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26 Cards in this Set
- Front
- Back
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Define personal property insurance? |
Refers to insurance policies provided for property having a personal or non-business use |
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Define commercial property |
Refers to insurance policies provided for property having business use. |
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What’s the main difference between “named perils” policies and broader “all risks” policies? |
Named “peril policies” name the perils they cover. “All risk policies” insure against all risks of direct physical loss or damage subject to policy exclusions. |
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What types of property are insured by policies of personal property insurance? |
- dwelling building - detached private structures - personal property |
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What types of property are insured by policies of commercial property insurance? |
- Building - Stock - Equipment |
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What is Direct damage and give an example. |
When the object of insurance is damaged or destroyed by an insured peril. When a fire occurs, Water damage to other parts of building which were hosed down by firefighters in order to prevent spread of fire. |
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What is Indirect damage and give an example. |
These are losses which arise as a consequence of direct losses. Ex. Loss of food in a freezer when the electrical motor is damaged due to lightning strike. Loss of rental income from and apartment building after a major fire. Loss of profit to the business after a tornado destroyed the building. |
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What are the two types of conditions in insurance policies? |
Statutory conditions and policy conditions |
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What is statutory condition? and an example of. |
These conditions are established in statute and are legally binding on all parties to the contract. - all property policies insuring the peril of fire. - accident and sickness insurance. - automobile insurance |
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What is a policy condition? and an example of. |
Policy conditions are common to property and if her insurance policies. They are specifically developed by insurers s to deal with important coverage areas. The Butlers furniture store is equipped with a sprinkler system and a burglar alarm. The policy issued by the fortress insurance company contains a policy condition requiring that the butlers notify it immediately when any known defects exist. |
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Define warranty |
A warranty is a promise by insureds that certain facts are truly as they are represented to be and that they will remain so. |
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Which “conditions” or “warranties” can result in a denial of coverage, regardless of whether the breach was directly linked to the cause of loss? |
Warranties require exact compliance. A breach of warranty entitles insurer to deny coverage, regardless of whether the breach was directly linked to the cause of loss. |
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What are two reasons why insurance policies contain exclusions? |
- when items can represent a greater than normal potential for loss and are more properly insured by other policy forms.
- the potential for catastrophic losses is of concern to all insurers, such as war which can jeopardize the solvency of insurers. No coverage for rust, corrosion or wear and tear |
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Define deductible |
The specific dollar amount or percentage of the insured value to be borne by the insured before a loss can be recovered from the insurer. |
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Explain how claims are settled when there is a loss to one item of a pair or set |
Loss or damage to one item of a pair or set does not constitute loss or damage to the entire pair or set. The item not lost continues to have value and this amount will be deducted from the amount of the claim payment. |
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Explain how claims are settled when there is a loss to one part of property which consists of several parts. |
When there is loss to only one part of property which consists of several parts, the basis settlement shall be the value of the lost or damaged part, including cost of installation. |
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What are the three criteria considered by the adjuster in determining the amount of loss? |
1. The actual cash value of the property at time of loss or damage. 2. The interest of the insured in the property. 3. The amount of insurance specified on the “declarations page” in respect to the property lost or damaged. (Limit of insurance) |
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What is the basis of the offer made to the insured by the adjuster? |
When an amount been arrived at for each, The insured will be offered a settlement based on the least of those amounts. |
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What are four factors used to determine the amount of depreciation when insured property is lost or damaged. |
1. Condition of items 2. Obsolescence 3. Resale value 4. Normal life expectancy |
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When “replacement cost” coverage is being claimed for building losses, what are three provisions relating to replacement cost coverage? |
1. Replacement shall be effected by the insured with due diligence and dispatch. 2. Replacement shall be on the same site or and adjacent site. 3. Settlement on a replacement cost basis shall be made only when replacement has actually be effected. |
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When “replacement cost” coverage is being claimed for building losses, what is the basis settlement when all of the provisions are not met? |
When provisions are not met it will be reverted to an actual cash value basis |
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Define replacement cost |
The cost of replacing, repairing, constructing or reconstructing (whichever is least) the property on the same site with new property of like kind and quality and for like occupancy without deduction or depreciation. |
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Explain the basis of settlement under a “valued” policy |
When insureds have property which cannot be replaced, such as original art, family jewelry, furs, antiques and memorabilia, the insurer may agree to provide coverage on a valued basis. Normally valuation by a qualified appraiser is necessary. |
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Who can be a mortgagee? |
A mortgagee is anyone having an insurable interest in the property insured. It can include a bank, trust company, credit union, individual or group of people. |
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What are two guarantees provided to mortgagees by the standard mortgage clause. |
1. Guarantee of payment when insured breaches any policy conditions. 2. Guarantee that the insurer will not reduce coverages to the prejudice of the mortgagee nor terminate the policy without providing it with the same notice required by law to be given to the insured. |
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What are two important provisions to be followed by the insurer when making settlement on a replacement cost basis. |
- insurer responsible for cost of new materials of like kind and quality. - insurers shall not make any deductions for depreciation. |
