SD 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 in the insured person or property such that a loss causes measurable economic harm; required at policy inception for life insurance and at the time of loss for property insurance.

Principle of Indemnity

The insured is restored to the same financial position held before the loss, no better and no worse, which prevents profit from insurance and supports actual cash value settlement.

Actual Cash Value

The replacement cost of damaged property minus depreciation. It is the default valuation method in property policies unless replacement cost valuation is specifically provided.

Utmost Good Faith

The disclosure standard for insurance contracts; applicants must answer honestly and insurers must not conceal material facts, and material misrepresentation on an application can allow rescission.

Subrogation

After paying a covered claim, the insurer takes the insured's legal right to recover from the responsible third party, preventing the insured from collecting twice for one loss.

Aleatory Contract

A contract in which the amounts exchanged are unequal and depend on chance, so the insured may pay premiums and collect nothing or receive a claim payment far greater.

Contract of Adhesion

A contract prepared by the insurer and accepted or rejected as written by the applicant; because the insurer drafts it, ambiguities in the wording are construed against the insurer.

Adverse Selection

The tendency of higher-than-average risks to buy or keep insurance more readily than preferred risks, which raises loss costs and is controlled by underwriting, deductibles, and exclusions.

Coinsurance Clause

A property provision requiring a limit of at least a set percentage of value; a smaller limit reduces the claim by the ratio of limit carried divided by limit required.

Replacement Cost

Settlement based on the cost to repair or replace damaged property with new property of like kind and quality, without deducting for depreciation, subject to the policy limit.

HO-3 Special Form

A homeowners policy insuring the dwelling and other structures against open perils while personal property is covered for named perils only; the most widely used homeowners form.

Off-Premises Personal Property

Homeowners Coverage C protects personal property away from the residence, typically up to 10% of the Coverage C limit, or $1,000 if that amount is greater.

Loss of Use Coverage

Homeowners Coverage D pays additional living expenses and fair rental value when the residence is uninhabitable due to a covered loss, for the time reasonably needed to repair.

Business Income Coverage

Commercial property coverage that pays the net income lost plus continuing normal operating expenses during the period of restoration following a covered loss at the described premises.

Vacancy Condition

A property condition that restricts coverage when a building is empty, commonly excluding vandalism, theft, glass breakage, and water damage after 60 consecutive days vacant.

Flood Exclusion

Standard homeowners and commercial property policies exclude flood, surface water, and mudslide; coverage must be purchased separately, typically through the National Flood Insurance Program.

Commercial General Liability

The standard liability form covering third-party bodily injury, property damage, personal and advertising injury, and medical expense arising from the insured's premises, operations, and products.

Claims-Made Form

A liability form that responds to claims first made during the policy period rather than when the injury occurred, usually paired with an optional extended reporting period.

Products-Completed Operations

CGL coverage for bodily injury or property damage caused by the insured's products or completed work away from the premises, with a separate aggregate limit.

Personal and Advertising Injury

CGL Coverage B protection for offenses such as libel, slander, invasion of privacy, wrongful eviction, and copyright infringement in an advertisement, without any bodily injury.

Split Limits

Separate dollar maximums for bodily injury per person and per accident, plus a separate property damage limit, such as 25/50/25 in an auto policy.

Employer's Liability

Part Two of a workers compensation policy, paying damages the employer owes for employee injury claims that fall outside the statutory workers compensation benefit schedule.

Umbrella Policy

Liability coverage that pays above underlying auto, general liability, and employers liability limits and can drop down to fill gaps, subject to a self-insured retention.

Negligence Elements

To recover for negligence a claimant must prove the defendant owed a duty of care, breached that duty, caused the injury, and produced actual damages.

South Dakota Division of Insurance

The state agency headed by the Insurance Commissioner, who is appointed by the Governor and enforces Title 58 of the South Dakota Codified Laws.

Continuing Education Requirement

South Dakota licensed producers must complete 24 credit hours of continuing education every two years, including 3 hours of ethics, to renew the license.

Producer Appointment

An insurer's authorization for a licensed producer to represent it, which the insurer reports to the Division of Insurance along with terminations of that authority.

Minimum Auto Liability Limits

South Dakota requires at least $25,000 per person and $50,000 per accident for bodily injury liability, plus $25,000 for property damage liability.

Uninsured Motorist Coverage

South Dakota insurers must offer uninsured and underinsured motorist coverage, and the named insured must reject it in writing to avoid the charge.

Unfair Trade Practices

Conduct prohibited by South Dakota insurance law, including misrepresentation, twisting, rebating, unfair discrimination, coercion, and unfair claim settlement practices, enforced by the Commissioner.

Fiduciary Duty of Producers

Premiums handled by a producer are held in trust, must be accounted for and remitted promptly, and may not be commingled with personal or general business funds.

Insurance Guaranty Association

The South Dakota entity that pays covered claims of insolvent member insurers, subject to statutory limits and deductibles, so policyholders are not left unprotected.