Florida Surplus Lines flashcards

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

Pure risk

A risk that involves only the chance of loss or no loss, with no possibility of gain, and is the type of risk typically insured.

Speculative risk

A risk that offers a chance of gain as well as loss, such as investing, and is generally not insurable by traditional insurance.

Insurable interest

A financial stake in the subject matter such that a loss would cause monetary harm; for property insurance it must exist at the time of loss.

Peril

The cause of a loss, such as fire, wind, theft, or collision; policies list covered perils and exclude others.

Hazard

A condition that increases the likelihood or severity of a loss; types include physical, moral, and morale hazards.

Indemnity principle

The idea that insurance should restore the insured to approximately the same financial position as before the loss, without creating profit.

Coinsurance clause

A property policy provision requiring the insured to carry a specified percentage of insurance to value, or claim payments are reduced proportionally.

Adverse selection

The tendency for people with higher-than-average risk to seek or retain insurance, which can raise costs for insurers and other insureds.

Binder

Temporary evidence of insurance that provides coverage until the formal policy is issued or until a specified date, subject to policy terms.

Insuring agreement

The policy section that states the insurer’s core promise to pay for covered losses in exchange for premium.

Exclusion

A policy provision that removes or limits coverage for specified perils, property, persons, or situations.

Representation

A statement made by an applicant that is believed true to the best of the applicant’s knowledge, not a guarantee of fact.

Warranty

A statement or condition in an insurance contract that must be literally true, and a breach may allow the insurer to deny a claim.

Concealment

Intentional failure to disclose a material fact to the insurer, which can give the insurer grounds to rescind the policy.

Subrogation

The insurer’s right, after paying a covered loss, to pursue recovery from a third party responsible for the loss.

Contra proferentem

The rule that ambiguous language in an insurance policy is interpreted against the party who drafted it, usually the insurer.

Florida Insurance Code

Florida’s insurance statutes, mainly Title XXXVII and Chapters 624 through 632, which govern insurers, agents, policies, and trade practices.

Agent appointment

The authorization an insurer files with Florida regulators so a licensed agent may represent and sell that insurer’s products.

Unfair trade practice

A prohibited business act such as misrepresentation, false advertising, coercion, or unfair discrimination in insurance transactions.

Rebating

Giving or offering part of an agent’s commission or anything of value to induce a sale, generally prohibited unless a specific Florida exception applies.

FIGA

The Florida Insurance Guaranty Association, which pays certain claims of insolvent authorized insurers and does not cover surplus lines insurers.

Biennial license term

Florida agent licenses are issued for two years and expire on the last day of the licensee’s birth month, subject to renewal requirements.

Continuing education

Required ongoing coursework that Florida licensees complete during each license term to renew their licenses.

FSLSO

The Florida Surplus Lines Service Office, which tracks surplus lines policies, collects premium taxes and fees, and supports regulatory compliance.

Surplus lines insurance

Coverage placed with an unauthorized insurer after authorized insurers decline the risk, used for risks the admitted market will not accept.

Diligent effort

Documented search for coverage from authorized insurers before placing with surplus lines; Florida generally requires declinations from three authorized insurers for non-exportable risks.

Exportable list

A Florida list of coverages that may be placed with surplus lines insurers without first obtaining the usual number of authorized-insurer declinations.

Eligible surplus lines insurer

An unauthorized insurer that meets Florida standards and is permitted to accept surplus lines business in the state.

Surplus lines disclosure

Written notice to the insured that the insurer is unauthorized, not protected by FIGA, and not regulated exactly like an admitted insurer.

FSLSO premium tax

Florida surplus lines premium tax is generally 5% of gross premium, reported and paid through the FSLSO along with its service fee.

Surplus lines agent license

A Florida license required to place surplus lines business; the agent must also hold the underlying general lines or applicable agent license.

Policy reporting

Surplus lines policies must be reported to the FSLSO so that premium tax and service fees can be collected and records maintained.