UT 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 relationship such that the insured would suffer monetary loss from destruction of the property or death of the person; in property insurance it must exist at the time of loss.

Law of large numbers

The principle that as the number of similar exposure units increases, actual losses more closely approximate expected losses, allowing insurers to predict losses and set adequate rates.

Aleatory contract

An insurance contract in which the dollar amounts exchanged by the parties are unequal and depend on chance; a small premium may purchase a very large claim payment.

Moral hazard

A hazard arising from the dishonesty or character traits of the insured, such as intentional loss or exaggeration of a claim, which increases the likelihood or size of loss.

Proximate cause

The unbroken chain of events between a peril and the resulting loss; a loss is covered when a covered peril is the efficient proximate cause of the damage.

Indemnity principle

Insurance restores the insured to the same financial position held before a loss, no better and no worse, which underlies actual cash value and replacement cost loss settlement.

Subrogation

The insurer's right, after paying a covered loss, to pursue the responsible third party for reimbursement and to take over the insured's legal claim against that party.

Actual cash value

Replacement cost minus depreciation; the standard property loss settlement when the policy does not provide replacement cost or the coinsurance requirement is not satisfied.

Property coinsurance clause

A provision requiring insurance at least equal to a stated percentage of the property's value at the time of loss; otherwise payment is reduced to (limit divided by required limit) times the loss.

HO Coverage C limit

Personal property coverage, usually 50 percent of Coverage A; property used off the residence premises is limited to 10 percent of the Coverage C amount.

Mortgage clause

A loss payable provision giving the lender the right to receive loss payments, to pay premiums to keep the policy in force, and to receive notice of cancellation or nonrenewal.

Business income coverage

Pays the insured's lost net income plus continuing normal operating expenses incurred during the period reasonably required to restore operations after a covered loss.

Vacancy provision

In homeowners policies, vandalism and malicious mischief losses are excluded when the dwelling has been vacant or unoccupied for more than 60 consecutive days before the loss.

Ordinance or law exclusion

Excludes the extra cost of repairing or rebuilding to comply with current building codes, including demolition and increased construction costs, unless added by endorsement.

Claims-made CGL form

Responds to claims first made or reported during the policy period for injury occurring after the retroactive date; an extended reporting period lengthens the time to report claims.

Products-completed operations

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

Personal and advertising injury

CGL Coverage B offenses such as libel, slander, wrongful eviction, and infringement of advertising ideas; it does not include bodily injury or property damage.

Uninsured motorists coverage

Pays the insured for bodily injury caused by a negligent driver who has no liability insurance or by a hit-and-run driver, up to the limits shown on the policy.

Medical payments auto coverage

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

Workers compensation Part Two

Employers liability coverage, which responds to work-related injury claims that fall outside the exclusive remedy of statutory workers compensation benefits, up to the stated limits.

Surety bond parties

Three parties: the surety guarantees the principal's performance to the obligee, and a loss results from the principal's default rather than from chance.

Utah continuing education

Resident producers must complete 24 credit hours each two-year license term, including at least 3 hours of ethics instruction, in order to renew the license.

Utah Insurance Commissioner

Head of the Utah Insurance Department, appointed by the Governor with Senate consent, with authority to license, examine, investigate, and penalize insurers and producers.

Utah personal injury protection

Utah auto policies must provide at least $3,000 per person of PIP for reasonable medical expenses, work loss, and replacement services after an accident, regardless of fault.

Utah unfair claims practices

Statutory prohibitions on misrepresenting policy provisions, failing to investigate claims promptly and fairly, and refusing to settle when liability has become reasonably clear.

Utah guaranty association

A statutory entity that pays covered claims of insolvent property and casualty insurers, within statutory limits and subject to exclusions, funded by assessments on member insurers.

Utah rebating prohibition

It is unlawful in Utah to offer rebates, commissions, or anything of value not stated in the policy as an inducement to purchase insurance.

Fiduciary duty

A producer holding premiums or funds for an insurer or insured must keep them segregated in a trust account and may not commingle or misuse them.

Twisting

Misrepresenting or unfairly comparing a policy to induce a policyholder to lapse, surrender, or replace existing coverage; a prohibited unfair trade practice.

Apparent authority

Authority a producer appears to possess because of the insurer's conduct or representations, which can bind the insurer even without express authority.

Errors and omissions coverage

Professional liability insurance protecting a producer against claims arising from negligent acts, errors, or omissions in selling, servicing, or advising on insurance.

Unfair discrimination

Charging different rates or refusing coverage to individuals in the same risk class without actuarial justification; prohibited under state unfair trade practice laws.