Wrecks & Fires

Table of Contents

Introduction	1	Renter's Insurance	40
Dear Reader . . .	2	Homeowner's Insurance	40
One Can Only Wish	5	Floaters and Endorsements	41
Chapter 1: The Insurance Company's Role	7	Section #1 - Property Exposures	41
Economic Benefits	7	Replacement Cost	42
Financial Intermediaries	7	Section #2 - Liability Exposures	42
Forms of Insurers	8	As a Recap	43
Chapter 2: Perils & Risk	9	Fire and Allied Coverage	45
Defining Risk	9	Section I of Form #1 (HO-1)	46
Insurable Exposures	10	Section II of Form #1	48
Law of Large Numbers	11	Form #2 (HO-2)	48
Chance of Loss	11	Form #3 (HO-3)	49
Morale and Moral Hazards	12	Form #4 (HO-4)	51
Two Basic Types of Risk	14	Form #5 (HO-5)	52
Reading the Policy	15	Form #6 (HO-6)	52
Chapter 3: Insurance For Wrecks	18	Form #8 (HO-8)	53
Insuring the Car	18	Exceptions	53
The Insurance Contract	18	National Disasters	55
Policy Deductibles	19	Volcanoes	57
Policy Components	19	Hurricanes and Tornadoes	58
Chapter 4: Auto Policy Divisions	24	Personal Property	58
Reading the Policy	24	Chapter 7: Umbrella Insurance	61
Declarations Page	24	Covering Large Assets	61
The Insuring Agreement	24	Choosing An Umbrella Policy	63
Exclusions in the Policy	25	Understanding Umbrella Insurance	63
Umbrella Policies	25	How Much Coverage?	64
The Family Automobile Policy	26	Variances in Price	64
Chapter 5: Liability Coverage	29	Liability Insurance for Liability Exposures	65
Bodily Injury Coverage	29	Torts	65
Single-Limit Policies	29	Intentional Torts	66
Split-Limit Policies	29	Intentional Interference - 2 Types	66
Investigation Costs and Settling the Claim	30	Unwanted Contact	66
Property Damage	31	Assault	67
Medical Payments	31	Mental Distress	68
Personal Injury Protection (PIP)	32	Defamation	68
Collision Insurance	33	False Imprisonment	69
Comprehensive Coverage	34	Intentional Interference With Property	68
Uninsured and Underinsured Motorists	34	Absolute Liability	71
Towing & Service/Rental Car Reimbursement	35	Strict Liability	72
Wage Loss and Substitute Services	35	Negligence	72
Setting Auto Insurance Rates	36	A Reasonable Man	73
No Fault Insurance	37	Third Party Forms	73
Chapter 6: Home Sweet Home	40	General Liability Forms	74
Actual Claims Result From Negligence	75	Declarations	105
Primary Underlying Policies	75	Insuring Agreements	105
Terms: Coverage & Liability	76	Exclusions	105
Legal Liability Must Exist	76	Conditions & Miscellaneous Provisions	105
Public Opinion	77	Definitions	106
Ownership & Liability	77	Endorsements & Riders	106
Everyone Wants a Chunk	78	Perils / Hazards	106
Paying for a Legal Defense	78	Chapter 10: Insurance Policy Layout	108
It Can Happen to Anyone	78	Understanding the Policy Language	108
Successful Liability Claims	78	Covering the Extras	109
Evidence of Negligence	79	Chapter 11: Negligence Laws	110
Daily Risks of Life	79	Prudent Man Rule	110
Dual Risk Contribution	80	Types of Negligence Laws	110
Injury Avoidance	80	Chapter 12: Loss-Adjustment Provisions	112
Shared Blame - Injured Party Preference	80	Safety First	112
Absolute Liability	80	Notice of Loss	112
Determining Monetary Damages	81	Processing An Auto Claim	113
Jury Awards	81	Dealing With Negligence	114
Using Umbrella Policies Effectively	82	Chapter 13: E&O Insurance	117
Excess Coverage	83	Public Awareness	117
Assessing Policy Risks	83	By Any Other Name . . .	120
Books of Business	83	Policy Elements	121
Underwriting Based on Exposures & Risks	84	E&O for Insurance Agents	124
Adverse Selection	85	E&O for Financial Planners	125
Risk Classifications	85	Standard of Care	126
Pricing Specific Contract Risks	85	In Summary	128
Actuarial Equity	86	Industry Variety	129
Subsidizing Rates	86	Professional Insurance Agents	130
Exposure Distribution	87	Professional Negligence	131
Recognizing the Underwriters	87	Presumed Negligence	132
You're the First Guy on the Scene	88	Contributory Negligence	133
Staff Underwriters	89	Imputed Negligence	133
Line Underwriters	89	Negligence in Tort Liability	133
Actual Underwriting Processes	89	Express Authority & Ostensible Authority	136
Insurers Rely On You, The Agent	90	Torts & the Basis for Liability Claims	137
Information & the Inspection Company	91	Torts & Contracts	138
Accepted or Rejected	92	Civil & Criminal Violations	138
Standard Risk Applicant	92	Breach of Contract	139
Preferred Risk Applicant	92	Breach of Implied Agreement Theory	140
Substandard Risk Applicant	93	Breach of Contract Theory	140
Post-Selection	94	Legally Binding Insurance Contract	141
Unique Aspects of Post-Selection	94	Relevance	141
Retention	95	A Contract of Adhesion	142
Line Limits	96	Investment Advisor's Liabilities	142
Underwriting & Production	96	Public Harm	144
Measuring Cost	97	"Triggers"	144
Chapter 8: Homeowner's Liability Insurance	98	Transferring Risk	145
Lawsuit Protection	98	What Type of Documentation?	147
Chapter 9: Premium Rates	101	Lying About What You Know or Did	147
Setting Premium Rates	101	Full Disclosure	148
Estimating Loss Exposures Determining Rates	101	Release of Liability Form	148
Basic Rate Guidelines	102	Keeping Current on New Trends	150
Risk Categories	102	Chapter 14: Insurance Ethics	151
Checking For Policy Errors	103	Consumer Regulations & Ethics	151
		Stupidity Rather Than Intentional	153
		Competency	154
		Knowledge Is Always Better	155
		Taking The Application	158
		Full Disclosure on Health Questions	159
		Using Proper Terminology	160
		Mixing Your Money With Their Money	160
		You Can't Sell Everyone	162
		Ethical Importance - Existing Long Term	163
		Religious Beliefs	164
		People of All Kinds	165
		Making Choices	167
		Technology Eliminates the Agent	169
		Sales Practices Have Consequences	169
		Class Action Lawsuits	171
		The Common Man's View	173
		Twinkies & Other Myths	174
		Acknowledging the Needs of Others	175
		Become Vocal	177
		Risk Control	178
		Liability of Insolvency	179
		Insuring Your Future Security	180
		Conflicts of Interest	181
		Failure to Place Necessary Insurance	181
		Fraud	183
		In Closing	184
		Chapter 15: Glossary	185- 193

United Insurance Educators, Inc.

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Eatonville, Washington  98328-8638

Telephone: (253) 846-1155

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