20-44 Personal Lines Agent
SMART notes
UNIT ONE:
Qualifications Required for a General Lines Test
WHAT are the required
qualifications?
Section 1.4 (p. 19)
18 years of age
A resident of the
state of Florida
Place of business
A U.S. citizen or legal
located in Florida
alien who possess work
authorization from the
United States Immigration
Naturalization Services
Not licensed for purpose
of writing or handling
controlled business
Controlled Business—is insurance
DUTIES AND FUNCTION OF
THE DEPARTMENT OF THE
FINANCIAL SERVICES AND
THE OFFICE OF
INSURANCE REGULATION
Section 1.7 (p. 22)
Department of Financial
Services
1) Approve issuance of
licenses to agents, CR,
and adjusters
2) Supervision of claims
3) Investigate charges of
unethical conduct and
take judicial action
Office of Insurance
Regulation
1) Examine the
qualifications of
insurance companies
doing business in
Florida
2) Examine the financial
conditions of
companies
(more than 50%) written on his or her
own interests or those of his or her
family or of any firm, corporation, or
association with which he or she is
associated with directly or indirectly
or has an interest other than the
insurance
UNIT TWO:
Property and Liability Concepts
RISK
BINDERS
Section 2.1
(p. 23)
Section 2.3
(p. 23)
WHAT is an insurance policy?
Section 2.2 (p. 23)
Risk—the chance
Binders—temporary
of financial loss
Both definitions are from the
Florida Statues
Policy—a written
PROPERTY AND
LIABILITY
INSURANCE
Section 2.4 (p. 24)
contract for effecting
insurance and
includes, clauses,
riders, endorsements,
and papers which are
part of the contract
Insurance—a
contract where one
undertakes to
indemnify another or
pay a specified
amount determined on
contingencies
Property Insurance—
where payment is made
directly to the insured or
other named interests Liability Insurance—
where payment is made
on behalf of the insured
to another
insurance policies,
which can be made
orally or written INSURANCE
CONTRACT
CHARACTERISTICS
Section 2.5 (p. 24)
The insurer shall
give 5 days prior
notice of cancelling
a binder unless the
binder is replaced by
a policy. No notice is
required unless the
binder exceeds 60
days.
WHAT are the four components of a
property or liability contract?
Personal Contract: Covers persons, not
property or operations
Conditional Contract:
Obligations of insurer to
perform, may depend on the
insured satisfying certain
conditions
Contract of Adhesion: Parties
have unequal bargaining power,
such as the insured cannot
negotiate the terms of the insurer.
Ambiguities found in the policy
are usually found in favor of the
insurer
Indemnity Contract: One
party should be put back in
the same financial condition
they were in before the
loss. (Never profit from a loss)
Departures from the principal of indemnity:
1)
terest
Insurable In
t the
must exist a
and the
time of loss
ld
insured wou
mic loss.
suffer econo
(p. 26)
Replacement Cost: Given new for old
2) Agreed Value: Specific amount agreed upon in
advance
3) Florida Value Policy Law: Policy limits are
paid for total loss
4) Liability: Pays amount that exceeds insured’s
resources
(Refer to page 25)
PROPERTY INSURANCE CONCEPTS
Section 2.6 (p. 27)
Peril—a contingency
that cause a loss
Proximate Clause—a
doctrine that states
when there is an
unbroken connection
between an occurrence
and damage that
grows out of the
occurrence, then the
resultant damage is all
part of the occurrence
Hazard—a condition that
WHAT are the three classifications
of hazards?
increases the likelihood of
a loss from a covered peril
Dir ect vs. Indir ect Loss
Direct Loss—physical
harm to tangible property
Morale: Physical: Moral: Intentional Accident-­‐prone Physical loss or carelessness characteristics that increase the probability and severity of loss Lender Interest
Indirect Loss—economic
loss that flows as a
consequence of the direct
loss
Real Property: Lender’s interest
is named in the Mortgage Clause,
Mortgagee Clause, or Mortgage
Holders
Personal Property: Usually
named in Loss Payable Clause
Many property policies
are issued subject to
Replacement Cost. This is
common on buildings.
Lender interest varies from
policy to policy. Virtually all
property insurance covering
real property provides for
naming mortgagees and gives
them special protection such
as:
1) Advanced notice of
cancellation
2) Protected even if insured
is prevented from recovery
3) Allows mortgagee to
continue payments in
order to continue the
policy even if insured fails
to do so
Loss Settlement Valuation (p. 28)
property
Most basic
te that
policies sta
e
losses will b
d on
settled base
Value
Actual Cash
Blanket—a single amount
Actual Cash Value (AVC)—the current
of coverage that applies to
two or more coverage items
cost to replace the item minus depreciation
Coinsurance (p. 29)
Coinsurance clauses encourage an insured to
insure their property to its replacement cost
If the coverage
amount is equal to or
more than the agreed
percentage of the
property value, the
coinsurance clause
does not have an
impact on the claim
payment to the
insured.
Specific vs. Blanket Insurance
(p. 30)
value. Coinsurance clauses limit the insurer’s
responsibility in a loss to the proportion of a
loss which the limit of insurance bears to the
value of the property at the time of loss times
the coinsurance percentage. Formula for Coinsurance:
Loss ×
𝑳𝒊𝒎𝒊𝒕 𝒐𝒇 𝑰𝒏𝒔𝒖𝒓𝒂𝒏𝒄𝒆
𝑽𝒂𝒍𝒖𝒆 𝒐𝒇 𝑷𝒓𝒐𝒑𝒆𝒓𝒕𝒚 × 𝑪𝒐𝒊𝒏𝒔𝒖𝒓𝒂𝒏𝒄𝒆 = Loss Settlement
Specific Insurance—property
insurance policies are issued with
separate limits for each individual
building, the contents of each
building, and the indirect loss
exposure at each building
Coinsurance Example:
Coverage limit is $30,000, with an 80% coinsurance clause, a loss of
$20,000 occurs.
If the value of the covered property is $50,000 at the time of loss, the
insurer’s loss payment responsibility is calculated as follows:
Blanket Insurance—an alternate
method of insuring, blanket insurance
is to apply a single amount to two or
more coverage items, with any part of
the full amount available to apply to
any item and/or all items
$20,000 ×
$"#,!!!
$"#,!!! × !"%
= $15,000
The insured would collect $15,000 of the $20,000 loss, as the $30,000
of coverage did not meet the 80% value of the dwelling.
Deductibles (p. 30)
STRAIGHT
PERCENTAGE
Deduction of a flat
amount
Percentage of loss of
the value of the
property or percentage
of the policy limits
Example: An insured has $500 collision
deductible on his/her auto. The
insured lightly backed into a
wall scratching the rear bumper
cover resulting in $300 in
damages. The insurance policy
would not make a payment to
the insured until the damages
exceeded the $500 collision
deductible. FRANCHISE
No payment is made
until the loss equals or
exceeds a prescribed
amount, then the loss
is paid in full Example:
A homeowner owns a home valued at $300,000, and has an insurance
policy with $300,000 of Homeowners coverage. The policy has a 2%
windstorm deductible. If a loss occurs, the insured is responsible for the
first 2% of the damages.
The percentage deductible can be expressed in dollars by multiplying the
percentage by the coverage amount:
2% × $300,000 = $6,000
In this example, the insured would be responsible for the first $6,000.
LIABILITY
INSURANCE
CONCEPTS
Legal Liability—means our
rules of law dictate that one must
provide reparations to another
based on negligence
Section 2.7 (p. 31)
nder
Insureds U
olicy—
Liability P
is the
“Insured”
legally
one who is
liable
Liability Policy Insuring Agreement
Liability insurance
policies contain an
insuring agreement
that essentially states
that the insurer agrees
“to pay on behalf of
the insured all sums
the insured becomes
legally obligated to
pay as damages…”
Liability Policy Limits
Expressed three ways:
1) Single: Maximum amount
paid to any one accident or
occurrence
2) Split Limits: Expressed in
two figures
Example:
A private passenger automobile
policy has split limits of
$100,000 per person and
$300,000 per occurrence
(written as 100/300 on many
declaration pages). The policy
will pay out no more than
$100,000 for any one person
and no more than $300,000 for
any one occurrence.
Example:
A private passenger
automobile policy has a single
bodily liability limit of
$300,000 which is the most the
insurer will pay for any one
injured party’s claim and also
the total the insurer will pay for
all injured party’s claims. 3) Aggregate: A limit is applied
which represents the total
insurance coverage that will be
paid for the policy term
INSURANCE POLICY CONDITIONS
Section 2.8 (p. 32)
WHAT are the insured’s duties
following loss?
GENERAL DUTIES:
1) Prompt notice
2) Cooperate with
insurer
3) Preserve insurer’s
rights
Subrogation (p. 33)
Subrogation—the right an insurance
company has when an insured has a right
to collect damages from another party, but
instead elects to claim the damages under
his/her own insurance policy, those rights
against the other party are transferred to
the insurer
PROPERTY POLICIES:
1) Inventory damaged
property
2) Protect against
further loss
3) Show damaged
property
4) Provide records and
documents
5) Submit to questions
6)
LIABILITY POLICIES:
1) Notify insurer of
name and address of
claimants and
witnesses
2) Forward all legal
papers received
3) Aid the insurer in
settlements
4) Avoid voluntary
payments or
assumption of
obligations
Example of Subrogation:
Jill’s automobile incurs $1,000 of
physical damage in an accident caused
by Michelle. Jill receives a claims
payment of $800 from her own insurer,
because of a $200 deductible clause.
