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Risk Management Insurance Exam 2 Review Chapter 7 A The 6 basic parts of the insurance contract 1 Declarations statements that provide information about the particular property or activity to be insured Usually found on first page i In property insurance it contains the name of the insured location of property period of protection amount of insurance premium and deductible info 2 Insurance contracts often have a page of definitions i Key words or phrases have quotation marks around them The insurer is usually referred to as we our or us The insured is usually referred to as you or your ii The purpose of this is to clearly define the meaning of key words so that coverage under the policy can be determined more easily 3 Insuring Agreement Summarizes the major promises of the insurer Heart of contract 2 forms in property insurance i Named peril coverage Only the perils specifically stated in policy are covered ii Open perils policy Special Coverage policy All losses are covered except those specifically excluded iii To deny payment the insurer must prove that the loss is excluded In contrast under a named perils contract the burden of proof is on the insured to show that the loss was caused by a named peril iv Most life insurance contracts cover all causes of death by accident or by disease except for certain exclusions The major exclusions are suicide during the first two years of the contract certain aviation hazard exclusions such as military flying crop dusting etc 4 Exclusions Provisions in an insurance contract that list the perils losses and property excluded from coverage 3 main types of exclusions i Excluded Perils In a homeowner s policy floods earthquake or nuclear contamination might be excluded In auto insurance loss to a covered auto is specifically excluded if vehicle is used as a public taxi ii Excluded Losses Certain types of losses may be excluded In a homeowner s policy failure of an insured to protect the property from further damage after a loss occurs is excluded added negligence In the personal liability section of a homeowner s policy a liability lawsuit arising out of the operation of an automobile is excluded Professional liability losses are also excluded a specific professional liability policy is needed to cover this exposure iii Excluded Property The contract may exclude or place limitations on the coverage of certain property Example In homeowner s insurance certain types of personal property are excluded such as cars planes animals birds etc iv Reasons for Exclusions Certain perils considered uninsurable Catastrophic losses due to war Presence of extraordinary hazards using auto as taxi Coverage better provided by other contracts reason why car damage isn t covered by homeowner s insurance Used to avoid duplication of coverage Moral hazard problems difficulty determining and measuring amount of loss Coverage of limited to 200 in homeowner s policy Attitudinal hazard problems Attitudinal hazard is carelessness or indifference to a loss which increases the frequency or severity of loss Coverage not needed by typical insureds most homeowner s don t own private planes 5 Conditions Provisions in the policy that qualify or place limitations on the insurer s promise to perform to get claim payout i The conditions section imposes certain duties on the insured in order i e Notifying insurer after loss protecting property after loss cooperating with insurer in the event of liability lawsuit 6 Miscellaneous Provisions i ii In property and casualty insurance miscellaneous provisions include cancellation subrogation requirements if a loss occurs assignment of the policy and other insurance provisions In life and health insurance typical miscellaneous provisions include the grace period reinstatement of a lapsed policy and misstatement of age B Definition of Insured An insurance contract must identify the person or parties who are insured under the policy 1 Name Insured The person or party named on the declarations page of the 2 First Name Insured The first name that appears on the declarations page of policy the policy as an insured 3 Other Insureds persons or parties under the named insured s policy even though they are not specifically named in the policy i For example a homeowner s policy covers resident relatives of the named insured or any person under age 21 who is in the care of an insured 4 Additional Insured person or party who is added to the name insured s policy by an endorsement Owner of property adds tenant living in same property under their liability policy as an additional insured C Endorsements and Riders used interchangeably and mean the same thing 1 In property and casualty insurance an endorsement is a written provision that adds to deletes from or modifies the provisions in the original contract i In a homeowner s policy earthquake damage is not covered However and endorsement can be added to the contract to have that covered 2 In life and health insurance a rider is a provision that amends or changes the original policy 3 An endorsement attached to a policy generally takes precedence over any conflicting terms in the policy Many policies have endorsements that amend the policy to conform to a given state s law Chapters 16 and 17 A Who are the persons insured in an HO 3 Policy 1 The following are considered insureds under an HO 3 Section I policy a Named Insured and spouse b Resident relatives c Other persons under the age of 21 foster child exchange student d Full Time student away from home under the age of 24 2 In addition to the above the following persons are covered under the Section II policy i a Any person legally responsible for covered animals or watercraft i e If you leave your dog with your neighbor and it bites someone the neighbor has liability coverage under your insurance excludes taking your dog to doggy day care or if you leave your jet ski in a marina b With respect to a motor vehicle covered by the policy coverage applies to persons employed by the named insured or by other insureds as defined above while working for the insured i i e if an employee mows your lawn with a riding mower that you own and someone is injured he or she has liability coverage under your policy B What perils are covered 1 Dwelling and other structures are covered against direct physical loss to property All direct physical losses are covered except those losses specifically excluded 2 Personal property is covered for the same perils as HO 2 i


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FSU RMI 3011 - Risk Management Insurance Exam 2 Review

Documents in this Course
Risk

Risk

26 pages

Exam #2

Exam #2

7 pages

Exam #2

Exam #2

7 pages

Exam #3

Exam #3

9 pages

Exam #3

Exam #3

9 pages

Exam 1

Exam 1

12 pages

EXAM 1

EXAM 1

13 pages

Exam 1

Exam 1

12 pages

Test 2

Test 2

13 pages

Test 1

Test 1

6 pages

Chapter 1

Chapter 1

56 pages

Test 2

Test 2

22 pages

Test 1

Test 1

5 pages

TEST 2

TEST 2

16 pages

Chapter 1

Chapter 1

56 pages

Notes

Notes

18 pages

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