property&casualtyexam

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[Audio] Welcome to slide number 2 of our presentation on PreLicenseTraining.com. This workbook will provide you with helpful tips and examples to retain the information you have learned from our videos. It is important to continue studying and preparing for your State exam, and this workbook will be a valuable tool in your journey. We are dedicated to your success and are here to support you every step of the way. We wish you all the best in your studies and know that with hard work and determination, you will excel on your State exam. Congratulations on passing and happy studying! © PreLicenseTraining.com..

[Audio] Today, we will be discussing the General Principles section, which is an essential part of insurance pre-license training. This section provides an overview of important facts, including basic insurance concepts and principles, as well as insurance regulations. It aims to reinforce these concepts and provide a general understanding of the material. Please note that this section is meant as a review and is not a substitute for the detailed information covered in your class material. It simply highlights key concepts that are consistently tested. Questions on the test can come from any material in your classroom manual. Our review will focus on key wording and phrasing associated with tested concepts. However, it is important to note that this review is not a substitute for the actual class manual. The retention questions in the video are designed to familiarize you with test wording, and our presenter will explain how some questions may appear, along with additional questions that could be asked. It is important to remember that all necessary information is included in your course material. This review serves as a refresher and prepares you for the test. Please keep in mind that the General Insurance portion of the test includes basic principles, contracts, concepts, and insurance regulations (ethics and code). This section is present in every test and includes laws specific to each license, as well as all licenses and licensees. Thank you for joining us for this portion of our presentation. Stay tuned for more valuable information and insights. Preparation is key to success. Good luck on your test. Thank you for choosing PreLicenseTraining.com..

[Audio] Slide number 4 of our presentation on general principles in the insurance industry covers basic terms and concepts commonly used. When referring to an insurance company, other terms like insurer or underwriter may also be used. The words "we," "us," and "our" typically refer to the insurer in policy language, as they are the second party in the contract. In the Life and A&H test, the person receiving benefits may be referred to as insured, policyholder, or Medicare beneficiary. For group insurance, terms used are employer, plan sponsor, employee, or member. It should be noted that the insured is the first party in these cases. In property and liability tests, the person receiving benefits may also be referred to as insured, policyholder, or owner. "You" and "your" typically refer to the "named insured" in policy language. The insured may also be referred to as the defendant in liability cases, while the third party is often called the claimant or plaintiff. The claimant is the person seeking recovery in these cases. It is important to note that falsifying information on a claim form is a serious matter and can result in fines and imprisonment. This warning is often included on claim forms. Our presentation may also mention the acronym CIC, which stands for California Insurance Code. These are the state laws that are proposed, written, enacted, and changed by the state legislature. CCRs refers to the California Code of Regulations, which are rules and procedures written by the Commissioner to carry out the California Insurance Code. The Commissioner has the authority to write and change these regulations. In the insurance world, pooling and sharing of risks is a common practice..

[Audio] Slide 5 out of 50 discusses loss exposure and perils in the context of insurance. Loss, as defined in policies, can take many forms such as death, bodily injury, property damage, and incurred expenses. Loss can be described as any reduction in quantity, quality, or value of something. In terms of insurance, there are two types of loss - property loss and liability loss. Property loss refers to direct damage to tangible property, while liability loss involves the insured's obligation to pay for harm caused to others. Before a loss can occur, there must be a loss exposure, which has three dimensions - the type of value exposed, the peril causing the loss, and the extent of potential financial consequences. This is often divided into property, liability, and human/personnel loss exposure. Furthermore, it's important to note that financial loss is not a type of loss exposure, but rather a consequence of the other types. Perils, on the other hand, are the cause or reason for loss. For example, in life insurance, a peril could be an auto accident, while in health insurance, it could be an illness or injury. The two types of property insurance policies are named peril and open peril/all risk. Named peril policies list specific perils covered and require the insured to prove the damage was caused by a listed peril. Open peril policies cover all perils except those specifically excluded, shifting the burden of proof to the insurer. It's essential to understand loss exposure and perils when navigating the world of insurance, and we will further explore these concepts and how they apply to different types of policies throughout this presentation..

[Audio] Our presentation will now discuss the different types of risk and how to effectively manage them. Slide number six shows that there are two types of risk: pure and speculative. Pure risk involves the possibility of loss without any chance of gain and is insurable. This includes risks like the uncertainty of when death will occur or the possibility of illness or injury. On the other hand, speculative risk involves the possibility of both loss and gain and is not insurable. Examples of this type of risk include gambling, the lottery, or starting a new business. In order to manage these risks, it is important to first identify them. This can be done by assessing the client's objectives, assets, and liabilities for life and accident and health policies, or through checklists, surveys, inspections, interviews, and financial statements for property and casualty policies. It's important to note that each client's risks are unique, so previous applications or declaration pages should not be copied. Once risks have been identified, various methods can be used to handle them, such as the STARR approach for property and casualty and the TARR approach for life and accident and health. These methods include risk sharing, risk transfer, risk avoidance, risk retention, and risk reduction. It's important to remember that risk is simply a chance, while hazards can increase the likelihood and severity of a loss. Perils are the actual cause of a loss. The law of large numbers states that the more exposure units there are, the more predictable the loss. This is used to establish appropriate rates and ultimately benefits the insured. In conclusion, managing risk is crucial in the insurance industry and requires identifying and handling various types of risk, understanding the differences between pure and speculative risk, and using the law of large numbers to predict losses. We will now continue with our presentation on slide number seven..

[Audio] Slide number 7, titled "Insurable Risks and Underwriting", discusses the importance of insuring risks in order to protect individuals and their assets. However, not all risks are eligible for insurance. The California Insurance Code 250 states that certain activities, such as gambling and lotteries, are excluded. Additionally, stock market investments, real estate ventures, and the market value of a home are also not insurable. To be considered "ideally insurable", a risk must be unintentional and create an economic hardship for the insured. It must also pertain to a large group of similar units and be measurable in terms of money, time, place, and cause. Catastrophic losses are typically covered by government programs and are therefore excluded from insurance coverage. In evaluating the insurability of a risk, insurers also take into consideration the frequency and severity of potential losses. This helps to calculate the premium, which must be reasonable for both the insurer and the insured. Another important factor in the insurance process is insurable interest. This means that the policyholder must have a legitimate financial interest in the property or life being insured. This can be proven through ownership in property and casualty insurance or through relationships in life and health insurance. A lack of insurable interest can void the contract, and contingent or expectant interests are not insurable. The underwriting process is crucial in selecting and evaluating risks for insurance coverage. Underwriters review the application and other relevant information to determine whether to accept or deny the risk. They are also responsible for selecting rating factors, policy terms, and conditions. It is the agent's responsibility to assist the applicant in completing the application and ensuring full disclosure of information to the insurer. Underwriters rely on producers to be good field underwriters, as they are the ones with personal contact with the proposed insured and can screen out unacceptable risks. In summary, insuring risks and the underwriting process are essential in protecting individuals and their assets. Insurers carefully evaluate risks to determine their insurability, and the underwriting process helps to select and evaluate risks for insurance coverage. It is important for both insurers and the insured to fully understand the terms and conditions of the insurance contract..