The insurance company is now
subrogated to Jill’s right to collect from
Michelle. Jill’s insurance company will
file a claim with Michelle’s insurance
company to recover the $800 paid.
Assignment (p. 34)
Assignment Clause—specifies that
transferring the policy to another will
not be valid unless the insurer consents
in writing
All changes to the policy
must be made by the
insurer, in writing.
Coverage applies only to
losses or occurrences
that take place during the
policy period.
Other Insurance (p. 34)
In cases were the insured has other policies, the policy may
call for paying its share in the following four ways:
Some policies cover
world-wide, but most
have a condition limiting
coverage.
1) Pro Rata: The company will pay its
proportionate part
2) Equal Shares: Contributions based on the
number of policies without regard to limits
Example:
A $300,000 loss has occurred and two liability
policies are determined to apply to the same
$300,000 loss. The first policy is responsible
for: $500,000/$1,500,000 (1/3 of the loss) of
the loss and the second policy is responsible
for $1,000,000/%1,500,000 (2/3 of the loss).
Example:
A $300,000 loss has occurred and two liability
policies are determined to apply to the same
$300,000 loss. The first policy has a $500,000
limit and the second a $1,000,000 limit. The first
policy is responsible for ½ of the loss and the
second policy is responsible for ½ of the loss.
Thus, the first policy pays $100,000 (1/3 of the
loss) and the second policy pays $200,000 (2/3
of the loss).
Thus, the first policy pays $150,000 (1/2 of the
loss) and the second policy pays $150,000 (1/2
of the loss).
3) Primary: Policy applies first up to the limit
before others apply
4) Excess: All other insurance must be
exhausted before the policy applies
Example:
A $300,000 loss has occurred and two liability
policies are determined to apply to the same
$300,000 loss. The first policy is primary and
has a $500,000 limit and the second policy is
excess with a $1,000,000 limit. The first
policy pays $300,000 for the loss and the
second policy pays zero, as the loss did not
exceed the first policy’s limit.
Example:
A $300,000 loss has occurred and two liability
policies are determined to apply to the same
$300,000 loss. The first policy is primary and
has a $500,000 limit and the second policy is
excess with a $1,000,000 limit. The second
policy pays zero, as the loss did not exceed the
first policy’s limit with the first policy paying
the entire $300,000 loss.
Appraisal (p. 35)
Liberalization—states that
when the insurer adopts a
revision that would broaden
coverage in other similar policies,
then the insured receives the
benefit of such broadened
coverage without additional
premium
When there is a dispute over the payment of
a claim, this condition provides for the
insured and insurer each to select an
appraiser and those
two then select a third
(or a court can appoint a third) and the
agreement of two of the three will be
binding.
Abandonment (p. 35)
cannot
Insured
d
damage
”
p
m
u
d
“
on the
property
nd
insurer a
its full
demand
value.
Severability (p. 36)
BASIS FOR INSURER
AVOIDANCE PERFORMANCE
Section 2.9 (p. 36)
Warranty—a policy
The insurance
applies separately
to each insured as
if other insureds
do not exist.
condition that is either
based on information in
the insured’s application or
inserted by the insurer
Misrepresentation—an
untrue statement in the
application made by the
insured
Concealment—when the
insured fails to reveal facts
to the insurer
UNIT THREE:
Personal Auto
FINANCIAL RESPONSIBILITY
Section 3.1 (p. 40)
All drivers in Florida must
be financially responsible
when operating a motor
vehicle. This includes
resident and non-resident
drivers.
WHAT triggers the Financial
Responsibility law?
(p. 40)
Accident involving
bodily injury
Accident involving
property damage
that results in an
inoperable vehicle
Accident involving
traffic violations such
as DUI and committing
a felony
WHAT limits satisfy the
Financial Responsibility Law?
WHAT are the penalties for not
providing financial responsibility?
(p. 41)
10/20/10 liability limits are required.
(p. 41)
If 10/20/10 limits are not carried, the owner
and operator must (to avoid penalties):
Drivers license and
registration of all
vehicles suspended
Owner or operator
responsible for up
to 10/20/10
File SR-22 that
certifies coverage is
in effect (filed for
three years)
1) Pay legally valid claims up to
10/20/10
2) Provide certification of financial
responsibility
DUI offenders: $100/$300/$50 or
$350,000 limits are required of anyone
found guilty of DUI. If after three (3)
years without being guilty of another DUI
or felony traffic offense, the person is
allowed to go back to standard coverage
limits.
WHO administers the
Financial Responsibility Law?
(p. 41)
A “Named Non-owner
Policy” is required if
the operator of a
vehicle does not own
a vehicle and is
required to carry an
SR-22. This coverage
is only when they are
operating a vehicle
owned by others.
The Department of Highway
Safety and Motor Vehicle
NO-FAULT
Section 3.2 (p. 42)
Personal Injury Protection (PIP)
ho is
t matter w
It does no
the
f you carry
at fault. I
um
ired minim
u
q
e
r
te
a
st
t
you canno
,
)
0
/1
0
/2
0
(1
e
cause of th
be sued be
in
nless certa
accident u
or verbal
monetary
are met.
thresholds
Personal Injury Protection (PIP), the
coverage under the No-Fault Law, is
mandatory for all owners of a registered
motor vehicle.
PIP only applies to Bodily Injury Claims.
Motor Vehicles—includes all self-propelled
vehicles with four or more wheels that are of a
type both designed and required to be licensed for
use on Florida highways, and trailers and semitrailers designed for use with such vehicles
Exceptions: 1) Taxicabs 2) Mobile homes 3) Government-­‐owned vehicles used to transport more than 5 passengers 4) School busses WHO or WHAT constitutes an
“owner” under the PIP law?
(p. 42)
Legal title is held
Option to purchase lease
Enforcement of this
requirement: Evidence of
insurance must be provided
at the time of registration
annually
WHAT is the responsibility of
nonresident?
(p. 43)
Nonresidents are not required to register their
vehicle in Florida, but are still subject to the
law if the vehicle has been physically present
in Florida for more than 90 of the preceding
365 days.
WHAT are the PIP benefits?
(p. 43)
Agreement to lease
six months or more
Debtor in possession
WHAT are the penalties for not
complying with the No-Fault law?
(p. 43)
Denied
immunities
from legal
liability
Personally liable
for payment of
PIP benefits
Driver’s license and
registration are
subject to suspension
The TOTAL benefit of PIP is $10,000 ($2,500 limit
if individual is not diagnosed with emergency
conditions)
Death benefit
of $5,000 in
addition to
$10,000
Replacement
Services, 100%
Income from
work, 60%
Medical, 80%
d PIP
An Extende
t can
endorsemen
d for
be purchase
med
only the na
d
insured an
bers
family mem
WHAT does the Extended
PIP endorsement cover?
WHAT does the Additional
PIP endorsement cover?
(p. 43)
(p. 44)
Additional PIP increases the PIP limit by
the following additional amounts:
MEDICAL
WORK LOSS
(raises medical
coverage from 80%
to 100%)
(raises work loss
coverage from 60%
to 80%)
$10,000
$20,000
$25,000
$40,000
$90,000
These increases do not
affect the $5,000
death
benefit.
Primary vs. Excess
When is PIP primary and when is PIP
excess?
(p. 44)
PIP is primary against all
other medical and
disability coverage except
Worker’s Compensation
PIP is excess over
Worker’s Compensation
WHO is covered?
(p. 44-45)
Named Insured
In Florida: The named
insured is covered while
occupying any defined motor
vehicle or if struck by a
defined motor vehicle as a
pedestrian
b) Outside Florida: The named
insured is covered while
occupying his/her own
insured motor vehicle or a
motor vehicle owned by a
resident relative (must be
insured for PIP)
a)
Relative who resides with
Named Insured
a) In Florida: Same as
insured
b) Outside Florida: Only
while occupying the
named insured’s PIPcovered motor vehicle
Other Named Insured or
Resident Relative
If not an owner or entitled to
benefits from another owner’s
insurer, then covered if:
a)
Occupying named
insured’s motor vehicle in
Florida
b) Struck by insured’s motor
vehicle while a pedestrian
if a Florida resident
WHAT are the PIP exclusions?
(p. 45)
Vehicles owned and
not covered by
insured’s policy
Operating insured’s
vehicle without
consent
Self-injury
intentionally inflicted
Injured while
committing a felony
Tort Exemption
(Under the Florida No-Fault Law)
(p. 45)
Tort exemption is tied to the vehicle
not to the person
Tort exemption is up to the PIP limits
only
The threshold
(FS627.737) is:
1) Loss of major bodily
function
2) Permanent injury
within a reasonable
degree of medical
probability
3) Significant scarring
or disfigurement
4) Death
Tort exemption is based upon PIP
paid or payable
Personal Auto Policy (PAP)
Section 3.3 (p.46)
ave
Unless you h
ove,
one of the ab
e
you cannot su
pain,
som eone for
suffering, or
ish. mental angu
WHO is covered?
(p. 46)
Individuals
Related
Persons
Unrelated
persons who
reside together
WHAT types of vehicles
are eligible?
(p. 46)
The following are not eligible to
be insured under the PAP:
1) Corporations
2) Partnerships
Private passenger automobiles
and pickup truck or van that has
a Gross Vehicle Weight (GVW)
of less than 10,000 pounds
Ownership
Intended for private family exposure, issued
only to an individual or related persons, or
Vehicles cannot be used to
deliver or transport good or
materials, except for those that
are incidental to the insured’s
business or furniture or
equipment installations,
maintenance, or repair, or for
farming or ranching
unrelated persons who reside together
If a non-owner of an auto, then they must
obtain a Named Non-Owner Policy
WHAT are the sections of
Personal Auto Policy?
