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Casualty Insurance Exam
Exam
364
Insurance
Professional
08/05/2019
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Term
The study of casualty is the study of what?
 Definition
Liability insurance
Term
What is considered an unreasonable or imprudent act (not an intentional act)?
 Definition
Negligence
Term
The standard for determining whether or not someone was negligent is to ask "what would a WHAT TYPE OF PERSON have done in the same or similar situation?"
 Definition
Prudent person
Term
To prove damages for negligence, a claimant, or injured party, must legally establish what four things to win a negligence lawsuit?
 Definition
1) Demonstrate that a duty was owed to the injured party
2) Show a breach of that duty by the defendant (insured)
3) Show an actual injury to a person or property has occurred; and
4) Establish that the breach of duty involved is the proximate cause of the injury (an uninterrupted chain of events, linked to the negligent party, was responsible for loss)
Term
What is the word for someone who enters the proximity or area of another without the owner's permission?
 Definition
Trespasser
Term
What is the name for someone who has been asked by the owner to come onto the property, usually for the owner's benefit?
 Definition
Invitee
Term
The owner of a building and land owes a duty to keep their property safe, depending on what?
 Definition
Who the potentially injured party might be
Term
What type of person can come on the premises at the invitation (either expressed or implied) of the owner?
 Definition
Licensee
Term
What duty is owed by an owner to a trespasser?
 Definition
A duty not to be grossly negligent (i.e. not keep wild animals about) or guilty of intentionally harmful activities (set up a trap designed to injure, maim or kill intruders)
Term
What duty is owed by an owner to an invitee?
 Definition
A very high standard of care is required to keep the invitee safe from harm including pointing out all possible hazards
Term
What standard of care is owed by an owner to a licensee?
 Definition
A high standard is owed but not as high as to an invitee
Term
What is a situation which draws the attention and possible injury of a child that creates a strict or what is known as an "absolutely" liability situation?
 Definition
Children - Attractive Nuisance Doctrine
Term
Under the idea of strict liability, does the injured party need to prove negligence?
 Definition
No - they simply have to qualify as a specifically protected class under the law (i.e. a child, an employee who is injured on the job)
Term
What are the 3 basic types of damages that can be awarded if someone were to win a negligence claim?
 Definition
1) Special Damages
2) General Damage
3) Punitive Damages
Term
What type of damages are the actual out-of-pocket expenses suffered by the injured party and income such items as medical expenses incurred and lost wages?
 Definition
Special Damages
Term
What type of damages are "subjective" or very personal and are compensation for the injured party's "pain and suffering"?
 Definition
General Damages
Term
What damages are meant to be a punishment to the offending party and are set by either a judge or jury and are designed to be financially painful to the negligent person as well as to others that might also engage in behavior similar to the party?
 Definition
Punitive damages
Term
The amount of money actually collected by an injured party in a legal action is also determined by a particular state's comparative negligence standard - what are the 3 types of comparative negligence standards?
 Definition
1) Pure standard
2) 49% Rule
3) 50% Rule
Term
Which comparative negligence standard does Illinois embrace?
 Definition
Pure standard of negligence
Term
Under which comparative negligence standard does the injured party collect a percentage of the offending party's responsibility, no matter how low or high?
 Definition
Pure standard
Term
Under what comparative negligence standard does the injured party not collect any amount of damages unless the defendant was at least 51% at fault?
 Definition
49% Rule jurisdiction
Term
Under what comparative negligence standard can the injured party be no more than half at fault for their own injuries to be allowed to collect?
 Definition
50% rule state
Term
What is the name for the extinct comparative negligence standard that some states used to use in which the person who is pursuing a claim could not hold liable the other party if it was ruled that the claimant, through a failure omission, or negligence of their own, had partly contributed to their own injury, no matter how small?
 Definition
Contributory negligence
Term
Under the extinct contributory negligence doctrine, which is an old comparative negligence standard, if the injured party was only 1% at fault and the other party owned 99% of the fault can the injured party collect any damages?
 Definition
No
Term
What is the law which is interpreted by judge through which legal precedents are followed?
 Definition
Common law
Term
What is the law which is written by legislative bodies either on a federal, state or local basis?
 Definition
Statutory law
Term
What type of liability involves an individual being liable for injury to another, or to their property, from both intentional acts and negligence?
 Definition
Personal liability
Term
What phrase means a party knew of an existing risk and understood injury was possible, yet went ahead and subjected him/herself to the risk anyhow?
 Definition
Assumption of risk
Term
What is a legal term taken from Latin and literally means "the thing speaks for itself," meaning that the thing that happened could not have happened unless negligence was involved?
 Definition
Res Ipsa Loquitur
Term
What phrase means that an employer can be held liable for any negligent acts committed by his employees or agents if some other party or third party suffers an injury?
 Definition
Respondeat Superior
Term
Respondeat superior is the basis for the modern concept of what type of liability?
 Definition
Workers Compensation
Term
What law insurance policy essentially offers business coverage involving injuries to persons who are (1) not employees of an insured (employees are covered under the Workers' Compensation policy when injured at work) and (2) who were not injured due to the use of an automobile?
 Definition
Commercial General Liability (CGL)
Term
The Commercial General Liability protects a business against loss caused by what?
 Definition
Negligent acts of the business
Term
What liability insurance policy pays loss to customers, vendors, and guests of the business who are injured due to a covered loss exposure?
 Definition
The Commercial General Liability
Term
What 2 loss exposures come standard with Commercial General Liability policies?
 Definition
1) Premises (building or real property ownership related)

2) Operations (related to the conduct or activity of the business or employees)
Term
What are the 4 exposures to loss that can be found within a Commercial General Liability policy?
 Definition
1) Premises
2) Operations
3) Products
4) Completed Operations
Term
What is the most common exposure loss under a Commercial General Liability policy?
 Definition
Lawsuits from injury arising out of the ownership and maintenance of land and building
Term
What exposure to loss in a commercial general liability policy results when a business is conducted from one or more locations?
 Definition
Premises
Term
What exposure to loss of a business mean the actions of the owner and/or employees while on or away fro the premises during the course of business?
 Definition
Operations
Term
What are the 2 exposures to loss that can be added on for additional money to a Commercial General Liability policy?
 Definition
1) Products (those made or designed improperly by a manufacturer)

2) Completed Operations (work already performed which later causes liability)
Term
Which exposure to loss within Commercial General Liability coverage covers both manufacturer and distributors of an improperly made product which injures someone?
 Definition
Products
Term
What are the 3 types of liability for which a company can be liable if their product injures someone?
 Definition
1) Negligence
2) Breach of warranty
3) Strict liability
Term
What are 3 loss exposures for a company that have to do with their products injuring someone?
 Definition
1) Poor manufacture
2) Design flaws
3) Failure to provide adequate warnings
Term
What exposure to loss within a Commercial General Liability policy involves loss potential from work of the firm that has already been performed?
 Definition
Completed Operations
Term
How are Products and Completed Operations coverage added to a Completed General Liability policy?
 Definition
By endorsement for an additional premium
Term
What are the 2 losses covered under Coverage A in a Commercial General Liability policy?
 Definition
1) Bodily Injury

2) Property Damage
Term
What is defined as injury to the body, sickness or disease suffered by a person including the concept of death that is a result of bodily injury, sickness or disease and is covered under Coverage A of Commercial General Liability?
 Definition
Bodily Injury
Term
What is defined as loss of use (nonphysical damage) of tangible property or physical damage to tangible property that renders the property unusable and is covered under Coverage A of Commercial General Liability policies?
 Definition
Property Damage
Term
Under a Commercial General Liability policy, the insurance company will pay Bodily Injury and Property Damage loss for which the insured is legally obligated due to a covered loss exposure caused by what?
 Definition
A negligent act of the insured
Term
What are 10 exclusions to Coverage A of a Commercial General Liability policy?
 Definition
1) Intentional acts
2) Work (employee) related loss
3) Auto, aircraft, or watercraft accidents
4) Liquor liability
5) Personal property in care, custody and control of the insured
6) War
7) Pollution discharge
8) Contractual liability
9) Damage to work product of the insured
10) Loss, expense or cost incurred by the insured for product recall due to known defect
11) Loss caused by personal activities of the insured
Term
Historically, Commercial General Liability policies were written only on an Occurrence Basis which means what? What does that not work anymore?
 Definition
Occurrence Basis means that the policies would cover for only occurrences that happened during the policy period