[Audio] Slide 8 out of 50 discusses the basics of insurance, specifically the expenses and pricing of individual risks. Insurance serves as a social device to transfer risk from individuals to a group, reducing the impact of uncertain losses. The main factor in determining an insurer's profitability is the expense ratio, which is calculated by dividing expenses by the premium. An insurer is considered profitable if the combined ratio is less than 100, breaking even if it is at 100, and losing money if it is greater than 100. Individual risks are priced by actuaries for groups of insureds and by underwriters for individual risks in order to achieve a profitable distribution. The three main methods for computing premiums are judgment rating, manual or class rating, and merit rating. Insurable risks include those resulting in a financial loss, and the insured must have an insurable interest in the event. Some risks, such as speculative or moral hazards, are not deemed insurable, including intentional acts and illegal activities. It's important to understand the purpose and principles of insurance, including the transfer of risk from individuals to a group and substituting small certain losses for larger uncertain ones. In Section 1, we reviewed these basics and now we will answer a few questions to test our knowledge. 1. False. 2. Probability. 3. Events that are not covered by insurance. 4. Not covered by insurance..

[Audio] Slide 9 out of 50 is part of our presentation on the fundamentals of insurance. As we discuss loss exposure, we will explore key concepts and terms essential to understanding this topic. There are different types of hazards that can contribute to potential losses in the insurance world, known as "hazards". Moving on, the "law of large numbers" is a measure used to determine insurance rates. It looks at the likelihood of just loss, which refers to loss without any gain. This can occur in various situations, such as an individual breaking their leg or the death of a key employee, both falling under loss exposure. Loss exposure can affect individuals and families in various ways, such as financial loss and property damage, resulting in monetary damages or a decrease in quality of life. The three dimensions of loss exposure are the type of value exposed, the peril causing the loss, and the financial consequence. Underwriters play a crucial role in guarding against adverse selection, which is when high-risk individuals are more likely to purchase insurance. They do this by charging higher rates, placing restrictions or limits on coverage, or rejecting coverage altogether. Although insurance can provide benefits, it cannot eliminate risk entirely. It is important to understand the different types of loss exposure and how to manage them. Giving false information on an application is considered a hazard that can affect the underwriting process. The law of large numbers also follows the principle that the larger the number, the more predictable the loss will be. Our final term for this slide is homogenous units, which refers to groups or categories with similar characteristics, also known as "other words" in the test. These are important concepts to remember as you prepare for your exam. Stay tuned for more valuable information in the remaining slides..

[Audio] Today, we will be discussing various concepts related to insurance. In this presentation, we will focus on questions 39 to 51. Question 39 asks about the effect of changing a deductible from $1000 to $100. Moving on to question 40, we will explore the definition of an insured event according to the State of California CIC. Question 41 deals with a term related to the underwriter's evaluation. Next, we will discuss examples of risk in questions 42, 43, and 44. For the next set of questions, we will cover different scenarios and concepts important in the insurance world. Question 46 addresses a general concept that may not be covered by insurance. In question 47, we will discuss a specific risk to keep in mind. Questions 48, 49, and 50 deal with calculations, formulas, and insurance policies. The final two questions, 50 and 51, mention the parties involved in good faith communications in insurance contracts..

[Audio] The eleventh slide of our presentation on General Principles of Coverage will cover the concept of indemnity, deductibles, and reinsurance. The main principle of insurance is indemnity, which aims to restore a person's financial state to what it was before a loss occurred. This is also known as the "make whole" principle, and it ensures that the insured does not experience any gain or loss from the insurance. The amount of insurance should not exceed the value of the property insured, and the insured cannot collect more than their actual loss. In life and health insurance, indemnity refers to replacing a wage earner's lost income or paying for medical bills. Deductibles in health insurance require the insured to pay a certain portion of covered expenses before the insurer takes over. In property insurance, the insurer pays the amount over the deductible, which allows the insured to retain a portion of the risk. Lowering the deductible may result in higher claims and premiums, while raising it will lead to a decrease in both. The purpose of deductibles is to reduce nuisance claims, keep premiums affordable, and encourage the insured to be more careful with loss control. Reinsurance is the process of transferring all or part of the risk to another insurer, where they share the risk. The primary insurer is known as the ceding or primary insurer, and the reinsurer is the party accepting the risk. The purpose of reinsurance is to spread the risk and provide financial stability to the primary insurer. We hope you found this information on coverage concepts useful. Please continue to the next slide for more valuable insights..

[Audio] This is a presentation about the topic of reinsurance and its role in addressing problems with unearned premium. Reinsurance is an agreement that restores one to the same condition as before a loss. Most reinsurance is automatic and not specific. It benefits insurers by providing a third party to insure them against loss or liability. However, for successful self-insurance, two key characteristics must be present. Firstly, the loss must be predictable and based on a large number of exposure units. This allows for predictability and informed decision making. Secondly, there must be sufficient assets to pay claims. It is important to note that in some cases, it is illegal to suggest stop loss insurance or self-insuring a portion of the risk. In health insurance, this allows for tailored benefits, but it is not possible for life insurance. Moving on to section 2, we have a few questions to answer regarding coverage concepts. What is the type of agreement that restores someone to the same condition as before a loss? What is the term used for an agreement in which an insurer contracts with a third party to insure itself against losses from insurance policies? Do insurers have to reveal statements on the application to the reinsurer? Is self-funding only possible when the risk is predictable and unknown? Does an insurer still have an interest in the contract after reinsuring? Is indemnification collecting more than the actual value of the economic loss? Who is the insurer that cedes a portion of the risk known as? What is the purpose of indemnity? Does reinsurance reduce the risk of catastrophic loss, avoid capacity problems, and spread the risk?.

[Audio] Slide number 13 of our presentation on Copyright © PreLicenseTraining.com will discuss the General Principles of the types of insurers in Section 3. There are four major categories of insurers, each with their own unique coverage and purpose. The first category is property insurance, which covers both direct and indirect losses. It is often referred to as first party insurance or coverage. The second category is casualty insurance, which includes a variety of unrelated coverages such as auto, workers compensation, general liability, crime insurance, and surety bonds. The third category is life insurance, which provides benefits for death or annuities for lifetime income. Lastly, we have accident and health insurance, which protects against losses caused by injury, illness, accidental death, and disability income. The California Code has 22 classes/lines of insurance, which are divided into different classes for regulatory purposes. Life insurance is regulated under a life agent license, while fire falls under the broker or agent license and disability is regulated under the A&H agent license. Property and casualty broker/agents are also known as "Insurance Agents" and are authorized to sell all types of insurance except for life and disability insurance. According to the California Code, any person capable of making a contract may be an insurer and must obtain a certificate of authority to transact in each class/line. The two major sources of insurance available to the public are private insurers and the United States government. Private insurers include stock and mutual insurers, with the main difference being that stock insurers are for-profit while mutual insurers are not-for-profit. Stock insurers, also known as non-participating insurers, are owned and elected by stockholders, shareholders, and stakeholders. Dividends from this type of company are taxable as a return of profit. On the other hand, mutual insurers, or participating insurers, are owned and elected by policyholders and their dividends are not taxable as they are considered a return of premium. Lastly, reciprocal insurers, also known as inter-insurance exchanges, operate through a central attorney and are owned by its members..