(p. 47)
Declarations
Agreement
And
Definitions
Part A:
Liability
Coverage
Part B:
Medical
Payments
Part C:
Uninsured
Motorists
Part D:
Damage to
Your Auto
Part E: Duties
after an Accident
or Loss
Part F:
General
Provision
s
PIP is
added by
endorsemen
t
PAP DECLARATIONS
Section 3.4 (p. 47)
Loss Payee—one who has an interest in a
vehicle, such as a bank or finance company
PAP Declarations
identify and state:
1) Named Insured
2) Mailing address
3) Policy period
4) Coverage that
applies
5) Limits
6) Premiums
7) Loss payees
ments
Claims pay
made
are jointly
red
to the insu
yee
and loss pa
PAP DEFINITIONS
Section 3.5 (p. 47)
Named Insured—referred to as “you” and
Owned—defines as any auto leased for six
“your” and includes resident spouse
months or more
Bodily Injury—bodily harm, sickness, or
Property Damage—physical injury to or
disease resulting in death
loss of use of tangible property
Family Member—defined to include
Business—trade, profession, or occupation
relatives, wards, and foster children in the
named insured’s house
Occupying—means in, upon getting in, on,
out, or off
Your Covered Auto—defined as follows:
1) Any vehicle in the Declarations
2) Newly acquired autos (14 days to
declare if additional vehicle)
3) Any trailer you own
4) Any auto or trailer you do not own
while used as a temporary
substitute
Newly Acquired Auto—defined to include
any of the following types of vehicles you
become the owner of during the policy
period:
1) A private passenger auto
2) A pickup or van, for which no other
insurance policy provides coverage, that
a. Has a GVW of 10,000 pounds
b. Is not used for delivery or
transportation of goods and materials
unless it is:
i. Incidental to your “business” of
installing, maintaining, or repairing
furnishings, or equipment
ii. Farming or Ranching
Trailer—a vehicle designed to be pilled by
private passenger, pickup, or van, or a farm
wagon or farm implement while towed by
any such vehicle
Only Part A, Part B, and UM will
follow the insured in temporary
substitute while the vehicle is out if
its normal use because of:
1) Breakdown
2) Repair
3) Servicing
4) Loss
5) Destruction
The coverage for Newly Acquired Auto:
For Liability, Medical Payments, Uninsured Motorists, or
any other coverage, except for coverage for damage to
your auto (Part D), the newly
acquired auto automatically
receives coverage that is equal to the broadest
coverage that the insured has for any vehicle
on the Declaration page.
If the newly acquired auto is an additional auto, the vehicle has coverage for 14 days. After 14 days, the
insured must request coverage.
If the newly acquired auto is a replacement vehicle, then the vehicle is covered until the policy expires,
even if the insured did not request coverage.
For Part D, Coverage for Damage to Your Auto, a newly acquired vehicle is covered:
If the insured has Collision coverage or Other Than Collision coverage on at least one vehicle, then
1) 14 days of automatic coverage applies
2) Coverage is equal to the broadest coverage on any vehicle on the policy
3) After 14 days, the insured needs to request the vehicle be added to the policy
If the insured dose not carry Collision coverage on at least one of the vehicles on the insured’s policy then:
1) The insured receives physical damage on a newly acquired auto for 4 days with a $500 deductible
2) After 4 days, the insured must request that the vehicle be added to the policy for coverage to continue
PART A: LIABILITY
Section 3.6 (p. 49)
Coverage
WHAT are the
Supplementary Payments?
(p. 49)
Part A pays on behalf of the
insured for Bodily Injury (BI)
and Property Damages (PD).
As a part of BI and PD, Part A
Liability provides/pays for a
legal defense against claims
brought by third parties (the
party suing the insured).
Loss of
earnings of
$200 per day
Interest
on
judgments
Appeal
Bonds
Bail Bonds
up to $250
Legal
Expenses
WHO is insured?
(p. 50)
Costs associated with defense
are called Supplementary
Payments; these payments are
in addition to the policy limits.
Named Insured and
family members for the
ownership, maintenance,
or se of any auto or trailer
Any person using
your covered auto
with permission
(permissive user)
Anyone legally
responsible for
your covered
auto (vicarious
liability)
Exclusions that apply to Coverage A—Liability
Insured not covered for: 1) Intentional injury 2) Damaged property that is owned or transported by insured 3) Damage to property rented to, used by, or in the care of the insured, except damage to residence or private garage 4) Injury to employee in the course of employment; does not apply to domestic workers not covered by WC 5) Using vehicle as public livery, except car pools 6) Selling, repairing, servicing, storing, or parking vehicles, except named insured, family member, or a partner, agent, or employee of the named insured or a family member 7) Business use, except for farming or ranching, or use of non-­‐owned pickup or van 8) Use of vehicle without permission (i.e. theft or conversion) 9) Nuclear Energy liability policy in effect WHAT vehicles are not
covered?
(p. 51)
Vehicles with fewer
than four wheels or
designed for off
road use
Vehicles regularly
furnished to an
insured and not a
“your covered auto”
Vehicles owned by or
furnished or available for
the regular use of a family
member, other than “your
covered auto”; however,
this does not apply to the
named or residing spouse
while maintaining or
occupying such a vehicle
Vehicles garaged or
located in a facility
designed for racing or
speed contests
WHICH types of limits apply
to Coverage A—Liability
(p. 51)
PART B: MEDICAL PAYMENTS
Section 3.7 (p. 52)
Single Limits: Only one limit
applies per person and per
occurrence
The minimum single limit is
$30,000
Split Limits: Limits are split into three
WHAT is covered in
Part B—Medical
Payments?
(p. 52)
The minimum split limit is 10/20/10
The first ten (10) represents: $10,000
per person for bodily injury
The twenty (20) represents: $20,000 per
accident for all bodily injuries
The last ten (10) represents: $10,000
per accident for property damage
Necessary medical and
funeral expenses for up
to three (3) years from
the date of the accident
Part B pays without
regard to fault
Liability Limits apply as primary
coverage for vehicles owned by
the insured
Liability limits are excess for
vehicles not owned by the insured
Part B is a firstparty coverage—
applies to the insured
and occupants of the
insured vehicle
Exclusions that apply to Coverage B—Medical Payments
WHO is insured under
Part B?
1)
2)
3)
4)
(p. 52)
The named insured and family
members while occupying any
car or as a pedestrian while
struck by any motor vehicle
designed for road use or by any
type of trailer
Others are insured while
occupying “your covered auto”
How Losses Ar e Paid
Part B is primary when occupying an owned auto.
Part B is excess when occupying a non-owned auto.
Fewer than four wheels Public/Livery Worker’s Compensation is payable Auto which is furnished or available for regular use 5) Used without permission 6) Business use of non-­‐private passenger auto 7) Racing facility Any amount payable under Part
B is reduced by any amounts
payable under Part A—Liability,
Part C—Uninsured Motorist
Bodily Injury, or PIP
Medical Payments Coordination with Personal Injury Protection
(PIP) Coverage
Medical Payments will pay some or all of the 20% medical not
paid by PIP
Medical Payments will not pay for any of the PIP deductible
PART C: UNINSURED MOTORIST
Section 3.8 (p. 53)
WHAT is covered in Part
C—Uninsured Motorist?
WHO is insured?
(p. 54)
(p. 53)
Part C protects the insured for Bodily
Injury caused by an uninsured or
underinsured motor vehicle. The
Florida Statute that governs the UM
law is FS 627.727
Named Insured and
Family Members
a) In any auto
b) As a pedestrian
Others are insured
while occupying
“your covered auto”
WHAT constitutes an
“uninsured”
motorist/vehicle?
(p. 54)
Responsible party’s
Bodily Injury limits are
lower than amount of
injury
Responsible party has
no insurance
Limits
(p. 54)
Single or
Split Limits
are available
Responsible party’s
insurance company is
“insolvent”
Hit and Run vehicle
Stacked vs. Non-stacked
(p. 54)
The UM law (FS 627.727)
requires that every policy that
provides Part A Liability
coverage must include
“stacked” UM at the same
limits as apply for Liability
coverage, unless the insures,
in writing:
1) Rejects UM coverage
2) Elects UM coverage at
limits lower than those
for Liability
3) Elects non-stacked UM
coverage
tion of
Determina
r UMBI
damages fo
ieved
can be ach
through:
nt
1) Agreeme
on
2) Arbitrati
3) Suit
Stacked UMBI coverage adds together
two or more vehicle’s UMBI coverage to
determine the limit of coverage available
to an injured person in any one accident
Non-stacked equals the limit shown on the
declarations page, but differs from stacked in the
following ways:
1) Coverage available to an injured person while
occupying a motor vehicle is only the limit
applicable to that motor vehicle
2) When the insured is occupying a non-owned
vehicle, any UM on that vehicle is primary. The
maximum UM paid under the insured’s policy is
the highest limit on any vehicle for which they
are the named insured or family member
3) UMBI does not apply to the insured while
occupying any vehicle owned by insureds for
which UM was not purchased
4) A person who is injured in an accident while
not occupying a motor vehicle may select limits
of UMBI applicable to any vehicle afforded
UMBI for which they are a named insured or
family member
5) Non-stacked coverage must be offered at
reduced rates
PART D: DAMAGE TO YOUR AUTO
Section 3.9 (p. 55)
The UM law (FS 627.727) requires that
insurers annually send a notification to all
insureds of their options under the UM law
WHAT vehicles are
covered?
