PA 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 leaves regulation of the business of insurance primarily to the states and exempts insurers from most federal antitrust law where state regulation exists.

NAIC

The National Association of Insurance Commissioners is a voluntary association of state regulators that drafts model laws and rates and accredits state departments, but it cannot enforce laws itself.

Admitted insurer

An insurer holding a certificate of authority from a state insurance department, allowing it to sell insurance there and subjecting it to that state's solvency and market conduct rules.

Surplus lines insurance

Coverage placed with a non-admitted insurer through a specially licensed broker when admitted insurers decline the risk; state guaranty funds do not protect these policies.

Guaranty association

A state-established pool funded by admitted insurers that pays covered claims of policyholders when an insurer becomes insolvent, usually subject to a per-claim maximum.

Market conduct examination

A regulatory review of an insurer's sales, underwriting, rating, and claims handling practices to verify compliance with state law, distinct from a financial examination testing solvency.

Pure risk

A situation offering only the chance of loss or no loss, with no possibility of gain; pure risks are insurable, unlike speculative risks such as gambling or investing.

Moral hazard

A risk-increasing condition created by an insured's attitude or dishonest intent, such as exaggerating a claim or intentionally causing a loss to collect insurance proceeds.

Insurable interest

A financial stake in the property or person insured such that the insured suffers genuine loss from a covered event; in property insurance it must exist at the time of loss.

Actual cash value

A loss settlement method equal to replacement cost minus depreciation, reflecting the used or damaged value of property at the time of loss rather than a new item's cost.

Subrogation

The insurer's right, after paying a claim, to pursue the negligent third party legally responsible for the loss and to recover those payments from that party or its insurer.

Contract of adhesion

An insurance policy drafted entirely by the insurer and offered take-it-or-leave-it; ambiguities are interpreted in favor of the insured because the insured had no part in drafting it.

Homeowners HO-3

The special form homeowners policy insuring the dwelling and other structures against open perils while covering personal property only for the named perils listed in the policy.

Loss of use coverage

Homeowners Coverage D pays additional living expenses such as temporary housing and meals when a covered loss makes the residence uninhabitable, plus lost fair rental value.

Mortgagee clause

A property policy provision protecting a lender named in the policy by paying its interest in a loss regardless of the insured's acts, with subrogation running for the lender's benefit.

Flood exclusion

Standard homeowners and commercial property policies exclude water damage from flooding and surface water; separate flood coverage is available through the NFIP or private insurers.

Replacement cost

A loss settlement basis paying the current cost to repair or replace damaged property with new material of like kind and quality, without deducting depreciation, subject to policy limits.

Business income coverage

Commercial property coverage that replaces net income and continuing normal expenses, such as rent and payroll, lost while repairs are made after a covered cause of loss.

HO-6 condominium form

A homeowners form for condo unit owners covering personal property, building improvements and betterments inside the unit, loss of use, and personal liability, since the association insures the structure.

Negligence elements

To recover for negligence a claimant must prove a duty of care owed, a breach of that duty, proximate cause linking the breach to the harm, and actual damages.

Claims-made policy

Liability coverage that responds to claims first made and reported during the policy period, subject to a retroactive date, rather than to when the injury actually occurred.

Personal and advertising injury

CGL Coverage B covers offenses such as libel, slander, wrongful eviction, and infringement of advertising ideas, but not bodily injury or property damage.

Uninsured motorist coverage

Auto coverage paying the insured's bodily injury damages caused by a driver with no insurance or by a hit-and-run driver, up to the coverage limit selected.

Workers compensation exclusive remedy

The principle that statutory workers compensation benefits are the employee's only recovery from the employer for a work injury, barring most tort suits in exchange for no-fault payments.

Umbrella liability policy

Excess liability coverage paying after underlying auto, general liability, and employers liability limits are exhausted, and dropping down for some losses not covered by those underlying policies.

PA minimum auto limits

Pennsylvania requires bodily injury liability limits of at least fifteen thousand dollars per person and thirty thousand dollars per accident, plus five thousand dollars property damage liability.

Limited tort option

A Pennsylvania auto election restricting the insured's right to sue for non-economic pain and suffering unless the injury is serious or fits a listed exception such as death or disfigurement.

PA medical benefits

Pennsylvania first-party personal injury protection paying at least five thousand dollars of medical expenses for the insured and passengers after an auto accident, regardless of fault.

PPCIGA

The Pennsylvania Property and Casualty Insurance Guaranty Association pays covered claims against insolvent member insurers up to three hundred thousand dollars per claim, funded by assessments on licensed insurers.

PA producer continuing education

Pennsylvania-licensed insurance producers must complete twenty-four credit hours of approved continuing education every two years, including at least three hours of ethics instruction.

PA Automobile Insurance Plan

Pennsylvania's assigned risk plan that places high-risk drivers with insurers, ensuring coverage remains available to applicants who cannot obtain auto insurance in the voluntary market.

Unfair Insurance Practices Act

Pennsylvania statute prohibiting misrepresentation, twisting, rebating, unfair discrimination, and unfair or deceptive claim settlement practices by insurers and producers, enforced by the Insurance Department.