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Principles of Risk Management and Insurance, 13th Edition

Book Description

Principles and Practices: Managing Risk with Consumer Considerations

Redja’s Principles of Risk Management and Insurance provides an in-depth examination of major risk themes. Using rich and up-to-date content on the basic concepts of risk and insurance, and introductory and advanced topics in traditional and enterprise risk management, the text is relevant to a wide number of disciplines in the business realm.

Fully updated and revised, the Thirteenth Edition now covers global topics ranging from natural disasters and terrorism, to domestic issues like the ever-evolving Affordable Care Act and Healthcare Reform. Principles of Risk Management and Insurance sets itself apart by placing primary emphasis on insurance consumers and blends basic risk management and insurance principles with consumer considerations, allowing students to apply basic concepts to their own personal risk management and insurance programs

Table of Contents

  1. Principles of Risk Management and Insurance
  2. Principles of Risk Management and Insurance
  3. Contents
  4. Preface
    1. KEY CONTENT CHANGES IN THE THIRTEENTH EDITION
    2. Instructor Resources
    3. ACKNOWLEDGMENTS
  5. Chapter1Risk and Its Treatment
    1. Learning Objectives
    2. Definitions of Risk
      1. Traditional Definition of Risk
      2. Risk Distinguished from Uncertainty
      3. Loss Exposure
      4. Objective Risk
      5. Subjective Risk (Perceived Risk)
    3. Chance of Loss
      1. Objective Probability
      2. Subjective Probability
      3. Chance of Loss versus Objective Risk
    4. Peril and Hazard
      1. Peril
      2. Hazard
        1. Physical Hazard
        2. Moral Hazard
        3. Attitudinal Hazard (Morale Hazard)
        4. Legal Hazard
    5. Classification of Risk
      1. Pure Risk and Speculative Risk
      2. Diversifiable Risk and Nondiversifiable Risk
      3. Enterprise Risk
      4. Systemic Risk
    6. Major Personal Risks and Commercial Risks
      1. Personal Risks
        1. Premature Death
        2. Inadequate Retirement Income
        3. Poor Health
        4. Unemployment
      2. Property Risks
        1. Direct Loss
        2. Indirect or Consequential Loss
      3. Liability Risks
      4. Commercial Risks
        1. Property Risks
        2. Liability Risks
        3. Loss of Business Income
        4. Cybersecurity and Identity Theft
        5. Other Risks
    7. Burden of Risk on Society
      1. Larger Emergency Fund
      2. Loss of Certain Goods and Services
      3. Worry and Fear
    8. Techniques for Managing Risk
      1. Risk Control
        1. Avoidance
        2. Loss Prevention
        3. Loss Reduction
      2. Risk Financing
        1. Retention
          1. Self-Insurance
        2. Noninsurance Transfers
          1. Transfer of Risk by Contracts
          2. Hedging Price Risks
          3. Incorporation of a Business Firm
        3. Insurance
    9. Summary
    10. Key Concepts and Terms
    11. Review Questions
    12. Application Questions
    13. Internet Resources
    14. Selected References
    15. Notes
  6. Chapter 2Insurance and Risk
    1. Learning Objectives
    2. Definition of Insurance
    3. Basic Characteristics of Insurance
      1. Pooling of Losses
      2. Payment of Fortuitous Losses
      3. Risk Transfer
      4. Indemnification
    4. Characteristics of an Ideally Insurable Risk
      1. Large Number of Exposure Units
      2. Accidental and Unintentional Loss
      3. Determinable and Measurable Loss
      4. No Catastrophic Loss
      5. Calculable Chance of Loss
      6. Economically Feasible Premium
    5. Two Applications: The Risks of Fire and Unemployment
    6. Adverse Selection and Insurance
    7. Insurance and Gambling Compared
    8. Insurance and Hedging Compared
    9. Types of Insurance
      1. Private Insurance
        1. Life Insurance
        2. Health Insurance
        3. Property and Liability Insurance
      2. Government Insurance
        1. Social Insurance
        2. Other Government Insurance Programs
    10. Benefits of Insurance to Society
      1. Indemnification for Loss
      2. Reduction of Worry and Fear
      3. Source of Investment Funds
      4. Loss Prevention
      5. Enhancement of Credit
    11. Costs of Insurance to Society
      1. Cost of Doing Business
      2. Fraudulent Claims
      3. Inflated Claims
      4. Cost to Society of Fraudulent and Inflated Claims
    12. SUMMARY
    13. Key Concepts and Terms
    14. Review Questions
    15. Application Questions
    16. Internet Resources
    17. Selected References
    18. Notes
    19. AppendixBasic Statistics and the Law of Large Numbers
      1. Probability and Statistics
      2. Law of Large Numbers
        1. Notes
  7. Chapter3Introduction To Risk Management
    1. Learning Objectives
    2. Meaning of Risk management
    3. Objectives of Risk management
      1. Pre-Loss Objectives
      2. Post-Loss Objectives
    4. Steps in the Risk management Process
      1. Identify Loss Exposures
      2. Measure and Analyze the Loss Exposures
      3. Select the Appropriate Combination of Techniques for Treating the Loss Exposures
        1. Risk Control
          1. Avoidance
          2. Loss Prevention
          3. Loss Reduction
          4. Duplication
          5. Separation
          6. Diversification
        2. Risk Financing
          1. Retention
            1. Determining Retention Levels
            2. Paying Losses
            3. Captive Insurer
            4. Income Tax Treatment of Captives
            5. Self-Insurance
            6. Risk Retention Groups (RRGs)
            7. Advantages and Disadvantages of Retention
          2. Noninsurance Transfers
          3. Commercial Insurance
            1. Advantages of Insurance
            2. Disadvantages of Insurance
        3. Which Technique Should Be Used?
        4. Market Conditions and Selection of Risk Management Techniques
      4. Implement and Monitor the Risk Management Program
        1. Cooperation with Other Departments
        2. Periodic Review and Evaluation
    5. Benefits of Risk Management
    6. Personal Risk Management
      1. Steps in Personal Risk Management
        1. Identify Loss Exposures
        2. Analyze the Loss Exposures
        3. Select Appropriate Techniques for Treating the Loss Exposures
        4. Implement and Monitor the Program Periodically
    7. Summary
    8. Key Concepts and Terms
    9. Review Questions
    10. Application Questions
    11. Internet Resources
    12. Selected References
    13. Notes
  8. Chapter4Enterprise Risk Management and Related Topics
    1. Learning Objectives
    2. Enterprise Risk Management
      1. Financial Risk Management
        1. Commodity Price Risk
        2. Interest Rate Risk
        3. Currency Exchange Rate Risk
        4. Managing Financial Risks
      2. Considering All Risks—Enterprise Risk Management
        1. The ERM Process