(p. 55)
Non-owned auto—a private passenger auto,
Your covered auto
pickup, van, or trailer that is not owned by
or furnished for regular use while being
operates or in the care of the named insured
or family member
Non-owned auto,
including their equipment
WHAT is covered in Part D—Coverage
for Damage to Your Auto?
(p. 55)
Collision: The upset or impact
with another vehicle or object
Other Than Collision: All direct and accidental
loss not covered by Collision and not excluded in
the policy, such as:
1) Missiles 2) Falling Objects 3) Fire 4) Theft
5) Larceny 6) Explosion
7) Flood 8) Hail
9) Water 10) Earthquake
11) Windstorm
12) Vandalism
13) Breakage of glass
14) Animal Impact
Part D includes Transportation Expenses
to Your Covered Auto
or Loss of Use to a
Non-Owned Auto
Transportation Expenses
1)
2)
3)
4)
$20 per day/$600 maximum
24 or 48 hour waiting period if a Theft Loss
No Deductible applies
Benefit begins 24 hours after loss and ends when
vehicle is returned or company pays for loss
Exclusions that apply to Coverage D—Damage to You Auto
(p. 56)
1)
2)
3)
4)
5)
6)
Mechanical Breakdown Tires, road damage, racing, and transportation for hire Wear and tear, war and nuclear Tapes, records, ect. Freezing, fancy fixtures, fuzz buster Sound reproducing equipment: permanently installed ($1,000 limit for non-­‐factory installed items) 7) Seizure by the government 8) Camper body/trailer not on the declaration page 9) Custom furnishings on pickup/van and awnings and cabanas 10) Non-­‐owned auto in the auto business How losses are paid
1) Lesser of ACV or cost to repair or replace 2) $1,500 for any non-­‐owned trailer PART E & F: OTHER PROVISIONS
Section 3.10 (p. 57)
WHAT are the insured’s duties after loss?
(p. 57)
Prompt notice
Forwarding legal papers
Cooperation
Submit to physical
exam
Proof of loss
General Provisions
Policy territory includes:
1) U.S.
2) Canada
3) Puerto Rico
4) U.S. territories and possessions
Uninsured Motorist
losses require the filing
of a police report
ENDORSEMENTS
Section 3.11 (p. 57)
Extended Non-owned Coverage—
for a non-owned auto which is
furnished or available for the regular
use of the insured (Liability and
optional Medical can be added by
endorsement)
Towing and Labor—covers for
towing and costs of labor performed
at the place if disablement for up to
$25, $50, $75, and $100 per
disablement
Coverage for Excluded
Equipment—covers tapes, records,
and discs up to $200. Other
customized equipment for pickup
and vans for specified amounts
Joint Ownership Coverage—
Named Non-owner Coverage—
provides Liability, Medical Payments,
and Uninsured Motorist Bodily Injury
for those who do not own an auto
Miscellaneous—covers motorhomes,
motorcycles, golf carts, and allterrain vehicles
required when the PAP covers two
or more relatives (whether or not
residing together) or individuals
residing together
Additional PIP—only available
Increased Limits of
Transportation Express Coverage—
increases the $20/$600 to any limit
selected by the insured
Extended PIP—increase medical to
100% and Work Loss to 80%. The
maximum amount of coverage
remains $10,000
to the named insured and family
members only, and only if the
Extended PIP is purchased. PIP
coverage can be increased by either
$10,000, $25,000, $40,000, or
$90,00 of additional coverage.
RATING
Section 3.12 (p. 58)
WHAT are the discounts
available?
WHAT is the standard
rating plan used by
insurance companies
(p. 58)
(p. 58)
Territory
Age
Sex
Marital
Status
Use of
Vehicle
Driving
record
Multicars
Good
Grades
Defense
Driving
Course
Anti-lock
brakes
Antitheft
Safe
Driver
MISCELLANEOUS FLORIDA
AUTOMOBILE LAWS
Section 3.13 (p. 59)
Cancellation/Nonrenewal
(There is always a cancel/nonrenewal
question on the exam)
(p. 59)
First 60 days when PAP provides mandatory PIP and PD:
1) Insurance company: Any reason except discrimination
2) Insurer cannot cancel for non-payment of premium unless
NFS or insured failed to pay any “Additional Premium” due
3) Insured has limited reasons for cancelling, such as total
destruction, purchasing replacement coverage with another
insurer, or selling the vehicle
After 60 days the insurer may cancel only for non-payment of
premium, material misrepresentation or fraud, or
suspension/revocation of the driver’s license or registration of an
operator during the policy term or within 180 days
When cancellation is permitted or nonrenewal, there is a 45-day
notice except 10 days for non-payment
If insured cancels policy, the insurer must return the unearned premium within 30 days. Unfair Trade Practices and
Information Disclosure to Claimants
(p. 60)
Florida law requires the insurer to disclose full policy information to a claimant within 30 days upon a written request Glass Breakage—Deductibles
(p.60)
No deductible for windshield glass breakage
per F.S. 627.7288
MECHANICAL BREAKDOWN
INSURANCE
Section 3.14 (p.60)
WHAT is covered?
(p. 60)
The coverage is for failure by a part,
notably: engine, transmission, drive axle,
steering assembly, air conditioning, and
front suspension.
Coverage is similar to extended warranty
coverage. Some policies cover rentals for
up to $15 a day with a maximum of $75
Exclusions under
Mechanical Breakdown Insurance
(p. 61)
1)
2)
3)
4)
5)
6)
7)
8)
9)
Lack of maintenance Fire, theft, or collision Odometer tampering Towing Tune-­‐ups Seals or gaskets Racing Towing Trailer Public Livery Policy Term
(p. 61)
New Car: 36 months,
36,000 miles
Used Car: 12 months,
12,000 miles UNIT FOUR:
Homeowners and Dwelling
HOMEOWNERS INSURANCE
Section 4.1 (p. 63)
Not eligible:
WHAT are the eligibility
requirements?
1)
2)
3)
4)
Corporation
Partnership
Estate
Individual who does not occupy the
premises (exception: if a condo unit
owner who rents the unit to others
is eligible)
5) Farms, except incidental farming is
eligible
(p. 63)
Owner-occupants of
1-4 family dwellings
Renters
residing in
any building
Dwelling
under
construction
Condo and
coop apartment
occupants
Allows up to two
roomers or boards per
family, owner must
reside in unit
WHO is covered?
(p. 63)
Person
Named
Residing
Spouse
Residing
Relatives of
either
Trust (with
endorsement)
Life estate
arrangement
Person under
the age of 21 in
care of named
insured
For Section II Liability Only: A
named insured can be persons
animals or
legally liable for
watercraft owned by the insured
A student away at
school, if related to the
name insured, under the
age of 24, and a full
time student (Full time
is defined by the
school)
A Homeowners Policy consists of:
1)
Declarations
2) One of the forms (2, 3, 4, 5, 6, 8)
3) Endorsements
WHAT Homeowners forms are
available?
(p. 64)
H0-2 Broad Form
(1-4 family)
H0-3 Special Form
(1-4 family)
For owner-occupants
of 1-4 family
dwellings only forms
H0-2, 3, 5, or 8
apply
H0-4
Contents
(Renters)
H0-5
Comprehensive
(1-4 family)
H0-6 Unit Owners
Form
(Condos/Cooperatives)
If the insured is a
condominium unitowner or cooperative
apartment dweller,
than an H0-6 would
apply even if the
insured rents the unit
If the insured
rents, then the
H0-4 applies
SECTION I—PROPERTY COVERAGE
Section 4.2 (p. 64)
WHAT are the types of property
coverage?
(p. 64)
Coverage A:
Dwelling
Coverage B:
Other Structure
Coverage C:
Personal Property
H0-8
Modified
Form (1-4
family)
Coverage D:
Loss of Use
COVERAGE A: DWELLING
COVERAGE B: OTHER STRUCTURES
Coverage A:
1) Covers the dwelling and structures that are
attached and construction materials onsite.
