[h] CPCU 553 – Module 1
[q] Liability loss exposure
[a] A condition that presents the possibility that a claim will allege legal responsibility of a person or business for injury suffered by another party.
[q] Special damages
[a] A type of compensatory damages that awards a sum of money for specific expenses (such as medical expenses) associated with an injured person’s loss. Also referred to as particular damages.
[q] General damages
[a] A type of compensatory damages designed to compensate a victim for pain and suffering.
[q] Punitive damages
[a] Damages awarded to a victim that are designed to punish a wrongdoer when there is intent, malice, or fraud. Also referred to as exemplary damages.
[q] Civil law
[a] A classification of law that protects rights and provides remedies for breaches of duties.
[a] A wrongful act other than a crime or breach of contract.
[a] A civil wrong that is unintentional. The failure to exercise the degree of care that a reasonable person would exercise.
[q] Intentional Tort
[a] A tort committed by a person who should be able to foresee that the impact will harm another person.
[q] Strict liability
[a] Liability imposed by a statute or a court in the absence of fault.
[q] Personal Auto Policy (PAP)
[a] A standard insurance form promulgated by Insurance Services Office, Inc. (ISO) for insuring private-passenger-type autos owned by individuals.
[q] Personal Auto Policy (PAP) sections
A – Liability Coverage
B – Medical Payments Coverage
C – Uninsured Motorists Coverage
D – Damage to Your Auto Coverage
E – Insured Duties Following Accident or Loss
F – General Provisions
[q] Declarations page
[a] A page included in the Personal Auto Policy that identifies the parties, vehicles, limits of liability, and policy period.
[q] Agreement and Definitions page
[a] A page included in the Personal Auto Policy that includes a general agreement stating the insurer is providing coverage, provided the insured pays the premiums.
[q] You and Your
[a] A common definition found in the Personal Auto Policy that refers to the named insured and an unnamed spouse (if a resident of same household).
[q] Family Member
[a] A common definition found in the Personal Auto Policy that refers to a person related to insured and who resides in the insured’s household.
[q] We, Us, and Our
[a] A common definition found in the Personal Auto Policy that refers to the insurer providing insurance under the contract.
[a] A common definition found in the Personal Auto Policy that defines occupying as in, upon, or getting in, on, out, or off.
[q] Your Covered Auto
[a] A common definition found in the Personal Auto Policy that defines a covered auto as:
Any vehicle shown in the Declarations.
A newly acquired auto.
An owned trailer.
A temporary substitute auto or trailer.
[q] Part A – Liability Coverage
[a] A coverage section of the Personal Auto Policy that provides protection against the financial consequences of automobile liability loss.
[q] Supplementary payments
[a] Payments from a Personal Auto Policy that do not reduce the limit of liability. These payments include:
Cost of bail bonds.
Premiums on appeal bonds.
Loss of earnings (up to $200).
Other reasonable expenses.
[q] Split limits
[a] Separate coverage limits in a Personal Auto Policy that allow a separate limit for:
1) Bodily injury to each person.
2) Bodily injury to all persons in each accident.
3) Property damage in each accident.
[q] Single limits
[a] A single coverage limit that applies to all damages arising from bodily injury or property damage in a Personal Auto Policy.
[q] Prejudgment interest
[a] Interest that has accrued on damages prior to a judgment being rendered.
[q] Other Insurance provision
[a] A provision contained in Part A of a Personal Auto Policy that addresses situations in which more than one auto policy covers a liability claim. In these situations, the insurer pays only its pro rata share of the loss.
[q] Part B – Medical Payments Coverage
[a] A coverage section of the Personal Auto Policy that provides auto accident medical coverage up to a limited amount without requiring a determination of fault.
[q] Classes of insureds covered under Part B – Medical Payments Coverage
[a] Classes of insureds covered:
Named insured and family members.
Any other person while occupying a covered auto.
[q] Part C – Uninsured Motorist Coverage
[a] A coverage section of the Personal Auto Policy in which the insurer agrees to pay damages caused by the owner or operator of an uninsured vehicle.