[Audio] In this presentation, we will be discussing the insurance industry and its various types of insurers and their operations within the market. The first type is service insurers, which are nonprofit organizations that offer services rather than traditional insurance coverage. Reinsurers are another type, who accept a portion of risk from primary insurers and reimburse them for any claims. Excess and surplus lines insurers are specialty insurers that cover risks not typically covered in the traditional market and are placed through brokers. Self-insurers are businesses or individuals who choose to insure their own risks and may purchase stop-loss insurance for claims that exceed a specified amount. Risk retention groups and purchasing groups are other types of insurers, with the former needing a license as a liability insurer in at least one state and the latter allowing individuals in the same industry to purchase insurance on a group basis. Government can also act as an insurer, whether as a primary or reinsurer. State governments often organize insurance pools for high-risk individuals, such as the assigned risk plan and the FAIR Plan. There are also government programs at both the state and federal level, such as workers' compensation and the National Flood Insurance Program. It is important to understand the diverse and ever-changing insurance industry, as well as the various types of insurers operating within it. Thank you for your attention..

[Audio] Slide 15 discusses the various types of insurers and their roles in the insurance industry. The first type is the Domestic insurer, which is organized under the laws of California and authorized to offer insurance products to its residents. The next type is the Foreign insurer, which operates under the laws of another state and can offer products through a Surplus Lines Broker. The third type is the Alien insurer, which is organized outside of the United States and can also offer products through a Surplus Lines Broker. These types are not authorized to transact in the state. Standard Market Insurers are the go-to option for those with less risk and have a good track record of providing quality products. In summary, we have discussed the three main types of insurers - Domestic, Foreign, and Alien - and their role in the industry, as well as briefly touched upon Standard Market Insurers. The presentation ends with a quick review of key concepts and a reminder that annuities and homeowners/commercial property are not classes of insurance, but fall under specific classes. Thank you for listening and let's continue to the next slide..

[Audio] This section will discuss the general principles of contract law and the elements of an enforceable contract. Contract law is the foundation for the formation and enforcement of contracts, including situations such as a breach of contract where the injured party is entitled to damages, attorney fees, and costs. Tort law determines who is responsible for a harm and obligated to pay, but this does not include breach of contract or criminal acts. Intentional torts are deliberate acts, such as assault, libel, slander, and false arrest, while unintentional torts refer to negligence. Absolute and strict liability hold individuals or organizations responsible for damages, regardless of intent. The elements of an enforceable contract include agreement, consideration, competent parties, and a legal purpose. Agreement refers to the offer and acceptance, consideration is the exchange of values, competent parties have the legal capacity to enter into a contract, and the legal purpose must be lawful. The features and characteristics of an insurance contract include adhesion, unilateral, utmost good faith, conditional, personal, and aleatory. Adhesion means that the terms are non-negotiable and will be ruled in favor of the insured in cases of vagueness or ambiguity. A contract is unilateral when only one side is obligated to fulfill their contractual duties. It is also conditional, meaning the conditions must be met before the promise is fulfilled. The contract is personal and cannot be assigned without written consent. Lastly, it is aleatory, meaning the performance is dependent on an uncertain future event, making the exchange of values unequal. In terms of indemnity, it..

[Audio] We will now discuss the concept of rescission in relation to intentional or unintentional injuries. The injured party has the right to rescind the contract if there was no prior inquiry or concealment of relevant facts. This means they do not have to communicate if the information is already known, should be known, or is considered immaterial. This includes waived or omitted information, which should only consist of relevant facts and not opinions or judgments. We will then move on to misrepresentation, which can come in the form of false oral or written statements. If the misrepresentation is deemed to be material, meaning it had a significant impact on the decision-making process, the injured party may choose to rescind the contract. This is determined by the influence of the facts, regardless of whether it was a representation or concealment. Moving on, there is a specific type of violation called producer misrepresentation. This refers to any act of causing or allowing misrepresentations of policy terms, benefits or privileges, or future dividends payable. Twisting is when a producer uses concealment, misrepresentation, or misleading comparisons to persuade the insured to drop their current policy and buy from them. These actions are classified as misdemeanors with a fine of $25000 and/or a one-year suspension of license, and if the insurer is found to be knowingly involved, their certificate and class may also be suspended. It's important to understand the terms of waiver and estoppel. Waiver refers to the legal abandonment or relinquishment of a known right, while estoppel prevents the reassertion of a previously waived right. According to the California Insurance Code, there are six required specifications for a policy: the parties involved, the risk being insured (property or life), their interest in the property, the risk being insured against, the policy period, and the premium. It's important to note that the insured's property address is not a requirement according to the code, and neither is the type of property..

[Audio] This presentation covers the essentials of insurance contracts, with this slide focusing on the key characteristics. These include non-negotiable terms, equal exchange of money, insurable interest, contracts of utmost good faith, the principle of indemnity, representations, warranties, and the relevance of time. The insurer cannot cancel a policy if concealed facts are material to the loss, and any intentional withholding or not disclosing of relevant information is known as concealment. Materiality is judged by the disadvantage it causes to the other party..

[Audio] In this presentation on insurance and copyrights, we will discuss important facts about insurance policies and their legal implications. Let's start with slide number 19. Did you know that the right to information of material facts can be waived by either the terms of insurance or by neglecting to make inquiries? This means that if there is no inquiry, there can be no concealment. This statement is either true or false. Moving on, when one party intentionally provides false information for unlawful gain, this is considered as fraud. The legal abandonment or relinquishment of a known right is known as waiver. The intent to do or not do something that materially affects the risk is known as material misrepresentation. In some cases, the insurer is barred from asserting a previously waived right or changing their conduct if doing so would harm the insured. These six required specifications for all insurance policies are determined by the applicable law. A contract in which one party promises to indemnify another against loss from an unknown event is known as an insurance policy. Upon inquiry, a producer is required to give their opinion or judgment. This statement is true. The importance of a representation is determined by the applicable rule. Keep watching for more important information on insurance and copyrights..

[Audio] Slide number 20 out of 50 in our presentation on general principles of distribution systems and ownership in the insurance industry will be discussing the different types of agencies and agents, as well as their authority and potential liabilities. The first type we will cover is independent agencies and agents who represent multiple insurers and own their accounts, policy records, and renewals. This gives them the flexibility to work with various insurance companies to find the best fit for their clients. On the other hand, we have exclusive or captive agencies and agents who represent a single insurer or one with common ownership or affiliates. In this case, the insurer owns all policies and renewals, which can limit options for clients but ensures a close relationship between the agent and insurer. Another type of agent is a direct writer, who is an employee of the insurer. They own all policies and renewals. Alternatively, direct mail or response is a system that does not use an agent and instead relies on mass marketing through mail, phone, vending machines, and the internet. This can be a cost-effective method for reaching potential clients. It is essential for all insurance producers to be identified on the internet with their name as it appears on their license, any approved fictitious names, state domicile, and principal place of business according to the Certified Insurance Counselor (CIC). However, phone numbers and license expiration dates are not required. In terms of agent authority, the principal (insurer) gives the agent specific powers or authorities. These authorities can be express, implied, or apparent. Express authority is given in writing, while implied authority is assumed to establish an agency relationship, even if it is not in writing. Apparent authority is when the agent oversteps their actual authority, and the public has no way of knowing. It is the responsibility of the insurer to ensure that their agents do not have apparent authority. Additionally, errors and omissions (E&O) insurance is a form of professional liability insurance for non-medical professionals, and it is essential to address this in the insurance industry..

