MS 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 such that the insured benefits from the property's continued existence and suffers loss from its damage; in property insurance it must exist at the time of loss.

Principle of indemnity

The insured is restored to approximately the same financial position held before the loss, no better and no worse, so recovery cannot exceed the actual amount of loss.

Aleatory contract

A contract in which the dollar amounts exchanged by the parties are unequal and depend on chance; the insured may pay premiums and receive nothing, or receive far more than paid.

Law of large numbers

The statistical principle that as the number of similar, independent exposure units increases, actual loss results come closer to expected results, making future losses more predictable.

Adverse selection

The tendency of applicants with the highest probability of loss to seek insurance most eagerly; insurers counter it through underwriting, exclusions, and proper rating classifications.

Morale hazard

Carelessness or indifference toward loss created by the presence of insurance, such as leaving a door unlocked because a policy will pay for the theft.

Subrogation

The insurer's right, after paying a covered loss, to pursue the party that caused the loss and to recover from the insured any duplicate payment, preventing double recovery.

Coinsurance clause

A property condition requiring the insured to carry a stated percentage of the property's value, often 80 percent; a lower limit reduces each claim payment proportionally.

Actual cash value

The standard property loss valuation equal to replacement cost minus depreciation; it reflects the used value of the damaged property rather than the cost of new property.

Replacement cost

A valuation method that pays the cost to repair or replace damaged property with new property of like kind and quality, with no deduction for depreciation.

HO-3 special form

A homeowners form covering the dwelling and other structures against risks of direct physical loss not excluded, while personal property is covered for named perils only.

HO-4 contents broad form

A homeowners form written for tenants; it covers personal property and loss of use on named perils but provides no coverage for the building itself.

HO-6 unit-owners form

A homeowners form for condominium owners covering personal property, building additions and alterations, and loss assessment charges levied by the condominium association.

Additional living expense

Homeowners coverage that pays the increase in living costs needed to maintain the insured's normal standard of living while the dwelling is repaired after a covered loss.

Occurrence trigger

A liability coverage trigger under which bodily injury or property damage must take place during the policy period; the claim may be filed and paid afterward.

Claims-made trigger

A liability coverage trigger requiring that the claim be first made against the insured during the policy period or a stated extended reporting period.

General aggregate limit

The maximum an occurrence-form liability policy will pay for all covered claims in a policy period, excluding damages paid under products-completed operations coverage.

Personal and advertising injury

Liability coverage for offenses such as libel, slander, wrongful eviction, invasion of privacy, and infringement of copyright in an advertisement, rather than bodily injury.

Exclusive remedy

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

Combined single limit

An auto liability limit expressed as one total dollar amount for all bodily injury and property damage arising from a single accident, rather than separate per-person figures.

Mississippi Commissioner of Insurance

The elected statewide official who heads the Mississippi Department of Insurance, licenses producers and insurers, examines market conduct, and enforces the state's insurance statutes.

Rebating

Offering an applicant any inducement not specified in the policy, such as sharing commission or giving gifts, as an enticement to buy insurance; prohibited as an unfair trade practice.

Twisting

Misrepresenting the terms or benefits of a policy to persuade a policyholder to lapse, surrender, or replace existing coverage; classified as an unfair trade practice.

Mississippi Insurance Guaranty Association

A statutory entity that pays covered claims of insolvent property and casualty insurers doing business in Mississippi, subject to per-claim limits and a deductible, protecting policyholders.

Producer fiduciary duty

The requirement that a licensed producer hold premiums collected on behalf of an insurer or insured in trust, keeping them separate and never using them personally.

Mississippi continuing education

Resident producers must complete twelve hours of approved continuing education each year, including at least three hours of ethics, to keep a Mississippi license in force.

Contra proferentem

The rule that ambiguous language in an insurance policy, which is a contract of adhesion drafted by the insurer, is interpreted in favor of the insured.

Endorsement

A written document added to and made part of a policy that changes, adds, or deletes coverage; it controls over conflicting printed policy provisions.

Appraisal provision

A policy condition used when the insurer and insured agree a loss is covered but disagree on its amount; each picks an appraiser and the appraisers select an umpire.

Mortgagee clause

A provision protecting a lender with an interest in insured property; the lender receives loss payments to the extent of its interest and notice of cancellation.

Liberalization clause

A condition stating that if the insurer adopts a broader coverage form or endorsement without additional premium, the broader coverage automatically applies to the existing policy.

Short rate cancellation

A cancellation by the insured before expiration in which the refund is less than the pro rata amount, because the insurer keeps a penalty for the unexpired term.