California Property & Casualty Broker-Agent flashcards

The party in a surety bond who is protected by the bond and to whom the promise of performance is made by the principal and guaranteed by the surety.

• The party requiring the bond.
• The beneficiary of the bond's guarantee.
• Typically the project owner or government entity.

Memory trick: The Principal promises, the Surety secures, the Obligee observes.

A component of aviation liability insurance that covers the legal liability of an airline or aircraft operator for bodily injury or death sustained by passengers.

• Covers bodily injury or death of passengers
• Applies while on board, or during boarding/alighting
• Distinct from third-party liability (non-passengers)

Memory trick: PASSENGER liability cares for PEOPLE on the PLANE.

A type of surety bond required by governmental bodies to ensure that individuals or businesses comply with applicable laws, regulations, and ordinances when performing specific activities or operating under a license or permit.

• Guarantees compliance with legal requirements.
• Often required for contractors, electricians, plumbers, public works.
• Protects the public and the governmental entity from non-compliance.

Memory trick: Contractors, Fiduciaries, and Public Permits all need bonds.

A provision in a commercial property insurance policy that requires the insured to maintain insurance equal to a specified percentage (e.g., 80%, 90%) of the property's value. If the insured fails to do so, they will share in any partial loss.

• Encourages adequate insurance coverage.
• Applies to partial losses.
• Formula: (Amount Carried / Amount Required) x Loss.

Memory trick: Coinsurance: Did you carry enough for the required percentage?

A type of aviation hull coverage that insures the aircraft against physical damage while it is on the ground and moving under its own power, such as during taxiing.

• Aircraft is on the ground
• Aircraft is moving under its own power
• Covers damage during taxiing, pushback, or towing with engine running

Memory trick: In Motion on the Ground means the plane is TAXIing with sound.

In ocean marine insurance, these are extraordinary perils peculiar to the sea, such as storms, stranding, collision, and jettison, that are accidental and not due to ordinary wear and tear or negligence.

• Must be extraordinary and accidental.
• Includes heavy weather, stranding, collision, fire, jettison.
• Excludes ordinary wear and tear, inherent vice, and most forms of negligence.

Memory trick: The sea's true dangers are stormy, striking, and sacrificing.

A type of surety bond that guarantees a contractor will complete a project according to the contract's terms and specifications.

• Ensures satisfactory completion of the work.
• Protects the project owner from financial loss due to contractor default.
• Often includes a warranty period for defects.

Memory trick: Contractors Perform, Pay, and Bid; Employees need Fidelity.

An aviation insurance coverage that protects the aircraft from physical damage while it is on the ground and not in motion, such as during storage or parking.

• Covers perils like fire, vandalism, theft, hangar collapse.
• Does not cover damage while taxiing or in flight.
• Often has a lower premium than in-flight coverage.

Memory trick: Planes are covered when Flying, Taxiing, or Sitting.

The standard duration from the date of application and premium payment until an NFIP flood insurance policy becomes effective.

• Typically 30 days.
• Prevents individuals from purchasing coverage only when a flood is imminent.
• Exceptions include new loans, map revisions, or changes to existing policies.

Memory trick: Thirty days to wait for flood protection, unless it's a new loan action.

A principle of maritime law where all parties with an interest in a voyage (ship, cargo, freight) proportionally share in losses incurred to save the entire venture from imminent peril.

• Intentional sacrifice of property (e.g., jettison)
• To save the entire ship and remaining cargo
• Losses are shared proportionally by all beneficiaries

Memory trick: GENERALly, everyone shares the AVERAGE loss to save the whole.

A specific coverage within an aviation liability policy that protects an air carrier against legal liability for loss or damage to cargo entrusted to them for transport.

• Covers the carrier's legal responsibility, not the cargo owner's direct loss.
• Subject to limits, exclusions, and conventions (e.g., Montreal Convention).
• Distinct from passenger liability or hull coverage.

Memory trick: Aviation liability covers Passengers, Third-parties, and precious Cargo.

A program created to provide basic property insurance to consumers who cannot obtain coverage in the voluntary insurance market, often due to high-risk locations or other underwriting reasons.

• State-mandated, industry-backed program.
• Provides coverage for dwellings, commercial properties, and farms.
• Coverage is typically basic fire and extended perils, not comprehensive.

Memory trick: FAIR for properties, CAARP for cars, CEA for quakes, NFIP for floods.