Coverage B:
1) Covers private structures on the residence
premises that are not attached to the main
dwelling
2) Does not include structures used for
certain business purposes or rented to
anyone who is not a tenant of the main
dwelling, unless a rental is for private
garage purposes
3) Automatically 10% of Coverage A
4) Is NOT in the H0-4 or H0-6
H0-6 Coverage A:
1) Covers certain interior building items
2) A basic limit of $5,000 applies, or higher
limits if approved
3) The unit-owner will usually need an
increased amount over the H0-6 basic
Coverage A
H0-4 Coverage A: Not included
COVERAGE C: PERSONAL PROPERTY
COVERAGE D: LOSS OF USE
(Automatically 50% of Coverage A: Dwelling)
Coverage C:
Covers personal property owned or used by the
insured anywhere in the world. Optionally, the
insured can give the coverage to property
owned by others while the property is located at
any residence occupied by insured
Coverage D:
Covers increases over normal living expenses if
damage from a covered peril makes the
residence unfit for occupancy
Limits
(p. 65)
Exclusions for Coverage C
1)
2)
3)
4)
5)
6)
7)
8)
9)
10)
11)
Specifically insured articles
Animals, Birds, or Fish
Motorized vehicles, except vehicles for the handicapped or maintenance
Portable electronic equipment that reproduces, receives, or transmits
audio, visual, or data signals, and is designed to be operated by the power
from the electronic system of a motorized vehicle
Aircraft and parts, except model or hobby aircraft
Hovercraft and parts
Property of roomers or tenants, unless related to the insured
Property in an apartment that is regularly rented or available for rentals to
others
Property that is rented or held for rental to others away from the
residence premises
Business in data books, paper records, or electronic software media,
except blanks
Water or Steam
•
•
•
•
30% of Coverage A
under H0-2, H0-3,
or H0-5
30% of Coverage C
under H0-4
50% of Coverage
under H0-6
10% of Coverage A
under H0-8
Special Property Coverage Limits
Special Coverage Limits
Coverage Amount
Property Off Premises
Money or related property
Securities, similar property
Watercraft, trailers, and accessories
Jewelry, watches, furs, stones by theft
Firearms and equipment by theft
Silverware, goldware, pewter by theft
10% Coverage C*
$200
$1,500
$1,500
$1,500
$2,500
$2,500
Business property on the residence premises
$2,500
Business property away from the residence premises
$1,500
Portable electronic equipment
$1,500
Tapes, wires, records, disks, or other media
$250
*Property located at another residence is 10% Coverage C or $1,000, whichever is
greater. The 10% is also applied to personal property located in a self-storage
unit. This 10% does not apply if personal property is being moved from residence
if:
1) It is being repaired
2) The residence is not for to live or store property in
The property is usually located at insured’s residence other than insured’s premises
Additional Coverages
(p. 66)
Additional Coverages
Debris removal after a loss
Trees, shrubs, and plants
Fire Department service charges
Property removal to protect from further loss
Credit card, fund transfer forgery, counterfeit
Loss assement ($2,000 for H0-6 Condo)
Landlord furnishings for insured who rents to other
Breakage of building glass if not vacant
Building ordinance
Additions, alterations, & additions by tenant H0-4 only
Coverage Amount
5% of Coverage A
5% of Coverage A
$500
30 days
$500
$1,500
$2,500
60 days
10% of Coverage A
10% of Coverage C
Perils Insured Against
1) Catastrophic Ground Cover Collapse 2) Fire 3) Lightning 4) Windstorm 5) Hail 6) Explosion 7) Weight of ice, snow, and/or sleet 8) Freezing of plumbing, heating, or A/C 9) Accidental discharge or overflow or appliances 10) Sudden and accidental tearing apart of steam, heating, or A/C system 11) Sudden and accidental damage from electrical current 12) Aircraft 13) Vehicles 14) Riot or civil commotion 15) Smoke 16) Volcanic eruptions 17) Vandalism or malicious mischief 18) Theft 19) Falling objects The H0-2, H0-4, and H0-6 all have
named perils (policy names the perils
insured against)
H0-3:
Coverage A and B: Open Perils (All
Risks)
Coverage C: Named perils 1-19 as listed
H0-5: All Risks for Coverage A, B, and C
H0-8: Named perils, 1-6 and 12-17 as
listed
All Risk or Open Peril—is protection for the
insured from loss arising from any peril other than
those perils specifically excluded in the policy
Conditions
Loss Settlement for Section I is mainly
Actual Cash Value, EXCEPT for,
replacement cost on Coverage A and B
if limit at the time of loss equals to
80% or more of the replacement cost.
If the 80% threshold is not met, then
the coinsurance formula applies
The method that identifies the covered causes of loss has
traditionally been called “all risks”. Many insurance
professionals still use the term, but it is no longer used in
when they hear the word “all”,
policies because the insured,
believes everything is covered. Because of this, some
insurance professionals have begun using the term “open
perils” instead of “all risks”
Some exceptions to replacement cost adjustments:
1)
ACV applies to awnings, carpeting,
appliances, outdoor antennas, and outdoor
equipment
2) To receive replacement cost, the insured must
notify the company of intent within 180 days
3) Can take ACV and later claim the difference
to meet 180 days
SECTION II: LIABILITY COVERAGE
Section 4.3 (p. 68)
WHAT are the types of liability
coverage?
(p. 68)
Personal (non-business)
activities are covered
anywhere
Section II Liability
applies to liability
arising from insured
locations
Coverage E: Liability
Coverage F: Medical
Payments to others
Coverage E: LIABILITY
Coverage F: MEDICAL PAYMENTS TO
OTHERS
Coverage E: protects insured from legal
liability for bodily injury (BI) or property
damage (PD) to others
Coverage F: pays for medical and other related
expenses for members of the public injured by
the personal activities of the insured without
regard to insured’s legal liability
WHAT are the insured locations?
(p. 68)
Premises
described in the
declarations
Newly acquired
residences
during policy
period
Locations
where insured
is temporarily
residing or
rented for nonbusiness use
Vacant land can
be rented by
insured that does
not include
farmland
Land where a
new family
dwelling is being
constructed as the
new residence
Cemetery plots
and burial vaults
Exclusions
(p. 69)
While most business pursuits are excluded,
the policy does not exclude the following:
While most motorized land vehicles are excluded,
the policy does not exclude the following:
1) Activities to non-business pursuits
2) Occasional or partial rental to others
3) Using part of residence as office, studio,
school, or private garage,
4) Activities receiving less than $2,000 a
year
5) Childcare for no compensation
6) Insured under 21 engaged in part time,
self-employed business with no
employees
1) Vehicle in dead storage at insured location
2) Used solely to service residence premises
3) Owned golf cars on insured location or used to
play golf in residential community where carts
are authorized for road use
4) Owned off road recreational vehicles on insured
location (can be elsewhere if not owned by
insured)
5) Vehicles designed for handicapped anywhere if
at the time of loss being used to assist
handicapped
Other exclusions of principal interest: 1) Aircraft 2) Hovercraft 3) Property damaged that is owned by insured or rented to or in the care of the insured (except others’ property damaged by smoke, fire, or explosion) 4) Injury to any insured 5) Workers’ Compensation The exclusion of coverage for watercraft
eliminates coverage for:
1) Inboard-outboard owned by insured or more
than 50 HP rented to insured
2) Watercraft powered by water jet pump owned
or rented to insured
3) Sailboats owned or rented to insured at
beginning of policy
4) Boats powered by outboard motors of over 25
horsepower owned by insured at the beginning
of the policy
Additional Coverages
(p. 69)
WHAT are the additional coverages?
(p. 69)
Claim Expenses
First Aid
Expenses
Damage to Property of
Others: Up to $1,000
max, if not covered
under Section I
Loss Assessment: Up to
$1,000, and applies to
assessments against the
insured by an association
of property owners
Limits of Liability
(p. 70)
Claim Expenses Include:
1) Cost of defense
2) Premium on appeal
bonds
3) Interest on judgments
4) Prejudgment interest
5) Reimbursement to the
insured for expenses for
defense
6) $250 per day for loss
earnings
Basic limits of $100,000 apply per
occurrence of Coverage E and $1,000 per
person for Coverage F. (Limits can be
increased)
Florida Law imposes $10,000 cap on
statutorily imposed vicarious parental liability
GENERAL CONDITIONS
Section 4.4 (p. 70)
WHAT are the conditions for
deductibles?
(p. 70)
$500 is the
standard
deductible for
all perils
except
hurricanes
When
multiple
deductibles
apply, only
the highest
will apply
$500 is the
minimum
hurricane
deductible
Options to
purchase
deductibles are
2%, 5%, or 10%
of the building
limit if $500,00
or less
Hurricane
deductible
amount applies
on an annual
basis
Windstorm
coverage can be
rejected, not
hurricane-only,
with a handwritten
statement by the
insured
The
deductible
must be stated
on the
Declarations
page
Cancellation Requirements: 1) Required 100 days written notice for cancellation/non-­‐renewal 2) During the first 90 days, 20-­‐days written notice for cancellation 3) A 10-­‐day notice for nonpayment of premium 4) A 45-­‐days notice for renewal 5) Cancellation/non-­‐renewal between June 1 and November, 100-­‐days notice written notice or notice by June 1, whichever is earlier 6) If the insured has been with the company for five years or more, then 120-­‐days notice of cancellation/non-­‐renewal ENDORSEMENTS
Section 4.5 (p. 71)
Endorsement
Coverage Amount
Money To
Securities To
Jewelry, Furs to
Silverware, etc to
Firearms to
Business Property
Credit Card, Forgery, counterfeit…
Property away from premises
Loss Assessment
Building Ordinance Law
$2,000
$2,000
$5,000
$10,000
$6,500
$10,000
$10,000
Varies
Varies
50%
WHAT are the options for Section I to
broaden coverage?
(p. 71)
Personal
property from
ACY to RC
Theft coverage for
residence occasionally
rented to others
Certain scheduled
property to open perils
with no deductible
(jewelry, furs, cameras,
silverware, golf
equipment, fine arts, ect.)
H0-4 to provide
for open perils for
personal property
Physical damage for
certain owned golf carts,
will pay all loss payable
that exceeds $500, loss
settlement is ACV
Structures not covered
under Coverage B may
be included
H0-8 to include
off-premise theft
up to $1,000
Coverage for relative of
an “insured” in an
assisted living facility
A residence in
name of trust is
eligible for
coverage
Condo Unit Owner
open perils for both
building and personal
property
A student away at school
who does not fit the
description of “an
insured” may be covered
by endorsement
WHAT are the options for Section II to
broaden coverage?
(p. 72)
Coverage for
excluded watercraft
Home-based business
exposures: Permitted
Incidental Occupancies
and Home Business
Insurance Coverage
Structures and 1-4
family dwellings
rented to others
Incidental farming
at residence and
other locations
Personal Injury Liability
for false arrest, detention,
imprisonment, libel,
slander, wrongful
eviction, ect.