The reason this became a problem is because there have been long term exposures that resulted in illness years and even decades after the policy was in effect (for example - asbestos)
Term
What is the new form of coverage that developed under a Commercial General Liability policy has a result of losses that have occurred from long windows of time in which exposure to a loss occurs (like asbestos)?
 Definition
Claims Made Coverage
Term
The Claims Made Coverage Trigger applies to Bodily Injury and Property Damage only if what 2 things are present?
 Definition
1) The loss DID NOT occur before the policy RETROACTIVE DATE and
2) The claim is first made either during the policy coverage period or during any Extended Reporting Period and took place in the coverage territory
Term
What is the retroactive date as referred to in Claims Made Coverage?
 Definition
The date when a claims made form actually replaces an occurrence form
Term
The retroactive date within the Claims Made Coverage restricts coverage in a claim made form by limiting it to any claims arising from events that occur when?
 Definition
ON or AFTER the state retroactive date
Term
Any subsequent purchases of the claims made form under a Commercial General Liability policy from another insurance company will result in what?
 Definition
In the newly issued policy to bear the same original retroactive date which means there is uninterrupted coverage from the most recent occurrence form to the most recent claims made form
Term
Losses will be covered by a claims made form that is in effect WHEN the claim is discovered UNLESS what?
 Definition
The first trigger (loss exposure) occurred when the preceding occurrence form was in effect
Term
A supplemental endorsement to extend the reporting period under Claims Made coverage extends the reporting period for an unlimited duration if the insured give the company what? How much does it generally cost?
 Definition
If the insured gives a company a written request for the coverage within 60 days from the end date of the policy and pays the additional premium charge

The additional premium charge can cost up to 200% of the annual premium more than the Claims Made form
Term
The Claims Made form automatically provides a "basic extended reporting period" at no additional cost which begins when the policy ends and continues for how long?
 Definition
5 years for Bodily Injury and Property Damage arising out of an occurrence reported to the insurer within 60 days after the policy ends
Term
The Basic Extended Reporting Period under the Claims Made form allows the insured to get a claim paid even after the policy ends as long as what?
 Definition
They give notice to the insurer within 60 days that a claim will be forthcoming

The notice entitles the insured to a 5 year period to actually bring the claim for payment
Term
What are the 2 injuries covered under Coverage B of Commercial General Liability policies?
 Definition
1) Personal Injury
2) Advertising Injury Liability
Term
Personal injury is defined as injury other than bodily injury (nonphysical injury) or property damage arising out of one more of what 6 actions?
 Definition
1) False arrest (detain and/or falsely imprison someone)
2) Malicious prosecution (sue with no legal basis)
3) Wrongful entry or eviction (of another's premises)
4) Libel (written defamation of character)
5) Slander (oral defamation of character)
6) Invasion of another's right to privacy
Term
Advertising injury liability, which is covered under Coverage B in Commercial General Liability policies, applies to situations in which the insured advertises their goods or services in the policy coverage territory that creates injury that arises from one or more of what 4 actions?
 Definition
1) Infringement of the copyright, title or slogan owned by another
2) Misappropriation of the advertising style or idea owned by another
3) Oral (slander) or written (libel) publication of statements that defame any person or organization unintentionally or inadvertently
4) Oral or written publication of statements that violate the privacy rights of another
Term
What are the 9 exclusions to Coverage B within a Commercial General Liability policy?
 Definition
1) Intentional publication of oral or written statements that defame and injure another
2) Willful violation of law
3) Loss caused by breach of a contract
4) Failure of goods to conform to advertised quality
5) Unauthorized use of the name or product of another
6) Pollution related loss
7) Offence committed by an insured that is in the business of advertising, broadcasting, publishing or telecasting
8) Loss caused by the insured's poor workmanship or poor business practices
9) All exclusions listed under Coverage A
Term
Coverage C of a Commercial General Liability policy agrees to pay medical expenses which are incurred within 12 months of an accident that cause bodily injury under what 3 circumstances?
 Definition
Bodily injury:

1) Occurring on the premises owned or rented by an insured
2) Caused by accident
3) Resulting from the insured's operation
Term
Under Coverage C in a Commercial General Liability policy, which pays for medical payments from an accident, does negligence or legal liability need to be established?
 Definition
No - it is no fault or goodwill coverage
Term
Does Coverage C of a Commercial General Liability policy cover an insured, the family of the insured or the employees of the insured?
 Definition
No it only covers medical payments "TO OTHERS"
Term
On what basis and up to what amount would an insurance company pay losses under Coverage C of a Commercial General Liability policy for medical payments?
 Definition
It is paid on a per person basis and is paid up to the limited stated in the declarations
Term
What are the 8 exclusions to Medical Payments - Coverage C under a Commercial General Liability policy?
 Definition
1) Loss to an insured or a family member of the insured
2) Employees of the insured
3) Tenants of the insured
4) Persons involved in an athletic contest
5) Loss to persons as a result of the products-completed operations loss exposure
6) Persons that are excluded under Coverage A
7) War
8) All exclusions listed under Coverage A
Term
What are the 7 losses that a company will pay under Coverages A and B of Commercial General Liability insurance WITHOUT requiring any additional premium?
 Definition
1)All reasonable expenses and up to $250 per day of lost wages when the insured is incurring expenses at the insurer's request to help in an investigation or defense of a claim or lawsuit
2) bail bonds costs up to $250
3) cost of bonds to release attachments
4) any expenses incurred by the insurance company
5) all cost levied against an insured in a lawsuit (court costs, NOT attorney fees)
6) Interest payments
7) Defense costs to defend a lawsuit
Term
Do supplemental payments that are covered without an additional premium under Coverages A and B under a Commercial General Liability policy reduce the liability limits?
 Definition
No - they are paid in addition to the applicable limits of liability
Term
What is the definition for any person or firm specifically named (first named insured) in the declarations section of the contract?
 Definition
The insured
Term
What are 7 groups that can be considered an insured within a Commercial General Liability policy?
 Definition
1) Sole proprietorships
2) Partnerships
3) Corporations
4) Limited Liability Corporations
5) Trusts
6) Joint Ventures
7) Any other qualifying organization
Term
What are 5 individuals/groups that are additional "insureds" that could be covered under a Commercial General Liability policy?
 Definition
1) Employees of the insured acting "within the scope of their employment"
2) Real Estate Manager/Agent of the insured if they are not an Employee
3) Any person/organization with temporary custody of the property of the insured due to the death of the insured until a legal representative of the insured's estate is named
4) Legal representative of the estate of the insured
5) Any organization newly acquired or formed by the insured only until the 90th day after the insured acquires or forms the organization
Term
The limit of coverage that would be paid out as shown in a Declaration of a Commercial General policy will be paid regardless of the number of what 3 things?
 Definition
1) Insureds
2) Claims made or lawsuits filed OR
3) Persons or organizations that make claims or bring lawsuits
Term
What are the 2 groups of aggregate limits within a Commercial General Liability policy?
 Definition
1) for Products and Completed Operations claims (this is an "all inclusive limit" for these loss exposures and)
2) for ALL OTHER coverages (referred to as the "general aggregate limit")
Term
When a claim or lawsuit is brought and paid under a Commercial General Liability policy, it is subject to "per occurrence" amount that is referred to as a "sub-limit" of the policy. What are the 4 sub-limits of the Commercial General Liability general aggregate limits?
 Definition
1) Medical expense limit
2) Damage to the premises rented to the insured
3) Personal and advertising injury limit and
4) Each Occurrence Limit
Term
What is an identified loss category with a specified limit that is less than the general aggregate limit of a policy?
 Definition
A sub-limit
Term
Does payment of a loss under each sub-limit in a Commercial General Liability policy reduce the general aggregate limit?
 Definition
Yes
Term
How long will sub-limits within a Commercial General Liability policy be paid for?
 Definition
They will be paid during the policy period under the general aggregate limit until it is exhausted
Term
What is the word for the limit that is the most a Commercial General Liability policy will pay for Coverage A, B and C no matter how many claims are filed during a policy period (an annual period)?
 Definition
The General Aggregate Limit
Term
Once an aggregate limit of a Commercial General Liability policy is reached within a policy period, what happens?
 Definition
There is no more coverage under the policy until the next policy period begins
Term
What is considered to be one of the most complicated insurance policies?
 Definition
The Auto Policy
Term
What is automobile insurance designed to cover?
 Definition
Third Party claims for bodily injury and property damage arising out of the insured's negligent use of the vehicle causing the damage
Term
Who are considered the insured of an Auto Policy, which is shown in the Declarations?
 Definition
The named insured and spouse of the named insured as long as they reside at the same address
Term
An automobile can be covered under an Auto Policy if it is to be furnished for the "regular use" of the insured as well as it must be what one of what 4 things?
 Definition
1) A private passenger automobile, van or pickup truck, owned or leased by the insured for a continuing period of at least 6 months, which qualifies with a gross vehicle weight of less than 10,000 pounds
2) any "newly acquired vehicle"
3) any trailer the insured owns which attaches to a covered auto
4) any auto or trailer the insured does not own while using a "Temporary Substitute" while their covered vehicle is out of normal use
Term
What are the 5 reasons that a covered vehicle may be out of normal use that would lead an insured to use a vehicle that would be considered a "Temporary Substitute" and covered under an auto policy?
 Definition
1) Breakdown
2) Repair
3) Servicing
4) Loss
5) Destruction
Term
What is the word for any person related to the insured by marriage, blood or adoption who resides in the same household as the insured in an auto policy?
 Definition
Family member
Term
What is the term in an auto policy for bodily harm, sickness or disease including death?
 Definition
Bodily Injury
Term
What is the term in an auto policy for physical injury, destruction or loss of the use of tangible property?
 Definition
Property Damage
Term
What are the 4 coverage parts in an auto policy?
 Definition
1) Part A: Liability Coverage
2) Part B: Medical Payments Coverage Part
3) Part C: Uninsured Motorist Coverage
4) Part D: Coverage for Damage to Your Auto
Term
Parts A, B, C and D in an auto policy are 4 separate coverages that are included in the policy and each part has its own what 2 things?
 Definition
1) Insuring agreement
2) Exclusions
Term
The General Provisions section of a Personal Auto Policy addresses what 10 things and applies to ALL coverage parts?
 Definition
1) Fraud
2) Coverage Period and Territory
3) Subrogation
4) Legal Action versus the Insurer
5) Bankruptcy
6) Coverage Changes
7) Cancellation
8) Nonrenewal
9) Assignment
10) Other Simultaneous Insurance
Term
Does an insurance company have the right to deny coverage if an insured has perpetrated a fraudulent statement or engaged in any fraudulent conduct with an accident or loss?
 Definition
Yes
Term
What is the policy territory for a Personal Auto Policy?
 Definition
United States and its possessions, Puerto Rico and Canada
Term
Is there coverage in Mexico under a Personal Auto Policy?
 Definition
No
Term
Is an insurance company automatically assigned the right of recovering against an at fault third party to the extent any payment was made by the insurer to the insured for damages the at fault third party caused the insured in a Personal Auto Policy?
 Definition
Yes
Term
When can an insured bring any legal action against the insurance company?
 Definition
After the insured has satisfied all terms of the policy
Term
If an insured declares bankruptcy, is the insurance company still obligated to pay any part of a judgment tat was covered by insurance at the time of the loss?
 Definition
Yes
Term
If an insurance company revises its policy to provide broader coverage without additional premium for new policy owners, does it also have to extend the same rights to existing policy owners automatically?
 Definition
Yes
Term
When an a named insured cancel their Personal Auto Policy?