[Audio] Today, we will be discussing Other Insurance Professionals as part of our overall presentation on Copyright © PreLicenseTraining.com. In slide number 21 out of 50, we will focus on the requirements and roles of various insurance professionals in the state of California. The first role we will discuss is the Administrator, which involves duties such as collecting premiums, handling claims, and addressing consumer complaints for life, health, or annuities. No Certificate of Registration is required for this position by agents, employers, unions, or insurers. Next, we have the Insurance Adjustor, who is responsible for settling claims on behalf of the insurer. It is important to note that this position cannot be held by a private investigator. Lastly, we will discuss the Public Adjustor, who is hired by the public to negotiate on behalf of the insured with the insurer. Moving on, we will now discuss the licensing requirements for transacting insurance in California. It is mandatory for all individuals who transact insurance to be licensed in the state of California. The term "transact" includes activities such as solicitation, negotiations, execution of contracts, and servicing existing contracts. It is a misdemeanor to transact insurance without a license and can result in fines of up to $50000 and/or 1 year in county jail. Moving on to the next topic, Section 5 - Distribution Systems, we will review some key concepts. It is important to identify the key words and answer the following questions without looking. Who owns their renewals? Managing General Agents cannot __________ __________. The type of policy that protects an agent who is sued for an error or omission is ____________________. A person who transacts on behalf of another and not an insurance company is a(n) ___________________. Who appoints a solicitor? And what must a broker/agent or personal lines agent/broker have before they can appoint a solicitor? Lastly, a direct writer is considered a(n) ____________ of an insurer while exclusive/captive agents represent a single insurer or one with common owners. Please review the material in this presentation to ensure a thorough understanding of the roles and requirements for Other Insurance Professionals in the state of California..

[Audio] In this slide, we will discuss important information about brokers and their role in the insurance industry. A broker is a person who acts as a mediator between clients and non-admitted insurers, meaning they are not affiliated with a specific insurer but transact on behalf of others. Now, let's test your knowledge with a true or false question: Is acting in a capacity that requires an active license without a valid license considered a serious offense? The correct answer is True. Next, let's compare the roles of a direct writer and a captive agent. Who holds the rights to ownership of renewals, book of business, and expiration dates? The direct writer does. Lastly, when transacting with a non-admitted insurer, only one type of licensee is allowed to do so. Can you guess who? The answer is a surplus lines broker. Thank you for your attention to slide number 22 and we hope this information has helped you better understand the role of brokers in the insurance industry. Please stay tuned for more valuable insights in the rest of our presentation. At PreLicenseTraining.com, we are dedicated to providing the best resources and tools for your insurance licensing journey..

[Audio] Slide number 23 out of 50 in our presentation on General Principles of Insurance Regulation will cover Section 6 and Subsection 1, specifically discussing the levels of regulation in the insurance industry. Insurance is a highly regulated industry with the main goal of protecting public interest and ensuring equitable access to coverage for consumers. This regulation is primarily overseen by three authorities: the state, self-regulation through the National Association of Insurance Commissioners (NAIC), and the federal government. The federal government's jurisdiction applies to individuals or companies whose activities impact interstate commerce and its main function is to oversee areas not covered by state regulation. This began with the landmark case of Paul vs Virginia in 1868, which ruled that insurance is not considered interstate commerce. However, this changed with the South-Eastern Underwriters Association (SEUA) in 1944, establishing that transacting across state lines is considered interstate commerce. In response, the McCarran-Ferguson Act (Public Law 15) was passed, giving jurisdiction back to the states. This act stated that the federal government has the right to regulate the business of insurance, but only to the extent that it is not already regulated by state law. Regarding privacy regulations, both the federal government and individual states have their own laws. For example, California's Privacy Act is more restrictive and has more severe penalties than the federal act. It aims to minimize intrusiveness and ensure fairness and impartiality in handling personal information. It also requires that applicants and insured individuals are given advance notice of the insurer's practices regarding the collection and use of personal information, as well as any information that may be disclosed to law enforcement, the Department of Insurance, or affiliates. This notice must be provided in writing and promptly given when applying, renewing, or reinstating coverage, and does not require a signature. Finally, the Fair Credit Reporting Act regulates consumer reporting agencies such as Equifax and the Medical Information Bureau (MIB). Its main purpose is to protect consumers by regulating how their personal information is used..

[Audio] We will be discussing the rights and protections of insured individuals in the insurance industry, specifically in regards to copyright and privacy laws. Under the California version of the federal Gramm-Leach-Bliley Act, known as the Cal-GLBA, insured individuals have the right to opt-out of having their personal information shared with third parties. This means that they can choose not to have their information shared unless they give explicit permission. HIPAA also has provisions to protect the privacy of an individual's medical information, including the HIPAA Security Rule and the confidentiality provisions of the Patient Safety Rule. Additionally, HIPAA limits the preexisting condition exclusion period and allows for creditable coverage to offset those exclusions. Federal laws also impose penalties for fraud and false statements in insurance transactions. These can result in civil fines of up to $50000 per violation, or in more serious cases, up to 15 years of imprisonment. It is important to note that written consent from the Commissioner is required to participate in the business of insurance..

[Audio] Slide number 25 covers the topic of state regulation of insurance companies and the role of the commissioner in enforcing the code. The commissioner's main responsibility is to ensure that insurance companies comply with state laws and regulations. This includes issuing rules and regulations, licensing and supervising insurers and producers, and regulating their investments. The commissioner also oversees insurer reserves, marketing practices, and handles consumer complaints to protect their rights. State regulation affects various aspects of insurance companies' operations from their formation to their investment and marketing practices. Admitted and nonadmitted insurance companies are subject to different regulations, with admitted insurers having the protection of the state guaranty association while nonadmitted insurers cater to niche markets and risks. California citizens have the right to obtain insurance from a nonadmitted insurer, but the commissioner has the authority to review policies and contracts and disclose gross premiums paid. Agents and brokers also have specific guidelines to follow when dealing with nonadmitted insurance..

[Audio] The 26th slide out of 50 discusses important aspects of insurance regulation. Insurance coverage for importing exotic animals can be obtained through excess and surplus lines, and surplus lines brokers must pay a gross premium tax. The disclosure form used by brokers and insurers must inform the insured that the policy is issued by a non-admitted insurer and is not subject to state regulation, guarantee associations, or protection for insolvency. A Commissioner's term of office and the regulation that gave jurisdiction of the insurance industry back to the states are left blank to be filled in. The purpose of privacy acts is to minimize intrusiveness and eliminate disclosure, and illegal interviews are only allowed if there is reasonable suspicion of fraud or criminal activity. The number of days for creditable coverage under HIPAA is also left blank. The Notice of Information Practices requires the applicant's signature and must disclose the collection and use of information without authorization. The key functions of an insurer are divided into four departments: actuarial, claims, market/sales, and underwriting. The actuarial division is responsible for rates, reserves, dividend scales, and more. This concludes the discussion on this section and we hope it has given you a better understanding of important considerations in insurance regulation..

