Property & Casualty flashcards

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

Principle of indemnity

Insurance restores the insured to the pre-loss financial condition, no better and no worse, by paying the actual value of the loss rather than a profit.

Insurable interest

The insured must have a lawful financial relationship to the person or property insured. For property insurance, that interest must exist at the time of loss.

Utmost good faith

Both parties must disclose material facts honestly. A material misrepresentation or concealment on an application can allow the insurer to rescind the policy.

Declarations page

The declarations summarize key policy facts, including the named insured, covered property, policy period, limits, deductibles, and premium, and form the basis for coverage.

Coinsurance clause

A property condition requiring the insured to carry a stated percentage of property value. A penalty reduces payment when the limit falls below that requirement.

Proof of loss

A sworn statement the insured submits detailing the amount, cause, and circumstances of a loss, usually required within a specified period after the insurer receives notice.

Named-peril policy

A property policy covering only the causes of loss specifically listed in the form. The insured must show that the loss resulted from one of those listed perils.

Special-form coverage

An open-perils property form covering all direct physical loss except causes specifically excluded. The insurer bears the burden of proving that an exclusion applies.

Actual cash value

ACV equals replacement cost minus depreciation. It reflects the damaged property's value immediately before the loss and is the default valuation in many property policies.

HO-3 special form

A homeowners form insuring the dwelling and other structures against open perils while personal property is covered for broad named perils, with personal liability coverage included.

Coverage C special limits

Homeowners personal property sublimits cap recovery for categories such as money, securities, jewelry, firearms, silverware, and business property, both on and off premises.

Loss of use coverage

Homeowners Coverage D pays additional living expenses or fair rental value when a covered loss makes the residence uninhabitable during the reasonable time needed to repair or replace.

Building and personal property

The commercial property coverage form insures buildings, business personal property, and personal property of others at described premises against covered causes of loss.

Agreed value option

A commercial property option that suspends the coinsurance requirement when the insured reports values acceptable to the insurer; an updated value report is required at policy expiration.

Business income coverage

Pays lost net income and continuing normal operating expenses during the period of restoration after a covered property loss at the insured premises.

Inland marine insurance

Covers property that is mobile or in transit, such as shipments, contractors' equipment, and valuable papers, reflecting the historical marine focus on moving goods.

Employee theft coverage

Crime coverage reimbursing the insured for money, securities, or other property stolen by employees, often written with a per-loss limit and a deductible.

Equipment breakdown coverage

Covers loss from accidental breakdown of covered mechanical, electrical, or pressure equipment, including repair costs and resulting business income loss, which property forms often exclude.

Negligence elements

A negligence claim requires a duty of care, breach of that duty, proximate cause, and actual damages. All four elements must be proven by the claimant.

Comparative negligence

A tort rule reducing a claimant's recovery by their percentage of fault. Pure comparative allows recovery despite high fault; modified comparative bars recovery above a threshold.

Claims-made policy

Liability coverage responds to claims first made during the policy period, regardless of when the injury occurred, often subject to a retroactive date.

Vicarious liability

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

Personal auto liability

PAP Coverage A pays damages for bodily injury and property damage the insured becomes legally liable for because of an auto accident, up to the stated limits.

Uninsured motorist coverage

Personal auto coverage for bodily injury caused by a hit-and-run or uninsured driver, and in some states underinsured drivers, up to the policy limits.

Collision coverage

Pays for damage to the insured auto caused by collision with another object or overturn, regardless of fault, subject to the deductible and policy limit.

Medical payments coverage

Pays reasonable medical and funeral expenses for the insured and passengers injured in an auto accident, regardless of fault, up to the stated limit.

Garagekeepers coverage

Garage coverage protecting a business for damage to customers' vehicles left in its care, custody, or control, written on a legal liability or direct primary basis.

Covered auto symbols

Numbers on the business auto declarations identify which autos are covered, such as any auto, owned autos, hired autos, nonowned autos, or specifically described autos.

Hired and nonowned auto

Hired auto covers rented or leased vehicles used in the business; nonowned auto covers employee-owned vehicles used for business purposes without being owned by the business.

Workers compensation Part One

Part One of a workers compensation policy pays statutory benefits required by state law for employee work-related injury or disease, without regard to fault.

Employers liability Part Two

Part Two covers the employer's liability for work-related injury or disease outside the statutory workers compensation system, with limits per accident and per employee.

Experience modification factor

A rating factor based on the insured's past payroll and loss experience compared with similar employers; it adjusts workers compensation premium above or below the class rate.