When can the insurance company cancel someone's Personal Auto Policy?
 Definition
Named insured can cancel the policy anytime

The insurance company's right to cancel is contingent upon the length of time the policy has been in force and notice requirements under state laws
Term
An insurance company reserves the right to nonrenew the insured in a Personal Auto Policy as described in the policy with how many days' notice?

If state law requires a different amount of days' notice than the contract, which rule applies?

How many days notice does Illinois require?
 Definition
- 20 days' notice

- State law overrules what is in the contract

- Illinois requires 30 day notice
Term
Can a personal auto policy be assigned without the written consent of the insurance company?
 Definition
No
Term
If an insured has more than 1 Personal Auto Policy which applies to the same accident, what is the maximum payable under all policies?
 Definition
It cannot be more than the highest applicable limit of any one of the policies that was issued
Term
The duties of the insured section of a Personal Auto Policy requires that an insured contact the police in what 2 instances?
 Definition
1) When theft occurs

2) When a hit and run accident happens
Term
The insuring agreement under liability in Coverage A of a Personal Auto Policy means the insurance company must pay for all damages for which the insured becomes what?
 Definition
Legally liable due to the insured's use of the automobile
Term
An insurance company must defend the insured in a legal action but can they make a settlement without the insured's permission?
 Definition
Yes
Term
Does Part A Coverage of a Personal Auto Policy ever pay losses to the insured?
 Definition
No - only to third parties
Term
In Coverage A of Personal Auto Policy, does the insurer have to defend the insured even after policy limits have been met and exhausted?
 Definition
No
Term
Coverage A of a Personal Auto Policy follows the car, where ever the car goes, as long as what?
 Definition
The operator has the permission of the insured to use the vehicle
Term
What Coverage Part of a Personal Auto Policy will pay medical expenses, lost wages and other legitimate "out of pocket" expenses to a third party when the insured is liable for bodily injury due to the use of a covered vehicle?
 Definition
Coverage Part A
Term
What Coverage Part of a Personal Auto Policy will pay for damages or destruction of another party's vehicle including reimbursement to the injured party if they need to rent a vehicle as a result of an insured's negligence while using a covered automobile?
 Definition
Coverage Part A
Term
In Illinois, a method of establishing the limit of liability under Coverage Part A of a Personal Auto Policy is to use split limits which does what?
 Definition
Establishes 3 separate loss categories each with its own specific limit expressed in thousands of dollars

Example: 20/30/20
The first 20 dollar limit numbers are related to bodily injury
- first number is the dollar limit in thousands per person in one accident
- second number is the dollar limit in thousands of the policy for all persons in a single accident

The last number refers to the Property damage and is the dollar limit in thousands for all property damage caused in one accident
Term
What are 2 methods of establishing limit of liability under Coverage Part A of a Personal Auto Policy?
 Definition
1) Split Limits
2) Combined Single Limit
Term
What limit basis method for Coverage Part A of a Personal Auto Policy expresses the loss limit for BOTH 1) bodily injury and 2) property damage loss as a single dollar amount in thousands arising out of one accident?
 Definition
Combined single limit
Term
The single dollar limit in a combined single limit basis method used for Coverage Part A of a Personal Auto Policy is the most paid in one accident no matter the number of what 3 things?
 Definition
1) Insureds
2) Claims made
3) Vehicles involved
Term
Which of the 2 liability limit methods for Coverage Part A in a Personal Auto Policy is better?
 Definition
It depeneds on the coverage limits and specific loss caused

If the loss caused is heavy on property and low on bodily injury - combined single limit is better

If insured has high bodily injury limits and the loss is mostly bodily injury - split limit method may have better coverage
Term
Does Coverage Part A of a Personal Auto Policy increase, if needed, when the insured incurs liability in an out of state situation?
 Definition
Yes
Term
If an insured is using a temporary substitute vehicle, which has its own insurance (like a rental car), and gets in an accident, how does the insured's insurance company treat the additional insurance?
 Definition
It is excess insurance which is an amount over and above other collectible insurance

The insurance company will only pay for its fair share of the loss
Term
What are the 9 exclusions in Coverage Part A of a Personal Auto Policy?
 Definition
1) Bodily injury to an employee during the course of employment
2) People engaged in the business of selling, repairing, serving, storing or parking automobiles
3) Any vehicle which is being used for regular business purposes
4) Any liability arising out of the ownership or operation of a vehicle while it is being used to carry people or property for money or a fee except sharing expenses in a car pool
5) Any intentional injury or damage
6) Damage to property owned or being transported by the owner
7) Use of a vehicle without a reasonable belief that one has permission to do so (theft)
8) Vehicles with fewer than 4 wheels
9) Liability loss created by racing a covered vehicle in a racing facility
Term
What are 6 supplementary payments of Coverage Part A and D in a Personal Auto Policy that are paid in addition to the limits of liability?
 Definition
1) up to 200 per day for lost wages when the insured is required to attend a legal hearing or trial
2) Bail bonds costs up to $250
3) Cost of bonds to release attachments
4) Any expenses incurred by the insurance company
5) Reasonable expenses incurred at the insurer's request
6) Interest payments (post judgment from a lawsuit)
Term
The insuring agreement for Part B of a Personal Auto Policy states that the company will pay reasonable expenses incurred for necessary medical and funeral expenses because of bodily injury that occurs which includes what 2 circumstances?

What is the time period for which an insurance company will pay those expenses?
 Definition
Expenses because of bodily injury:

1) Caused by accident; and
2) Sustained by an insured

The company will pay only those expenses incurred within three years from the date of the accident
Term
What is the basis in which an insurance company pays for medical payments under Part B Coverage in a Personal Auto Policy?
 Definition
Per Person, Per Accident
Term
An insurance company pays per person, per accident under Part B coverage in a Personal Auto Policy regardless of the number of what 4 things up to the bodily injury limits of the policy as stated in Part A?
 Definition
1) Insureds
2) Claims Made
3) Vehicles shown in the Declarations
4) Vehicles involved in a single accident
Term
Does Part B coverage under a Personal Auto Policy duplicate any payments made for medical expenses paid from Part A or from Part C?
 Definition
No
Term
What is the limit that is automatically included for Part B Coverage of a Personal Auto Policy statement?
 Definition
$1,000 per person, per accident
Term
Is Part B in a Personal Auto Policy option coverage?
 Definition
Yes and it can be removed at the request of the policyowner
Term
Occupying the vehicle for purposes of Part B Coverage for a Personal Auto Policy means what?
 Definition
Being in, upon or getting in, on, out, or off of the vehicle
Term
The definition of "INSURED" under Coverage Part B of a Personal Auto Policy is unusual because of who is included and the broadness of the coverage - who are the 3 groups of people that insured includes under Part B Coverage?
 Definition
1) The named insured or family members while "occupying" a motor vehicle
2) The named insured or family member struck by an auto while a pedestrian
3) Any other person while occupying the covered auto of the insured
Term
The Part B exclusions under a Personal Auto Policy indicates that medical payments coverage will not apply to any persons for bodily injury who are "occupying" the vehicle in what 5 circumstances?
 Definition
1) During the course of employment that is engaged in use for the business of the insured
2) Creating liability arising out of the ownership or operation of a vehicle while it is being used to carry people or property for money or a fee
3) while using it as a residence or premises
4) If owned by the insured but not a covered auto listed in the declarations
5) Without a reasonable belief that the person has permission to do so (theft)
- sustained in vehicles with fewer than 4 wheels
- as a consequence of racing a covered vehicle in a racing facility
- caused by nuclear reaction, contamination, radioactivity
Term
Uninsured motorist protection (Part C Coverage of Personal Auto Policy) was created to provide the insured and family with coverage in the event they suffer bodily injuries in what circumstance?
 Definition
At the hands of an uninsured driver
Term
The insuring agreement of uninsured motorist coverage, Part C Coverage of a Personal Auto Policy, promises to pay what amount of damages?
 Definition
The amount of damages that the insured would have collected fro the insurance company of the uninsured driver if that driver had the proper amount of auto liability insurance
Term
The insuring agreement of uninsured motorist coverage, Part C Coverage of a Personal Auto Policy, promises to pay what amount of damages?
 Definition
The amount of damages that the insured would have collected fro the insurance company of the uninsured driver if that driver had the proper amount of auto liability insurance
Term
When the insured sustains bodily injury by an uninsured motor vehicle the definition of "uninsured" coverage includes what 4 things?
 Definition
1) A motor vehicle that is not covered for bodily injury liability insurance
2) A liability policy or bond did apply at the time of the loss but the injury limits in force are less than the limits that are required by state law
3) Hit and run vehicle - the owner of the at-fault vehicle cannot be identified
4) At-fault vehicle was insured at the time of the accident but the insurance or bonding company subsequently becomes insolvent or denies coverage
Term
What 3 types of people are defined as an insured under Part C - Uninsured Motorist Coverage - of a Personal Auto Policy?
 Definition
1) The named insured or any family member while occupying a motor vehicle or hit as a pedestrian
2) Any other person occupying a vehicle
3) Any person entitled to recover for bodily injury damages to an insured
Term
Part C - Uninsured Motorist Coverage - under a Personal Auto Policy does not apply to what 6 excluded vehicles?
 Definition
1) Owned by the insured or available for use by family members
2) Owned by a self-insurer allowed by law unless they become insolvent
3) Owned by any unit of government
4) Operated on rails or crawler threads
5) Designed for use mainly on off public roads while not on public roads
6) Used as a residence or premises
Term
Under what 5 situations is there no coverage for Bodily Injury sustained by any person under Part C - Uninsured Motorist Coverage - in a Personal Auto Policy?
 Definition
1) While occupying or struck by any vehicle owned by the insured or family member when that vehicle is not listed in the Declarations as a covered auto
2) If the person or a legal representative settle the Bodily injury claim without the consent of the company
3) While occupying a covered auto being used for livery
4) Using a vehicle without a reasonable belief the person is entitle to use the vehicle
5) If the person is entitle to benefit under worker compensation or disability benefit law
Term
Under Part C Coverage of a Personal Auto Policy, if the insured and the company cannot agree on the existence or amount of coverage either party may demand that it gets resolved in what way?
 Definition
Arbitration
Term
What coverage can be purchases by adding an endorsement when the limit of uninsured motorist coverage is above the limit required by any financial responsibility laws?
 Definition
Underinsured motorist coverage
Term
Underinsured motorist coverage allows a covered person to be paid what amount?
 Definition
The difference between what the actual damages for bodily injury were and what the limit of the other drivers insurance was when the at-fault driver's coverage was not sufficient to pay the entire claim of the injury party
Term
What is the formula for calculating how much underinsured motorist coverage would be a covered person?
 Definition
Underinsured motorist coverage (of injured driver) - bodily injury limit (of other driver) = underinsured motorist coverage payment amount
Term
Part D Coverage of a Personal Auto Policy is optional coverage that offers what 2 separate coverages?
 Definition
1) Collision and
2) Other Than Collision
Term
What word pertaining to Part D Coverage of a Personal Auto Policy is defined as "the upset of a covered auto or its impact with another vehicle or object"?
 Definition
Collision
Term
Other than collisions, Part D Physical Damage Coverage under Personal Auto Policy, includes what 10 categories of named perils?
 Definition
1) Missiles or Falling Objects
2) Fire
3) Theft or larceny
4) Explosion or earthquake
5) Windstorm
6) Hail, water or flood
7) Malicious mischief or vandalism
8) Riot or Civil Commotion
9) Contact with a bird or animal
10) Breakage of glass
Term
Under Part D Coverage in a Personal Auto Policy, are losses to both owned and nonowned vehicles paid?
 Definition
Yes less the deductible
Term
Is the coverage offered under collision versus other than collision within Part D Coverage in a Personal Auto Policy mutually exclusive?
 Definition
Yes - each does not offer coverage for loss caused by the other (except glass breakage which can be caused by collision also)
Term
In order to be covered by Part D Coverage in a Personal Auto Policy, newly acquired vehicle must be reported to the company within how many days?

If there is no Part D Coverage on an insured's current policy, but they want it on a newly acquired vehicle, how soon does the insured need to report this newly acquired vehicle?
 Definition
Already covered under Part D - within 14 days

Not already covered under Part D but want new car covered - 4 days
Term
Under Part D Coverage in a Personal Auto Policy, the contract stipulates that a loss payment is the lesser amount of either what 2 options?
 Definition
1) The Actual Cash Value of the stolen or damaged property at the time of a loss, OR
2) The amount required to repair or replace the property with other property which is of a like kind or quality
Term
Under Part D Coverage of a Personal Auto Policy, the most the policy will pay for Damage to Your Auto in a total loss situation is what?
 Definition
The actual cash value (current replacement cost minus depreciation for use and wear and tear to the covered auto)
Term
What is the most a carrier will pay for a nonowned auto, like a trailer, under Part D Coverage in a Personal Auto Policy?
 Definition
$1,000
Term
What is the most a carrier will pay under Part D Coverage in a Personal Auto Policy for any electronic equipment permanently installed in the vehicle in an area not usually used by the manufacturer for such installation?
 Definition
$1,000
Term
What are the 11 exclusions to Part D Physical Damage Coverage in a Personal Auto Policy?
 Definition
1) When the auto is being used for livery conveyance (Car pools are OK)
2) Coverage for damage due to wear and tear, freezing, mechanical, electrical breakdown or failure, and road damage to tires (does not apply if this cause of loss is due to theft)
3) Loss caused by radioactive contamination and nuclear weapons (also war, civil war, insurrection, rebellion and revolution)
4) When the vehicle is destroyed or confiscated by civil authorities or local government
5) When any non-owned or temporary substitute auto is being used and there is no reason to believe that the user has permission to use the vehicle
6) Any non-owned auto damage where the auto is being used by an insured while they are employed or otherwise engaged business selling, repairing, servicing, storing or parking vehicles
7) Sound and communications systems that are later installed into an automobile (does not apply to sound equipment that was permanently installed)
8) Any equipment used in the detection or location of various radar and laser devices by law enforcement officials
9) Any custom furnishings or equipment in pickups or vans including carpeting, furniture, bars, cooking apparatus, sleeping materials and any custom murals, decals or graphics placed on the body of the van
10) A camper or trailer which the named insured owns but has failed to include in the declaration section of the policy (does not apply to newly acquired camper during coverage period and insured asks the company within 30 days of becoming owner)
11) Awnings, cabana or equipment designed to create additional living facilities
Term
In addition to the limits of liability for collision and other than collision loss, Part D Coverage under a Personal Auto Policy, will pay up to $20 per day to a maximum of $600 for what 2 transportation expenses?
 Definition
1) Temporary transportation expenses the insured incurs when there is loss to a covered auto (fees for buses, cabs, trains, etc)

2) Loss of use expenses for which the insured becomes legally responsible in the event of loss to a non-owned vehicle (the rental car of an insured is put out of service due to loss caused by the insured - this pays the car rental agency for their lost income)
Term
How long is the waiting period before transportation expenses will be paid if the loss is caused by theft?

How long is the waiting period if the loss is caused by another reason other than theft?
 Definition
If loss is because of theft - 48 hours waiting period