[Audio] Welcome to slide number 27 out of 50 in our presentation. Today, the important topic of copyright and financial regulations in the insurance industry will be discussed. The first concept to be addressed is File and Use, in which an insurance rate can be used immediately until instructed otherwise by the Commissioner. On the other hand, Use and File allows rates to be used first and filed later. Another important aspect is Open Competition, also known as Open Rating, where competition sets the rates with oversight by the DOI. Financial regulation is crucial in the insurance industry as it enforces capital and surplus requirements, annual statements, and periodic examinations of the insurer. Its purpose is to detect any financial instability of the insurer, achieved through periodic exams and insurance regulatory information systems. Additionally, an accredited financial statement must be given annually to both the DOI and the NAIC. Rating services play a vital role in providing information and ratings on an insurer's financial strength, stability, and claim paying ability. It is important to acknowledge that there are numerous rating services available, including A M Best, Standard & Poors, and Duff & Phelps. However, it is a common mistake to assume that all of these services use the same rating system. Another significant term to understand in the insurance industry is insolvency, which refers to any impairment in paid-in capital, where the insurer is unable to meet its financial obligations when due. An insurer is considered insolvent if it only has enough assets to cover liabilities and reinsurance, and must possess additional assets equivalent to the required paid-in-capital. In the event of insolvency, the Commissioner may petition the court for Conservation and become the Conservator, with control over the insurer's books, records, premises, and assets. The DOI will then try to rehabilitate and make the insurer solvent again, which may involve merging, converging, reinsuring, or selling off a portion of the assets. If the insurer cannot be saved, a court order for liquidation will be obtained. In summary, Summary Seizure is a last resort when immediate intervention is necessary to prevent further financial instability..

[Audio] Slide number 28 of our presentation discusses the topic of unfair trade practices in insurance regulations. It should be noted that not all life and health contracts are guaranteed by the association, leaving some contracts not covered in case of a claim. Furthermore, self-insured plans are not included in this coverage. Unfair trade practices can be categorized into two groups: unfair methods of competition and unfair claims practices. Unfair methods of competition include actions such as falsely promising dividends to a client, misrepresenting an insurer as a member of the Guarantee Association in sales or advertisements, or using tactics like boycott or coercion to restrict trade. It also encompasses deceptive record-keeping. The second category, unfair claims practices, involves misleading a client by settling for less than what a reasonable person would expect, advising the client not to consult an attorney, or excessively prolonging an investigation by requiring recurring reports with the same information. Individuals who violate these unfair practices may face penalties of up to $5000 for unintentional violations, and up to $10000 for willful violations. For example, if a single policy has three mistakes, it would result in three violations, totaling to a penalty of $15000. In cases of suspected misconduct, the commissioner may conduct a hearing and issue a cease and desist order, requiring the individual to halt their unfair activities and pay the penalty. The hearing would take place 30 days after the person is notified. It is imperative to comply with these regulations and uphold fair practices in the insurance industry. Thank you for your attention..

[Audio] Today, we will discuss important points regarding insurance regulations in California. We are currently on slide 29 out of 50, with the presentation title "Copyright © PreLicenseTraining.com". In order to remain solvent and meet requirements set by the California insurance code, an insurer must have enough assets to cover liabilities and reinsurance. It is considered a violation of unfair claim practices to directly advise a claimant to seek an attorney. The California Life and Health Guarantee Association protects policy holders and individuals in the event of insurer insolvency. Engaging in unfair practices can result in a fine of up to $5000 if not willful, and up to $10000 if willful. Refusing to submit books and records is a violation for an agent. If the Commissioner revokes an insurer's Certificate of Authority, they have the power to take possession of transaction records, confiscate office premises, or liquidate the business. As a conservator, the Commissioner can use guarantee funds to keep the insurer operational. Identifying and selling to potential customers is an important function in the insurance business. Deciding which customers to insure and what coverage to provide is a crucial aspect of the industry. In California, any excessive, unfairly discriminatory, or inadequate rates will not be allowed. The Commissioner considers an insurer's financial stability when determining rate adequacy. It is a violation to advise clients that an insurer is protected from insolvency by the California Insurance Guarantee Association or to suggest not placing business with a certain insurer or obtaining an attorney. The California Insurance Guarantee Association is regulated by state law to protect policy holders and insured individuals. Thank you for listening, we hope you found this information helpful..

[Audio] Slide number 30 discusses the topic of "Licensing and Maintaining a License" in subsection 3 of the presentation. To become a qualified resident producer, one must hold a license, which allows them to represent and sell all lines of insurance, except for Life, Disability, or Health. This individual can also have unlimited appointments with different insurers. Moving on to the role of an insurance agent, they are appointed and represent a specific insurer, allowing them to sell all lines of insurance except for Life, Disability, or Health. They can also represent multiple insurers simultaneously. In the property category, a broker is not appointed but transacts on behalf of another insured individual. They can sell all lines of insurance except for Life, Disability, or Health, and can also be a broker or agent with several insurers at the same time. For the casualty category, an insurance solicitor is appointed and employed by an agent or broker. They can sell the same lines of insurance as the agent or broker who appointed or employed them, but are limited to non-commercial lines of insurance. Next, the customer service representative can only be appointed by one agent or broker at a time to handle customer service tasks. In the personal lines category, a broker is not appointed but transacts on behalf of another insured individual, and can be appointed with multiple insurers at the same time. There is also an insurance solicitor in this category who is appointed and employed by an agent or broker and can sell the same lines of insurance as a personal lines agent or broker. Finally, the limited lines automobile insurance agent is authorized to sell auto insurance for non-commercial vehicles with a load capacity of 1,500 or less. This individual must be appointed by an insurer or business entity and is limited to selling non-commercial lines of insurance such as auto, residential, inland marine, umbrella, and government programs like earthquake and flood..

[Audio] Slide 31 discusses different types of licensed producers in the insurance industry and their specific roles and limitations. The first type is the Life Agent, who is appointed by an insurer to sell Life and Annuity policies, but cannot act as a Life Broker or Solicitor. The A&H Agent, also appointed by an insurer, focuses on selling accident, health, and disability income policies and has similar restrictions as the Life Agent. Other producers and licensees have specific limitations, such as the Limited Life License which only allows individuals to sell Funeral and Burial policies, not life or annuity contracts over $15000. A new Life Settlement Broker license has recently been introduced for licensed Life Agents with at least one year of experience, which allows them to assist policyowners in negotiating life settlements. However, those with less than a year of experience or who are not licensed as a Life Agent must complete 15 hours of education on life settlement transactions and pay a fee to apply for this license. Some professionals, like attorneys, CPAs, and accredited financial planners, do not require a Life Settlement Broker license to provide advice on Life, Disability, and Health products for a fee. There are four reasons that may result in a license denial without a hearing, including being convicted of a felony or misdemeanor of the Insurance Code, having a prior application denied for cause within the last five years, or having a license revoked..

[Audio] In the insurance industry, there are specific rules and regulations that must be followed in order to maintain the trust of clients and uphold the integrity of the industry. This presentation will cover important information about business names, maintaining a license, and appointments. First, as a licensee, you must file your true and fictitious names with the commissioner, who has the authority to reject any name except for your natural name as stated on your birth certificate. You are only allowed to have a maximum of two fictitious names, which cannot imply that you are an insurer or engage in prohibited activities. If your business name interferes with another's business, it will be rejected. Regarding maintaining your license, resident insurance producers in California are required to have a principal office, which must be listed on all license and renewal applications. If you are a broker-agent for property and casualty or personal lines, you must prominently display your license in your office. Lastly, it is crucial for all agents transacting insurance to be properly licensed and appointed. Your first appointment serves as a notice to clients that the appointing insurer trusts you and deems you worthy of their business. This appointment, also known as an implied declaration, becomes effective immediately upon signing. These rules and regulations are in place to protect both clients and industry professionals. By following them, we can uphold the standards of the insurance industry and maintain the trust of our clients. Thank you for your attention and compliance. Now, let's move on to the next slide..