          1. Risk Identification
          2. Risk Analysis
          3. Selection of Risk Treatment Measures
          4. Implement and Monitor the Program
        2. Emerging Risks
          1. Terrorism Risk
          2. Climate Change Risk
          3. Cyber-Liability Risk
    3. Insurance Market Dynamics
      1. The Underwriting Cycle
        1. Insurance Industry Capacity
        2. Investment Returns
      2. Consolidation in the Insurance Industry
        1. Insurance Company Mergers and Acquisitions
        2. Insurance Brokerage Mergers and Acquisitions
        3. Cross-Industry Consolidation
      3. Capital Market Risk-Financing Alternatives
        1. Securitization of Risk
        2. Insurance Options
    4. Loss Forecasting
      1. Probability Analysis
      2. Regression Analysis
      3. Forecasting Based on Loss Distributions
    5. Financial Analysis in Risk Management Decision Making
      1. The Time Value of Money
      2. Financial Analysis Applications
        1. Analyzing Insurance Coverage Bids
        2. Risk-Control Investment Decisions
    6. Other Risk Management Tools
      1. Risk Management Information Systems (RMIS)
      2. Risk Management Intranets
      3. Predictive Analytics
      4. Risk Maps
      5. Value at Risk (VAR) Analysis
      6. Catastrophe Modeling
    7. Summary
    8. Key Concepts and Terms
    9. Review Questions
    10. Application Questions
    11. Internet Resources
    12. Selected References
    13. Notes
  9. Chapter5Types of Insurers and Marketing Systems
    1. Learning Objectives
    2. Overview of Private Insurance in the Financial Services Industry
    3. Types of Private Insurers
      1. Stock Insurers
      2. Mutual Insurers
        1. Advance Premium Mutual
        2. Assessment Mutual
        3. Fraternal Insurer
        4. Changing Corporate Structure of Mutual ­Insurers
      3. Lloyd’s of London
      4. Reciprocal Exchange
      5. Blue Cross and Blue Shield Plans
      6. Health Maintenance Organizations
      7. Other Private Insurers
        1. Captive Insurers
        2. Savings Bank Life Insurance
    4. Agents and Brokers
      1. Agents
      2. Brokers
    5. Types of Marketing Systems
      1. Life Insurance Marketing
        1. Personal Selling Systems
        2. Financial Institution Distribution Systems
        3. Direct Response System
        4. Other Distribution Systems
      2. Property and Casualty Insurance Marketing
        1. Independent Agency System
        2. Exclusive Agency System
        3. Direct Writer
        4. Direct Response System
        5. Multiple Distribution Systems
    6. Group Insurance Marketing
    7. Summary
    8. Key Concepts and Terms
    9. Review Questions
    10. Application Questions
    11. Internet Resources
    12. Selected References
    13. Notes
  10. Chapter6Insurance Company Operations
    1. Learning Objectives
    2. Insurance Company Operations
    3. Rating and Rate making
    4. Underwriting
      1. Statement of Underwriting Policy
      2. Basic Underwriting Principles
      3. Steps in Underwriting
        1. Agent as First Underwriter
      4. Sources of Underwriting Information
        1. Making an Underwriting Decision
      5. Other Underwriting Considerations
    5. Production
      1. Agency Department
      2. Professionalism in Selling
    6. Claims Settlement
      1. Basic Objectives in Claims Settlement
      2. Types of Claims Adjustors
      3. Steps in Settlement of a Claim
        1. Notice of Loss
        2. Investigation of the Claim
        3. Filing a Proof of Loss
        4. Decision Concerning Payment
    7. Reinsurance
      1. Definitions
      2. Reasons for Reinsurance
        1. Increase Underwriting Capacity
        2. Stabilize Profits
        3. Reduce the Unearned Premium Reserve
        4. Provide Protection against a Catastrophic Loss
        5. Other Reasons for Reinsurance
      3. Types of Reinsurance
        1. Facultative Reinsurance
        2. Treaty Reinsurance
      4. Methods for Sharing Losses
        1. Quota-Share Treaty
        2. Surplus-Share Treaty
        3. Excess-of-Loss Reinsurance
        4. Reinsurance Pool
      5. Alternatives to Traditional Reinsurance
        1. Securitization of Risk
        2. Catastrophe Bonds
    8. Investments
      1. Life Insurance Investments
      2. Property and Casualty Insurance Investments
    9. Other Insurance Company Functions
      1. Information Systems
      2. Accounting
      3. Legal Function
      4. Loss-Control Services
    10. Summary
    11. Key Concepts and Terms
    12. Review Questions
    13. Application Questions
    14. Internet Resources
    15. Selected References
    16. Notes
  11. CHAPTER7Financial Operations of Insurers
    1. Learning Objectives
    2. Property and Casualty Insurers
      1. Balance Sheet
        1. Assets
        2. Liabilities
        3. Policyholders’ Surplus
      2. Income and Expense Statement
        1. Revenues
        2. Expenses
      3. Measuring Profit or Loss
      4. Recent Underwriting Results
    3. Life Insurance Companies
      1. Balance Sheet
        1. Assets
        2. Liabilities
        3. Policyholders’ Surplus
      2. Income and Expense Statement
      3. Measuring Financial Performance
    4. Rate Making in Property and Casualty Insurance
      1. Objectives in Rate Making
        1. Regulatory Objectives
        2. Business Objectives
      2. Basic Rate-Making Definitions
      3. Rate-Making Methods
        1. Judgment Rating
        2. Class Rating
        3. Merit Rating
    5. Rate Making in Life Insurance
    6. Summary
    7. Key Concepts and Terms
    8. Review Questions
    9. Application Questions
    10. Internet Resources
    11. Selected References
    12. Notes
  12. Chapter8Government Regulation of Insurance
    1. Learning Objectives
    2. Reasons for Insurance regulation
      1. Maintain Insurer Solvency
      2. Compensate for Inadequate Consumer Knowledge
      3. Ensure Reasonable Rates
    3. Historical Development of Insurance Regulation
      1. Early Regulatory Efforts
      2. Paul v. Virginia
      3. South-Eastern Underwriters Association Case
      4. McCarran-Ferguson Act
      5. Financial Modernization Act of 1999
      6. Dodd-Frank Wall Street Reform and Consumer Protection Act
    4. Methods for Regulating Insurers
      1. Legislation
      2. Courts
      3. State Insurance Departments
    5. What Areas are Regulated?
      1. Formation and Licensing of Insurers
      2. Solvency Regulation
        1. Admitted Assets
        2. Reserves
        3. Surplus
        4. Risk-Based Capital
        5. Investments
        6. Dividend Policy
        7. Reports and Examinations
        8. Liquidation of Insurers
      3. Rate Regulation
        1. Prior-Approval Law
        2. Modified Prior-Approval Law
        3. File-and-Use Law
        4. Use-and-File Law
        5. Flex-Rating Law
        6. State-Made Rates
        7. No Filing Required
        8. Commercial Lines Deregulation
        9. Life Insurance Rate Regulation