[q] Classes of persons covered under Part C – Uninsured Motorists Coverage
[a] Classes of persons covered:
Named insured and family members.
Any other person occupying a covered auto.
Any other person legally entitled to recover damages.
[q] Uninsured motor vehicle
[a] A vehicle:
1) Not insured for bodily injury liability.
2) Insured for less than the financial responsibility limits.
3) That is a hit-and-run vehicle.
4) Whose insurer denies coverage or becomes insolvent.
[a] A method for settling insurance disputes regarding the amount of a covered loss. The disputing parties use a neutral party to examine the issues and develop a settlement.
[q] Part D – Damage to Your Auto
[a] A coverage section of the Personal Auto Policy that provides physical damage coverage for damage to or theft of a covered auto.
[a] A portion of a covered loss that is not paid for by the insurer. Instead, this amount is paid for by the insured.
[a] A type of coverage offered under Part D of a Personal Auto Policy. Represents the upset of or impact of an auto with another vehicle or object, and includes:
Auto colliding with another auto.
Auto colliding with a tree.
Driver losing control and auto overturns.
Opening door and hitting a parked auto.
[q] Other Than Collision (OTC)
[a] A type of coverage offered under Part D of a Personal Auto Policy. Represents auto physical damage losses that are not caused by collision. Includes falling objects, fire, theft, wind, vandalism, contact with a bird or animal, and glass breakage.
[q] Nonowned autos
[a] A type of vehicle that may be covered under Part D of a Personal Auto Policy. Includes autos occasionally borrowed or rented.
[q] Reasons for deductibles
To reduce small claims.
To hold down premiums.
To encourage insureds to be careful in protecting their cars against damage or theft.
[q] Transportation expenses
[a] Additional coverage in the Personal Auto Policy for substitute transportation costs incurred as the result of a covered physical damage loss.
[q] Actual cash value
[a] The replacement cost of property minus depreciation.
[q] Other Sources of Recovery provision
[a] A provision contained in Part D of a Personal Auto Policy that allows the insurer to pay the proportion that its limit of liability bears to the total applicable limits if other insurance coverage is available.
[q] Part E – Duties After an Accident or Loss
[a] A coverage section of the Personal Auto Policy that outlines duties that must be performed by an insured before an insurer is obligated to pay for an accident or loss.
[q] General duties after an accident or loss
[a] General duties required under all coverages:
Provide prompt notice to the insurer.
Cooperate with the insurer.
Submit legal papers to the insurer.
Submit to physical exam.
Agree to examination under oath (if required by insurer).
Authorize release of medical records.
Submit proof of loss.
[q] Additional duties for uninsured motorist coverage
[a] Additional Duties for uninsured motorists coverage:
Submit legal papers.
[q] Additional duties for physical damage coverage
[a] Additional Duties for physical damage coverage:
Notify police (if auto is stolen).
Prevent further loss.
Permit inspection and appraisal.
[q] Bankruptcy of Insured provision
[a] A provision in a Personal Auto Policy that indicates if the insured declares bankruptcy or becomes insolvent, the insurer is not relieved of its obligations under the policy.
[q] Fraud provision
[a] A provision in a Personal Auto Policy that indicates no coverage exists for any insured who makes fraudulent statements.
[q] Legal Action Against the Insurer provision
[a] A provision in a Personal Auto Policy that indicates no legal action can be brought against the insurer until the insured has fully complied with all of the policy terms.
[q] Subrogation clause
[a] A provision in a Personal Auto Policy that indicates if an insurer makes a loss payment, the insurer has a right of recovery against a negligent third party.
[q] Transfer of Insured’s Interest provision
[a] A provision in a Personal Auto Policy that indicates the insured’s rights under the policy cannot be assigned without the insurer’s written consent.
[q] Cancellation provision
[a] A provision in a Personal Auto Policy generally allowing the named insured to cancel the policy anytime during the policy period. An insurer may also cancel the policy in certain circumstances.
[q] Nonrenewal provision
[a] A provision in a Personal Auto Policy that outlines the terms under which an insurer may choose to not renew a policy.