RATING
Section 4.6 (p. 72)
Rating is based on three elements: Construction of Dwelling Fire Protection
Available
Location in State DWELLING PROGRAM
Section 4.7 (p. 72)
Examples of Dwelling Program Usage:
1)
Three or four family dwellings
The Dwelling Program is personal
insurance for insuring buildings having not
more than four apartments or family units,
mobile homes not having more than one
apartment, and personal property used as
living quarters or rented to others.
2) Dwelling rented to others by insured
3) Dwellings owned by corporation or other
business entities
4) Owner-occupied dwellings, lower values than
minimum required for homeowners insurance
WHAT are the
coverage forms?
(p. 72)
DP-1 Basic
Form
DP-2 Broad
Form
DP-3
Special Form
WHAT are the available
coverages?
(p. 73)
A—Dwelling
B—Other
Structures
C—Personal
Property
WHAT are the limits?
(p. 73)
DP-2 may not be
less than $12,000
for Coverage A
DP-3 may not be
less than $15,000
for Coverage A
DP-2 and DP3
Coverage C limit is
$4,000 if Coverage
A is not included
D—Fair
Rental Value
E—Additional
Living Expenses
Standard deductible is $500 for ALL perils other than hurricanes. For hurricanes: • $500 minimum applies • Insurer must offer deductible options of 2, 5, and 10% of building • The amount of the deductible must be stated on the Declaration page • Deductible applies on an annual basis, not per occurrence basis COVERAGE A: DWELLING
Covers:
1) The described dwelling and includes
additions in contact with dwelling
2) Building equipment and outdoor used to
service and is located on premises
3) Building materials on or adjacent to
premises for se in alteration or repair to
dwelling
COVERAGE C: PERSONAL PROPERTY
Covers:
1) Household and personal property in the
dwelling or on the premises belonging to
the insured, family members, or guests
Excluded property includes:
1) Money
2) Tickets
3) Stamps
4) Valuable papers
5) Precious metals
6) Animals, birds, fish
7) Aircraft and parts
8) Motor vehicles (except equipment for
premises maintenance)
9) Boats (except rowboats and canoes)
10) Books of accounts
11) Electronic Data Processing Software
(except blank software or prerecorded
computer programs)
12) Water, Steam
13) Grave markers
14) Credit and fund transfer cards
COVERAGE B: OTHER STRUCTURES
Covers:
1) Detached structures on the dwelling
premises which are not used in whole or
in part for commercial, manufacturing or
farming purposes or rented to others
Exceptions:
1) Detached structure rented to a tenant of main
dwelling or rented for private garage
2) For storing of commercial or farming equipment, if
solely owned by insured as long as property does
not contain gaseous or liquid fuel other than
contained in a permanently installed fuel tank on
the vehicle/craft stored/parked in the structure
COVERAGE D: FAIR RENTAL VALUES
Reimburses the insured for the fair rental
value of covered property if the property
becomes uninhabitable from damage from a
covered peril. It only applies to the portion of
the premises rented to others or held for rental
COVERAGE E: ADDITIONAL LIVING
EXPENSES
Covers:
1) Additional living expenses to maintain
insured’s normal living standards when
property is uninhabitable by covered peril
for necessary period of restoration
Coverage E is not included in form DP-1
General Exclusions
(p. 74)
Basic Form—Other Coverages
(p. 74)
General Exclusions: 1) Enforcement of any law regulating use, construction, demolition, or repair of property 2) Earth movement 3) Water damage from flood, rising waters, backing up of sewer or drains, overflow from sump or subsurface water 4) Power interruption if damaged sours is at other premises 5) Neglect to protect property from damage 6) War 7) Nuclear hazards 8) Intentional loss 9) Governmental actions Perils Insured Against
(p. 75)
WHAT perils are insured
against?
(p. 75)
Fire
Lighting
Internal
explosion
DP-­‐1 Basic Form Other Coverage: 1) Up to 10% of Coverage A limit applied to Coverage B—Other Structures 2) Debris removal 3) Up to 10% of Coverage C limit for damage to improvements, alterations, and additions to property of others 4) Up to 10% of Coverage C limit to property anywhere in the world 5) Up to 20% of Coverage A limit for fair rental value of property, described in Coverage D, limited to one-­‐twelfth (1/12) of the 20% per month 6) Reasonable costs for necessary repairs to prevent further loss 7) Coverage up to five days at temporary locations when property is removed from a premises endangered by covered peril 8) Additional $500 for fire department service charge For DP-­‐1 only, the fire department service charge can be paid as additional amount above policy limits Catastrophic
Ground Cover
Collapse
WHAT are the Extended
Coverages?
(p. 75)
Windstorm
Hail
Explosion
Riot or Civil
Commotion
Aircraft
Vehicles
Smoke
Volcanic
Eruption
Extended coverages are not available without the basic four coverages, and may not be purchased for separate amount WHAT are the Extended
Coverage Limitations?
(p. 75)
Signs
Outside
antenna
equipment
Awnings
Damage to
building interior
Boats
Contents, unless
exterior damage
to roofs or walls
Conditions for Form DP-­‐1: 1) Loss Settlement: ACV 2) Other Insurance: Policy pays pro rata if other insurance applies 3) Cancellation/Nonrenewal i.
100-­‐day written notice for cancellation or nonrenewal ii.
first 90 days, 20-­‐days During written notice of cancellation iii.
10-­‐days notice for nonpayment iv.
45-­‐days notice of renewal premium v.
Between June 1 and November 30, 100-­‐days written notice by June 1, whichever is earlier vi.
If insurance has been with same company for five years or more, then 120-­‐days notice of cancellation/nonrenewal When EC and “FIRE” have been included under
DP-1, the additional peril of vandalism and
malicious mischief may be added.
Vandalism includes: 1) Damage to building glass
2) Crime loss (except damage by burglar)
3) Vacant building for 60 or more days
preceding loss
Broad Form
(p. 76)
WHAT does DP-2 Broad Form Cover?
Includes “FIRE”, EC, and VMM perils of DP-1 and add the
following:
(p. 76)
Damage by
burglars
Falling
objects
Weight of
ice, snow,
or sleet
Accidental
discharge
Overflow of
water or
steam from
within
plumbing
Steam or hot
water heating;
AC; and, hot
water system
tearing apart,
burning, cracking,
or bulging
Freezing of
plumbing,
heating, or
AC
Artificially
generated
electrical
current
Volcanic
eruption
Other Coverages
Includes coverages in DP-1 with variations and
broadened features:
1) 10% of Coverage A can be applied to other structures and 10% of Coverage C can be applied to tenants’ improvements 2) 20% of Coverage A applied to the combination of rental value and additional living expenses. No monthly limit and applies as an additional amount of insurance 3) 5% of Coverage A may be applied as an additional amount of insurance to trees, shrubs, or plants with a limit of $500 for any one item 4) Collapse of a building or part of a building 5) Breakage of glass. Does not apply if the building is vacant for more than 60 consecutive days 6) Building Ordinance or Law covered in DP-­‐2 and DP-­‐3. 10% of Coverage A if the building owner; 10% of Coverage B if not owner; 10% of improvements, alterations, and additions if tenant Loss Settlement:
1) Building-replacement cost
(excludes antennas,
carpeting, awnings,
outdoor equipment, etc.)
2) Full replacement cost if
insurance is not less than
80% of replacement cost. If
less than 80%, the insurer
will pay a portion of loss
3) Must notify the insurer of
intent to replace property
within 180 days, but can
take ACY until property is
replaced
Special Form
(p. 77)
Summary of Differences
(p. 77)
DP-3 is the same as DP-2, except building
WHAT are the differences among the
Dwelling Program coverage forms?
structures are covered on an “open perils”
(p. 77)
basis.
DP-3 covers interior damage to the dwelling
from windstorm when there is no exterior
Basic DP-1
covers limited
perils and ACY
loss settlements
building damage, and theft of property that is an
integral part of the dwelling.
Options to alter coverage:
1) “Automatic Increase Insurance” specifies annual percentage increase for
Coverage A and B
2) Windstorm and hail may be included for property not covered
3) “Building Ordinance Law” to cover loss of building ordinance enforcement
4) Condo Unit Owners covered for loss to building additions, alterations, and
assessments
5) Personal property associated with business conducted in dwelling
6) Theft, including attempted theft, vandalism, and malicious mischief that results
from theft or attempted theft
7) Personal liability
Broad DP-2 covers
additional named perils
and has broadened
“Other Coverages”,
which may provide
replacement cost on
buildings
Special DP-3
includes DP-2
features and
buildings for
“all-risk”
FLOOD
Section 4.8 (p. 78)
Definition of Flood: • A general and temporary condition of partial or complete inundation of two or more acres of normally dry land area or two or more properties (at least one of which is yours) from any of the following three: 1) Overflow of inland or tidal waters 2) Unusual rapid accumulation of runoff or surface waters from any source 3) Mudflow • Collapse or subsidence of land along the shore of a lake or similar body of water as a result of erosion or undermining caused by waves or currents of water exceeding anticipated cyclical levels that result in a flood as defined above WHO are the major providers
of flood insurance?
(p. 78)
Write Your Own
programs: Private
insurers backed 100%
by the NFIP
National Flood
Insurance Program
(NFIP)
Eligibility Community
(p. 79)
Not every community is eligible for
the NFIP. Once the community applies
for admittance and is accepted, then
the community is in the Emergency
Program.