      4. Policy Forms
      5. Sales Practices and Consumer Protection
        1. Licensing of Agents and Brokers
        2. Unfair Trade Practices
        3. Twisting
        4. Rebating
        5. Complaint Division
        6. Publications and Brochures
      6. Taxation of Insurers
    6. State Versus Federal Regulation
      1. Advantages of Federal Regulation
      2. Advantages of State Regulation
      3. Shortcomings of State Regulation
      4. Repeal of the McCarran-Ferguson Act
    7. Current Issues in Insurance Regulation
    8. Modernizing Insurance Regulation
      1. Dodd-Frank Act and Insurance Regulation
      2. Financial Stability Oversight Council (FSOC)
      3. Federal Insurance Office
      4. Recommendations for Modernization of Insurance Regulation
        1. Areas for Reform at the State Level
        2. Areas for Direct Federal Involvement in Insurance Regulation
      5. Optional Federal Charter
    9. Insolvency of Insurers
      1. Reasons for Insolvencies
      2. Solvency Modernization Initiative (SMI)
      3. Methods of Ensuring Solvency
    10. Market Conduct Regulation
    11. Summary
    12. Key Concepts and Terms
    13. Review Questions
    14. Application Questions
    15. Internet Resources
    16. Selected References
    17. Notes
  13. CHAPTER9Fundamental Legal Principles
    1. Learning Objectives
    2. Principle of Indemnity
      1. Actual Cash Value
        1. Replacement Cost Less Depreciation
        2. Fair Market Value
        3. Broad Evidence Rule
      2. Exceptions to the Principle of Indemnity
        1. Valued Policy
        2. Valued Policy Laws
        3. Replacement Cost Insurance
        4. Life Insurance
    3. Principle of Insurable Interest
      1. Purposes of an Insurable Interest
      2. Examples of an Insurable Interest
        1. Property and Casualty Insurance
        2. Life Insurance
      3. When Must an Insurable Interest Exist?
    4. Principle of Subrogation
      1. Purposes of Subrogation
      2. Exceptions to Subrogation
    5. Principle of Utmost Good Faith
      1. Representations
      2. Concealment
      3. Warranty
    6. Requirements of an Insurance Contract
      1. Offer and Acceptance
      2. Exchange of Consideration
      3. Competent Parties
      4. Legal Purpose
    7. Distinct Legal Characteristics of Insurance Contracts
      1. Aleatory Contract
      2. Unilateral Contract
      3. Conditional Contract
      4. Personal Contract
      5. Contract of Adhesion
    8. Law and the Insurance Agent
      1. Law of Agency
        1. No Presumption of an Agency Relationship
        2. Authority to Represent the Principal
        3. Principal Responsible for Acts of Agents
        4. Limitations on the Powers of Agents
      2. Waiver and Estoppel
    9. Summary
    10. Key Concepts and Terms
    11. Review Questions
    12. Application Questions
    13. Internet Resources
    14. Selected References
    15. Notes
  14. Chapter10Analysis of Insurance Contracts
    1. Learning Objectives
    2. Basic Parts of an Insurance Contract
      1. Declarations
      2. Definitions
      3. Insuring Agreement
      4. Exclusions
        1. Excluded Perils
        2. Excluded Losses
        3. Excluded Property
        4. Reasons for Exclusions
      5. Conditions
      6. Miscellaneous Provisions
    3. Definition of “Insured”
      1. Named Insured
      2. First Named Insured
      3. Other Insureds
      4. Additional Insureds
    4. Endorsements and Riders
    5. Deductibles
      1. Purposes of Deductibles
      2. Deductibles in Property Insurance
        1. Straight Deductible
        2. Aggregate Deductible
      3. Deductibles in Health Insurance
        1. Calendar-Year Deductible
        2. Elimination (Waiting) Period
    6. Coinsurance
      1. Nature of Coinsurance
      2. Purpose of Coinsurance
      3. Coinsurance Problems
    7. Coinsurance in Health insurance
    8. Other-Insurance Provisions
      1. Pro Rata Liability
      2. Contribution by Equal Shares
      3. Primary and Excess Insurance
    9. Summary
    10. Key Concepts and Terms
    11. Review Questions
    12. Application Questions
    13. Internet Resources
    14. Selected References
    15. Notes
  15. Chapter11Life Insurance
    1. Learning Objectives
    2. Premature Death
      1. Meaning of Premature Death
      2. Costs of Premature Death
      3. Declining Problem of Premature Death
      4. Economic Justification for Life Insurance
    3. Financial Impact of Premature Death On Different Types of Families
      1. Single People
      2. Single-Parent Families
      3. Two-Income Earners with Children
      4. Traditional Families
      5. Blended Families
      6. Sandwiched Families
    4. Amount of Life Insurance to Own
      1. Human Life Value Approach
      2. Needs Approach
        1. Estate Clearance Fund
        2. Income During the Readjustment Period
        3. Income During the Dependency Period
        4. Life Income to the Surviving Spouse
        5. Special Needs
        6. Retirement Needs
      3. Illustration of the Needs Approach
        1. Cash Needs
        2. Income Needs
        3. Special Needs
        4. Determining the Amount of New Life Insurance Needed
      4. Adequacy of Life Insurance for American Families
      5. Opportunity Cost of Buying Life Insurance
    5. Types Of Life Insurance
      1. Term Insurance
        1. Types of Term Insurance
        2. Uses of Term Insurance
        3. Limitations of Term Insurance
      2. Whole Life Insurance
        1. Ordinary Life Insurance
        2. Uses of Ordinary Life Insurance
        3. Limitations of Ordinary Life Insurance
        4. Limited-Payment Life Insurance
      3. Endowment Insurance
    6. Variations of Whole Life Insurance
      1. Variable Life Insurance
      2. Universal Life Insurance
        1. Separation of Component Parts
        2. Two Forms of Universal Life Insurance
        3. Considerable Flexibility
        4. Cash Withdrawals Permitted
        5. Favorable Income-Tax Treatment
        6. Universal Life Insurance Illustration
        7. Limitations of Universal Life
      3. Indexed Universal Life Insurance
      4. Variable Universal Life Insurance
        1. Selection of Investments by Policyholders
        2. No Minimum Interest Rate or Cash-Value Guarantees
        3. Relatively High Expense Charges
        4. Substantial Investment Risk
      5. Current Assumption Whole Life Insurance
        1. Common Features
        2. Low-Premium Design
        3. High-Premium Design
    7. Other Types Of Life insurance
      1. Modified Life Insurance
      2. Preferred Risks
      3. Joint Life Insurance
      4. Second-to-Die Life Insurance
      5. Savings Bank Life Insurance
      6. Home Service Life Insurance
      7. Group Life Insurance
    8. Summary
    9. Key Concepts and Terms
    10. Review Questions
    11. Application Questions
    12. Internet Resources
    13. Selected References
    14. Notes
  16. Chapter12Life Insurance Contractual Provisions
