7. Property Insurance Basics Flashcards
2 types of insurable Property
- Real Property
- Personal Property
Real Property
land and the buildings and other items attached to it
Personal Property
Any tangible Item other than real property
The biggest factor is determining real property’s value is….
how its constructed
4 basic types of construction and their sub types
- Frame
- Masonry Veneer
- Masonry
- Superior
- noncombustible
- masonry noncombustible
- fire resistive
Frame
A home with interior and exterior walls made of combustible material such as wood, stuccco plaster, and aluminum or plastic siding
Masonry Veneer
combustible frame and interior walls and an outside veneer of brick or stone.
Masonry
Walls supporting the house are constructed of masonry materials. Floors and roof are generally made of combustible material.
Noncombustable
The exterior walls, floors, and roof are constructed of, and supported by, metal, cement, or other noncombustible materials.
Masonry Noncombustible
The exterior walls are constructed of masonry materials, and the floors and roof are constructed of metal or other noncombustible products.
Fire Resistive
The exterior walls, floors, and roof are constructed of other fire-resistive materials, such as steel.
Insurable Interest —
A Policy owners financial interest in the person/property that is being insured.
Direct Loss —
Loss that is the Direct Result of a covered peril
Indirect Loss —
Losses that are a consequence of a direct loss.
Consequential Loss —
losses related to equipment failure
Replacement Cost —
Benefits paid are based on the cost to replace damaged/destroyed property
Replacement Cost is Commonly Used for:
Valuing houses and commercial buildings
Functional Replacement Cost —
the amount it would cost to repair or replace a damaged building with common (and less costly) construction materials and methods that are functionally equivalent
Functional Replacement Cost is Commonly Used for:
Valuing older buildings that have components that are no longer found in modern buildings
Actual Cash Value (ACV) —
replacement cost minus physical depreciation
Actual Cash Value (ACV) is Commonly Used for:
Valuing household contents and other personal property
Broad Evidence Rule —
An Alternative to ACV where the insurance company, appraiser, or adjuster examines every standard of value bearing on the property under consideration,
Market Value —
The amount that the property could be sold for in the current market.
Market Value is Commonly Used for
establishing the value of cars and other personal property
