AssociatePI &illin the lank Study 'uide€¦ · P U 555 Personal Risk Management and Property Casualty Insurance How to use this guide: Use this guide as you go through the CPCU 555

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AssociatePI Fill-in the Blank Study Guide

CPCU 555

Personal Risk Management and Property Casualty Insurance

How to use this guide: Use this guide as you go through the CPCU 555 Comprehensive course by filling in the corresponding content underneath the section heading. NOT every section will be included. Only the most important subjects will be required in this guide For instance, under the “Property Loss Exposure” section, write in information about the property loss exposure process that YOU find relevant to your studying DO NOT write every single word from the online course. This should be used for note taking purposes. Notes should be quick bullet points or short hand for your future reference after you complete this course Come back to this study guide once you complete the course for quicker and easier studying

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Section I – Personal Insurance Product Overview

Property Loss Exposure What is property loss exposure? Define the three aspects of property loss exposures:

1. Assets exposed to loss

2. Causes of loss

3. Financial consequences of loss

Liability Loss Exposure What is liability loss exposure? Define the three aspects of liability loss exposures:

1. Assets exposed to loss





2. Causes of loss

Tort Liability: Negligence and intentional torts

Contractual liability

Statutory liability

Risk Management Process What are the 6 steps of the financial planning process?

1.

2.

3.

4.

5.

6.

7.

Define the following:

Loss frequency

Loss severity

Total dollar losses

Timing





Risk control Define risk control Define the six risk control tactics

1. 2. 3. 4. 5. 6.

Risk financing Define risk financing Define retention Define transfer





Section II: Auto Insurance and the Personal Auto Policy

Auto Accident Victim Compensation Define the six approaches to compensating auto victims: 1. Tort Liability System

Advantages

Disadvantages

2. Financial Responsibility Laws

3. Compulsory Auto insurance laws

Advantages

Disadvantages

4. Uninsured Motorists Coverage (UM)





5. Underinsured Motorist Coverage (UIM)

Advantage:

Disadvantage:

6. No Fault Insurance

Advantages:

Disadvantages

No Fault Automobile Laws Modified no fault plan

Monetary threshold

Verbal threshold Add on plans

Choice no fault plans





Rate Regulations for Auto Insurance

List the primary rating factors: 1. 2. 3. 4. 5.

Other factors: What are the three rating classes?

High Risk Drivers Auto Insurance What is a high risk driver? Voluntary market Residual market

The Personal Auto Policy (PAP) List the 5 main section of the PAP

1. 2. 3. 4. 5.

What are the 4 PAP coverages?





What is found on the declaration page? What is the agreement and definitions page? Define:

You and your

Family member

Your covered auto

Part A: Liability Coverage What is coverage A? Who is covered under part A of the PAP? Define the following exclusions to part A:

Intentional injury

Public or livery conveyance

Garage business use

Other business use

Vehicle without reasonable belief of being entitled

Vehicles with fewer than 4 wheels or for off road

Other vehicles owned by insured or available for insured’s regular use

Vehicles owned by or available for a family members regular use





Split limit basis vs. single limit

Part B: Medical Payments Coverage

What is covered by part B of the PAP? Who is covered by part B of the PAP?

List and define the part B exclusions:

Part C: Uninsured Motorist Coverage What is covered by part C of the PAP? Who is covered by part C of the PAP?





List and define the part C exclusions:

Limits trigger Damagers trigger Inter Policy Stacking

Part D: Coverage for Damage To Your Auto What is covered by part D of the PAP What are the four types of physical damage covered by part D?





Collision Coverage Other than collision coverage (OTC) Deductibles Transportation expenses List and define the part D exclusions:

Part D will pay the lower of:





Part E: Duties After Accident or Loss What is part E of the PAP? List and define the six general duties of an insured after a loss: List the two additional duties after a coverage C loss: List the two additional duties after a coverage D loss:





Part F: General Provisions What is part F of the PAP? Define the following provisions: Bankruptcy of insured Insurer's right to recover payments Termination

Cancelation

Non-renewal Transfer insured's interest in policy List and define any other provisions you find necessary:

Auto Policy Endorsements What is an endorsement?

Define the following endorsements: Miscellaneous type vehicle

What vehicles are covered Snowmobile

What coverages apply





Trailer/camper body coverage (max limit of liability) Extended non-owned coverage Named non-owner coverage Auto loan or lease coverage Excess Electronic equipment coverage Coverage for damage to your auto (max limit of liability) Optional limits transportation expenses coverage Towing and labor costs coverage





Section III: Homeowners Policy

HO-3 Form What is the HO-3 form? What is found on the declarations page?

Section I - Property Coverages Coverage A - Dwelling What is coverage A and what is insured by coverage A? Coverage B- Other Structures What is coverage B? What is the coverage B insurance limit?

Coverage C - Personal Property What is coverage C? What is the coverage C insurance limit?