If loss is for reason other than theft - waiting period is only 24 hours
Term
The definition of an insured under the Personal Auto Policy for liability coverage (Part A) includes what three people/groups?
 Definition
1) You (the insured) your spouse and any family member for ownership; maintenance or use of any auto trailer
2) Any person using your auto (with permission)
3) Any organization with respect to legal responsibility for acts or omissions of a person for whom coverage is afforded under Part A for any auto or trailer other than your covered auto
Term
Does Part A Coverage of a Personal Auto Policy extend coverage to anyone you let use your vehicle as well as to any organization a driver was working with?
 Definition
Yes
Term
The policy attached to a car that is in an accident is considered the primary coverage, how is the coverage of another driver treated?
 Definition
It will be excess coverage
Term
If the spouse ceases to be a resident of the same household during the policy period, then the spouse will no longer be covered under a Personal Auto Policy when the earliest of what 3 conditions occurs?
 Definition
1) The coverage period ends; OR
2) The spouse gets his/her own policy naming them as the insured OR
3) 90 days from the change of residency
Term
What are the 5 types of automobiles for purposes of Personal Auto Policies?
 Definition
1) Owned
2) Nonowned
3) Hired
4) Temporary substitute
5) Newly Acquired Autos
Term
What type of automobile is an vehicle that is titled in the name of the insured or is capable of being titled in the name of the insured?
 Definition
Owned
Term
What type of automobile is an vehicle that is titled in the name of the insured or is capable of being titled in the name of the insured?
 Definition
Owned
Term
What type of automobile is being used for the benefit of a business and is owned by someone else, including an employee's own vehicle?
 Definition
Nonowned
Term
What type of automobile coverage is used by a business to protect the liability exposure that arises due to an auto accident while an employee of the business is performing a task for the company and is sued for causing the accident?
 Definition
Nonowned automobile
Term
An automobile that has been borrowed is considered a hired automobile unless what?
 Definition
It is borrowed from an employee or partner
Term
Is Hired Auto Coverage considered coverage for an employee?
 Definition
No
Term
Is Hired Auto Coverage considered coverage for an employee?
 Definition
No
Term
Can Hired Auto coverage supplement or replace a car rental agency's liability coverage?
 Definition
Yes
Term
A Hired Auto policy's liability coverage protects who or what?
 Definition
The company an insured owns
Term
What type of automobile is a nonowned vehicle tat is used when the auto of the insured is out of normal use due to breakdown, repair, servicing, loss or destruction?
 Definition
Temporary substitute auto
Term
What type of automobile has the broadest type of coverage in the Declarations on the date of ownership except to Part D?
 Definition
Newly Acquired Autos
Term
What is optional coverage under Part D that can insured can select to help pay the cost of a rental car when a covered cause of loss renders the covered vehicle listed in the Declarations inoperable or it is stolen?
 Definition
Rental Reimbursement Expense
Term
What are the 5 main commercial coverage forms in a Commercial Auto Policy?
 Definition
1) Business Auto Coverage
2) Business Auto Physical
3) Garage Coverage
4) Truckers Coverage
5) Motor Carrier Coverage
Term
All forms of Commercial Auto Coverage Forms provide both auto liability and physical damage coverage except for which form?
 Definition
Business Auto Physical Damage Form
Term
What Commercial Auto Policy offers specified liability and physical damage coverage for risks associated with business use of the auto?
 Definition
Business Auto Policy
Term
What are the 9 categories of automobiles that are considered covered under a Business Auto Policy?
 Definition
1) Any auto
2) Owned autos only
3) Owned private passengers autos only
4) Owned autos other than private passenger autos only
5) Owned autos subject to state no-fault benefits
6) Owned autos subject to compulsory uninsured motorists law
7) Specifically described autos
8) Hired autos only
9) Nonowned autos only
Term
What are the 4 groups of excluded individuals that would not be covered and not considered insureds under a Business Auto Policy?
 Definition
1) Owner and anyone else from whom a covered auto is hired or borrowed
2) Partners of the named insured for a covered auto owned by them or a member of their household
3) Persons using a covered auto in a manner which dictates the auto should be covered under Garage coverage and Garagekeeper insurance
4) Anyone other than the named insured's employees, partners, lease or borrower or any of their employees, while moving property to or from a covered auto
Term
Liability coverage on covered auto extends to the named insured and all other individuals while using a covered auto having the permission of the named insured so long as what?
 Definition
As the auto is hired, owned, or borrowed by the NAMED INSURED
Term
What are 13 exclusions to the Business Auto Policy?
 Definition
1) Expected or intended injury
2) Contractual liability
3) Workers compensation
4) Employers liability
5) Fellow employee
6) Care custody and control
7) Handling of property
8) Movement of property be mechanical device
9) Operation of certain equipment
10) Completed operations
11) Pollution
12) War
13) Racing
Term
Section 2 of a Business Auto Policy is what type of coverage?
 Definition
Liability coverage
Term
Section 3 of a Business Auto Policy spells out what type of coverage?
 Definition
Physical Damage Coverage
Term
Section 3 of the Business Auto Policy spells out Physical Damage Coverage for covered auto or its equipment under what 3 conditions?
 Definition
Under
1) Other than collision coverage OR
2) Specified causes of loss coverage AND
3) Collision coverage
Term
While there are 6 sections to the Garage Policy, only what 3 are examined for the state exam?
 Definition
1) Section 1 - Covered Autos
2) Section 2 - Liability Insurance
3) Section 3 - Garagekeeps coverage
Term
A Garage Policy offers what 2 types of liability coverage in 1 policy?
 Definition
1) Comprehensive liability for general liability AND
2) Automobile liability exposures
Term
The business exposures addressed by the Garage Policy are those of what 2 groups?
 Definition
1) Automobile dealers and
2) Automobile service organizations, such a service stations, storage garages and public parking places
Term
Section 1 of a Garage Policy, Covered Autos, includes 11 different automobiles that are each assigned a symbol - what are those automobiles (do not worry about symbols)?
 Definition
1) 21 - any auto
2) 22 - owned autos only
3) 23 - owned private passenger autos only
4) 24 - owned autos other than private passenger autos only
5) 25 - owned autos subject to state no-fault benefits
6) 26 - owned autos subject to compulsory uninsured motorists law
7) 27 - specifically described autos
8) 28 - hired autos only
9) 29 - nonowned autos that are used in the garage business of the insured
10) 30 - autos left with the insured for service, repair, storage or safekeeping
11) 31 - dealer autos and autos held for sale by nondealers or trailer dealers (physical damage coverage)
Term
Liability Coverage of Section II of a Garage e Policy focuses on what 2 sections?
 Definition
1) Garage Operations - other than covered autos

2) Garage Operations - covered autos
Term
What is defined as the ownership, maintenance or use of locations for garage business and that portion of the roads or other access that adjoin these locations?
 Definition
Garage Opeartions
Term
Under Section II of a Garage Policy, Garage Operations - Other Than Covered Autos - pays for bodily injury and property damage for accidents resulting from what?
 Definition
Garage operations than the ownership maintenance or use of covered autos

This coverage specifically states that all covered autos indicated in Section I are treated as covered autos for all operations necessary and incidental to the garage business
Term
Under Section II of a Garage Policy, Garage Operations - Covered Autos coverage pays for Bodily Injury and Property Damage liability for accidents caused by what?
 Definition
Garage operations that relate to the ownership, maintenance or use of covered autos
Term
Are the two coverages under Section II of a Garage Policy mutually exclusive?
 Definition
Yes - each covers vehicles that the other does not
Term
What are the 16 exclusions to Liability Section II coverage of a Garage Policy?
 Definition
1) Expected or intended injury
2) Contractual liability
3) Workers compensation
4) Employers liability
5) Fellow employee
6) Care custody and control
7) Leased autos
8) Pollution
9) Watercraft or aircraft
10) Defective products
11) Work performed by the insured
12) War
13) Loss of use
14) Racing
15) Products recall
16) Liquor liability
Term
What are the 4 exclusions to the Garagekeepers Section - Section III of a Garage Policy?
 Definition
1) Contracts in which the insured accepts the legal liability for a loss
2) Loss caused by the insured or by an employee of the insured by theift
3) Loss caused by defective parts or materials
4) Faulty work of the insured
Term
What section of a Garage Policy provides liability coverage to the insured garage owner/operator for his liability arising from damage to his customer's auto?
 Definition
Section III Garagekeepers
Term
Under Section III - Garagekeepers Coverage - of a Garage Policy, all loss the insured is legally obligated to pay as damages is covered when a covered auto or auto equipment is in what situation?
 Definition
In the care of the insured while the insured is attending, servicing, repairing, parking or storing the property in garage operations of the insured
Term
The Section III Garagekeepers Coverage in a Garage Policy mimics the Business Auto Policy in what way?
 Definition
With respect to Other Than Collision, Collision, and the availability of the optional Specified Causes of Loss Coverage
Term
What is a commercial endorsement that is used when one or more autos of the private passenger type are to be covered under a commercial auto form when owner needs to obtain the equivalent of Personal Auto Policy coverage under the commercial auto form?
 Definition
Individual Insured
Term
In an Individual Insured commercial endorsement for a commercial auto policy, the named insured is usually 1 of what 2 people?
 Definition
1) Sole proprietor, or
2) Principal officer
Term
What is a commercial auto endorsement that provides coverage for liability, medical payment, underinsured and physical damage coverage for specifically named insureds and is needed when a company car is furnished to an individual (officer, partner or employee of the business) and the company car is the only vehicle available for use to the named insured?
 Definition
Driver Other Car (DOC)
Term
Under what laws can someone hold their employer liable for economic or financial damages as a result of being inured, becoming disabled or dying from injuries or illness arising out of and occurring in their course of employment without being required to prove negligence?
 Definition
Workers Compensation Laws
Term
What are the 2 categories of workers compensation laws that exist in which a state can adopt?
 Definition
1) Compulsory - all eligible employees have to be covered and mounts for coverage are stipulated by each state law

2) Elective - employer is not required to make a policy purchase (Texas and New Jersey are elective states) but if they do not they are not entitle to the three common law defenses
Term
What are the 3 common law workers compensation defenses?
 Definition
1) Contributory negligence - employer was not 100% at fault

2) Assumption of Risk - if employee knew that the work was dangerous or the workplace was dangerous then they were not liable