The California FAIR Plan provides basic property insurance for those unable to obtain it in the voluntary market, covering perils such as fire, extended coverage, and vandalism.

• Market of last resort for property insurance
• Covers basic perils: Fire, Extended Coverage, Vandalism
• Does NOT cover flood, earthquake, or liability

Memory trick: FAIR Plan is for FIRE, Wind, and VANDALS, not floods or big scandals.

Collision Coverage in a Personal Auto Policy pays for direct and accidental loss to a covered auto caused by collision with another object or by upset of the covered auto.

• Covers damage to the insured's own vehicle.
• Applies regardless of fault in the accident.
• Subject to a deductible.

Memory trick: My Car Needs Protection, Don't Forget Collision!

A Combined Single Limit (CSL) in an auto insurance policy specifies one maximum dollar amount that the insurer will pay for all bodily injury and property damage liability resulting from a single accident.

• No separate limits for bodily injury per person, bodily injury per accident, or property damage.
• Provides flexibility in how the total limit is applied across different losses in an accident.
• Often preferred for its simplicity and broader potential coverage in complex accidents.

Memory trick: Limits: Split (Separate) or Combined (One Pot)!

CGL Premises Liability, covered under Coverage A, protects a business from claims of bodily injury or property damage occurring on its owned or leased premises due to its negligence.

• Covers bodily injury to third parties (e.g., customers).
• Applies to incidents occurring on the business's property.
• Requires the business to be legally liable for the injury.

Memory trick: A for Accidents on the Area.

A section of the Commercial General Liability policy that covers liability for specific 'personal and advertising injury' offenses, such as libel, slander, false arrest, and certain advertising-related torts.

• Covers non-physical injuries, often related to reputation or intellectual property.
• Includes offenses like false advertising, copyright infringement, and malicious prosecution.
• Distinct from bodily injury and property damage liability.

Memory trick: A-BI/PD, B-P&AI, C-MedPay, D-RentedPrem - Know your ABCs!

A type of physical damage coverage in a Commercial Auto Policy that protects the insured's vehicles against losses from perils other than collision, such as fire, theft, vandalism, hail, falling objects, and contact with animals.

• Covers 'other than collision' events.
• Includes perils like fire, theft, vandalism, weather.
• Typically subject to a deductible.

Memory trick: Comprehensive covers all, except collision's fall.

Standard Commercial General Liability policies typically exclude liability for bodily injury or property damage arising out of the ownership, maintenance, use, or entrustment of aircraft, which generally includes drones.

• Drones are considered aircraft under most liability policies.
• Specific endorsements or separate aviation liability policies are needed for drone coverage.
• Underwriters view drone operation as a specialized, higher-risk activity.

Memory trick: CGL says NO to AIR, AUTO, and WATER risks!

Coverage A of a Commercial General Liability policy provides protection against claims of bodily injury and property damage for which the insured is legally liable.

• Covers bodily injury to others.
• Covers property damage to others' property.
• Subject to exclusions (e.g., expected/intended injury, contractual liability).

Memory trick: A is for Accidents and Assets of others.

Commercial Auto coverage that provides liability protection for a business when it leases, hires, rents, or borrows vehicles for its business operations.

• Applies to vehicles not owned by the business, but temporarily used.
• Essential for businesses that supplement their fleet with rentals or leases.
• Distinguished from Non-Owned Auto, which covers employee-owned vehicles.

Memory trick: Hired Auto: When you 'hire' a car, your policy is the fire!

Professional Liability insurance (E&O) covers claims arising from actual or alleged negligent acts, errors, or omissions in the performance of professional services, resulting in financial damage to a third party.

• Covers financial loss to clients.
• Triggered by professional errors or omissions.
• Distinct from general liability or property damage.

Memory trick: When professional words go wrong, E&O makes the client strong.

A type of liability insurance that covers employers against claims made by employees, former employees, or potential employees alleging wrongful termination, discrimination, sexual harassment, and other employment-related issues.

• Covers claims from employees.
• Includes wrongful termination, discrimination, harassment.
• Protects the business from legal costs and damages.

Memory trick: EPLI for employee woes, from wrongful acts to legal throws.

The Experience Modification Rate (Mod Factor) is a multiplier applied to an employer's Workers' Compensation premium that reflects their actual loss experience compared to the average expected loss experience for similar businesses.

