual damages.

Claims-made policy

Liability coverage that responds to claims first made and reported during the policy period, subject to any retroactive date shown in the declarations.

Split limits

Liability limits stated as separate amounts for bodily injury per person, bodily injury per occurrence, and property damage per occurrence.

Supplementary payments

Amounts such as defense costs, bail bond premiums, and loss of earnings that the liability insurer pays in addition to the limit of liability.

Coverage C special limits

Homeowners sub-limits capping payment for theft of money, jewelry, furs, firearms, and silverware unless the items are separately scheduled.

HO-4 renters policy

Homeowners form covering personal property, loss of use, liability, and medical payments for tenants; it provides no building or other structures coverage.

Loss of use coverage

Pays additional living expenses when the residence is uninhabitable because of a covered peril, or fair rental value when the home was rented to others.

Loss assessment coverage

Pays the insured's share of a homeowners association assessment levied for a covered loss to commonly owned property, up to a stated limit.

Uninsured motorist coverage

Pays bodily injury damages the insured is legally entitled to recover from an at-fault driver who has no insurance or from a hit-and-run driver.

Temporary substitute auto

A non-owned vehicle used while the insured auto is out of service because of breakdown, repair, or loss, and covered as an insured auto.

Loan/lease gap coverage

Pays the difference between the outstanding auto loan or lease balance and the actual cash value after a total loss, less the deductible.

Named driver exclusion

Endorsement removing a specified person from coverage so that no coverage applies while that person operates the insured vehicle.

Businessowners policy

Package policy for eligible small businesses that combines property, business income, and general liability coverage in a single simplified form.

Products-completed operations

Commercial general liability coverage for bodily injury or property damage arising from the insured's products or completed work away from the premises.

Business income coverage

Pays lost net income and continuing normal operating expenses during the period of restoration following a covered property loss.

Equipment breakdown

Coverage for loss caused by accidental breakdown of covered boilers, machinery, and electrical equipment, including expediting expense and business income.

Exclusive remedy

Workers compensation principle that statutory benefits are the employee's sole recovery against the employer for a work-related injury.

Employers liability (Part Two)

Coverage for the employer's liability on work-related injury claims that fall outside the statutory workers compensation benefit system.

Experience modification factor

A multiplier applied to workers compensation premium that reflects the insured employer's loss history compared with others in the same classification.

Commercial umbrella

Policy providing limits above underlying general liability, auto, and employers liability coverage, and sometimes dropping down to fill coverage gaps.