Exam 2 Review Compare exclusions conditions and declarations o Declarations Statements that provide information about the particular property or activity to be Found on the first page of the policy Property insurance Contains name of the insured location of property period of protection amount of insurance premium and deductible information o Conditions Provisions in the policy that qualify or place limitations on the insurer s promise to insured perform If not met the insurer may refuse to pay the claim Common Conditions things that have to be met requirements Filing a proof of loss notify employer Insured applicant has a duty to protect the property after the loss Agree to cooperate with insurer if liability suit comes out of loss o Exclusions Provisions not covered by the policy Excluded perils Excluded losses Ex flood intentional act Excluded property Why they are necessary Ex a professional liability loss is excluded in the homeowners policy Ex pets are not covered as personal property in the homeowners policy Some perils are not commercially insurable Extraordinary hazards are present Ex Catastrophic losses due to war o Ex Using the automobile for a taxi Coverage is provided by other contracts Moral hazard problems Ex Use of auto excluded on homeowners policy o Ex Coverage of money limited to 200 in homeowners policy Attitudinal hazard problems o Ex Individuals are forced to bear losses that result from their own carelessness Coverage not needed by typical insured s o Ex Homeowners policy does not cover aircraft Insuring agreement Summarizes the major promises of the insurer o 2 basic forms only apply to property insurance Open Perils special coverage All losses are covered except those losses specifically excluded Burden of proof on the insurer to prove loss was excluded Preferred from applicant perspective Ex Life insurance Named Perils Only those perils specifically named in the policy are covered Burden of proof on the insured applicant to prove loss was caused by a named peril Endorsements Riders o Endorsements Written provision that adds to deletes from or modifies the provisions in the original contract Property liability insurance o Riders Provision that amends or changes the original policy Life health insurance o Both are changes amendments to contracts improvements o Take precedence over apparently conflicting policy provisions Contracts forms aren t negotiated but endorsements riders are negotiated Deductibles Provision by which a specified amount is subtracted from the total loss payment that o Usually written otherwise would be payable o Purpose Eliminate small claims that are expensive to handle and process Reduce premiums paid by the insured Reduce moral hazard and attitudinal morale hazard o Deductibles don t occur Life insurance total loss Personal liability insurance Professional engineer makes a mistake liability insurance Require legal defenses o Straight deductible The insured must pay a certain number of dollars of loss before the insurer is o Aggregate deductible All losses that occur during a specified time period usually a year are required to make a payment Ex Auto insurance accumulated to satisfy the deductible amount Ex Health insurance Coordination of benefits provision o Coordination of benefits provision In group health insurance is designed to prevent over insurance and the duplication of benefits if one person is covered under more than one group health insurance plan Coinsurance clause for property insurance o Coinsurance clause Encourages the insured to insure the property to a stated percentage of its insurable value o Insurance carried how much insurance on property Insurance required coinsurance clause Example Building face value Coinsurance condition 80 1 Million 600 000 Insurance bought carried Loss 100 000 How much do you recover o 80 of 1 million required 800 000 o 600 000 800 000 100 000 75 000 payment you get eat 25 000 o Underinsured building o Dictates payment if there is a loss o Purpose Achieve equity in rating o Penalize the underinsured Most property loss is partial not total loss o Elimination period Stated period of time at the beginning of a loss during which no insurance Law of large numbers vs large loss principle o Large loss principal Large loss is uncommon mostly partial so people don t get insurance to protect themselves from large loss o Law of large numbers More exposure units means the actual and expected loss come closer Elimination waiting period benefits are paid o Deductible together Other insurance provision o Multiple insurance companies cover same loss o Other insurance provisions Purpose is to prevent profiting from insurance and violation of the principle of indemnity Pro rata liability provision Each insurer s share of the loss is based on the proportion that its insurance bears to the total amount of insurance on the property Contribution by equal shares Each insurer shares equally in the loss until the share paid by each insurer equals the lowest limit of liability under any policy or until the full amount of the loss is paid Calculation examples for pro rata v equal shares which Ins Co pays what Loss Amount Company Pays o Pro Rata Company Amount Total Insurance on Loss o Equal shares loss paid for Each company pays up to limit then the left over goes to remaining companies until entire Excess policy calculation o Example o Primary and excess insurance provision Primary insurer pays first and the excess insurer pays only after the policy limits under the primary policy are exhausted Liability insurance 500 K with Company A primary Liability insurance 1M with Company B excess Loss 700 K Who pays what Primary Company A pays total up to limit of 500 K Excess Company B pays 200 K McHugh lecture o IRM SMART Ideal Realist Minimal Bigger goals Specific Measure Achieve Realistic Time Used for goal setting objectives Smaller goals o Interviewing tips job fair Practice in mirror Mirror other people s body language Smiling is important reduces stress Eye Contact Look people in the eye Hold eye contact until end of sentence or thought Good steady contact No shifty eyes or look at ceiling or look down Look down during pause Quality of Voice Carries over Project confidence Warm or etch glass Lower tone of voice adds meaning to message sounds more important Handshake Firmness Posture Drop shoulders back Tilt forward waste engaged interested conversational Opening Message HO insurance for ISO forms o HO 2 broad
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