Untitled Quiz

Insurance Concepts

• Insurance Policy: A contract transferring risk to an insurer, protecting individuals from financial loss.
• Pure Risk: Involves an unplanned loss that can occur without any intention from the insured.
• Speculative Risk: A type of risk that an individual intentionally causes, which is not covered by insurers.
• Pooling of Risks: A method where a large group contributes to a fund to cover losses, sharing the risk collectively.
• Insurable Interest: A financial stake the insured must have at the time of a loss to claim insurance.
• Indemnity Principle: Insurers cannot reimburse the insured for more than the actual loss incurred.

Insurance Policy Features

• Deductible Purpose: Limits small claims to reduce administrative costs for insurers, allowing insured to cover minor losses.
• Limits of Liability: Specifies the maximum payouts an insurer will provide under various coverage terms.
• Named Peril Coverage: Protects only against specified risks mentioned in the policy.
• All Risk Coverage: Provides protection against nearly all perils not explicitly excluded in the policy.

Liability and Claims

• Liability Coverage: Protects against claims made by third parties for injuries or damages.
• Conditions for Claims: Insurers pay claims when the insured is found legally liable for damages.
• Elements to File a Claim: Proof of negligence is essential for filing a claim against the insured.

Insurance Clauses and Laws

• Subrogation Clause: Allows insurers to assume the insured’s rights to seek compensation after paying out a claim.
• Pro Rata Liability Clause: Outlines how multiple insurers share coverage for a single loss, particularly for high-profile properties.
• Fair Credit Reporting Act: Protects consumers' privacy regarding their background information related to insurance.

Homeowners Insurance Types

• H.O. 1 Basic Form: Covers basic perils, liability insurance, and temporary living expenses.
• H.O. 3: Special Form: Most comprehensive homeowners policy covering all risks except for certain exceptions like floods or earthquakes.
• H.O. 8 Modified Form: Designed for older homes where replacement costs exceed market value.

Licensing and Regulations

• Insurance Producer License: Required to sell, negotiate, or provide advice about insurance policies, and must be renewed every two years.
• Limited Lines Producer License: Allows the sale of specific insurance products, requiring no pre-licensing education.
• Temporary Producer License: Issued for 90 days; conditions apply, particularly in situations like death or military service.
• Disqualifications: Certain acts, such as misappropriating funds, can lead to severe penalties, including felonies and misdemeanors.

Types of Insurance Companies

• Stock Insurers: Owned by shareholders with profits distributed as dividends.
• Mutual Insurers: Owned by policyholders with profits returned to members through dividends or reduced premiums.
• Admitted Insurers: Authorized to operate within a state, meeting specific regulatory requirements.
• Non-Admitted Insurers: Not licensed in a state, usually offering coverage for specialized risks.

Special Considerations

• Coverage for Damage: Actual cash value is paid if the insured opts not to rebuild after a loss.
• Health Insurance Considerations: Policies may require proof of loss, and conditions must be met at the time of purchase and loss.
• Insurance Education Requirements: Pre-licensing and continuing education requirements are critical to maintaining insurance licenses.

These notes encapsulate essential information regarding insurance policies, classifications, liabilities, claims, regulatory frameworks, and the operation of insurance companies.