Insurance Policy Conditions

Question 1

What is the point of insurance policy conditions?

Answer 1

Sets for the Rights and Responsibilities of the INSURED, the conditions are provisions inserted into the policy that qualify or place limitations on the insurer’s promise to pay/perform. If the policy conditions are not met, the insurer can deny a claim

Question 2

Subrogation

Answer 2

when an insurer pays the insured for a covered loss, any rights of recovery from an at-fault party are transferred to the insurer

in other words, we can sue the at-fault instead of the NI

Question 3

Assignment

Answer 3

A transfer of legal rights under, or interest in, an insurance policy to another party. One cannot transfer policy to another without company’s written permission.

Question 4

Primary

Answer 4

policy pays first

Question 5

Excess

Answer 5

other insurance must be exhausted then this policy will apply

Question 6

Pro-rata

Answer 6

Will pay a proportion of a loss as it limits bear to the overall limits of coverage in force

Question 7

Cancellation

Answer 7

Provides advance notice for valid reasons.

FL Lax governs specific requirements

Question 8

Nonrenewal

Answer 8

most policies require that the insurer provide advance notice of non renewal with the notice requirement ranging in days depending on jurisdiction and circumstances surrounding the non renewal

Question 9

Liberalization

Answer 9

If revision in policy form broadens coverage within 60 DAYS of inception or during policy period, without additional premium, insured receives the broadened coverage

Question 10

Appraisal

Answer 10

A survey that determines value (not coverage) of property without legal action: Insured hires an independent appraiser and company hires independent appraiser, if they can not agree an umpire is hired and any 2 common decisions are binding

Question 11

Arbitration

Answer 11

Procedure in which an ins company and the insured or a vendor agree to settle a claim dispute by accepting a decision made by a 3rd party

Question 12

Mediation

Answer 12

A non-adversarial alternative dispute resolution procedure prompted by the need for effective, fair, and timely handling of propriety insurance claims. Mediation is non-binding however if a written settlement is reached, the insured has 3 business days to rescind the settlement unless the insured has cashed or deposited any check. Insurer bears all cost of mediation.

Question 13

Abandonment

Answer 13

Insured cannot dump damaged property and request full value of property

Question 14

Severability

Answer 14

Separations of Insureds: insurance applies separately/ equally to each insured as if other insureds did not exist

Question 15

Loss Conditions in general

Answer 15

1. Prompt Notice
2. Cooperate
3. Insured must preserve insurer’s rights

Question 16

Loss Conditions for Property Insurance

Answer 16

1. Take inventory of damaged property
2. Use reasonable means to protect against further loss
3. Show damaged property
4. Provide records
5. Be questioned under oath
6. Report thefts to police
7. Reveal other existing insurance
8. Submit “PROOF OF LOSS” in a timely manner

Question 17

Loss Conditions for Liability Insurance

Answer 17

1. Notify insurer of claimant and witness
2. Forward legal papers received
3. Aid the insurer in settlement
4. Avoid voluntary payments or assumption of obligations

Question 18

Proof of Loss

Answer 18

Evidence offered by the insured to prove entitlement to collect the amount claimed; a statement, signed and sworn by the insured, setting forth the claim information required by the policy

Question 19

Bases for insurer avoidance to perform after a covered act

Answer 19

• Intentional Acts

- Representation

Question 20

Intentional Acts

Answer 20

illegal; will not permit insured to profit from their intentional acts

Question 21

Representation

Answer 21

A statement made in an application for insurance that the prospective insured represents as being correct to the best of his or her knowledge

Question 22

When will representations have legal effect (prevent recovery under the policy)?

Answer 22

• Warranty
• Misrepresentation
• Concealment of facts

The insurer can void a contract for misrepresentations, concealment, and breach of warranty BY STATUTE if:
fraudulent, they were material to accepting the risk, the insurer would not have issued knowing these risks

*In FL all statements on the apps are deemed to be representations and not warranties

Question 23

Warranty

Answer 23

is a policy conditions based on the info on the application or inserted by the insurer

Ex: Applications states NI has alarm system, insurer inserts a provision that coverage is contingent on the alarm being maintained

Question 24

Misrepresentation

Answer 24

An untrue statement on an application that does not become part of the policy

Ex: Have there been any accidents in the last 3 years? answers no but truth is yes, several

Question 25

Concealment of Facts

Answer 25

Failure of the insured to reveal known material facts to the insurer