    1. Learning Objectives
    2. Life Insurance Contractual Provisions
      1. Ownership Clause
      2. Entire-Contract Clause
      3. Incontestable Clause
      4. Suicide Clause
      5. Grace Period
      6. Reinstatement Clause
      7. Misstatement of Age or Sex Clause
      8. Beneficiary Designation
        1. Primary and Contingent Beneficiary
        2. Revocable and Irrevocable Beneficiary
        3. Specific and Class Beneficiary
      9. Change-of-Plan Provision
      10. Exclusions and Limitations
      11. Payment of Premiums
      12. Assignment Clause
      13. Policy Loan Provision
        1. Advantages of Policy Loans
        2. Disadvantages of Policy Loans
      14. Automatic Premium Loan
    3. Dividend Options
      1. Cash
      2. Apply to Payment of Premiums
      3. Dividend Accumulations
      4. Paid-Up Additions
      5. Term Insurance (Fifth Dividend Option)
      6. Other Uses of Dividends
    4. Nonforfeiture Options
      1. Cash Value
      2. Reduced Paid-Up Insurance
      3. Extended Term Insurance
    5. Settlement Options
      1. Cash
      2. Interest Option
      3. Fixed-Period Option
      4. Fixed-Amount Option
      5. Life Income Options
        1. Life Income
        2. Life Income with Guaranteed Period
        3. Life Income with Guaranteed Total Amount
        4. Joint-and-Survivor Income
      6. Advantages of Settlement Options
      7. Disadvantages of Settlement Options
      8. Use of a Trust
    6. Additional Life Insurance Benefits
      1. Waiver-of-Premium Provision
      2. Term Insurance Riders
      3. Guaranteed Purchase Option
        1. Amount of Insurance
        2. Advance Purchase Privilege
        3. Other Considerations
      4. Accidental Death Benefit Rider
        1. Requirements for Collecting Benefits
      5. Cost-of-Living Rider
      6. Accelerated Death Benefits
      7. Viatical Settlement
      8. Life Settlement
      9. Stranger-Owned Life Insurance (STOLI)
    7. Summary
    8. Key Concepts and Terms
    9. Review Questions
    10. Application Questions
    11. Internet Resources
    12. Selected References
    13. Notes
  17. Chapter13Buying Life Insurance
    1. Learning Objectives
    2. Determining The Cost Of Life Insurance
      1. Traditional Net Cost Method
      2. Interest-Adjusted Cost Method
        1. Surrender Cost Index
        2. Net Payment Cost Index
      3. Using Interest-Adjusted Cost Data
      4. NAIC Policy Illustration Model Regulation
    3. Rate Of Return On Saving Component
      1. Linton Yield
      2. Yearly Rate-of-Return Method
    4. Taxation of Life Insurance
      1. Federal Income Tax
      2. Federal Estate Tax
    5. Shopping for Life Insurance
      1. Determine Whether You Need Life Insurance
      2. Estimate the Amount of Life Insurance You Need
      3. Decide on the Best Type of Life Insurance for You
      4. Decide Whether You Want a Policy That Pays Dividends
      5. Shop Around for a Low-Cost Policy
      6. Consider the Financial Strength of the Insurer
      7. Deal with a Competent Agent
    6. Summary
    7. Key Concepts And Terms
    8. Review Questions
    9. Application Questions
    10. Internet Resources
    11. Selected References
    12. Notes
    13. APPENDIXCalculation of Life Insurance Premiums
      1. Net Single Premium
        1. Term Insurance
          1. Yearly Renewable Term Insurance
          2. Five-Year Term Insurance
        2. Ordinary Life Insurance
      2. Net Annual Level Premium
        1. Term Insurance
        2. Ordinary Life Insurance
      3. Gross Premium
      4. Policy Reserves
        1. Purposes of the Reserve
        2. Definition of the Reserve
        3. Types of Reserves
          1. Key Concepts And Terms
          2. Notes
  18. Chapter14Annuities and Individual Retirement Accounts
    1. Learning Objectives
    2. Individual Annuities
      1. Annuity Principle
    3. Types of Annuities
      1. Fixed Immediate Annuity
      2. Fixed Deferred Annuity
      3. Joint Life Annuities
        1. Annuity Payout Options
        2. Partial Cash Withdrawal Rider
      4. Variable Annuity
        1. Basic Characteristics of a Variable Annuity
        2. Guaranteed Death Benefit
        3. Fees and Expenses
      5. Equity-Indexed Annuity
        1. Participation Rate
        2. Maximum Cap Rate or Cap
        3. Indexing Method
        4. Guaranteed Minimum Value
        5. Limitations of Equity-Indexed Annuities
      6. Longevity Annuity (Longevity Insurance)
    4. Taxation Of Individual Annuities
    5. Individual Retirement Accounts
      1. Traditional IRA
        1. Eligibility Requirements
        2. Annual Contribution Limits
        3. Income Tax Deduction of Traditional IRA Contributions
        4. Tax Penalty for Early Withdrawal
        5. Taxation of Distributions
        6. Establishing a Traditional IRA
        7. IRA Investments
        8. IRA Rollover Account
      2. Roth IRA
        1. Income Limits
        2. Conversion to a Roth IRA
    6. Adequacy of IRA Funds
    7. Summary
    8. Key Concepts and Terms
    9. Review Questions
    10. Application Questions
    11. Internet Resources
    12. Selected References
    13. Notes
  19. Chapter15Healthcare Reform: Individual Health Insurance Coverages
    1. Learning Objectives
    2. Defects in the Healthcare System in the United States
      1. Rising Health Care Expenditures
        1. Comparison with Foreign Countries
        2. Reasons for the Increase in Healthcare Expenditures
      2. Large Number of Uninsured Persons in the Population
      3. Reasons Why People Are Uninsured
      4. Waste and Inefficiency
      5. Harmful Insurer Practices
    3. Basic Provisions of the Affordable Care Act
      1. Prohibition of Harmful Insurer Practices
      2. Individual Mandate
      3. Essential Health Benefits
      4. Health Insurance Marketplace
      5. Advanced Premium Tax Credits
      6. Cost-Sharing Subsidies
      7. Employer-Shared Responsibility Requirements
      8. Small Business Healthcare Tax Credits
      9. Expansion of Medicaid
      10. Improving Quality and Lowering Costs
      11. Cost and Financing
    4. Individual Medical Expense Insurance
      1. No Lifetime Limits or Annual Limits
      2. Essential Health Benefits
      3. Calendar-Year Deductible
      4. Coinsurance
      5. Copayments
      6. Out-of-Pocket Maximum Limits
      7. Exclusions
    5. Individual Medical Expense Plans and Managed Care
    6. Health Savings Accounts
      1. Eligibility Requirements
      2. High-Deductible Health Plan
      3. Contribution Limits
      4. Favorable Income-Tax Treatment
      5. Rationale for HSAs
    7. Long-Term Care Insurance
      1. Chance of Entering a Nursing Home
      2. Basic Characteristics
        1. Types of Policies
        2. Covered Services
        3. Elimination Period
        4. Eligibility for Benefits
        5. Inflation Protection
        6. Guaranteed Renewable Policy
        7. Expensive Coverage
        8. Exclusions
        9. Nonforfeiture Benefits