3) Fellow-Servant Rule - employer not liable if another employee caused the injury and the employer showed good judgment in hiring that employee
Term
Do all employees need to be covered under a Workers Compensation policy?
 Definition
Yes - full-time; part-time and seasonal
Term
An employer may meet the workers compensation requirements as set forth by law in one of what 3 ways?
 Definition
1) Through private insurance (self-insuring or purchase from an insurance company)

2) by established state funds which are in competition with private insurers

3) through a monopolistic state fund (private insurance is now allowed in six states)
Term
Even though the vast majority of workers in America are covered under a state Workers Compensation law, certain types and classes of employee are covered under Federal law instead - what 5 groups are covered by Federal law?
 Definition
1) Workers employed by the Federal government
2) Maritime workers (people at sea who are covered under the Jones Act)
3) Railroad workers (covered under FELA - Federal Employers Liability Act)
4) Coal Miners (due to black lung disease)
5) Dock Workers (Longshore and Harbor Workers Compensation Act)
Term
Under a Workers Compensation contract who is the insured?
 Definition
The employer
Term
How long is a premium amount for a workers compensation policy subject to audit?
 Definition
Up to 3 years after the policy has ended
Term
Is the premium amount listed on the Information Page in a Workers Compensation Policy an exact amount or estimated amount?
 Definition
Estimate
Term
The court system has defined what has an individual who perform services for another individual "at the direction of the other individual as to the details and means by which the result is accomplished"?
 Definition
Employee
Term
What are the 6 attributes that an independent contractor has that makes them different than an employee?
 Definition
1) Special skills
2) Control over the details of the task(s) performed
3) Bring and use their own tools
4) Place of employment
5) Manner in which they are paid
6) Right to terminate the relationship
Term
What are the 5 types of compensation that an injured worker can be entitled to under a Workers Compensation policy?
 Definition
1) Lost Wages
2) Medical
3) Disability
4) Vocational Rehabilitation
5) Death Benefit (for Survivors)
Term
Can lost wages from an injury at work be subject to a waiting period of specified days before being paid to an injured employee from a Workers Compensation policy?
 Definition
Yes
Term
Is there a limit to the amount of medical expenses that could be paid to an injured employee from a Workers Compensation policy?
 Definition
There is no limit and no deductible and all expenses must be paid
Term
What are the 4 types of disability awards that can be given from a Workers Compensation policy?
 Definition
1) Permanent Total Disability - employee can never work again
2) Temporary Total Disability - unable to do any work for a period of time but can return to work at some point
3) Permanent Partial Disability - permanent disability but worker can return to work
4) Temporary Partial Disability - least severe and short in duration
Term
Are payments from a Worker's Compensation policy made to an injured employee regardless of fault?
 Definition
Yes
Term
Can an employee sue an employer and collect money outside of a Workers Compensation policy?
 Definition
No - this is the exclusive remedy for the injured/ill worker
Term
What are 4 Supplementary (Additional Benefits) that are available in Part 1 of a Workers Compensation policy at no additional premium cost?
 Definition
1) Reasonable expenses incurred by the insurance company
2) Premiums for court bonds (appeals and to release attachments)
3) Litigation costs to the employer
4) Interest on judgments
Term
Possible causes of injury or illness that may be excluded under a Workers Compensation policy can include what 4 causes?
 Definition
1) Intentional injury of the employee (self-inflicted just to collect money)
2) Non-work related activities that cause the loss (like tossing the football around the machines)
3) Intoxication of employee at time of injury (alcohol and/or drugs)
4) Loss sustained while going to or coming from work (not actually at work - lose but no cigar)
Term
What are the 2 parts of a Workers Compensation policy?
 Definition
1) Compensation
2) Employers Liability
Term
When an employer decides to expand to one or more additional states and will be employing workers in those new states, what must they do to make sure those employees are covered under their Workers Compensation policy?
 Definition
They must contact the insurance company promptly to add the required states to the policy Information page and it is optional coverage for which an additional premium is required
Term
What is the part of Workers Compensation coverage and is an optional liability coverage (requires additional premium) that benefits the employer when a third party (if allowed to sue an employer under state law) makes a claim and they must prove negligence to collect?
 Definition
Employers' Liability
Term
What is the phrase for the situation in which a worker is no longer the same person they used to be and the family members have suffered loss as well?
 Definition
Loss of consortium
Term
What is the word for the situation in which an injured worker is hurt not at work but instead as a customer of the employer? What theory can this individual sue under?
 Definition
This situation is called "dual-capacity"

The worker can sue under a product liability theory
Term
What are the 5 types of liabilities that are excluded under Employer's Liability, Part 2 of a Workers Compensation Policy?
 Definition
1) Liability assumed under contract
2) Injured workers while employed under violation of law (illegal immigrant)
3) Injury intentionally made worse by the employer
4) Damages arising out of actions taking by the employer relating to employment practices
5) Fines, penalties and punitive damages
Term
What is the legal doctrine that says that in exchange for the employer giving up their common law defenses, workers compensation would be the only compensation to the injured or ill worker?
 Definition
Exclusive Remedy
Term
What is the legal doctrine that says that in exchange for the employer giving up their common law defenses, workers compensation would be the only compensation to the injured or ill worker?
 Definition
Exclusive Remedy
Term
What crime requires the following 3 elements:

1) There is forcible entry or exit into or out of locked premises and
2) The perpetrator has felonious intent and
3) The perpetrator leaves behind visible signs that they were on the premises?
 Definition
Burglary
Term
What crime involves someone taking property that does not belong to them by threatening the property owner with harm or violence if they do not relinquish the property to them?
 Definition
Robbery
Term
What is the word for any act of stealing, including both robbery and burglary?
 Definition
Theft
Term
What is the phrase that refers to property loss that is a mystery?
 Definition
Mysterious Disappearance
Term
Is theft loss covered under a Worker's Compensation policy?
 Definition
It may or may not be covered depending upon the way the contract is worded and whether or not mysterious disappearance is included in the definition of theft loss
Term
What is the technical word for payroll?
 Definition
Remuneration
Term
How is premium for Workers Compensation coverage determined?
 Definition
By multiplying the appropriate job classification rate by the payroll of that job classification rate
Term
What are the 5 commercial insuring agreements that need to be analyzed for the exam?
 Definition
1) Employee Dishonesty (employee)
2) Theft (non-employee)
3) Robbery (non-employee)
4) Burglary (non-employee)
5) Forgery and Alternations (non-employee)
Term
What can be used by a business for protection when they are a victim of theft either from employees or non-employees?
 Definition
Crime forms that can be written alone or made part of a Commercial Package Policy
Term
What are the 2 theories upon which an employer can recover under Crime insurance, depending on the form that is written?
 Definition
1) Discovery period
2) Loss sustained
Term
What is the approach in which an employer can recover under Crime insurance in which a loss to be paid must be a covered loss discovered by the insured and the form is submitted no later than 60 days from the end of the policy?
 Definition
Discovery period approach
Term
The Commercial Crime coverage program in a Workers Compensation policy is only available on a what basis?
 Definition
Per loss basis
Term
Crime forms in a Workers Compensation policy protect against loss in what 2 categories of property which are mutually exclusive?
 Definition
1) Money and Securities or
2) Property Other than Money and Securities
Term
hat is the approach in which an employer can recover under Crime insurance in which a loss to be paid is covered when discovered during the policy period or within 1 year of the end of the policy and will also cover loss in a current coverage period, even if under different coverage, if the policies ran consecutively without coverage interruption?
 Definition
Loss sustained
Term
What is the insuring agreement in the Commercial Crime Form that will pay for loss of or damage to money and securities and to other property; loss from forgery is included and coverage goes to the honesty of the employee?
 Definition
Employee Theft
Term
Under the Employee Theft insuring agreement in the Commercial Crime Form, the limit of coverage applies to what?
 Definition
Each act of theft and not to the employee
Term
What is the word that describes the following items:

- Currency
- Coins and bank notes in current use and having a face value
- Travelers checks
- Register check
- Money orders held for sales to the public?
 Definition
Money
Term
What word describes the following items:

- negotiable and nonnegotiable instruments
- contracts representing either money or property?
 Definition
Securities
Term
Besides money and securities losses, the Theft Form in the Commercial Crime Form in a Workers Compensation policy also pays what for what 2 damages?
 Definition
1) for damage to the insured premises or its exterior resulting directly from the actual or attempted theft of money and securities if the insured is the owner or liable for damage done to the premises AND