[Audio] Today, we will be discussing important information regarding license numbers and regulations for licensees. It is crucial for licensees to include their license number on all quotes, advertisements, and business cards, and it must be printed in the same size and type as other contact information. Please note that violating this regulation may result in fines. Moving on, brokers must have a written agreement, called a Broker agreement, and agents are not allowed to charge fees, but insurers may do so and must be included in all premium quotations. If you arrange premium financing, the premium financier must disclose any compensation paid to you and it is important to keep records of this for 3 years. Agents act in a fiduciary capacity and must forward premiums immediately and keep them in a trust fund. Changes in address or organization must be reported to the Commissioner immediately. This includes changes in business, residential, mailing, or email address, as well as changes in officers, directors, or stockholders. Thank you for your attention and commitment to following these regulations..

[Audio] Slide number 34 of our presentation on copyright laws and requirements for insurance producers focuses on necessary records and continuing education requirements for agents in the state of California. Agents are required to maintain records of their activities for 3 years, including Analyst Records, Life/Annuity Replacement records, and LTC advertising. They are also responsible for providing the effective date of coverage to their insureds at the time of application or premium receipt, for personal lines only. In terms of continuing education, the State of California passed a law in 1992 requiring agents to stay up-to-date and qualified in their field. The number of required hours varies depending on the type of license held. For example, Life Only, Accident & Health, and Life Agent Combo licenses require 24 hours of continuing education per license term (2 years). Personal Lines and Limited Lines Automobile licenses require 24 hours per renewal. It should be noted that these continuing education hours apply per person, not per license. Holding multiple licenses does not increase the number of required hours. Additionally, there are specific subject requirements for certain licenses, such as 4 hours of Ethics training for Life Agent Combo, Property/Casualty, Life Only, and Accident & Health licenses. Personal Lines and Limited Line Automobile licenses require 2 hours of Ethics training, and those soliciting Long-term Care (LTC) policies must complete 8 hours of LTC training annually if licensed for less than 4 years, and every license term (2 years) if licensed for more than 4 years. Agents soliciting California Partnership LTC policies must also complete 4 hours of LTC training if licensed for less than 4 years, and 8 hours per license term if licensed for more than 4 years. It is crucial for agents to be aware of and fulfill these requirements to continue their work in the insurance industry. Please refer to your materials for more information on specific CE course requirements..

[Audio] Slide number 35 of our presentation on insurance regulations in section 6 focuses on general principles. This subsection discusses important information and requirements for agents and agencies. For an organizational license, if a corporation dissolves, the license will continue if at least one original partner remains with the new corporation. Is this statement true or false? Please answer without looking and underline key words. If an agent holds both a life and property & casualty license, they are considered to be a certain type of licensed. This is an important designation to be aware of. Continuing education hours are required for agents holding both a life and property & casualty license. Is this statement true or false? In the case of an insurer accepting an application from an agent who is not specifically appointed by that insurer, the insurer must forward a notice of appointment to the insurance commissioner within a certain number of days. This is an important step to ensure compliance. In California, agents must pass a LTC exam every 10 years in order to be qualified to sell LTC insurance. Is this statement true or false? If an agent's license becomes inactive, they are not allowed to transact any insurance business that requires a license, and they would need to file an application to become active again. Agents or brokers who receive compensation for arranging or directing sales in connection with premium financing must disclose all their commissions to the insured. Is this statement true or false? An agent's appointment may be terminated if another insurer submits an appointment. Is this statement true or false? Lastly, appointments can be terminated if an agent fails to meet certain requirements or fails to maintain a good reputation in the insurance industry..

[Audio] Slide number 36: In this section, we will discuss important regulations that all agents and brokers must be aware of. Slide number 18: An agent or broker is required to keep records of their compensation from a premium financier for a period of 3 years to ensure transparency and proper documentation in all financial transactions. Is this statement true or false? Slide number 19: It is essential to maintain current fees in order to keep your license active. If your fees are not up to date, your license will be considered inactive. Is this statement true or false? Slide number 20: Any changes to a partnership within a company require a new application and additional fees. This must be done within 30 days and the new name must be approved by the proper authorities. It is important to note that in case of a change in partnership, you may still transact under your own license, as well as incorporating. Is this statement true or false? Slide number 21: Your license will be considered to be _________ if your fees and education are current but there is no appointment. Can you fill in the blank with the correct term? Slide number 22: All advertisements must be approved before usage, including any written or printed material used for marketing purposes. Can you name at least three words that are not allowed to end an agency name? Slide number 23: The Department of Insurance cannot disapprove the use of any true corporate name. Is this statement true or false? Slide number 24: A customer service representative who only deals with soliciting and servicing life insurance would need which type of license? Can you fill in the blank? Slide number 25: It is considered an unfair and deceptive act for an agent to negotiate a claim for less than what the claimant is entitled to, based on a written or printed advertisement. Is this statement true or false? Slide number 26: The font size of the licensee's license number must be the same size as their ___________, ___________, or ___________ on all price quotes, business cards, and printed material. Can you fill in the blanks? Slide number 27: It is required for insurance records to be made available for the Commissioner's inspection at all times. Is this statement true or false? Slide number 28: Insurance agents must make their records available for the Commissioner's inspection at all times..

[Audio] Slide 37 covers the requirements for a change in partnership for a licensed insurance company. In order for the license to continue, at least one person with agency powers must remain in the new co-partnership. This statement is either true or false. Moving on to slide 38, we will discuss the penalties for engaging in unfair practices. If the actions are not willful, the maximum penalty is $5000. If the actions are willful, the maximum penalty is $10000. True or false? Slide 39 poses the question of whether a licensee can return their license back to the Commissioner. Is this statement true or false? Slide 40 states that if an employer receives a written notice of license revocation, they must also give it to the Commissioner. Now, onto slide 41. If an insurer makes an unintended error in underwriting, issuing, or renewing a single policy, how many violations under Unfair Practices would they incur? Slide 42 asks what type of license is needed to sell annuities. Moving on to slide 43, the role of a life broker will be discussed. Does a life broker represent the insured? True or false? Slide 44 poses the question of what type of license is needed to sell health insurance. Slide 45 clarifies that according to the California Insurance Code, a life agent is only defined as a Life Agent. True or false? Slide 46 covers the license issued to those who transact life and disability for a fee, which is known as an ____________ (fill in the blank). Slide 47 discusses the role of a natural person employed by an agent or broker to assist in all lines of insurance except for life and disability. This person is known as a ______________ ______________ (fill in the blank). Moving on to slide 48, we will discuss the actions of an agent who handles money in a trust capacity. They are considered to be acting as a _____________ (fill in the blank). Slide 49 states that a solicitor employed by an agent who sells auto, worker's comp, homeowners, and life insurance may sell all lines. True or false? Slide 50 covers the job of a natural person who solicits and services life insurance for the agent who employs them, known as a ____________________________ (fill in the blank)..