• Can result in a premium credit (lower) or debit (higher).
• Calculated based on a business's previous 3-5 years of loss data (excluding the most recent year).
• Incentivizes employers to implement safety programs and manage claims effectively.

Memory trick: Workers' Comp: Mod Factor Makes Money Move!

When calculating payouts under a Combined Single Limit (CSL) policy, the insurer will pay the lesser of the total proven damages or the stated CSL amount for all bodily injury and property damage from a single accident.

• The CSL is the absolute maximum paid per accident.
• Total damages from BI and PD are aggregated.
• If aggregated damages exceed CSL, the policy pays the CSL amount.

Memory trick: CSL: Compare Sum to Limit, Pay Lower!

Permanent Partial Disability (PPD) benefits in Workers' Compensation are paid for a permanent impairment that results from a work-related injury, but which does not totally incapacitate the employee from all gainful employment.

• Applies after Maximum Medical Improvement (MMI) is reached.
• Calculated based on the impairment rating and scheduled benefits.
• Allows the employee to return to work, potentially in a modified role.

Memory trick: Disability: Temp or Perm, Total or Partial!

A type of coverage included in a Commercial Auto Policy that provides liability protection for the insured business when its employees use their own personal vehicles (non-owned autos) for business-related activities.

• Covers business's liability for employee use of personal vehicles.
• Protects against vicarious liability.
• Often included as part of broader commercial auto liability.

Memory trick: Non-Owned Auto: employee's car, company's legal scar.

Non-Owned Auto Liability coverage in a Commercial Auto Policy protects a business from liability arising from an employee's use of their personal vehicle for company business.

• Applies to vehicles not owned, hired, or leased by the insured.
• Covers the business's legal liability, not damage to the employee's vehicle.
• Crucial for businesses with employees using personal cars for work.

Memory trick: Non-Owned means your employee's car, but your business's risk.

A type of liability insurance policy that covers claims reported to the insurer during the policy period, provided the incident causing the claim occurred on or after the specified retroactive date.

• Coverage is triggered by when the claim is MADE, not when the incident OCCURRED.
• Requires a retroactive date to limit coverage for past acts.
• Often necessitates 'tail coverage' (extended reporting period) when a policy is terminated or non-renewed.

Memory trick: Claims-Made: The claim must be 'made' within the policy dates, after the retro date!

A core component of Workers' Compensation insurance that covers all reasonable and necessary medical treatment for an employee's work-related injury or illness, including doctor visits, hospital stays, prescriptions, and therapy.

• Covers all necessary medical care.
• No deductibles or co-pays for the injured employee.
• Provided until maximum medical improvement (MMI) is reached.

Memory trick: For the worker's medical need, medical benefits take the lead.

A common exclusion in a Personal Auto Policy (PAP) that denies coverage for losses occurring while the insured vehicle is being used for commercial purposes, such as transporting paying passengers for a ridesharing service.

• Standard PAPs generally exclude commercial use.
• Ridesharing falls under commercial use.
• Drivers need special endorsements or commercial policies for rideshare coverage.

Memory trick: Rideshare's commercial, so personal policy won't cover your fare.

A numerical assessment in Workers' Compensation that quantifies the degree of permanent impairment resulting from a work-related injury and its impact on the employee's ability to compete in the open labor market.

• Determines the amount of permanent disability benefits.
• Considers medical impairment, age, occupation, and future earning capacity.
• Calculated after the injured worker reaches Maximum Medical Improvement (MMI).

Memory trick: PD Rating: Your injury's lasting mark on your job market value!

Professional Liability insurance, also known as Errors & Omissions (E&O) insurance, protects professionals and companies from claims of negligence or errors in their professional services that result in financial loss for their clients.

• Covers economic damages, not bodily injury or property damage.
• Essential for service-based businesses (e.g., consultants, accountants, lawyers, architects).
• Often claims-made in form.

Memory trick: Biz Liability: General for General, Pro for Professional!

Specified Causes of Loss Coverage in a Commercial Auto Policy is a named perils physical damage coverage that protects against losses from specific perils such as fire, theft, vandalism, and certain natural disasters.

• Named perils coverage, meaning only listed perils are covered.
• Less comprehensive than 'Comprehensive Coverage'.
• An alternative to 'Comprehensive Coverage' for businesses seeking more limited physical damage protection.

Memory trick: Physical Damage: COLL-SPEC-COMP, Got It All!