        10. Taxation of Long-Term Care Insurance
      3. Long-Term Care Partnership Program
    8. Disability-Income Insurance
      1. Definitions of Total Disability
      2. Partial Disability
      3. Residual Disability
      4. Benefit Period
      5. Elimination Period
      6. Waiver of Premium
      7. Rehabilitation Provision
      8. Accidental Death, Dismemberment, and Loss-of-Sight Benefits
      9. Optional Disability-Income Benefits
    9. Individual Health Insurance Contractual Provisions
      1. Renewal Provisions
        1. Guaranteed Renewable
        2. Noncancelable
        3. Conditionally Renewable
        4. Nonrenewable
        5. Guaranteed Issue
      2. Uniform Individual Accident and Sickness Policy Provisions Act
    10. Summary
    11. Key Concepts and Terms
    12. Review Questions
    13. Application Questions
    14. Internet Resources
    15. Selected References
    16. Notes
  20. Chapter16Employee Benefits: Group Life and Health Insurance
    1. Learning Objectives
    2. Meaning of Employee Benefits
    3. Fundamentals of Group Insurance
      1. Differences between Group Insurance and Individual Insurance
      2. Basic Underwriting Principles
        1. Insurance Incidental to the Group
        2. Flow of Persons through the Group
        3. Automatic Determination of Benefits
        4. Minimum Participation Requirements
        5. Efficient Administration
      3. Eligibility Requirements in Group Insurance
        1. Eligible Groups
        2. Eligibility Requirements
    4. Group Life Insurance
    5. Group Medical Expense Insurance
      1. Commercial Insurers
      2. Blue Cross and Blue Shield Plans
      3. Managed Care Organizations
      4. Self-Insured Plans by Employers
    6. Managed Care Plans
      1. Health Maintenance Organizations (HMOs)
        1. Types of HMOs
      2. Preferred Provider Organizations (PPOs)
      3. Point-of-Service (POS) Plans
    7. Affordable Care act and Group Medical Expense Insurance
    8. Key Features of Group Medical Expense Insurance
    9. Consumer-Directed Health Plans
      1. High-Deductible Health Plans
      2. Health Reimbursement Arrangements
    10. Recent Developments in Employer-Sponsored Health Plans
    11. Group Medical Expense Contractual Provisions
      1. Coordination of Benefits
      2. Continuation of Group Health Insurance
      3. Preexisting Conditions
    12. Group Dental Insurance
      1. Benefits
      2. Calendar-Year Deductible
      3. Coinsurance
      4. Calendar-Year Maximum Benefits
      5. Noncovered Services
      6. Predetermination-of-Benefits Provision
    13. Group Disability-Income Insurance
      1. Short-Term Plans
      2. Long-Term Plans
    14. Cafeteria Plans
    15. Summary
    16. Key Concepts and Terms
    17. Review Questions
    18. Application Questions
    19. Internet Resources
    20. Selected References
    21. Notes
  21. Chapter17Employee Benefits: Retirement Plans
    1. Learning Objectives
    2. Fundamentals of Private Retirement Plans
      1. Favorable Income Tax Treatment
      2. Minimum Coverage Requirements
      3. Minimum Age and Service Requirements
      4. Retirement Ages
        1. Normal Retirement Age
        2. Early Retirement Age
        3. Deferred Retirement Age
      5. Vesting Provisions
        1. Defined-Benefit Plans
        2. Defined-Contributions Plans
      6. Early Distribution Penalty
      7. Minimum Distribution Requirements
      8. Integration with Social Security
    3. Types of Qualified Retirement Plans
    4. Defined-Benefit Plans
      1. Traditional Defined-Benefits Plans
      2. Limits on Benefits
      3. Defined-Benefit Formulas
      4. Pension Benefit Guaranty Corporation
      5. Advantages of Defined-Benefit Plans
      6. Disadvantages of Defined-Benefit Plans
      7. Cash-Balance Plans
    5. Defined-Contribution Plans
      1. Money Purchase Plan
      2. Limits on Contributions
    6. Section 401(K) Plan
      1. Annual Limit on Elective Deferrals
      2. Actual Deferral Percentage Test
      3. Limitations on Distributions
      4. Roth 401(k) Plan
      5. Individual 401(k) Retirement Plan
      6. Section 403(b) Plan
    7. Profit-Sharing Plans
    8. Retirement Plans for the Self-Employed (Keogh Plans)
    9. Simplified Employee Pension (SEP)
      1. Eligible Employees
      2. SEP Contribution Limits
    10. Simple IRA Plan
      1. Eligible Employees
      2. Employee Contributions
      3. Employer Contributions
    11. Saver’s Credit
    12. Funding Agency and Funding Instruments
      1. Trust-Fund Plan
      2. Separate Investment Account
      3. Guaranteed Investment Contract
    13. Problems and Issues in Tax-Deferred Retirement Plans
    14. Summary
    15. Key Concepts and Terms
    16. Review Questions
    17. Application Questions
    18. Internet Resources
    19. Selected References
    20. Notes
  22. Chapter18Social Insurance
    1. Learning Objectives
    2. Social Insurance
      1. Reasons for Social Insurance
      2. Basic Characteristics of Social Insurance
        1. Compulsory Programs
        2. Floor of Income
        3. Social Adequacy Rather Than Individual Equity
        4. Benefits Loosely Related to Earnings
        5. Benefits Prescribed by Law
        6. No Means Test
        7. Full Funding Unnecessary
        8. Financially Self-Supporting
    3. Old-Age, Survivors, and Disability Insurance
      1. Covered Occupations
      2. Determination of Insured Status
        1. Fully Insured
        2. Currently Insured
        3. Disability Insured
    4. Types of Benefits
      1. Retirement Benefits
        1. Full Retirement Age
        2. Early Retirement Age
        3. Monthly Retirement Benefits
        4. Retirement Benefit Amount
        5. Delayed Retirement
        6. Automatic Cost-of-Living Adjustment
        7. Earnings Test
      2. Survivor Benefits
      3. Disability Benefits
      4. Taxation of OASDI Benefits
      5. Financing Social Security Benefits
    5. Medicare
      1. The Original Medicare Plan
        1. Medicare Part A (Hospital Insurance)
        2. Payments to Hospitals
        3. Medicare Part B (Medical Insurance)
        4. Amount Paid by Part B
        5. Part B Monthly Premiums
        6. Financing of Medicare
      2. Medicare Advantage Plans
      3. Other Medicare Health Plans
      4. Medicare Prescription Drug Coverage
        1. Cost of Prescription Drug Coverage
        2. Financial Help for Low-Income Beneficiaries
      5. Medigap Insurance
    6. Problems and Issues
      1. Long-Range OASDI Actuarial Deficit
      2. Reducing the Long-Range Deficit
      3. Depletion of Disability Income Trust Fund
      4. Medicare Financial Crisis
    7. Unemployment Insurance
      1. Coverage
      2. Eligibility Requirements
      3. Unemployment Insurance Benefits
      4. Financing Unemployment Insurance Programs
      5. Problems and Issues
    8. Workers Compensation
      1. Development of Workers Compensation
      2. Objectives of Workers Compensation
      3. Complying with the Law
