[h] CPCU 555 – Module 1
[q] Property loss exposure
[a] A condition that presents the possibility that a loss to property will be sustained.
[q] Real property
[a] Property consisting of land and everything permanently attached to land. All of this property is tangible.
[q] Personal property
[a] All property that is not real property. Can be either tangible or intangible.
[a] A specific cause of loss, such as fire damage to a building.
[q] Natural risks
[a] Risks that occur randomly in nature, such as windstorm and earthquake.
[q] Human risks
[a] Risks that include both deliberate acts of humans and organizations as well as events that are not deliberate.
[q] Financial consequences of loss
[a] Outcomes related to a loss:
Reduction in property value.
[q] Risk management process
[a] A step-by-step method of minimizing the adverse effects of risk on an organization.
[q] Steps in risk management process
[a] Steps in the process:
1) Scan the environment.
2) Identify risks.
3) Analyze risks.
4) Treat risks.
5) Monitor and review.
[q] Risk control
[a] Techniques utilized to minimize the frequency and severity of losses.
[a] A type of risk control technique that involves an organization stopping an activity or never undertaking an activity.
[q] Loss prevention
[a] A risk control technique that reduces the frequency of a loss.
[q] Loss reduction
[a] A risk control technique that reduces the severity of a loss.
[a] A type of risk control technique. The act of dispersing a particular asset over several locations.
[a] A type of risk control technique. The act of recreating an exposure unit, such as with the creation of a back up.
[a] A risk control technique that spreads loss exposures over numerous products or projects.
[q] Risk Financing
[a] A form of risk treatment that involves the retention or transfer of risk.
[q] Risk retention
[a] A risk financing technique that involves accepting the consequences of a particular risk.
[q] Risk transfer
[a] The act of sharing or moving a risk to another party, often through the use of insurance.
[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] ISO HO-2 homeowners coverage form
[a] An Insurance Services Office homeowners form that provides named-perils coverage for dwellings, other structures, and personal property.
[q] ISO HO-4 homeowners coverage form
[a] An Insurance Services Office homeowners form that is applicable to individuals renting a premises in which they reside.
[q] ISO HO-5 homeowners coverage form
[a] An Insurance Services Office homeowners form that is similar to an HO-3 policy, but provides open-perils coverage on personal property.
[q] ISO HO-6 homeowners coverage form
[a] An Insurance Services Office homeowners form that is applicable to individuals owning a condo used for residential purposes.
[q] Internet of Things
[a] A network of objects that transmit data without intervention by humans.
[a] A virtual ledger that is dynamically updated. Facilitates secure transactions without the need for a third party.
[a] A device which detects or measures a physical property and records, indicates, or otherwise responds to it.
[q] Compulsory auto insurance laws
[a] Laws requiring auto liability insurance for all motorists to drive legally within the state.
[q] Disadvantages of compulsory auto insurance laws
Do not guarantee compensation to all victims.
Required minimum amount of insurance may not meet full needs of accident victims.
May not reduce number of uninsured drivers.
Insurers argue that compulsory laws restrict their freedom to select profitable insureds.
Consumer advocates argue rates might become unfairly high for good drivers.
Do not reduce number of accidents.
[q] Financial responsibility laws
[a] Laws enacted to ensure motorists have the abillity to pay for damages they might cause as a result of owning an automobile.
[q] Pure no-fault
[a] A type of no-fault law in which an injured person does not need to establish fault or prove negligence.
[q] Modified no-fault
[a] A type of no-fault plan that places some restrictions on the right of an injured person to sue an at-fault driver.
[q] Add-on plan
[a] A type of no-fault plan that adds no-fault benefits to auto insurance policies.
[q] Choice no-fault
[a] A type of no-fault plan that allows an insured to choose to be covered on a modified no-fault basis when a policy is purchased or renewed.
[q] Personal injury protection coverage
[a] Coverage that pays benefits resulting from bodily injury to occupants of a covered auto, regardless of fault.
[q] Residual market
[a] Insurers and other organizations that make insurance available to those unable to obtain private insurance.
[q] Joint underwriting association
[a] An organization that designates servicing insurers to handle high-risk auto insurance business.