RMI 270 Exam #3 Study Guide
RMI 270 Exam #3 Study Guide RMI 270
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This 6 page Study Guide was uploaded by Danielle Notetaker on Friday April 8, 2016. The Study Guide belongs to RMI 270 at Ball State University taught by Dr. Fitzgerald in Spring 2016. Since its upload, it has received 41 views. For similar materials see in Risk Management And Insurance at Ball State University.
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Date Created: 04/08/16
RMI 270 Exam #3 Study Guide Ch.22, 23, 24, 20 Chapter 24 Dwelling Program • Most homeowners are insured under a homeowner’s policy, but some are not For example: o If the home is not occupied by the owner but is rented to the tenant o The property owner is ineligible for a homeowners policy o Homeowners want a less costly policy • Major differences between dwelling coverage & homeowners: o Dwelling forms do NOT include coverage for theft of personal liability!!! § Can add coverage through endorsements • Current dwelling program includes: o Basic form – least coverage o Broad form o Special form – broadest coverage *The ISO dwelling program is designed for dwellings that are ineligible for coverage under a homeowners policy and for people who do not want or need a homeowners policy Mobile Home Insurance • Mobile home insurance is written by adding an endorsement to either a HO-‐2 or HO-‐3 policy, which tailors the homeowners policy to meet the special characteristics of mobile homes • Mobile home must be designed for year-‐round living (no campers) • Coverage A insures the mobile home against physical damage losses on replacement cost basis Inland Marine Floater • Provides broad coverage on property frequently moved from one location to another o Ex: jewelry, furs, cameras o Insurance is tailored to specific type of personal property to be insured o Desired amount & types of insurance can be selected o Broader coverage can be obtained o Most floaters cover insured property anywhere in the world o Often written without a deductible Personal Article Floater (PAF) • Insures personal property on an “all-‐risk” or “open-‐peril” basis • Direct physical losses are covered except for losses specifically excluded Watercraft Insurance • Homeowners policy provides only limited coverage on boats • Homeowners covers: o Coverage on boat is limited to $1500 o Direct loss from windstorm or hail is ONLY covered if the boat is inside fully enclosed building o Theft of boat is excluded o Legal liability not covered • Boat owners Package Policy: combines physical damage insurance, medical expense insurance, liability insurance into one policy o Direct physical losses are covered • Yacht Insurance: designed for larger and more valuable boats Government Property Insurance Programs 1. National Flood Insurance program 2. FAIR Plans: provide basic property insurance to individuals who are unable to obtain coverage in the normal markets • Definition of flood = a general and temporary condition of partial or complete inundation of two or more acres of normally dry land or two or more properties from overflow of inland or tidal waters • The dwelling form • The general property policy • The residential condominium Title Insurance • Protects the owner of the property or the lender against any unknown defects in the title Personal Umbrella Policy • Designed to provide protection against a catastrophic lawsuit or judgment Features: o Provides excess liability insurance o Coverage is broad & protects against things not normally covered o This policy is a reasonable cost Chapter 20 Homeowner’s Insurance o HO-‐1: basic o HO-‐2: broad form, named-‐peril policy o HO-‐3: special, losses to the dwelling (how are they settled, replacement cost or actual cash value?) and losses to personal property (how are they covered?) o HO-‐4: tenants form (renters insurance) o HO-‐5: comprehensive form o HO-‐6: condos, unit-‐owners form o HO-‐7: mobile homes o HO-‐8: modified coverage form, older homes, Ex: if you have a really old home, it may costs a lot to replace it exactly the same • HO-‐3: insures the dwelling and other structures against direct physical loss to property (all direct losses to property are covered) • Losses paid on full replacement cost with no deduction for depreciation • HO-‐4: covers the tenant’s personal property against loss or damage and also provides personal liability insurance. Also pays for additional living expenses if your home is completely burned down • HO-‐8: modified coverage form that covers loss to the dwelling and other structures on the basis of repair cost (for older homes) • Designed for older homes whose replacement costs exceeds its market value Appendix A-‐ Homeowners 3-‐ Special Form Definitions: • “you”, “your” refer to the named insured • “we”, “us” “our” refer to the company providing the insurance • “bodily injury” means bodily harm, sickness, disease, including required care, loss of services and death that results Section 1 – Property Coverages A. We cover: a. The dwelling on the residence premises b. Materials & supplies located on or next to residence premises c. Do not cover land B. Other Structures a. Cover other structures that are