      4. Covered Occupations
      5. Eligibility Requirements
      6. Workers Compensation Benefits
        1. Unlimited Medical Care
        2. Disability Income
        3. Death Benefits
        4. Rehabilitation Services
      7. Problems and Issues
        1. Medical Marijuana and Workers Compensation
        2. Overuse of Opiate Prescription Drugs in Workers Compensation
        3. Impact of the Affordable Care Act on Workers Compensation
    9. Summary
    10. Key Concepts and Terms
    11. Review Questions
    12. Application Questions
    13. Internet Resources
    14. Selected References
    15. Notes
  23. Chapter19The Liability Risk
    1. Learning Objectives
    2. Basis of Legal Liability
      1. Intentional Torts
      2. Strict Liability
      3. Negligence
    3. Law of Negligence
      1. Elements of Negligence
        1. Existence of a Legal Duty
        2. Failure to Perform That Duty
        3. Damage or Injury
        4. Proximate Cause Relationship
      2. Defenses Against Negligence
        1. Contributory Negligence
        2. Comparative Negligence
        3. Last Clear Chance Rule
        4. Assumption of Risk
    4. Imputed Negligence
    5. res ipsa Loquitur
    6. Specific Applications of the Law of Negligence
      1. Property Owners
        1. Trespasser
        2. Licensee
        3. Invitee
      2. Attractive Nuisance Doctrine
      3. Owners and Operators of Automobiles
      4. Government Entities
      5. Charitable Institutions
      6. Employer and Employee Relationships
      7. Parents and Children
      8. Animals
    7. Current Tort Liability Problems
      1. Defective Tort Liability System
        1. Rising Tort Liability Costs
        2. Inefficiency in Compensating Injured ­Victims
        3. Uncertainty of Legal Outcomes
        4. High Jury Awards
        5. Long Delays in Settling Lawsuits
        6. Reforming the Tort Liability System
        7. Effectiveness of State Tort Reform Proposals
      2. Medical Sector Claims
        1. Medical Malpractice Tort Costs
        2. Medical Errors and Malpractice Costs
        3. Why Do Patients Sue Physicians?
        4. Reducing Medical Malpractice Costs
        5. Current Concerns
      3. Liability Arising from Technological and Societal Change
        1. Technology-Related Liability
          1. Cyberliability
          2. Hydraulic Fracturing
          3. Unmanned Aircraft Systems (Drones)
        2. Societal Change Liability
    8. Summary
    9. Key Concepts and Terms
    10. Review Questions
    11. Application Questions
    12. Internet Resources
    13. Selected References
    14. Notes
  24. Chapter20Auto Insurance
    1. Learning Objectives
    2. Overview of Personal Auto Policy
      1. Eligible Vehicles
      2. Your Covered Auto
        1. Any Vehicle Shown in the Declarations
        2. Newly Acquired Auto
        3. Trailer Owned by the Named Insured
        4. Temporary Substitute Vehicle
      3. Summary of PAP Coverages
    3. Part A: Liability Coverage
      1. Insuring Agreement
      2. Insured Persons
      3. Supplementary Payments
      4. Exclusions
      5. Limit of Liability
      6. Out-of-State Coverage
      7. Other Insurance
    4. Part B: Medical Payments Coverage
      1. Insuring Agreement
      2. Insured Persons
      3. Exclusions
      4. Other Insurance
    5. Part C: Uninsured Motorists Coverage
      1. Insuring Agreement
      2. Insured Persons
      3. Uninsured Vehicles
      4. Exclusions
      5. Other Insurance
      6. Underinsured Motorists Coverage
    6. Part D: Coverage for Damage to Your Auto
      1. Insuring Agreement
        1. Collision Loss
        2. Other-Than-Collision Loss
        3. Nonowned Auto
        4. Collision Damage Waiver on Rental Cars
        5. Deductible
      2. Transportation Expenses
      3. Exclusions
      4. Limit of Liability
        1. Betterment
        2. Diminution in Value
      5. Payment of Loss
      6. Other Sources of Recovery
      7. Appraisal Provision
    7. Part E: Duties After an Accident or Loss
    8. Part F: General Provisions
      1. Policy Period and Territory
      2. Termination
        1. Cancellation
        2. Nonrenewal
        3. Automatic Termination
        4. Other Termination Provisions
    9. Insuring Motorcycles and Other Vehicles
    10. Summary
    11. Key Concepts and Terms
    12. Review Questions
    13. Application Questions
    14. Internet Resources
    15. Selected References
    16. Notes
  25. Chapter21Auto Insurance (Continued)
    1. Learning Objectives
    2. Approaches for Compensating Auto Accident Victims
      1. Financial Responsibility Laws
      2. Compulsory Insurance Laws
      3. Unsatisfied Judgment Funds
      4. Uninsured Motorists Coverage
      5. Low-Cost Auto Insurance
      6. “No Pay, No Play” Laws
      7. No-Fault Auto Insurance
        1. Definition of No-Fault Insurance
        2. Basic Characteristics of No-Fault Plans
        3. Arguments for No-Fault Laws
        4. Arguments Against No-Fault Laws
        5. Evaluation of No-Fault Laws
    3. Auto Insurance for High- Risk Drivers
      1. Automobile Insurance Plan
      2. Joint Underwriting Association
      3. Reinsurance Facility
      4. Maryland Automobile Insurance
      5. Specialty Insurers
    4. Cost of Auto Insurance
      1. Territory
      2. Age, Gender, and Marital Status
      3. Use of the Auto
      4. Driver Education
      5. Good Student Discount
      6. Number and Types of Cars
      7. Individual Driving Record
      8. Insurance Score
    5. Shopping for Auto Insurance
      1. Carry Adequate Liability Insurance
      2. Carry Higher Deductibles
      3. Drop Collision Insurance on Older Vehicles
      4. Shop Around for Auto Insurance
      5. Take Advantage of Discounts
      6. Improve Your Driving Record
      7. Maintain Good Credit
    6. Summary
    7. Key Concepts and Terms
    8. Review Questions
    9. Application Questions
    10. Internet Resources
    11. Selected References
    12. Notes
  26. Chapter22Homeowners Insurance, Section I
    1. Learning Objectives
    2. Homeowners Insurance
      1. Eligible Dwellings
      2. Overview of Homeowners Policies
        1. Homeowners 2 (Broad Form)
        2. Homeowners 3 (Special Form)
        3. Homeowners 4 (Contents Broad Form)
        4. Homeowners 5 (Comprehensive Form)
        5. Homeowners 6 (Unit-Owners Form)
        6. Homeowners 8 (Modified Coverage Form)
    3. Analysis of Homeowners 3 Policy (Special Form)
      1. Persons Insured
    4. Section I Coverages
      1. Coverage A: Dwelling
      2. Coverage B: Other Structures
      3. Coverage C: Personal Property
        1. Special Limits of Liability
        2. Property Not Covered
      4. Coverage D: Loss of Use
        1. Additional Living Expense
        2. Fair Rental Value
        3. Prohibited Use
      5. Additional Coverages
        1. Debris Removal
        2. Reasonable Repairs
        3. Trees, Shrubs, and Other Plants
        4. Fire Department Service Charge
        5. Property Removal