WHAT is an eligible building?
(p. 79)
Two or more
outside rigid walls
and secured roof
Affixed to
permanent site
located in an
eligible community
50% or more
above ground
Once a detailed study is undertaken,
resulting in a Flood Insurance Rate
Map (FIRM), higher limits of coverage
will be available if the community
passes ordinances. Once requirements
are met, then the community is in the
Regular Program.
WHAT are eligible contents?
(p. 80)
Located in fully
enclosed building
Secured to prevent
flotation out of the
building
Certain specific property in
basements and under
elevated floors is excluded
WHAT are the insurance forms
available from the NFIP
(p. 80)
Dwelling
Form
Preferred
Risk Policy
General
Property Form
Dwelling Form
1) 1-4 Family dwelling
2) up to 10% of the dwelling limit
for detached garages
3) Other separate structures which
service a dwelling (such as
garage apartments, utility
buildings, and storage sheds)
require a separate policy
Preferred Risk Policy
1) Zones B, C, and X only
2) All risks
3) Not available in the Emergency
Program
Residential
Condominium
Association
Policy Form
Residential Condominium
Building Association Policy Form
1) Applies to any condo
association with one or more
residential unit if:
i. At least 75% of the total
floor area is residential
ii. The building is located in a
Regular Program
Community
Valuation of Losses
(p. 80)
Replacement Cost:
Single family building for individuals, and is the
insured’s principal residence (insured lives there
80% of the time and dwelling insured for 80% of
replacement cost). RCBAP is subject to coinsurance.
All other losses are ACV. LIABILITY—PERSONAL
Section 4.9 (p. 81)
Similar to section II of the Homeowners policy, but can
be written separately. It provides coverage for liabilities
arising from private residence and personal activities. It
include Med Pay to Others
WHAT does Personal
Liability cover?
(p. 81)
Liabilities arising from private
residence and activities
WHO is Personal Liability
coverage available to?
WHO are the insureds under
Personal Liability coverage?
(p. 81)
(p. 81)
Named
insured
Owner-occupants and non-owner
occupants of a dwelling, condo unit,
mobile home, co-op, or apartment
WHAT are the Basic
Limits?
Residing
spouse
Residing
relatives of
either
Anyone under
the age of 21
in the care of
either
Persons who are
legally responsible
for animals or
watercraft owned
by insured
WHAT are the endorsements?
(p. 81)
(p. 81)
$100,000 for
Liability
$1,000 for
Medical
Payments
$1,000 to Damage
Property of Others
INLAND MARINE
INSURANCE UNIT
Certain
watercraft
Permitted incidental
business pursuits
PERSONAL INLAND MARINE POLICIES
Section 4.11 (p. 81)
Section 4.10 (p. 81)
Two Forms:
Extension of Ocean Marine
coverage for cargo traveling
Controlled-standard
over land instead of sea
Uncontrolled-nonstandard
Exclusions to Open Perils: 1) Water 2) Tear 3) Deteriorations 4) Inherent vice 5) Government action 6) Insects 7) Vermin WHAT are the Personal
Articles Floater Provisions?
(p. 82)
Worldwide
coverage
Open perils
WHAT is the coverage?
(p. 82)
ACV
Cost to repair
or replace or
limit specified
Agreed value
option
No deductible
Pairs or set: Insurer may
elect to repair or replace,
to restore to original
value, or pay the
difference between ACV
before and after the loss
Parts: Responsibility
is only for the value
of the part damaged
or lost
WHAT are the classes of
property?
(p. 82)
Jewelry
Furs
Cameras
Musical
Instruments
Automatic Coverage for newly acquired
property:
1) 30 days after acquisition
2) 25% of coverage limit up to $10,000
Fine Arts Automatic Coverage:
1) 90 days after acquisition
2) 25% of total limit
3) ACV
Silverware
Golfer’s
equipment
Fine arts
Stamps and
coin collections
Exclusions:
1) Fading, creasing, denting, scratching, tearing, or
thinning
2) Transfer of colors, inherent defect, dampness,
extremes of temperature, or depreciations
3) Damage from being handles or worked on
4) Disappearance of individual items
5) Property in custody of transportation companies
or mail
6) Property not part of collection
EXCESS LIABILITY/UMBRELLAS
Section 4.12 (p. 84)
When the policy limits are insufficient for an insured’s needs there
are two coverage forms used to provide additional amounts:
Excess Liability
Policies
Umbrella Policies
Excess Liability
Follow Form: Provides exact
same coverage, provisions, and
exclusions, to insureds as the
underlying policy
Umbrellas
Operates like a stand-alone
policy except it will provide
coverage not included in the
underlying policies
Stand-alone: Same coverage as
underlying, but each policy has
its own terms
When umbrella is primary, it is
subject to a deductible known as
the self-insured retention (SIR)
UNIT SIXTEEN:
Residual Markets
When the voluntary insurance market is
unable to meet the needs of Florida residents,
the Florida Legislature establishes various
These various market
organizations are known as
“residual markets.”
market organizations to provide coverage.
These are:
1)
Required by state statutes
2) Deemed crucial to various insureds
FLORIDA AUTOMOBILE JOINT
UNDERWRITING ASSOCIATION (FAJUA)
Section 16.1 (p.185)
FAJUA is a market
source to those who
are unable to purchase
auto insurance through
normal channels
It is
composed of
All licensed
companies in
Florida that write
auto insurance
by a group of
serving earners
It is available to
Coverage Available
Private Passenger Auto:
1) Liability coverage up to 100/300/50
2) PIP
3) UM
4) Medical Payments $500,$1,000, or $2,000 limit
5) Physical Damage subject to $100, $250, $500 deductibles
Commercial Automobiles:
1) Liability: unlimited limits if required by any law
2) PIP
3) UM
4) Property Damage only for light vehicles under 10,000 lbs
1) Florida Residents 2) Military nonresidents stationed in Florida 3) Nonresidents with autos registered in Florida 4) Subject to Florida No-­‐Fault Law CITIZENS PROPERTY INSURANCE COPORATION
Section 16.2 (p.186)
The Florida Residential Property and
Casualty Joint Underwriting Association
and the Florida Windstorm
Underwriting
Association were merged to form
Citizens in 2001
Eligibility: Applicant must certify that they were
unable to obtain and have received no offer from
an authorized insurer that is less than 15% higher
than the price quoted through Citizens.
Consumer Choice Legislation: Asserts the right
of consumers to select and maintain their agent of
choice. This includes all keep-out and take-out
plans of Citizens
Uninsurable Properties:
1) Vacant or unoccupied properties
2) Disrepair
3) Over 50 years old, unless wiring, heating,
and roof updated
4) Do it yourself construction
5) Condemned properties
6) Inaccessible or property build over water
Commercial Property Market For:
1) Condo associations
2) Apartment buildings
3) Common elements of homeowners
associations
4) Other commercial coverages for
residences
Commercial Property Ineligible:
1) Hotels, motels, boarding houses, rooming
houses, and similar risks
2) Vacant properties, less than 60% occupied
3) Builders risk
4) Mercantile occupancy exceeding 25% of total
building area
5) Condemned risks
6) Disrepair due to neglect
7) No intention to repair by owner
8) Existing sinkhole damage, unless engineer
certifies stabilized
A policy may be
replaced with a
policy from an
authorized
insurer at any
time during the
policy period with
a 60-day notice
Commercial Eligibility: Entitled but unable to
procure commercial property coverage in
voluntary market
Commercial Property Effective: September 1,
2007 up to $2,500,000
Commercial Property Coverage: Utilized
standard commercial property coverage forms and
endorsements. Only the basic Form Perils Causes
of Loss are available
Wind-Only
Covers wind and hail only
Eligible:
1) All types of buildings, including mobile
homes if tied down, and contents
2) Local area must request certification from
DFS
FLORIDA WORKERS’ COMPENSATION JOINT
UNDERWRITING ASSOCIATION
Section 16.3 (p. 188)
Covers: Employees who are unable to either self-insure or secure through normal marketing channels
Eligible:
1) Unable to obtain coverage from at least 2 other carriers
2) Not indebted for any previous unpaid WC premium
Tiers: All FWCJUA are assigned to one of three tiers
•
Tier One
Employees with an experience
modification factor: Below 1.00
•
No lost-time claims subsequent
to the experience modification
rating period
•
Medical-only claims did not
exceed 20% of premium
Employees without experience
modification factor:
•
1)
2)
3)
4)
5)
No lost-time claims for 3 years preceding
inception date or renewal of coverage under
the plan
Medical claims only for 3 years preceding
inception or renewal did not exceed 20%
Has secured coverage for entire 3-year
period preceding inception or renewal
Provide loss history from previous carrier
Not a new business
•
1)
2)
3)
Tier Two
Employers with an experience
modification factor:
Equal or greater than 1.00 but not
greater than 1.10
No lost-time claims subsequent to the
applicable experience modification rating
period
Medical only claims subsequent to the
applicable experience modification did
not exceed 20% of premium
•
Employer has no experience
modification due to being a
new business:
1)
No lost-time claims during that 3 year
period
Medical only claims for that period did
not exceed 20% of premium
Able to provide a loss history during the
period that WC was secured
2)
3)
•
Tier Three
For all
employers who
do not meet
criteria for Tier 1
or Tier 2
Miscellaneous Provisions
(p. 190)
Rates:
Deficit:
Renewal:
Tier 1 rates are set at 25% above
comparable voluntary market rates
If a deficit was to occur in either Tier
1 or Tier 2, funding would come
form an assessment for 1 year on all
WC policies in the voluntary market
Sent 45 days prior to expiration
Tier 3 deficit funding would come
from assessments from Tier 3
participants
FWCJUA insured are entitled
to prorate cancellation when
coverage is secured through the
voluntary market
Tier 2 rates are set at 50% above
comparable voluntary market rates
Tier 3 rates are to be actuarially
sound from the beginning
If premium is not received by
expiration date, coverage ends
UNIT SEVENTEEN:
Florida Statutes and Rules
This unit will focus on the statutes and rules
that normally appear on the state exam
AGENT PRE-LICENSING TRAINING UNAUTHORIZED ENTITIES
Section 17.1 (p. 192)
McCarran-Ferguson Act
Made the business of insurance state regulated in 1945
Unauthorized Entities
Health insurance has been the main problem area for “unauthorized entities”
Insurance market is cyclical (hard and soft market). The hard markets spawn fraudulent
activity.
