640 Class 8 Outline

640 Class 8 Outline - Class 8 Outline Business Finance 640...

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Class 8 Outline Business Finance 640 - Insurance and Risk Winter Quarter, 2008 This class will focus on the Personal Auto Policy (PAP). However, at the outset, we will return to adverse selection, a topic that we touched on at the start of the course. Adverse selection is the tendency of persons with higher-than-average chance of loss to seek insurance at standard rates. We will see how adverse selection impacts auto rate classification system, underwriting selection, limits and deductibles. We will then return to the PAP and review two topics introduced in the previous class, eligible vehicles and the definition of “your covered auto”. We will likewise revisit Part A – Liability Coverage and look again at the Insuring Agreement, the definition of Insured, Supplementary Payments and Exclusions. We will move forward into “out of state coverage” and the “other insurance provisions”, which were not covered in the previous class. Next, we will discuss Part B of the PAP, Medical Payments Coverage. We will examine the Insuring Agreement of Part B, as well as the Definition of Insured and Exclusions. Then, we will turn to Uninsured Motorists Coverage, which is Part C of the PAP. We will pay particular attention to the definition of “Uninsured motor vehicle” in Uninsured Motorists and see how this definition impacts the Insuring Agreement. We will then turn to Part D, Coverage for Damage to Your Auto. We will see how physical damage coverage has two parts: Collision and Other than Collision, and we will clarify the meaning of each. We will conclude by reviewing Part E, “Your Duties after an Accident or Loss”, and Part F, General Provisions. In the General Provisions review, we will look at Policy Period and Territory and the Termination provision. I. Adverse Selection and Insurance A) Adverse selection: Tendency of persons with a higher-than-average chance of loss to seek insurance at standard (average) rates. B) Consequences of adverse selection: If not controlled by underwriting, results in higher-than-expected loss levels. C) Can be controlled by careful underwriting, by charging higher premiums to substandard applicants for insurance, and by certain policy provisions (deductibles, limits, sub-limits etc.). D)
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640 Class 8 Outline - Class 8 Outline Business Finance 640...

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