ME 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 stake in the subject matter such that a loss causes the insured genuine economic harm; for property insurance it must exist at the time of loss.

Pure risk

A situation offering only the chance of loss or no loss, with no possibility of gain; the only category of risk private insurance is designed to handle.

Principle of indemnity

The rule that a property claim payment should restore the insured to approximately the same financial position held before the loss, never creating a profit from the loss.

Moral hazard

A loss exposure created by dishonesty or intent, such as filing a fraudulent claim or deliberately causing damage, which insurers counter with exclusions, deductibles, and investigation.

Law of large numbers

The statistical principle that as the number of similar independent exposure units increases, actual loss experience tends to approach the expected loss level, enabling accurate ratemaking.

Contract of adhesion

An insurance policy drafted by the insurer and offered on a take-it-or-leave-it basis; ambiguities in the wording are generally construed against the drafter, the insurer.

Subrogation

The insurer's right, after paying a loss, to pursue recovery from the party legally responsible, preventing the insured from collecting twice for the same loss.

Apparent authority

Authority a producer appears to have because of the insurer's words or actions, binding the insurer even when the producer acted beyond express or implied authority.

Coverage D Loss of Use

Pays additional living expenses and fair rental value when a covered loss makes the residence uninhabitable, usually limited to a percentage of the Coverage A amount.

Replacement cost valuation

A method paying the cost to repair or replace with new property of similar kind and quality, without deduction for depreciation, subject to the policy limit.

Commercial property coinsurance clause

A requirement that the insured carry a stated percentage of the property's value; claims pay the ratio of carried to required insurance times the loss when that percentage is not met.

Special form causes of loss

An open-perils form covering all direct physical loss except perils specifically excluded, shifting to the insurer the burden of proving an exclusion applies.

Business income coverage

Pays the net income the business would have earned plus continuing normal operating expenses during the period of restoration following covered physical damage.

HO-4 tenants policy

A homeowners form for renters covering personal property and liability, with limited coverage for improvements and betterments to the rented dwelling rather than the building itself.

Personal property special limits

Sub-limits that cap recovery for categories such as money, securities, theft of jewelry, firearms, and silverware, regardless of the Coverage C amount shown.

Additional living expense

Payment for the increase in normal living costs, such as temporary housing and meals, needed to maintain the household's standard of living while the home is being repaired.

Occurrence liability policy

A liability policy responding to injury or damage that happens during the policy period, even if the claim is reported years later; the injury date controls coverage.

Claims-made liability policy

A liability policy responding to claims first made or reported during the policy period, subject to a retroactive date and optional extended reporting endorsements.

Products-completed operations coverage

Liability coverage for bodily injury or property damage arising from the insured's products or completed work away from the premises, usually carrying its own aggregate limit.

Personal and advertising injury

Liability coverage for offenses such as libel, slander, false arrest, wrongful eviction, invasion of privacy, and infringement of copyright in an advertisement.

Auto medical payments coverage

Pays reasonable medical and funeral expenses for the insured and passengers regardless of fault, up to the limit shown, with no deductible or coinsurance penalty.

Uninsured motorists coverage

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

Exclusive remedy doctrine

The principle that statutory workers compensation benefits are an injured employee's sole recovery against the employer, replacing tort suits for work-related injury.

Umbrella liability policy

Excess liability coverage over underlying policies that may also drop down to cover gaps in those underlying coverages, usually after a self-insured retention.

Maine Bureau of Insurance

The state agency headed by the Superintendent of Insurance that licenses producers and insurers and enforces Title 24-A, Maine's insurance code.

Maine minimum liability limits

Maine requires auto liability limits of at least $50,000 per person, $100,000 per accident for bodily injury, and $25,000 per accident for property damage.

Maine medical payments requirement

Maine law requires every private passenger auto policy to include medical payments coverage of at least $2,000, though higher limits may be purchased.

Producer continuing education

Maine resident producers complete 24 credit hours of approved continuing education every two years, including at least 3 hours of ethics instruction.

Appointment of producer

The insurer's authorization of a licensed producer to act on its behalf; in Maine appointments are filed with the Bureau of Insurance and terminations are reported.

Rebating

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

Producer fiduciary duty

A producer who collects premium holds those funds in a trust capacity and may not commingle them with personal or general business funds.

Maine Insurance Guaranty Association

An entity that pays covered claims of insolvent admitted property and casualty insurers doing business in Maine, subject to statutory caps and deductibles.