NE Property & Casualty flashcards

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

McCarran-Ferguson Act

A 1945 federal law that reserves primary regulation of insurance to the states and exempts insurance from most federal antitrust law where state regulation exists.

Certificate of authority

A license issued by a state insurance department authorizing an insurer to transact insurance business in that state as an admitted, or authorized, insurer.

Rebating

The illegal practice of offering part of an agent's commission, or any other inducement not stated in the policy, to persuade a buyer to purchase coverage.

Twisting

Misrepresenting or making an incomplete comparison of policies in order to induce a policyholder to lapse, surrender, or replace existing coverage.

Surplus lines insurance

Coverage placed with a nonadmitted insurer after admitted insurers decline the risk; it must be placed through a licensed surplus lines producer.

Nebraska continuing education

Licensed Nebraska producers must complete 24 hours of approved continuing education every two years, and 3 of those hours must be ethics.

Producer fiduciary duty

Premiums a producer collects are held in trust for the insurer or insured and may not be commingled with the producer's personal or business funds.

Pure risk

A situation offering only two outcomes, loss or no loss; it is the type of risk that insurance is designed to transfer.

Peril versus hazard

A peril is the cause of a loss, such as fire or wind; a hazard is a condition that increases the chance or severity of that loss.

Principle of indemnity

The insured is restored to approximately the same financial position held before the loss, and never profits from the loss.

Insurable interest in property

A person must stand to suffer financial loss from damage to the property; for property insurance, this interest must exist at the time of loss.

Contract of adhesion

A policy drafted by the insurer and offered to the insured on a take-it-or-leave-it basis, so ambiguities are construed against the insurer.

Subrogation

The insurer's right, after paying a covered loss, to recover that amount from the negligent third party who caused the loss.

Actual cash value

Replacement cost of damaged property minus depreciation; the default valuation method on most property forms when replacement cost is not endorsed.

Replacement cost

Settlement at the cost to repair or replace damaged property with new property of like kind and quality, with no deduction for depreciation.

Coinsurance clause

A commercial property provision requiring the insured to carry a limit of at least a stated percentage of the property's value to avoid a reduced claim payment.

Coinsurance penalty formula

Payment equals insurance carried divided by insurance required, times the loss, where insurance required is the coinsurance percentage times value at the time of loss.

Loss of use coverage

Coverage D pays additional living expenses and fair rental value when the residence cannot be occupied because of a covered loss.

Coverage C

Homeowners personal property coverage; on the HO-3 it is written on a named-perils basis, while the HO-5 covers it on an open-perils basis.

Vacancy

A building with neither occupants nor personal property inside; most property forms suspend or restrict coverage after it has been vacant a stated number of days.

Negligence elements

Four elements must be proven: a legal duty owed, a breach of that duty, proximate cause linking the breach to the harm, and actual damages.

Compensatory damages

Special damages reimburse medical expenses and lost wages; general damages pay pain and suffering and other non-economic losses in a liability claim.

Comparative negligence

Damages are reduced in proportion to the injured party's own fault; under the modified form, recovery is barred if that fault exceeds a set percentage.

Strict liability

Liability imposed without proof of negligence, applied to inherently dangerous activities such as blasting and to defective products.

Occurrence versus claims-made

An occurrence policy covers injury that happens during the policy period; a claims-made policy covers claims first made during the period, subject to a retroactive date.

Supplementary payments

CGL defense costs, bail bond premiums, and loss-of-earnings payments made on behalf of an insured in addition to the limits of liability.

HO-4 renters policy

Covers a tenant's personal property, loss of use, personal liability, and medical payments to others; the building itself is not insured.

HO-6 condominium policy

Covers building items inside the unit such as fixtures and improvements, personal property, loss assessment, liability, and medical payments.

Personal auto Part D

Physical damage coverage for the insured auto, divided into collision and other-than-collision coverage, each subject to its own deductible.

Businessowners policy

A package policy for eligible small businesses combining property, general liability, and business income coverage under one policy with a single aggregate.

Umbrella policy

Excess liability over underlying auto, general liability, and employer's liability limits that can also drop down to cover some gaps.

Workers compensation Part Two

Employer's liability coverage paying damages for work-related injury or disease that fall outside statutory workers compensation benefits, such as third-party actions.