connected to the dwelling by only fence, utility line, or similar connection C. Personal Property: cover personal property owned or used by an “insured” while its anywhere in the world a. Covered: • Windstorm or hail: this peril includes loss to watercraft ONLY while in a fully enclosed building. Does NOT include damage caused by rain, snow, sleet, sand, or dust UNLESS wind/hail creates a hole in ceiling and then snow damages the boat • Attempted theft • Accidental overflow of water or steam: does not include coverage for the system/appliance that is damaged & leaking. It only covers other property that has water damage b. Property NOT covered: • Animals • Motor vehicles • Aircraft • Hovercraft • Property of tenants • Credit cards • Water or steam D. Loss of Use/ Loss Settlement a. Additional Living Expense i. If there is a covered loss to your home, where you can no longer live in that home, we will cover living expenses incurred for you to live a normal standard of living b. Fair Rental Value i. If there is a covered loss to a home rented to others or held for rental, we cover fair rental value (rent due from tenant) while it is not fit for renters to live in c. Loss or Expense NOT covered i. WE do not cover loss or expense due to cancellation of a lease or agreement d. The terms “cost to repair or replace” and “replacement cost” do NOT include the increased costs incurred to comply with laws Chapter 22 Auto Insurance • The Personal Auto Policy (PAP) consists of a declarations page, a definitions section, and six major parts 1. Liability Coverage a. Protects the insured from bodily injury and property damage liability from negligent operation of auto 2. Medical Payments Coverage a. Pays all reasonable medical, dental, and funeral expenses for services needed within 3 years of the accident 3. Uninsured Motorists Coverage a. Pays for bodily injury of a covered person caused by an uninsured motorist, a hit & run, or negligent driver who’s insurance is expired b. Can be added as an endorsement to the PAP 4. Coverage for damage to your auto a. Pays for a direct physical loss to a covered auto less any deductible b. A collision loss or other-‐than-‐collision loss is ONLY covered if it says so on the declarations page 5. Duties after an accident or loss 6. General provisions • A covered auto includes… (4 Classes of Covered Vehicles) o any vehicle shown in the declarations o newly acquired vehicles o a trailer owned by named insured o temporary substitute auto • Insured persons include… o The named insured and spouse o Resident family members o Other people using a covered auto if a reasonable belief that they have permission to drive it o Any person or organization legally responsible for the acts of the covered person • Duties for insured after accident: o Must cooperate with the insurer in the investigation o Send copies of legal papers or notices related to the accident to the insurer • Policy Cancellation o After the policy has been in force for 60 days, the insurer can cancel the policy ONLY… § if the premium has not been paid § the insured driver’s license has been suspended or revoked § there was material misrepresentation in the policy o The insurer can also decide not to renew the policy, but must give the named insured a 20 day notice • Motorcycles & mopeds – can be insured by adding the miscellaneous-‐type vehicle endorsement to the PAP Eligible Vehicles • A four wheeled motor vehicle owned by the insured or leased for at least 6 months Chapter 23 Auto Insurance & Society • Financial Responsibility Laws: o Require motorists to show proof of financial responsibility after an accident that involves bodily injury or property damage, conviction of certain offenses, and failure to pay • Compulsory insurance laws require motorists to carry auto liability insurance equal to a certain amount BEFORE the car is licensed or registered • No-‐fault auto insurance o After an accident involving bodily injury, each party collects from their insurer, regardless of fault Ø Arguments in favor of non-‐fault insurance: o Difficulty in determining fault o Inequity in claim payments o High transactions costs and attorney fees o Fraudulent and excessive claims o Delay in payments Ø Arguments against no-‐fault insurance: o Defects of the negligence system are exaggerated o Claims of efficiency and premium savings are exaggerated o Court delays are not universal o Safe drivers may be penalized o There is no payment for pain & suffering o The tort liability system needs to be reformed instead • Approaches for high-‐risk drivers: o Auto insurance plan o Joint underwriting association o Reinsurance facility o Maryland auto insurance fund o Specialty insurance • Variables that affect premium costs: o Territory o Age, gender, martial status o Use of the auto o Driver education o Good student discount o Number and types of cars o Individual driving record o Insurance score • Suggestions to save money on auto insurance: o Carry adequate liability insurance o Carry higher deductibles o Drop collision insurance on older vehicles o Shop around o Take advantage of discounts o Improve driving record o Maintain good credit
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