        6. Credit Card, Electronic Fund Transfer Card or Access Device, Forgery, and Counterfeit Money
        7. Loss Assessment
        8. Collapse
        9. Glass or Safety Glazing Material
        10. Landlord’s Furnishings
        11. Ordinance or Law
        12. Grave Markers
    5. Section I Perils Insured Against
      1. Dwelling and Other Structures (Coverage A and B)
        1. Excluded Losses
      2. Personal Property
        1. Fire or Lightning
        2. Windstorm or Hail
        3. Explosion
        4. Riot or Civil Commotion
        5. Aircraft
        6. Vehicles
        7. Smoke
        8. Vandalism or Malicious Mischief
        9. Theft
        10. Falling Objects
        11. Weight of Ice, Snow, or Sleet
        12. Accidental Discharge or Overflow of Water or Steam
        13. Sudden and Accidental Tearing Apart, Cracking, Burning, or Bulging of a Steam, Hot Water, Air ­Conditioning, or Automatic Fire Protective Sprinkler System, or Appliance for Heating Water
        14. Freezing of a Plumbing, Heating, Air Conditioning, or Automatic Fire Protective Sprinkler System, or ­Household Appliance
        15. Sudden and Accidental Damage from Artificially Generated Electrical Current
        16. Volcanic Eruption
    6. Section I Exclusions
      1. Ordinance or Law
      2. Earth Movement
      3. Water Damage
      4. Power Failure
      5. Neglect
      6. War
      7. Nuclear Hazard
      8. Intentional Loss
      9. Governmental Action
      10. Weather Conditions
      11. Acts or Decisions
      12. Faulty, Inadequate, or Defective Planning and Design
    7. Section I Conditions
      1. Insurable Interest and Limit of Liability
      2. Deductible
      3. Duties After a Loss
      4. Loss Settlement
        1. Personal Property
        2. Dwelling and Other Structures
        3. Extended and Guaranteed Replacement Cost
      5. Loss to a Pair or Set
      6. Appraisal Clause
      7. Other Insurance and Service Agreements
      8. Suit Against the Insurer
      9. Insurer’s Option
      10. Loss Payment
      11. Abandonment of Property
      12. Mortgage Clause
      13. Policy Period
      14. Concealment or Fraud
    8. Section I and II Conditions
    9. Summary
    10. Key Concepts and Terms
    11. Review Questions
    12. Application Questions
    13. Internet Resources
    14. Selected References
    15. Notes
  27. Chapter23Homeowners Insurance, Section II
    1. Learning Objectives
    2. Personal Liability Insurance
      1. Insuring Agreements
        1. Coverage E: Personal Liability
        2. Coverage F: Medical Payments to Others
    3. Section II Exclusions
      1. Exclusions that Apply to Both Coverage E and Coverage F
        1. Motor Vehicle Liability
        2. Watercraft Liability
        3. Aircraft Liability
        4. Hovercraft Liability
        5. Expected or Intentional Injury
        6. Business Activities
        7. Professional Services
        8. Uninsured Locations
        9. War
        10. Communicable Disease Exclusion
        11. Sexual Molestation, Corporal Punishment, or Physical or Mental Abuse
        12. Controlled Substance Exclusion
      2. Exclusions that Apply Only to Coverage E
        1. Contractual Liability
        2. Property Owned by an Insured
        3. Property in the Care of an Insured
        4. Workers Compensation
        5. Nuclear Energy
        6. Bodily Injury to an Insured
      3. Exclusions that Apply Only to Coverage F
        1. Injury to a Residence Employee off an Insured Location
        2. Workers Compensation
        3. Nuclear Energy
        4. Persons Regularly Residing on the Insured Location
    4. Section II Additional Coverages
      1. Claim Expenses
      2. First-Aid Expenses
      3. Damage to Property of Others
      4. Loss Assessment
    5. Section II Conditions
      1. Limit of Liability
      2. Duties after an “Occurrence”
      3. Duties of an Injured Person under Coverage F
      4. No Suit against Insurer
      5. Other Insurance
      6. Concealment and Fraud
    6. Endorsements to a Homeowners Policy
      1. Inflation Guard Endorsement
      2. Earthquake Endorsement
      3. Personal Property Replacement Cost Loss Settlement Endorsement
      4. Scheduled Personal Property Endorsement (with Agreed Value Loss Settlement)
      5. Personal Injury Endorsement
      6. Watercraft Endorsement
      7. Home Business Insurance Coverage Endorsement
      8. Identity Theft Endorsement
    7. Cost of Homeowners Insurance
      1. Construction
      2. Location
      3. Fire-Protection Class
      4. Construction Costs
      5. Age of the Home
      6. Type of Policy
      7. Deductible Amount
      8. Insurance Score
      9. Loss History Report
      10. Suggestions for Buying a Homeowners Policy
        1. Carry Adequate Insurance
        2. Add Necessary Endorsements
        3. Shop Around for a Homeowners Policy
        4. Consider a Higher Property Insurance ­Deductible
        5. Take Advantage of Discounts
        6. Don’t Ignore Floods and Earthquakes
        7. Improve Your Credit Record
        8. Consider Purchasing a Personal Umbrella Policy
    8. Summary
    9. Key Concepts and Terms
    10. Review Questions
    11. Application Questions
    12. Internet Resources
    13. Selected References
    14. Notes
  28. Chapter24Other Property and Liability Insurance Coverages
    1. Learning Objectives
    2. ISO Dwelling Program
      1. Dwelling Property 1 (Basic Form)
      2. Dwelling Property 2 (Broad Form)
      3. Dwelling Property 3 (Special Form)
      4. Endorsements to the Dwelling Program
    3. Mobile Home Insurance
      1. Eligibility
      2. Mobile Home Coverages
    4. Inland Marine Floaters
      1. Basic Characteristics of Inland Marine Floaters
      2. Personal Articles Floater
      3. Scheduled Personal Property Endorsement
    5. Watercraft Insurance
      1. Boatowners Package Policy
        1. Physical Damage Coverage
        2. Liability Coverage
        3. Medical Expense Coverage
        4. Uninsured Boaters Coverage
      2. Yacht Insurance
        1. Property Damage
        2. Liability Coverage
        3. Medical Payments Coverage
        4. Uninsured Boaters Coverage
        5. Other Coverages
    6. Government Property Insurance Programs
      1. National Flood Insurance Program
        1. Eligibility Requirements
        2. Definition of Flood
        3. Amounts of Insurance
        4. Policy Forms
        5. Waiting Period
        6. Deductible
        7. Premiums
        8. Critical Problems and Issues
        9. Extension of the National Flood Insurance Program
        10. The Homeowner Flood Insurance Affordability Act of 2014
        11. FAIR Plans
    7. Title Insurance
    8. Personal Umbrella Policy
      1. Basic Characteristics
        1. Excess Liability Insurance
        2. Broad Coverage
        3. Self-Insured Retention
        4. Reasonable Cost
      2. ISO Personal Umbrella Policy
        1. Persons Insured
        2. Coverages
        3. Exclusions
    9. Summary