2) Damage done to a locked safe, vault, cash register, cash box of cash drawer inside the premises which directly results from the actual or attempted theft of or unlawful entry in such containers
Term
What is defined as the unlawful taking of property from the care and custody of a person by one who has: caused or threatened to cause that person bodily harm or committed an obviously unlawful act witnessed by that person?
 Definition
Robbery
Term
What main insuring agreement that pertains to robbery in the Commercial Crime Form in a Workers Compensation policy covers robbery of a custodian which is defined as the insured or any of the insured's partners or members or any employee while having care and custody of property inside the premises, excluding any person while acting as a watchperson or janitor?
 Definition
Inside the Premise - Robbery or Safe Burglary of Other Property
Term
Which insuring agreement that pertains to robbery in the Commercial Clause Form in a Workers Compensation policy covers robbery of money and securities and other property outside the premises if in the possession of a messenger or an armored car company at the time of the loss?
 Definition
Outside the Premises
Term
What are the 10 exclusions to the Employee Theft, Inside the Premises - Robbery or Safe Burglary of Other Property and Outside the Premises insuring agreements?
 Definition
1) Employees that were cancelled from coverage under previous policies
2) Inventory Shortage (cannot prove theft was the cause of loss)
3) Trading one type of property for another
4) Warehouse receipts (must have a competent and honest warehouse person)
5) Employees where prior dishonest acts are known by the owner or other management levels before the coverage period begins
6) Voluntarily parting with property
7) Fire
8) Accounting or math errors
9) Motor vehicles
10) Money operated devices
Term
What means the signing of the name of another person or organization with intent to deceive?
 Definition
Forgery
Term
What insuring agreement under the Commercial Crime Form in a Workers Compensation policy covers the expenses associated with any legal action that would result from the insured who stops payment on a valid check or note where they had good reason to believe there was a specific crime related to it, but there was not?
 Definition
Forgery
Term
What are the 2 insuring agreements that addresses burglary in the Commercial Crime Form of a Workers Compensation policy?
 Definition
1) with the burglary loss of money and securities including paying for the damage a burglar does to the premises in breaking in or out
2) with other property when safe burglary is involved; addresses the need to place valuable property that is not money or securities but belongs in a safe or vault nonetheless
Term
What are the 6 main types of guarantees in surety bonding?
 Definition
1) Federal (assures payment of duties owed to the federal government)
2) Contracts (they guarantee performance expected under a contract)
3) License and Permit (individuals need them to make governments happy in order to get permits and licenses issued - building contractors, for example)
4) Public Official (protect the citizens of local governments if elected officials rob them blind)
5) Court (known as judicial bonds)
6) Miscellaneous (hundreds of possibilities)
Term
What is the face amount, or limit, of a surety bond called?
 Definition
The Bond Penalty
Term
What is a guarantee for performance (a promise) made by a Principal to an Obligee (usually a customer or business associate of the principal who has made a promise to perform to the obligee) which is financially backed?
 Definition
Surety bond
Term
Who are the 2 parties in an insurance contract?
 Definition
1) Insured
2) Insurance company
Term
Who are the 3 parties in a bonding contract?
 Definition
1) Principal
2) Surety
3) Obligee
Term
Is an insurance contract or bonding contract designed to pay for covered losses based on expectations of the loss?
 Definition
Insurance
Term
Under what type of contract is no loss expected but it is one party vouching for another party?
 Definition
Bonding
Term
What is the risk of loss in an insurance contract based on?
 Definition
Based on change, loss is outside of the control of the insured
Term
Once a loss is paid in an insurance contract, does an insurer expect repayment?
 Definition
No, except in the case of subrogation
Term
If a loss payment is made in surety bonding contract, does the insurer have the right to recover loss payment from the principal?
 Definition
Yes
Term
Is there an expectation of paying a loss in a surety bonding contract?
 Definition
No since the activity is within the control of the principal to perform
Term
What offers protection against the dishonest and fraudulent acts of employees, therefore they guarantee honesty?
 Definition
Fidelity bonds
Term
The fact amount of a fidelity bond is called what?
 Definition
The limit of liability
Term
Fidelity bonds are written with predictions for loss that is reflected in the pricing which is also known as what?
 Definition
Employer Dishonesty Insurance
Term
What are the 3 general types of fidelity bonds?
 Definition
1) Individual (each covered employee is named)
2) Scheduled (multiple name employees or protects against loss when any employee is engaged with a specific job duty - known as a position schedule bond)
3) Blanket - theft by all employees is covered
Term
What are the 2 types of blanket fidelity bonds?
 Definition
1) Commercial Blanket Bond - per loss basis; one year discovery period
2) Blanket Position Bond - per employee loss basis; 2 year discovery period
Term
What is the word for the length of time the employer has to realize that they have suffered a loss?
 Definition
Discovery period
Term
Are losses caused entirely by inventory shortages covered by fidelity bonds?
 Definition
No because it does not meet the burden of proof of dishonesty
Term
What are the 2 categories of professional liability insurance?
 Definition
1) Malpractice
2) Errors and Omissions
Term
Fidelity bonds run continuously and stay in force until when?
 Definition
They are expressly cancelled by either the insurance company or the employer
Term
What type of liability insurance is created when a professional fails to meet the regular standard that is expected of a particular service given the degree of skill required and expected of a person in the particular profession?
 Definition
Professional liability insurance
Term
What are the 2 loss exposures to a professional?
 Definition
1) Injuries (bodily and personal)

2) Acts of omission (not providing necessary information)
Term
What are the 4 professional liability policies that you should be aware of for the exam?
 Definition
1) Errors and Omissions
2) Medical Malpractice
3) Directors and Officers
4) Employment Practices
Term
What is a special clause that is only found in various malpractice (medical) and other professional liability (legal) coverages that indicates that the written consent of the insured is required before the insurer can settle a case brought against an insured and is designed to protect the reputation of the professional who is insured for liability?
 Definition
The consent to settle a loss provision
Term
What type of professional liability insurance protects the insured from liability that arises from their negligent acts in the market places they serve when making mistakes or when loss is created because they do not provide information clients that should have been provided?
 Definition
Errors and Omissions
Term
Is there any professional liability insurance that provides coverage for dishonesty, fraud, criminal acts, defamation and punitive damages?
 Definition
No
Term
What are the 2 main policies in the area of Medical Malpractice insurance?
 Definition
1) Physicians, Surgeons and Dentist Professional Liability Insurance

2) Hospital Professional Liability Insurance
Term
What is a medical malpractice policy that is an individual policy that payments for damages arising from a "medical incident" in which the required level of professional service was not delivered?
 Definition
Physicians, Surgeons and Dentist Professional Liability Insurance
Term
What is the medical malpractice policy that covers damages arising out of medical incidents from most professional services rendered to patients in a hospital by medical personnel and staff in the hospital?
 Definition
Hospital Professional Liability Insurance
Term
What type of coverage protects individuals that serve as officers and board of directors members?
 Definition
Directors and Officers Professional Liability Coverage
Term
Why is Directors and Officers professional liability insurance necessary for officers and board of director members?
 Definition
Because there is no other personal liability coverage that protects the individual serving in this capacity
Term
What is defined as any breach of duty, neglect, error, misstatement, misleading statement, omission or other act committed or wrongfully attempted by the insured or alleged to have been committed solely based on their service in the capacity of officer or director?
 Definition
Wrongful act within professional liability coverage for directors and officers
Term
Are punitive damages and fines included in Directors and Officers professional liability coverage?
 Definition
No
Term
What type of professional liability insurance provides protection for an employer against claims made by employees, former employees or potential employees covering discrimination, wrongful termination of employment, sexual harassment and other employment-related allegations?
 Definition
Employment Practices Liability Insurance
Term
Claims for Employment Practices Liability professional liability insurance are categorized into 3 what classes?
 Definition
1) Those arising pursuant to statutory liability
2) Civil law (tort) theories
3) Claims arising from employment contracts
Term
What are the 2 types of Cyber insurance?
 Definition
1) First Party Response Coverage
2) Third Party Defense and Liability Insurance
Term
What are the 7 types of liabilities that are included in Third-Party Defense and Liability cyber insurance?
 Definition
1) Network security breaches
2) Legal settlements
3) Infringement of copyright
4) Judgments
5) Electronic media liability
6) Employee privacy liability
7) Civil court awards
Term
What are the 8 benefits that are included in First-Party Response cyber insurance coverage?
 Definition
1) Forensic services for detecting whether or not a breach occurred
2) Customers and employees notification
3) Crisis management
4) Customer credit monitoring
5) Public relations to manage the crisis
6) Business interruption expenses
7) Costs of added labor to the business due to the claim
8) Reimbursement in cases of cyber extortion
Term
What type of policy is an excess and broad form of liability insurance coverage for both general liability and automobile liability that is purchased separately from and in addition to the separate basic liability contracts of general liability and automobile liability coverage?
 Definition
Umbrella liability policy
Term
What are the target economic groups for an umbrella liability policy?
 Definition
The wealthy to middle and upper-middle class individuals with sizable assets (a good benchmark is probably in excess of $300k in assets)
Term
What is a drawback of recent personal umbrella liability policies?
 Definition
They do not cover loss to the insured due to uninsured and underinsured auto loss
Term
In an umbrella liability policy, the umbrella amount (usually a minimum of $1,000,000) is typically paid only when?
 Definition
If the underlying primary insurance amount is first exhausted (fully paid(
Term
What is the exception to the general rule that the umbrella amount in an umbrella liability policy will only pay if the underlying primary insurance amount is fully paid?
 Definition
The umbrella will pay when the umbrella, which is written in broader language than the underlying primary insurance, covers the loss which arises but the underlying coverage does not
Term
All three coverages in an umbrella policy, the underling policies and the umbrella must be written by the same insurer and a personal umbrella can be written with what which range from several hundred to many thousands of dollars?
 Definition
Self-Insured Retention - a deductible also known as SIR
Term
The Self-Insured Retention on a commercial umbrella policy is much greater and is required when 1 of what 2 things happen?
 Definition
1) When either the underlying coverage is exhausted or