Problems with “unauthorized entities started about 1974 with the enactment of the Employee
Retirement Income Security Act (ERISA)
Union Plans
Can be an exception to the MEWA if U.S. Department of Labor makes express finding.
If no express finding by the US DOL, then is subject to state regulations
Association Plans
These plans are not exempt from state regulation
Professional Employer Organization
PEG-sponsored health plans not exempt from state regulation
Concerns with Unauthorized Entities:
1)
2)
3)
4)
5)
6)
Ongoing
Criminal activity
Adverse economic impact
Unpaid claims
No guaranty fund to cover unpaid claims
Adverse impact on future insurability of
participants
7) Adverse impact on health care providers
8) Lack of comprehensive federal oversight
9) Perception that state government is
responsible for protecting the consumer
from insurance schemes
WHAT are possible consequences
for aiding and abetting an
unauthorized insurer?
(p. 195)
Third-degree
felony
Liability of
unpaid
claims
Suspension or
revocation of all
insurance licenses
WHAT are possible consequences for acting
as an insurer without a proper license?
(p. 195)
Third-degree felony
Liability of unpaid claims
Suspension or revocation of
all insurance licenses
AGENT PRE-LICENSING TRAINING EITHICS
Section 17.2 (p. 195)
Ethics is striving to
do what is right.
Florida Statute (F.S.) 626.730, Purpose of License
To engage in the insurance business and supervise
activities with respect to the public interest and not just
for controlled business
WHAT is the code of ethics?
(p. 196)
Honesty
and truth
Responsibility
and accountability
Respect and
tolerance
Fairness
and justice
Compassion
and caring
INSURANCE DISCOUNTS FOR WIND MITIGATION
Section 17.3 (p. 201)
Background
In 2007, the Florida Legislature required insurance companies to give discounts on the wind portion
of the homeowners insurance premium for certain and protection features.
Roof Features
1) Roof Shape:
a. Gable Roof: Two slopes that come together to form a peak or ridge giving the appearance of
an “A” shape where the slopes come together.
b. Hip Roof: Slopes upward from all sides so that the lowest point of the roofline is consistent
all the way around the dwelling
2) Roof Covering:
a. Shingle
b. Tiles
C. Metal panels
(all must be tested and installed according to Building Code requirement)
3) Roof Decking:
Neither of these receives discounts
a. Plywood
b. Oriented Strand Board
Credits can be applied based on how the decking is attached to the trusses
4) Roof to Wall Connection: Use of straps and clips in accordance with the Florida Building Code
will qualify the consumer for mitigation discounts. Basic toe nailing does not receive any
discounts.
Opening Protection
Openings such as windows, skylights, doors with and without glass, sliding glass doors, and garage
doors must be tested and approved with either the Florida Building Code or Miami-Dade County
Building Code. Unless they have been tested and approved, they do not qualify for mitigation
discounts.
Miscellaneous Mitigation Credits
Credits are also available for the following types of protection:
1) Secondary water resistance: peel and seal strips
SELECTED FLORIDA STATUTES
Section 17.4 (p.205)
All statutes are paraphrased for purposes of studying for the exam
F.S. 624.06: “Domestic”, “Foreign”, “Alien”, insurer defined
1) A domestic insurer is formed under the laws of this state
2) A foreign insurer is formed under the laws of any other state but Florida
3) An alien insurer is other than domestic or foreign
F.S. 624.09: “Authorized”, “Unauthorized”, insurer defined
1) An authorized insurer is certified by the state to transact insurance in Florida
2) An unauthorized insurer is not authorized
F.S. 626.175, Temporary Licensing
The DFS can issue a temporary license up to 6 months to an employee, family member, business
associate, or personal representative for the purpose of continuing or winding up the business affairs of
an agent in the event the agent dies or is other wise unable to person his or her duties.
F.S. 626.112, License and appointed requirement
1) Cannot represent themselves as an agent, customer rep, or adjuster without properly being licensed
and appointed
2) If an agency is required to be licensed but fails to file for application, the DFS can impose a penalty
of $10,000
3) If the agency is eligible for registration but fails to register, the DFS can impose a penalty of $5,000
F.S. 626.2815, Continuing Education Requirements
CE is required every 2 years, due by the end of agents birth month.
F.S. 626.382, Continuation, Expiration of License; insurance agencies
An agency license is issued for a period of 3 years
F.S. 626.431, Effect of Expiration of License and Appointment
An individual who goes without an appointment for 48 months loses the license and has to start as a
first-time applicant
F.S. 626.551, Notice of Change of Address, Name
A license has 30 days to notify the DFS if there is a change in any of the following:
1) Name
2) Residence address
3) Business address
4) Mailing address
5) Contact telephone number
6) Business telephone number
7) Email Address
The license is subject to a $250 fine for their first offense
F.S. 626.561, Reporting and Accounting for Funds
Every license shall keep books, accounts, and records pertaining to a premium payment for at least 3
years after payment
F.S. 626.572, Rebating, when allowed
Rebating is allowed under certain circumstances. The key to remember is, if you rebate, for one you have
to rebate for all
F.S. 626.611, Grounds for Compulsory Refusal, Suspension, or Revocation of Agent or Customer
Representative License
1) Lack qualifications
2) Material misstatement, misrepresentation, or fraud in obtaining a license or appointment or
attempting to obtain
3) Using the license to circumvent the requirements or prohibitions of this code
4) Willful misrepresentation of any insurance policy in person or advertising or any form of
dissemination
5) Materially misrepresented the terms or coverages of the policy to effect the settlement of the claim
6) Demonstrate lack of fitness or trustworthiness
7) Demonstrate lack of reasonable knowledge and technical knowledge
8) Fraudulent or dishonest practices in the conduct of business
9) Misappropriation, conversion, or unlawful withholding of moneys belonging to the insurer or insureds
or to others
10) Unlawful rebating or attempting to unlawfully rebate
11) Using license or appointment to handle controlled business
12) Willful failure to comply or willful violation of rules of the DFS or the insurance code
13) Found guilty or plead nolo contendere to a felony or a crime punishable by imprisonment of 1 year or
more
F.S. 626.730, Purpose of License
The purpose of the license is to engage in the insurance business with respect to the public and to
facilitate the public supervision of such activities in the public interest.
The license cannot be used for the purpose of securing rebates or commissions on “controlled business”
(controlled business is insurance written on the agent’s own interests or their family’s interest or their
business).
F.S. 626.731, Qualifications for General Lines Agent’s Test
1) Must be 18 years or older
2) United States citizen or legal alien
3) Bona fide resident of Florida
4) Place of business located in Florida
5) Not licensed for purpose of writing or handling controlled business
F.S. 626.7354, Customer Representative’s Power; Agent’s or Agency’s Responsibility
A customer representative shall not engage in transacting insurance outside of the office or his or her
agency
F.S. 626.748, Agent’s Records
The agent must always have daily reports, application, change endorsements, and documents signed or
initialed available to the policyholder and the DFS
F.S. 626.753, Sharing Commission Penalty
An agent may divide or share in commission only with other agents appointed and licensed to write the
same kind or kinds of insurance
F.S. 626.9521, Unfair Methods of Competition and Unfair or Deceptive Acts or Practices
Prohibited, Penalties
Any person who violates any provision of this part is subject to a fine in an amount not greater than
$5,000 for each non-willful violation and not greater than $4,000 for each willful violation
F.S. 626.9541, Unfair Methods of Competition and Unfair or Deceptive Acts or Practices Defined
Misrepresentation—knowingly
Sliding—telling the insured that additional
Defamation—to
making untrue statements in an
insurance application so that a
benefit can be gained
coverage is required by law when purchasing auto
insurance or including the additional coverage
without the insured knowing
injure a person by
libel or slander
Coercion—Using
Twisting—tricking the insured or
intimidation in the
business of insurance
prospect so that they will change
their policy to another insurer
Unlawful use of designation, misrepresentations, or
agent qualifications—agent falsely telling an insured
or prospect that they hold a certain designation (CPCU
or CLU), degree, or license
Fraudulent signature on applications or
policy related document—submitting to
the insurer an application with false or
fraudulent signatures
Unfair Discrimination—favoring one insured
over other insureds
Advertising gifts permitted—giving prospect or
insured merchandise for the purpose of advertising
must be $25 or under
F.S. 628.021, “Stock Insurer” defined:
An incorporated insurer with its capital divided into shares and owned by its stockholders
F.S. 628.031, “Mutual Insurer” defined:
An incorporated insurer without permanent capital stock, the governing body of which is
elected in accordance with this part