NC Property & Casualty flashcards

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

Law of large numbers

The principle that as the number of similar independent exposure units increases, actual loss experience more closely approximates expected losses, allowing insurers to predict losses and set accurate rates.

Insurable interest

A financial interest in the subject of insurance such that a loss would cause the insured economic harm; it must exist at policy inception for life insurance and at the time of loss for property insurance.

Indemnity principle

The concept that insurance restores the insured to approximately the same financial position as before the loss, no better and no worse, and it underlies actual cash value settlement.

Utmost good faith

The mutual duty of insurer and insured to deal honestly, disclose material facts, and avoid concealment or misrepresentation, because the insurer depends on information supplied by the applicant.

Subrogation

The insurer's right, after paying a covered loss, to pursue recovery from the negligent third party who caused the loss; it prevents double recovery and helps control premium costs.

NC Insurance Commissioner

An elected statewide official who heads the North Carolina Department of Insurance, licenses producers, approves rates and policy forms, and enforces the state's insurance laws for a four-year term.

NC Rate Bureau

A licensed rating organization that collects loss data and files rates and policy forms on behalf of member property and casualty insurers, subject to approval by the Insurance Commissioner.

NC Reinsurance Facility

North Carolina's residual market mechanism that reinsures private passenger auto liability and physical damage risks insurers would otherwise decline; every auto insurer writing in the state participates.

Coastal Property Insurance Pool

Administered by the North Carolina Insurance Underwriting Association, this residual market pool provides wind and hail coverage to eligible coastal properties that cannot obtain coverage in the voluntary market.

Safe Driver Incentive Plan

North Carolina's point system that increases private passenger auto premiums for traffic convictions and at-fault accidents, while drivers with clean records earn safe driver discounts.

Coverage A Dwelling

The homeowners coverage that insures the dwelling and attached structures on a replacement cost basis; the limit should equal at least 80 percent of full replacement cost.

Coverage C special limits

Internal caps within homeowners personal property coverage, such as $200 for money, $1,500 for theft of jewelry, and $2,500 for theft of silverware, regardless of the total Coverage C limit.

Loss of use coverage

Homeowners Coverage D, which pays additional living expenses and fair rental value when a covered loss makes the residence premises uninhabitable while repairs are reasonably being made.

Actual cash value

The replacement cost of damaged property minus depreciation, reflecting age and condition; it is the standard settlement basis on older homeowners and dwelling forms.

HO-4 tenants policy

A homeowners form for renters that insures personal property, loss of use, personal liability, and medical payments, but provides no coverage for the building itself.

NFIP waiting period

Flood insurance under the National Flood Insurance Program generally takes effect 30 days after application and premium payment, except for certain closings required by lenders.

Negligence elements

To recover for negligence a claimant must prove that the defendant owed a duty, breached it, that the breach was the proximate cause of harm, and that actual damages resulted.

Split liability limits

Auto limits shown as three numbers, such as 30/60/25, meaning the most paid per person for bodily injury, per accident for bodily injury, and per accident for property damage.

Uninsured motorist coverage

Pays the insured for injury and damage caused by a hit-and-run driver or a driver with no insurance; North Carolina requires it at limits equal to the liability coverage.

Medical payments coverage

Pays reasonable medical and funeral expenses for the insured and injured passengers regardless of fault, subject to a per-person limit and a stated time period after the accident.

Vicarious liability

Legal responsibility imposed on one party for the acts of another, such as an employer being liable for an employee's negligent acts committed within the scope of employment.

Business income coverage

Pays the net income the business would have earned plus continuing normal operating expenses during the period of restoration after a covered loss at the described premises.

Coinsurance clause

A commercial property provision requiring the insured to carry a stated percentage of property value; when underinsured, each loss is settled on a reduced proportional basis.

Special causes of loss form

The commercial property form that covers risks of direct physical loss unless a cause is specifically excluded, placing the burden of proving an exclusion on the insurer.

Period of restoration

The time beginning with the date of direct physical damage and ending when the damaged property is repaired or replaced with reasonable speed, used to measure business income loss.

Ordinance or law coverage

Coverage that pays for the undamaged portion of a building that must be demolished, demolition costs, and increased construction costs required by current building codes after a covered loss.

Builders risk coverage

Insurance on a structure under construction, covering the building, materials, and supplies while work is in progress; it ends when the project is complete and accepted.

Commercial general liability

Coverage for third-party bodily injury, property damage, and personal and advertising injury arising from the insured's premises, operations, and products; it is written on occurrence or claims-made forms.

Claims-made trigger

Coverage responds when the injury occurs after the retroactive date and the claim is reported during the policy period or an extended reporting period, unlike an occurrence form.

Products-completed operations

CGL coverage for bodily injury or property damage occurring away from the insured's premises and arising out of the insured's product or completed work.

Fire legal liability

CGL coverage for fire damage to premises rented to or temporarily occupied by the insured, payable under a separate limit in addition to the general aggregate.

Workers compensation Part One

The part of the workers compensation policy under which the insurer pays all benefits the employer is legally required to provide under state law, regardless of fault.