2A Flashcards
Declarations
personalize the property to the insured. lists: the insured, property covered, coverage limits, policy period and territory
Named Insured
individuals or entities
First Named Insured
individual authorized on behalf of the Named Insured
Additional Insured
lender or additional family members, etc
Real property
buildings and structures
Personal property
contents and other property
Coverage Limit
policy limit or limit of insurance or limit of liability
Policy Period begin and end at 12:01am
to prevent gaps in coverage
Insuring Agreement
addresses the coverages provided and perils insured against
Policy Coverages
Basic, Additional, Extensions and Optional
Basic Coverages
coverage for direct loss of property. (ie the dwelling and its contents)
Additional Coverages
for specified exposures (ie debris removal) w/o additional premium charge
Coverage Extensions
- may override a general exclusion providing limited coverage for specified types of property
- may extend coverage to a newly acquired premises
Optional Coverages
added by endorsement and additional premium applies (ie. earthquake coverage)
Endorsement
changes the policy in some way. needs to be accepted by insurer, signed by exec officer and attached to policy
Named Peril
lists the specific perils that it will cover
Named Peril Examples
riot and civil commotion, volcanic eruption, explosion, smoke and theft
Open Peril
covers everything not excluded from coverage review of exclusions is as important than reviewing what is covered
Friendly Fire
burns where it is intended to burn, not insurable
Hostile Fire
burnes but where it is not intended to burn, covered cause of loss
Direct Damage Example
smoke from a fire, eligible for coverage
Direct Loss
occurs directly through an unbroken chain of events as a result of an insured peril (ie. property loss due to fire)
Indirect Loss
involves loss of use (ie loss of income during restoration)
Proximate Casue
action that produces the loss (lightning strikes a tree which falls on home)
Common Exclusions
- non accidental losses: wear and tear
- extra hazardous perils earthquake, flood & war
- loss controlled by insured: intentional
- property covered by other insurance
Conditions
rights and duties of insurer and insured
Legal Actions Provisions in Property
insured can’t bring legal action against the insurer unless they are in compliance w policy conditions
Deductible
a form of risk retention or self-insurance: used to avoid minor claims
Replacement Cost
amount of settlement needed to replace damaged property with one of like kind. “new for old”
Actual Cash Value
Replacement Cost - Depreciation
Coinsurance
condition applies to replacement cost contracts. requires insured to carry insurance at a stated percentage of the full replacement cost (generally 80%) to receive ful replacement
Functional Replacement Cost
damaged property is repaired using common construction methods. (ie used on older homes)
Market Value Replacement
minimum amount an insured would be reimbursed in the event of damage (ie. agricultural products, commodities)
If claim hasn’t been made w/in a specific period under Functional Replacement
settled at the LESSER of the limit, cost to replace with like materials or the market value at the time of loss
Agreed Value
coverage for hard to value items. not going to change. need appraisal with annual updates
Stated Amount
based on what insured states value to be
Loss to Pair or Set
insurer has option to replace or repair any part to restore pair/set to its value b4 loss
Pro Rata Settlement
each policy pays proportionately based on amount of insurance coverage compared to the total amount of insurance carried
Concurrent
each policy pays proportionate share
Nonconcurrent
if one policy doesn’t cover loss, the other is limited to their pro-rata amount
Loss Payment
written notice in 30 days and losses payable in 60 days
Primary vs. excess
primary is exhausted before excess is paid
Vacancy
unfurnished building not being used as a dwelling or for a business
Unoccupancy
furnished building but not used as a dwelling or for business
Vacant building for 60 days
theft, vandalism and glass breakage will not be covered
Right of Salvage
when an insurance co replaces damaged property, they have a right to the damaged property.
Abandonment
insured cannot abandon property to insurer. it is insurer’s option to repair, replace or pay for damaged property
Subrogation
“transfer of right of recover”: right of the insurer to take legal action against a third party responsible.
Appriasal
either party may demand one. each party pays own appraiser and shares cost of umpire
Arbitration
used for disagreement not involving value of loss
Insurer cancellation
pro rata return premium
Insured cancellation
short rate return premium
Assignment
insured cannot assign the policy to another person w/o insurer’s written consent