The Products-Completed Operations Hazard coverage in a CGL policy provides protection against liability for bodily injury or property damage arising from the insured's products or completed work, occurring after the product has been sold or the work completed.

• Covers incidents occurring away from the insured's premises.
• Triggered after the work is finished or product delivered.
• Crucial for contractors, manufacturers, and service businesses.

Memory trick: Completed work can come back to bite you.

The Products-Completed Operations Hazard in a CGL policy covers bodily injury and property damage that occurs away from the insured's premises and arises out of the insured's product or work after the product has been delivered or the work completed.

• Crucial for manufacturers, contractors, and businesses that deliver products or complete projects.
• Coverage applies *after* the work is finished or product is sold.
• Subject to its own aggregate limit, separate from the General Aggregate Limit.

Memory trick: CGL Triggers: ON-SITE, AFTER-WORK, or WORDS!

A type of professional liability insurance that protects individuals and companies against claims made by clients for negligent acts, errors, or omissions in the performance of professional services.

• Covers professional negligence.
• Also known as Malpractice Insurance for medical professionals.
• Protects against financial loss due to a professional mistake.

Memory trick: For professional errors, E&O is the coverage that cares.

An Occurrence-based policy covers claims for incidents or occurrences that happen during the policy period, regardless of when the claim is reported to the insurer.

• Provides 'lifetime' coverage for incidents that occurred during its term.
• Simpler to understand than claims-made policies.
• More expensive due to the potential for long-tail claims.

Memory trick: Trigger Types: O-C-C, Occurrence or Claims-Made!

Liability limits in a Personal Auto Policy expressed as three numbers: per person bodily injury, per accident bodily injury, and per accident property damage.

• Example: 25/50/25 means $25,000 per person BI, $50,000 per accident BI, $25,000 per accident PD.
• The 'per person' limit caps payment to any single injured individual.
• The 'per accident' BI limit is the maximum paid for all injured parties combined.

Memory trick: Split limits: P.P.A.P.D. — Per Person, Per Accident, Property Damage!

An insurance policy that provides broad coverage for a business's liability exposures, primarily for claims of bodily injury and property damage to third parties arising from business operations.

• Covers bodily injury and property damage to third parties.
• Applies to premises, operations, products, and completed operations.
• Essential for most businesses to cover general liability risks.

Memory trick: General Liability covers general harm, not specific work or car alarm.

Liability coverage, typically part of a CGL policy's 'Products-Completed Operations Hazard,' that protects businesses from claims of bodily injury or property damage caused by their manufactured products or goods sold/distributed.

• For a restaurant, prepared food is considered a product.
• Can cover design defects, manufacturing defects, or failure to warn.
• Applies once the product leaves the insured's control.

Memory trick: Food poisoning? That's a 'product' problem!

The coverage extension in a Personal Auto Policy that provides liability protection for individuals who drive the insured vehicle with the express or implied permission of the named insured.

• Coverage generally follows the vehicle.
• The owner's policy is usually primary for permissive users.
• Exclusions may apply (e.g., if the user has no reasonable belief of permission, or uses the car for ride-sharing).

Memory trick: Permissive Use: If you let 'em drive, your policy's their guide!

Two different triggers for Commercial General Liability (CGL) policies: 'Occurrence' covers incidents that happen during the policy period, regardless of when reported. 'Claims-Made' covers claims first made and reported during the policy period, provided the incident occurred after a retroactive date.

• Occurrence policy: 'When did the injury/damage occur?'
• Claims-made policy: 'When was the claim first made and reported?'
• Retroactive date is crucial for claims-made policies.

Memory trick: Occurrence asks 'When did it happen?', Claims-Made asks 'When was it a-happenin' and reported?'

Coverage B of a Commercial General Liability policy provides coverage for 'personal and advertising injury,' which includes non-physical harms such as libel, slander, false arrest, and copyright infringement or false advertising.

• Covers intangible injuries, not physical bodily injury or property damage.
• Essential for businesses involved in marketing, publishing, or public communication.
• Subject to its own limits and exclusions.

Memory trick: CGL: A-B-C, Always Be Covered!

Professional Liability insurance protects professionals and businesses against claims of negligence, errors, or omissions in the professional services they provide.

• Covers financial damages to third parties.
• Triggered by professional services performed.
• Often called Errors & Omissions (E&O) insurance.

Memory trick: Professionals' Poor Performance Pays Penalties.

A claims-made policy's coverage is triggered when a claim for a covered act is first made against the insured and reported to the insurer during the policy period or an extended reporting period.