[Audio] "Slide 38 out of 50 covers important regulations and ethical considerations for obtaining an insurance license. These regulations ensure the integrity and professionalism of the insurance industry. On slide 57, an application for a license may be denied if the applicant has a conviction or violation of the insurance code. Slide 58 explains that assisting a nonadmitted insurer is only legal for surplus lines agents or brokers. Slide 59 states that an applicant's license may be suspended if fees are not paid current. Slide 60 highlights the requirement to renew a license before the expiration date. Slide 61 covers the four addresses required by the Department of Insurance. Any changes to these addresses must be reported immediately in writing. On slide 63, agents must display their license number and "insurance" on all newspaper advertisements and written quotes. Slide 64 emphasizes the importance of maintaining a clean record for applicants. On slide 65, it is stated that agent records must include printed materials distributed by the insurer..

[Audio] We are now on slide number 39 out of 50 in our presentation on copyright laws and regulations for the insurance industry. This slide covers information about the amount of gross premium for insurance coverage, the term of coverage, and notices and penalties related to insurance transactions. To start, different types of insurance have varying premium amounts determined by the insurer and it is best to consult with your insurance agent or broker for specific details on the amount of gross premium. The term of coverage refers to the length of time the insurance is effective and can range from a few months to several years. It is important to understand this term in order to have adequate protection for the designated period of time. It is important to note that no person is required to finance the purchase of an automobile through a specific insurance agent or broker. As a consumer, you have the right to choose who you work with for your insurance needs. Penalties are in place for those who violate this right of voluntary selection and the Commissioner has the authority to suspend or revoke a license for non-compliance. A cease and desist order may also be issued to anyone with multiple violations, which is considered a misdemeanor. Additionally, temporary insurance contracts called binders have a premium charge and are valid for up to 90 days, with permission from the Department of Insurance to extend up to 150 days. Binders are not applicable for life, health, or disability insurance and unauthorized issuance can result in a license suspension. It is important to be aware of the appropriate use of certificates of liability insurance and evidence of property insurance..

[Audio] We are currently on slide number 40 out of 50, discussing the regulations set by the Fair Claims Practices for the selection of automotive repair dealers. These regulations state that an insurer cannot require a claimant to have their vehicle repaired at a specific shop. The claimant has the right to choose where they want their vehicle repaired. If an insurer chooses to repair the vehicle or directs the claimant to a specific shop, they must ensure that the vehicle is restored to its pre-loss condition at no extra cost to the claimant. If the recommendation is given orally, the insurer must provide a written notice within five days, clearly stating the claimant's right to choose their own repair shop. Once the claimant has chosen a repair shop, the insurer cannot suggest or recommend another shop. It is important to note that the insurer cannot limit or discount reasonable repair costs based on charges from their chosen shop. The Fair Claims Practices also require insurers to accept or deny a claim within 40 calendar days, with a possible extension to 80 days if fraud is suspected. The claimant must be notified of the status of their claim every 30 days, with the option for the insurer to request additional time. Our presentation will now continue with the remaining slides..

[Audio] Slide number 41 of our presentation focuses on the importance of honesty and truthfulness when filing an insurance claim. This is essential in maintaining the integrity of the insurance industry and protecting both the insured and the insurer. When filing a claim, it is crucial to provide a detailed statement of the circumstances surrounding the theft. This includes the insured's current driver's license number, which must be verified by an agent, broker, adjuster, or claim representative. If the insured is unable to sign the claim form in person, it must be notarized. According to CIC 1871.3, the insurer must retain settlement checks, the original claim form, and a legible copy of the policy report for a minimum of 3 years when settling a claim for auto theft. Making false or fraudulent statements related to any type of insurance claim is illegal. This includes knowingly providing false information to obtain or deny compensation, presenting false information to support or oppose a claim, or assisting or conspiring with someone engaged in unlawful activities. It is also illegal to make false or fraudulent statements regarding entitlement to benefits with the intent to discourage an injured worker from claiming or pursuing a claim. Those who violate these laws may face imprisonment, fines, or both. Additional fines and jail time may also be added if the state prosecutor takes on the case. Insurers are responsible for maintaining a fraud unit to investigate claims made by and against their insureds to detect and address potential fraud. It is important to note that brokers and agents are only allowed to use funds due for return premiums to offset unpaid amounts from the same insured. Any other type of premium offset is not permitted..

[Audio] In this presentation, we will be discussing important information regarding genetic traits, physical and mental impairments, and ethics in the insurance industry. It is important to note that no insurer can refuse to issue, sell, or renew a life or disability policy based on the presence of a potential genetic trait. However, if the gene does not have a negative effect on the carrier, the insurer cannot use it as a reason to deny coverage. The law also prohibits insurance companies from discriminating against individuals with physical or mental impairments. This means they cannot refuse to issue a policy, charge a different rate, or limit coverage solely based on a person's impairment. However, there are exceptions if it is based on sound actuarial principles or anticipated experience. Additionally, blindness is also protected under the law. Insurers cannot discriminate against individuals who are blind or partially blind when it comes to life, annuity, or disability policies. Moving on to ethics, while the Code and Regulations outline unethical and illegal practices, it is not an exhaustive guide to ethical behavior. As licensed professionals, it is our responsibility to always act in the best interest of our clients and never let our personal interests influence an insurance transaction. We must remain unbiased and objective in our judgment, valuations, and product recommendations. It is also our duty to fulfill ethical responsibilities, such as full disclosure, confidentiality, timely application submission, prompt policy delivery, and addressing any questions or concerns our clients may have. We must always conduct ourselves with integrity and honesty when dealing with clients. In conclusion, the Code of Ethics for agents and brokers ensures fair and honest practices in the insurance industry and it is our duty to uphold these ethical standards..

[Audio] We are currently on slide number 43 of our presentation on general insurance principles. The focus of this section is insurance code violations and fair claim settlement practices. First, let's answer a question about what action the insurance Commissioner would likely take if a violation involved loans on real or personal property, without looking and underlining key words. Next, we have a fill-in-the-blank question about the intended use of the word "may" in the code. Moving on, we have a true or false question about whether the CCRs prohibit unfair discrimination in claim settlements based on factors such as gender, income, behavior, or physical handicap. Let's test your knowledge again with a question about an insurer's use of higher rates based on religion, race, or ethnic group. According to the code, all insurers must have a fraud unit to investigate fraudulent claims. Next, we have a question about which class of insurance cannot issue a binder according to the code. The Commissioner has the right to suspend or revoke an insurance license for unauthorized issuance of a binder. We then have a true or false question about binders being valid up to 1000000. Moving on, we come to the topic of diverting or misappropriating fiduciary funds, which is considered a violation. It is important to remember that committing any act of discrimination is a violation of the code. Let's see if you were paying attention by answering a question about the fine amount for a fraudulent claim. The next question is about acts that can result in a license being rescinded, such as felony convictions or misstating information on a license application. Finally, according to the code, all types of insurance are vulnerable to fraud, including health, auto, and worker's compensation..

[Audio] We are currently on slide number 44 out of 50 in our presentation, focusing on the basics of property and liability. The purpose of the Commercial Section is to provide an overview of key concepts and reinforce important facts. Detailed information can be found in your class material. This review is meant to emphasize commonly tested areas. It is important to note that questions on the exam may come from any material in your class manual, so it is crucial to thoroughly review all provided material. Our review will primarily focus on key wording and phrasing related to tested concepts, but it is important to understand that this is not a substitute for the class manual which contains all necessary information for the exam. To familiarize you with the wording used on the test, we will also have retention questions. In the video, our presenter will further explain how these questions may appear and touch upon additional questions that could be asked. It is essential to remember that your course material contains all the information being reviewed. We hope this presentation has reinforced your understanding of the basics of property and liability. We wish you the best of luck on your exam and remember that practice and thorough review are the keys to success. Thank you for choosing Copyright © PreLicenseTraining.com and we hope to see you in our future courses..