What is the special liability sublimits for coverage the following items? Money and precious metals: Securities, documents, records, stamps: Watercraft and any trailers, equipment and motors used with watercraft: Trailers not for watercraft: Portable electronic equipment: Antennas, tapes ,wires or other media: Business property on residence premises: Business property away from residence: Theft of jewelry, furs, stones: Theft of firearms and related items: Theft of silverware, gold ware, platinum ware:





Coverage D - Loss of use What is coverage D? What is the coverage D insurance limit? List and define the three groups for coverage D:

1.

2.

3. Perils Insured Against Coverage A and B of the HO-3 use what type of coverage? Coverage C of the HO-3 uses what type of coverage? List and define the coverage A and B exclusions List and define the coverage C named perils





Define the following section I - exclusions Earth movement Water Power failure Neglect Intentional loss

Define the following section I – conditions Deductible Your duties after loss Loss settlement Loss to pair or set Appraisal Our option Abandonment of property





Section II – Liability Coverages Coverage E - Personal Liability What is coverage E? Who is covered by coverage E?

Coverage F - Medical Payments to Others What is coverage F? When does coverage F apply?

Section II - additional coverage List and define the four additional coverages of section II

1.

2.

3.

4.





Motor vehicle and other motorized craft exclusions Define the following E and F coverage exclusions: Motor vehicle Liability

Watercraft liability Property damage and BI outside scope of Coverage E and F Define the following E and F coverage exclusions: Expected or intended injury Business

What are the business exclusion exceptions? Professional Services





Coverage E Exclusions Define the following coverage E exclusions: Damage to insured's property BI to insured Coverage F Exclusions Define the following coverage F exclusions: Residence employee off premises Injury to residents

HO-3 Section II – Conditions Define the following HO-3 section II conditions Severability of insurance Duties after occurrence

Duties of injured person - Coverage F Payment of claim - coverage F Bankruptcy of an insured





Homeowner Endorsements for Adjusting Limits Fill in the table below for the following HO-3 endorsements

Endorsement When Needed or Used How it Modifies HO Form

Additional Limits of Liability For Coverage A, B, C and D

Specified Additional Amount of Insurance for Coverage A Dwelling

Inflation Guard

Other Structures on Residence Premises -Increased Limit

Personal Property at Other Residences

Credit Card, EFT card or access device, forgery and counterfeit money coverage

Scheduled Personal Property Endorsement

Coverage C Increased Special Limit of Liability





Fill in the table below for the following special deductible HO-3 endorsements


Windstorm or Hail Percentage Deductible

Hurricane Deductible

Fill in the table below for the following “modifying perils insured against” HO-3 endorsements


Special Computer Coverage

Limited Fungi, wet or dry rot, or bacteria coverage

Earthquake

Identity fraud expense coverage

Scheduled personal property endorsement

Limited water back-up and sump discharge or overflow coverage

Refrigerated property coverage





Sinkhole collapse

Special personal property

Unit owners coverage C special coverage

Unit Owners Coverage A Special Coverage

Fill in the table below for the following “modifying valuation” HO-3 endorsements


Replacement cost loss settlement for certain non-building structures on residence premises

Scheduled personal property endorsement (with agreed value loss settlement)

Actual cash value loss settlement

Personal property replacement cost loss settlement





Functional replacement cost loss settlement

Insured wants building loss settlement based on cost to repair or replace property using common materials and methods. Used by owners of old homes to reduce policy premium

Functional replacement cost defined as "amount it would cost to repair or replace damaged building with less costly common construction material and methods which are equivalent to construction materials and methods used in original building.”

Fill in the table below for the following “business exposures” HO-3 endorsements


Home business insurance coverage

Section I - Property coverages Section II - Liability

Additional insured - managers or lessors of premises leased to an insured

Additional insured - vendors

Exclusion - personal and advertising inquiry





Liquor liability exclusion and exception for scheduled activities

Special coverage - spoilage of perishable stock

Valuable papers and records coverage increased limits

Permitted incidental occupancies- residence premises

Permitted incidental occupancies- other residence

Home day care coverage endorsement

Section I Section II

Business pursuits





Fill in the table below for the following “rental exposure” HO-3 endorsements


Structures rented to others

Section I - property coverage Section II - liability coverage

Extended theft coverage for residence premises occasionally rented to others

Landlord furnishings

Unit owners rental to others

Additional residence rented to others

Fill in the table below for the following “miscellaneous exposures” HO-3 endorsements


Assisted Living Care Coverage

Coverage B - other structures, away from residence premises

Specific structures away from residence premises

Additional insured - student living away from residence premises





Owned motorized golf cart physical loss coverage

Property remediation for escaped liquid fuel and limited lead and escaped liquid fuel liability coverage

Incidental low power recreational motor vehicle liability coverage

Owned snowmobile

Watercraft

Canine Liability Exclusion Endorsement

Personal Injury Coverage





Other ISO Homeowner Forms Define the following ISO homeowner forms: HO-2 - Broad form HO-3 Special Form HO-4 Contents Broad Form HO - 5 Comprehensive form HO - 6 Unit owners form HO - 8 modified coverage form

Dwelling Property 3 - Special Form (DP-3)

What is the DP-3 policy? What coverages are available under a DP-3? What perils are insured by the DP-3?