    10. Key Concepts and Terms
    11. Review Questions
    12. Application Questions
    13. Internet Resources
    14. Selected References
    15. Notes
  29. Chapter25Commercial Property Insurance
    1. Learning Objectives
    2. Commercial Package Policy
      1. Common Policy Declarations
      2. Common Policy Conditions
      3. Coverage Forms
    3. Building and Personal Property Coverage Form
      1. Covered Property
        1. Building
        2. Business Personal Property
        3. Personal Property of Others
        4. Additional Coverages
        5. Extensions of Coverage
      2. Other Provisions
        1. Deductible
        2. Coinsurance
        3. Optional Coverages
    4. Causes-of-Loss Forms
      1. Causes-of-Loss Basic Form
      2. Causes-of-Loss Broad Form
      3. Causes-of-Loss Special Form
    5. Endorsements
    6. Reporting Forms
    7. Business Income Insurance
      1. Business Income (and Extra Expense) Coverage Form
        1. Loss of Business Income
        2. Extra Expenses
        3. Additional Coverages
        4. Coinsurance
        5. Optional Coverages
      2. Extra Expense Coverage Form
      3. Business Income from Dependent Properties
    8. Other Commercial Property Coverages
      1. Builders Risk Insurance
      2. Condominium Association Coverage Form
      3. Condominium Commercial Unit-Owners Coverage Form
      4. Equipment Breakdown Insurance
        1. Covered Cause of Loss
        2. Coverages Provided
      5. Difference in Conditions Insurance
      6. Terrorism Insurance
    9. Transportation Insurance
      1. Ocean Marine Insurance
      2. Basic Concepts in Ocean Marine Insurance
        1. Implied Warranties
        2. Covered Perils
        3. Particular Average
        4. General Average
      3. Inland Marine Insurance
      4. Nationwide Marine Definition
      5. Major Classes of Inland Marine Insurance
        1. Domestic Goods in Transit
        2. Property Held by Bailees
        3. Mobile Equipment and Property
        4. Property of Certain Dealers
        5. Instrumentalities of Transportation and Communication
      6. ISO Inland Marine Forms
      7. Other Inland Marine Forms
        1. Shipment of Goods
        2. Bailee Forms
        3. Business Floaters
        4. Instrumentalities of Transportation and Communication
    10. Businessowners Policy (BOP)
      1. Eligible Business Firms
      2. BOP Coverages
    11. Summary
    12. Key Concepts and Terms
    13. Review Questions
    14. Application Questions
    15. Internet Resources
    16. Selected References
    17. Notes
  30. Chapter26Commercial Liability Insurance
    1. Learning Objectives
    2. General Liability Loss Exposures
      1. Premises and Operations Liability
      2. Products Liability
      3. Completed Operations Liability
      4. Contractual Liability
      5. Contingent Liability
      6. Other Liability Loss Exposures
    3. Commercial General Liability Policy
      1. Overview of the CGL Occurrence Policy
      2. Section I—Coverages
        1. Coverage A: Bodily Injury and Property Damage Liability
        2. Defense Costs
        3. Exclusions
        4. Fire Legal Liability Coverage
        5. Coverage B: Personal and Advertising Injury Liability
        6. Coverage C: Medical Payments
        7. Supplementary Payments: Coverages A and B
      3. Section II——Who is an Insured?
      4. Section III——Limits of Insurance
      5. Section IV——Commercial General Liability Conditions
      6. Section V—Definitions
      7. Overview of the CGL Claims-Made Policy
        1. Meaning of “Claims-Made”
        2. Rationale for Claims-Made Policies
        3. Retroactive Date
        4. Extended Reporting Periods
    4. Employment-Related Practices Liability Insurance
      1. Insuring Agreement
      2. Legal Defense
      3. Exclusions
    5. Workers Compensation Insurance
      1. Part One: Workers Compensation Insurance
      2. Part Two: Employers Liability Insurance
      3. Part Three: Other-States Insurance
    6. Commercial Auto Insurance
      1. Business Auto Coverage Form
        1. Liability Insurance Coverage
        2. Physical Damage Coverage
      2. Auto Dealers Coverage Form
        1. Covered Autos Coverages
        2. General Liability Insurance Coverages
        3. Acts, Errors or Omissions Liability Coverages
    7. Aircraft Insurance
      1. Aircraft Insurers
      2. Aircraft Insurance for Private Business and Pleasure Aircraft
        1. Physical Damage Coverages
        2. Liability Coverages
        3. Medical Expense Coverage
    8. Commercial Umbrella Policy
      1. Coverages
      2. Required Underlying Coverages
      3. Exclusions
    9. Cyber Liability Insurance
    10. Businessowners Policy
      1. Business Liability
      2. Medical Expenses
      3. Legal Defense
      4. Exclusions
    11. Professional Liability Insurance
      1. Physicians Professional Liability Insurance
      2. Errors and Omissions Insurance
    12. Directors and Officers Liability Insurance
    13. Summary
    14. Key Concepts and Terms
    15. Review Questions
    16. Application Questions
    17. Internet Resources
    18. Selected References
    19. Notes
  31. Chapter27Crime Insurance and Surety Bonds
    1. Learning Objectives
    2. The Iso Commercial Crime Insurance Program
    3. Commercial Crime Coverage Form (Loss-Sustained Form)
      1. Basic Definitions
      2. Insuring Agreements
        1. Employee Theft
        2. Forgery or Alteration
        3. Inside the Premises—Theft of Money and Securities
        4. Inside the Premises—Robbery or Safe Burglary of Other Property
        5. Outside the Premises
        6. Computer and Funds Transfer Fraud
        7. Money Orders and Counterfeit Paper Currency
      3. Exclusions
      4. Policy Conditions
        1. Discovery Form
        2. Loss-Sustained Form
        3. Loss Sustained during Prior Insurance Not Issued by Us or Any Affiliate
        4. Termination as to Any Employee
    4. Financial Institution Bonds
      1. Fidelity Coverage
      2. On Premises Coverage
      3. In-Transit Coverage
      4. Forgery or Alteration Coverage
      5. Securities Coverage
      6. Counterfeit Currency
      7. Fraudulent Mortgages
    5. Surety Bonds
      1. Parties to a Surety Bond
      2. Comparison of Surety Bonds and Insurance
      3. Types of Surety Bonds
        1. Contract Bonds
        2. License and Permit Bonds
        3. Public Official Bonds
        4. Judicial Bonds
        5. Miscellaneous Surety Bonds
    6. Summary
    7. Key Concepts and Terms
    8. Review Questions
    9. Application Questions
    10. Internet Resources
    11. Selected References
    12. Notes
  32. AppendixAPersonal Auto PolicyPersonal Auto Policy
  33. AppendixBHomeowners 3 (Special Form)
  34. Glossary
  35. Index
    1. A
    2. B
    3. C
    4. D
    5. E
    6. F
    7. G
    8. H
    9. I
    10. J
    11. K
    12. L
    13. M
    14. N
    15. O
    16. P
    17. Q
    18. R
    19. S
    20. T
    21. U
    22. V
    23. W
    24. Y