2) a claim develops that is not covered by the underling coverage but s covered under the umbrella
Term
What is strictly defined as an uncertainty regarding financial loss?
 Definition
Risk
Term
What are the 2 basic types of risk?
 Definition
1) Pure risk
2) Speculative risk
Term
What basic type of risk is solely the chance of loss without a possibility to gain a profit from that loss (there is no change to gain in these situations)?
 Definition
Pure risk
Term
What type of basic risk involves the possibility or chance of loss or gain (you could win OR lose), these types of risk are not insurable?
 Definition
Speculative risk
Term
What are the only risks that are insurable?
 Definition
Pure risks
Term
What seeks to eliminate or reduce the loss which can occur from pure risk?
 Definition
Insurance by allowing the insured to transfer the risk of loss to an insurance company in exchange for a premium payment
Term
What is defined as something that creates an increased possibility that a peril (a cause of loss) will actually occur?
 Definition
Hazard
Term
What are the 3 types of hazards?
 Definition
1) Morale hazard
2) Moral hazard
3) Physical hazard
Term
Which type of hazard depends upon the personal or subjective makeup of the insured and can arise from a state of mind related to indifference of the insured to the loss that may occur?
 Definition
Morale hazard
Term
Which type of hazard make loss more likely to occur due to the character of the insured because they have bad habits or perhaps are dishonest people; the chance of loss is greater because of who they are?
 Definition
Moral hazard
Term
Which type of hazards are physical conditions left in a manner making a loss more likely to occur?
 Definition
Physical hazards
Term
The purpose of what is to make the insured "whole" again, to reimburse the loss and NOT to make the insured better off than they were?
 Definition
Indemnity
Term
The principal of what stands for the fact that an insured shall not profit or gain by their loss?
 Definition
Indemnity
Term
Insurable interest means what 4 things?
 Definition
1) If the subject property is lost, damaged, destroyed or stolen the insured would suffer financial loss, AND
2) There is only a chance for loss, AND
3) There is no chance to gain, AND
4) The insured must prove to the company that they have insurable interest both at the time they buy the insurance and when the loss actually happens
Term
What is defined as having to have a legitimate interest in preserving the property that one seeks to insure?
 Definition
Insurable Interest
Term
Actual cash value when calculating a loss valuation is defined as what?
 Definition
Current replacement cost - depreciation
Term
What means what the insured property will cost today at the time of the loss to replace?
 Definition
Replacement cost
Term
What means the use or wear and tear property experiences over time that reduces the value?
 Definition
Depreciation
Term
What is the exact amount of money needed to replace damaged or destroyed property at the time the loss occurred (without regard for any depreciation)?
 Definition
Replacement cost
Term
What is the price at which property will sell in the regular marketplace when neither the seller nor the buyer is forced to terms?
 Definition
Market value
Term
What is the term for the value of an item that the owner indicates it is at the time the policy is issued, but the insurance company does not issue any formal agreement with that value in the event of a claim?
 Definition
Stated value
Term
What is the value of insured property after its usefulness has ended?
 Definition
Salvage value
Term
What is the standard that the court system uses to determine if someone was negligent?
 Definition
The prudent person standard - whether or not a person used reasonable care under the circumstances
Term
In court, in order to prove negligence an injured party must prove what 4 elements to establish legal liability?
 Definition
1) A duty to act or to refrain from acting in a manner which will lead to harming another's body or property
2) Beaching that duty
3) Incurring an actual (demonstrative) injury AND
4) Proving that the first 3 elements were the proximate cause of the loss suffered by the injured party
Term
Are intentional acts that cause injury insurable?
 Definition
No
Term
What type of negligence is defined as failing to act in a reasonable or prudent manner?
 Definition
Simple negligence
Term
What type of negligence is defined as something much more serious than simple negligence and borders almost on being an intentional act?
 Definition
Willful and wanton negligence
Term
What are the 3 types of liability?
 Definition
1) Absolute Liability
2) Strict Liability
3) Vicarious Liability
Term
When one's action results in the bodily injury or property damage of another person, that person has what?
 Definition
Liability
Term
Liability insurance provides coverage only for acts which are not what?
 Definition
Not intentional - negligent acts are covered only
Term
What type of liability exists when a person subjects another to a dangerous or hazardous condition present, including the idea of harboring a wild animal on their premises?
 Definition
Absolute liability
Term
What type of liability applies to manufacturer of products?
 Definition
Strict liability
Term
What type of liability applies when one person is legally responsible for the actions of another person?
 Definition
Vicarious Liability
Term
What is the Latin phrase reflecting the concept of Vicarious Liability?
 Definition
Respondeat Superior - or let the master answer
Term
When a victim is hurt in an absolute liability situation, do they have to establish negligence to collect money damages?
 Definition
No
Term
What does the victim in a strict liability scenario have to prove?
 Definition
That the product was defective and not that the maker was negligent in its manufacture
Term
What is a broad concept that includes both (1) an accident AND (2) continuous or repeated exposure to conditions over time that results in injury or loss?
 Definition
Occurrence
Term
What is an unexpected, unintended and sudden event which causes property damage or bodily injury?
 Definition
Accident
Term
Is an accident unforeseen?
 Definition
Yes
Term
Is every accident considered an occurrence?

Is every occurrence considered an accident?
 Definition
Yes

No - occurrences can also happen over a lengthy period of time to eventually cause a loss
Term
What is temporary coverage and is the acknowledgment that immediate coverage is in effect pending the future issuance of a policy?
 Definition
Binders
Term
Can binders be written or oral? Can they be done with or without tendering money?
 Definition
Yes and Yes
Term
Are statements made by an insurance applicant considered to be a representation or a warranty statement?
 Definition
Representation
Term
What is a fact which is sworn to by a party and is the absolute truth? This is not the standard for insurance.
 Definition
Warranties
Term
What are considered to be a statement of fact, in the opinion of the person making the statements, and is the standard for an insurance application?
 Definition
Representations
Term
If an applicant intentionally lies about a material fact, what is it considered?
 Definition
Fraud
Term
In order for an insurance company to be able to void a policy on the basis of misrepresentation made by an applicant, the company must show that the statement which was misrepresented was a statement of what?
 Definition
Material fact
Term
What is a statement that would have changed the underwriting basis of a policy?
 Definition
Material fact
Term
What is the failure to disclose a known fact of material importance?
 Definition
Concealment
Term
What are written additions that can be used to add or delete coverage?
 Definition
Endorsements
Term
In order for any changes to be made to insurance coverage in anyway, what needs to be done?
 Definition
An endorsement must be added to a policy to make that change valid
Term
What refers to the initial premium paid by an insured at the beginning (inception) date of certain policies which is estimated and subject to later adjustment based on audits?
 Definition
Deposit Premium/Audit
Term
What is evidence from the insurance company to the insured that insurance has been issued in the amount shown as of the date indicated on the certificate?
 Definition
Certificate of Insurance
Term
What shows that a policy was issued as of the date indicated, but as of the present, the coverage may not be currently in force?
 Definition
Certificate of Insurance
Term
What is the principle of actuarial science that states that the greater the number of risks insured in the same risk pool, the more predictable losses become so that premium charges can be very accurate and insurers can be more financially stable?
 Definition
Law of Large Numbers
Term
What are money amounts awarded to an injured party when a negligent part is liable for loss caused by their actions to the body or property of another?
 Definition
Damages
Term
What is harder to calculate, property or bodily injury damages?
 Definition
Bodily injury damages
Term
What are the 2 types of damages that can be awarded?
 Definition
1) Compensatory Damages
2) Punitive Damages
Term
What are damages that are meant to compensation an injured party for bodily injury loss?
 Definition
Compensatory Damages
Term
What type of damages are assessed when a negligent party is guilty of "outrageous" behavior (not quite intentional harm but very close) and needs to be punished as a warning?
 Definition
Punitive Damages
Term
Do punitive damages get awarded often?
 Definition
No
Term
What are the 2 considerations involved in assessing compensatory damages?
 Definition
1) General Damages
2) Special Damages
Term
What type of compensatory damages compensate a victim for all the inconveniences associated with their loss and include the concepts of "pain" and "suffering;" these are subjective and are hard to determine?
 Definition
General Damages
Term
What type of compensatory damages are the actual "out-of-pocket" expenses incurred by an injured party and includes bills from doctors, hospitals, therapists and even lost wages from the inability to work; these are objective and are easy to calculate?
 Definition
Special Damages
Term
Insurance applicants must be provided what when an insurance company will require a credit report as part of the underwriting process?
 Definition
Written disclosure
Term
Can applicants demand copies of the consumer reports directly from the insurance company?
 Definition
No
Term
When an applicant receives an adverse decision (denied coverage or higher premium rate) based on information in the consumer report, the applicant has the right to obtain what 2 things?
 Definition
1) Summary of the information provided by the consumer reporting agency
2) Name of all entities that obtained the same information within the last 6 months from the reporting agency
Term
Can an insurance company use any information from a consumer report that is older than 10 years?
 Definition
NO
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