Section IV: Other Coverages

Inland Marine Floaters What is the inland marine policy?

What is covered by each of the following inland marine policy types?

Personal articles standard loss settlement form

Personal property form

Personal effects form





Farm Insurance Coverages What are the two ISO farm program categories?

Define the following farming ISO HO Endorsements Incidental farming personal liability endorsement

Farmers personal property liability endorsement

What is covered by each of the following specialty farm insurance programs?

Crop-hail insurance

Multiple peril crop insurance

Animal mortality insurance

Feedlot insurance

Federal crop insurance

FAIR and Beachfront and Windstorm Plans

What is a FAIR Plan?

What Areas are eligible for FAIR plans? What coverages are available under a FAIR plan?





What is a beachfront and windstorm plan? What properties are eligible for beachfront and windstorm plans?

Flood insurance What is the National Flood Insurance Program (NFIP)?

Who is eligible for NFIP? What is the incentive for NFIP?

What is covered by the emergency NFIP?

What is covered by the regular NFIP?

What is the write your own program (WYO)?





Miscellaneous Vehicles Coverage

What are the options for motor home and recreational trailer insurance coverage?

What are the options for two wheeled vehicle insurance coverage?

What are the options for two wheeled vehicle insurance coverage?

How is a snowmobile covered by the following insurance options?

Unendorsed Homeowners

ISO owned snowmobile endorsement

Snowmobile endorsement

Non-ISO Snowmobile policies

How is a golf cart covered by the following insurance options?

Unendorsed ISO homeowners

Owned motorized golf cart physical loss coverage endorsement





How is an antique automobile insured for the following coverages?

Liability coverage

Physical damage coverage

How are ATVs, dune buggies, go carts and children play cars insured?

Mobile Home Insurance

What is the ISO Mobile Home endorsement?

What coverage is available under the ISO mobile home endorsement?





Personal Watercraft Insurance Small boat policy What type of boat is covered by a small boat policy?

What coverages are available under a small boat policy?

Boat owners and Yacht policy

What type of boat is covered by a Boat owners and Yacht policy?

Who is covered by a Boat owners and Yacht policy?

ISO Personal Lines Watercraft Policy

What coverages are available under a Boat owners and Yacht policy?

What type of boat is covered by the ISO Personal Lines Watercraft Policy?

What coverages are available under the ISO Personal Lines Watercraft Policy?





What watercraft coverages are available under an unendorsed HO policy?

What watercraft coverages are available under an unendorsed PAP?

Personal Umbrella Liability Insurance

What is the personal umbrella policy?

What is the main condition associated with umbrella policies?





Section V: Personal Lines Profit, Goals and Management

Personal lines Profit Goals

What are the main factors that affect a portfolio manager’s ability to meet underwriting goals? How is underwriting profit calculated?

Define the following terms

Loss ratio

Expense ratio

Combined ratio Define the following industry trends Economic Environmental Demographic Industry trends





Individual Company Trends Competition Regulations New and Retiring Product Lines

Increasing Personal Lines Profitability

What are the three elements used to meet underwriting goals: 1. 2. 3. 4.

Increasing Premiums Selective growth Growth in Niche Markets

Advantages:

Disadvantages:

Point of sale marketing





Adjusting Rates and Relativity Factors

Decreasing Losses List all of the underwriting actions that can help to decrease loss: Control expenses List all of the actions that can be implanted to control expense:

Personal Lines Pricing Define the following: Pure premium

Loss cost

Exposure unit Base rate Class Relativity Factors

Residential property rate relativities

Auto rate relativity factors





Analyzing Loss Data and Forecasting Trends Loss frequency trends Loss severity trends

Ratemaking Principles What regulatory objectives must be met by an insurer? What social objectives must be met by an insurer?

Portfolio Management Analysis Tools and Approaches What is the insurance portfolio?

Root cause analysis (RCA)

Event and casual

Change analysis

Barrier analysis





Re-underwriting

Portfolio Key Indicator Analysis Define the following

Policies in force(PIF) New Policy Count Retention Risk profile analysis

Describe the following corrective actions and limitations Product changes

Underwriting changes

Service Changes Automation changes





Evaluating Portfolio Management Methods Describe the following portfolio management evaluation methods Credit related underwriting and pricing

Modeling Predictive Models Catastrophe management

Outsourcing Data Collection

Increasing data collection





Next Steps

You’ve completed the study guide!

You should review your notes in this guide for a better understanding of the concepts and make sure you have mastered each section recap.

Your next step is to complete the practice exams. Use this guide as reference/study

sheet and return back to any section of the text in which you need more practice after your practice exam








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AssociatePI &illin the lank Study 'uide€¦ · P U 555 Personal Risk Management and Property Casualty Insurance How to use this guide: Use this guide as you go through the CPCU 555