• Crucial concept for Professional Liability and D&O policies.
• Requires claim to be 'made and reported' within policy term.
• Often includes a 'retroactive date' to limit coverage for past acts.

Memory trick: Claims-Made: The claim must be 'made' and 'reported' to get paid.

Professional Liability policies (Errors & Omissions) typically exclude coverage for claims that fall under other types of insurance, such as bodily injury or property damage not directly arising from professional advice or services.

• Generally excludes bodily injury and property damage (covered by CGL).
• May exclude dishonest, fraudulent, or criminal acts.
• Often excludes claims for guarantees or warranties.

Memory trick: E&O: Excludes Ordinary Ops, Covers Only Opinions!

A legal principle in Workers' Compensation stating that an employer is liable for an employee's work-related injuries or occupational diseases, regardless of fault or negligence on the part of the employer, employee, or any third party.

• Applies to work-related injuries.
• Fault or negligence is irrelevant.
• Employer is always responsible for covered injuries.

Memory trick: Absolute liability: no fault, just fact, if it's work-related, the employer's got your back.

Cyber Liability insurance provides coverage for financial losses and expenses arising from data breaches, cyberattacks, network security failures, and privacy violations.

• Covers costs like notification, credit monitoring, legal fees, regulatory fines.
• Often includes business interruption from cyber incidents.
• Standard CGL policies typically exclude these risks.

Memory trick: Cyber safeguards all your digital secrets.

Split limits for bodily injury specify a maximum amount payable per person and a maximum total amount payable per accident for bodily injuries.

• First number: maximum per person bodily injury.
• Second number: maximum per accident bodily injury.
• Third number: maximum per accident property damage.

Memory trick: Per-person first, then per-accident, finally property.

An aleatory contract is one in which the values exchanged by the parties are unequal, and the performance of the contract depends on the occurrence of an uncertain event.

• Unequal exchange of value
• Performance depends on uncertain event
• Common in insurance contracts

Memory trick: Aleatory: Unequal stakes, a roll of the dice.

A fundamental principle of insurance requiring both the insured and the insurer to act with complete honesty and transparency regarding all material facts.

• Requires honesty from both parties
• No misleading or concealment
• Violated by intentional acts of damage

Memory trick: Good faith: Honesty is the foundation of the deal.

Insurance functions as a mechanism to transfer the financial risk of potential losses from an individual or entity to an insurance company.

• Transfers financial burden of loss
• Provides financial protection
• Does not eliminate risk

Memory trick: Shield your wallet from unexpected falls.

California Property & Casualty Broker-Agents must complete 3 hours of continuing education specifically dedicated to ethics every two-year license renewal period.

• Applies to Property & Casualty Broker-Agents.
• Required during each two-year license renewal period.
• Specific requirement for ethics education.
• Part of overall CE hours.

Memory trick: Three ethics hours for your P&C license, keep your moral compass true.

Part Three of a Workers' Compensation policy extends coverage to employees working in states other than the primary state(s) listed, ensuring compliance with other states' workers' compensation laws.

• Requires listing of applicable states.
• Automatically covers new states if not already listed, for a short period.
• Ensures statutory compliance across multiple jurisdictions.

Memory trick: Workers' Comp has parts, like a play, with 'Other States' as the traveling act.

In California, insurers are required to make partial payments on property loss claims when requested by the insured and liability for at least that amount is reasonably clear.

• Applies to property loss claims.
• Triggered by insured's request.
• Requires liability for the partial amount to be reasonably clear.
• Aims to alleviate financial hardship during claim processing.

Memory trick: Clear liability makes a partial payment, like a clear path to your home funds.

In California, insurers must provide a minimum of 45 days' advance written notice to an insured for the non-renewal of a personal lines policy.

• Applies to personal lines policies (e.g., homeowner's, auto).
• Minimum notice period is 45 days.
• Notice must be in writing.
• Must be provided before the policy's expiration date.

Memory trick: Forty-five days to find a new home for your policy.

Commercial General Liability (CGL) covers bodily injury, property damage, and personal/advertising injury, while Professional Liability (Errors & Omissions) covers financial losses arising from professional negligence or mistakes.

• CGL excludes professional services.
• Professional Liability is specific to financial harm from advice/service.
• Businesses often need both for comprehensive coverage.

Memory trick: CGL protects your business from general mishaps, not professional blunders.