[Audio] In this slide, we will discuss the key components of a policy, including the Personalized Promise, Declarations, Insuring Clause, Conditions, and Exclusions. Starting with the Declarations, this section provides information about the insured, the policy period and territory, and any restrictions on insuring. It also includes any additional or other coverages and outlines what is specifically excluded from the policy. Moving on to the Insuring Clause, this is the part that defines the purpose and scope of coverage under the policy. Next, the Conditions section outlines the rules, duties, and obligations of both the insured and the insurer. It also covers what is omitted from the policy. The Exclusions section lists specific risks that are not covered under the policy and should be carefully reviewed to ensure appropriate coverage. The Insured & Insurer section defines the roles and responsibilities of both parties, as well as the policy period and territory. The Rules/Duties & Procedures section provides a detailed outline of what is covered and the responsibilities and procedures for the insured in the event of a claim. The Optional section covers additional coverages that can be added to the policy. The Policy Structures Summary also includes a section on extensions for specific risks not covered by the original policy, as well as the process for cancelling a policy. Under Property Insurance, you will find information on what is not covered, including the Transfer of Rights and Duties for both building and contents, as well as any limitations on coverage. In the Assignment section, you will find information on the transfer of rights and duties in the event of a change in ownership of the insured property. The Insurable Interest section outlines the requirements for the insured to have a financial stake in the property being insured..

[Audio] This presentation focuses on different forms of insurance policies, specifically named peril and open peril forms for commercial and personal lines. Starting with commercial lines, named peril policies only cover explicitly stated perils. On the other hand, open peril or all-risk policies cover all perils unless specifically excluded. These forms are used in the Commercial Package Policy (CPP) and the Business Owners Policy (BOP). In personal lines, there are named peril and Special Form policies. The Special Form policies include DP-3 and HO-3, while the Comprehensive form is used for Basic Form and Broad Form policies such as DP-1, HO-8, DP-2, HO-2, HO-4, and HO-6. It is important to note that the Broad Form covers 6-7 more perils compared to the Basic Form in CPP and BOP policies. It is crucial to understand the covered and excluded perils when choosing an insurance policy. Thank you for your attention and please continue with our final slides as we conclude our presentation on "Copyright © PreLicenseTraining.com..

[Audio] Slide number 47 explains the provisions and conditions for property and liability in the insurance industry. It is crucial to consider these factors in the case of an accident or event that causes a loss. An accident is defined as a sudden and unintentional event, while an occurrence is a broader term that encompasses constant exposure to harmful conditions resulting in damage or harm. There are two types of policies - primary and excess. A primary policy pays first, regardless of other policies, while an excess policy only pays once the primary policy's limits have been exhausted. In the case of multiple insurance policies covering a loss, pro rata liability is used. This means each policy will pay a portion of the loss based on its limit compared to all other applicable insurances. There are also concurrent and nonconcurrent policies. Concurrent policies are identical, whereas nonconcurrent policies do not provide the same coverage. This can lead to coverage gaps or disputed payments. In the case of liability, nonconcurrency can cause complications in determining which insurer is responsible for which portion of the claim. Lastly, there is liberalization, which broadens coverage without an increase in premium, and appraisal and arbitration, which are used to handle claims when the insured and insurer cannot agree on the amount of indemnification. These concepts are important to understand in the complex world of insurance..

[Audio] We will now discuss important concepts related to property insurance. We are on slide number 48 out of 50 and will focus on key terms and definitions crucial for understanding property insurance. Our first term is Nonrenewal, which means not continuing a policy at the end of the policy period. Renewal, on the other hand, refers to continuing a policy beyond its original term and into a new policy period. Next is Lapse, which is when a policy is terminated due to nonpayment of premium. This can be avoided by paying premiums on time. Assignment is the transfer of an insurance policy to another individual or entity, with written consent from the insurer. We also have Subrogation, where the insurer seeks recovery of the amount paid to the insured from a responsible third party, preventing the insured from collecting twice. In the event of the named insured's death, the policy rights will transfer to their legal representative. It's important to note that the loss must occur during the policy period and within the coverage territory, which includes the U S , its territories and possessions, Puerto Rico, and Canada. Some policies may have worldwide coverage. Concealment, Misrepresentation, or Fraud can void or rescind a policy. Proximate Cause refers to the chain of events leading to damage or loss, with the proximate cause being an insured peril in property insurance and negligence in liability insurance. A Certificate of Insurance serves as proof of insurance. Lastly, we will cover the term Business..

[Audio] This slide, number 49, is part of our presentation on insurance terminology where we will be discussing important terms essential for understanding insurance policies. Slide 10 explains unoccupancy, the state of a property without occupants and personal property. Slide 11 discusses vacancy, where there are no occupants or personal property in the property. Moving on to slide 12, we cover the standard mortgage or mortgage clause, which protects the lender's financial interests in the insured property. The mortgagee must fulfill certain duties to protect their interests, including paying premiums and notifying the insurer of any changes in ownership, occupancy, or risk. It is important to note that the mortgagee retains the right to claim loss payment even if the insured fails to comply with the policy terms. If the policy is cancelled or not renewed, the mortgagee must be given a 10-day written notice by the insurer. Slide 13 discusses the right of salvage, where the insurer has the right to take possession of damaged property after the loss has been paid and to keep any salvage value gained. Slide 14 covers the abandonment of property, where the insurer can transfer title of the damaged property and declare a total loss. The insurer also has the right to control the property and the actions of others outside of the policyholder's control will not affect the insurance. Thank you for listening to slide number 49. Stay tuned for the final slide..

[Audio] The final slide of our presentation is dedicated to reviewing the key points of property insurance. We have discussed various valuation methods and policies. It is important to address a few important details before concluding. One such method is Replacement Cost, which pays the entire amount required to repair or replace a damaged property, without taking into consideration the depreciation. For instance, if a property worth $10000 is damaged, the full amount would be paid out. However, this method requires the coverage to be at least 80% of the replacement cost at the time of the loss. Another method is Functional Replacement Cost, which allows for the replacement of damaged property with a less expensive, but functionally equivalent property. This may be necessary due to technological or environmental changes. Another method is Market Value, which takes into account the current market value of the property. This differs from Replacement Cost. Agreed Value is a provision in the policy that suspends the coinsurance clause by establishing an agreement between the insured and the insurer on the value of the property and the required amount of insurance to fully cover the risk. Stated Amount sets a maximum value for the insured property, but it can still be subject to adjustment and valuation at the time of the loss. Lastly, we have Valued Policy, which guarantees payment for the insured property at a specified sum without any adjustments. Some states have laws that require full payment of insurance in the event of a total loss. Moving on to liability basics, a tort is a legal or civil wrong for which legal action can be taken. An individual may face legal liability for intentional torts, negligence, absolute or strict liability. That concludes our presentation on property insurance and liability basics. We hope the information provided has been helpful. Thank you for your attention and have a great day..