Ch. 3 Property Insurance Basics

Question 1

A fire that burns outside of its intended boundaries or becomes uncontrollable

Answer 1

Hostile Fire

Question 2

Fire that was intentionally set and that stays within its intended boundaries

Answer 2

Friendly Fire

Question 3

Any act of stealing, including burglary and robbery

Answer 3

Theft

Question 4

The taking of property from inside the premises, a locked safe, or a locked vault by a person who forcibly enters or exits the property

Answer 4

Burglary

Question 5

The taking of property from the care and custody of a person who has been threatened with bodily harm or has been harmed

Answer 5

Robbery

Question 6

Sometimes property goes missing and the cause of loss is not known

Answer 6

Mysterious Disappearance

Question 7

A property that contains personal property, but has no occupants

Answer 7

Unoccupied

Question 8

A property that contains no personal property and has no occupants

Answer 8

Vacancy

Question 9

A person or organization that has taken the property of another into their care, custody, or control for servicing, repair, or storage

Answer 9

Bailee

Question 10

The person who retains the ownership of the property that has been taken into a bailee’s care, custody, or control

Answer 10

Bailor

Question 11

Loss from the immediate result of a peril

Answer 11

Direct Loss

Question 12

A consequence of a direct physical loss

Answer 12

Indirect Loss

Question 13

The primary cause of loss is known as…

Answer 13

Proximate Cause

Question 14

When two perils simultaneously cause a loss (in other words, both perils are the proximate cause), the insurer must pay for the loss even if one of the perils is excluded by the policy

Answer 14

Concurrent Causation

Question 15

A quality within a property that causes it to damage or destroy itself

Answer 15

Inherent Vice

Question 16

A type of coverage that only provides insurance for the causes of loss that are listed in the policy

Answer 16

Named Perils

Question 17

Provides insurance for all causes of loss that are not specifically excluded under the policy

Answer 17

Open Perils

Question 18

The policy will pay for the cost to repair or replace the damaged property at the time of loss, minus depreciation

Answer 18

Actual Cash Value (ACV)

Question 19

The full cost to repair damaged property or replace damaged property with property of like kind and quality, at current pricing, without a deduction for depreciation

Answer 19

Replacement Cost

Question 20

Some properties, like older dwellings or Victorian homes, use outmoded or obsolete materials and construction techniques that would make replacing them in their original condition too cost-prohibitive

Answer 20

Functional Replacement Cost

Question 21

The value stated by an insured

Answer 21

Stated Value

Question 22

The value of an item agreed upon by both the insurer and the insured

Answer 22

Agreed Value

Question 23

The price a willing buyer would pay for property purchased from a willing seller under fair market conditions

Answer 23

Market Value

Question 24

The amount for which property can be sold at the end of its useful life is…

Answer 24

Salvage Value

Question 25

One limit of liability for multiple types of property at the same location or the same type of property at multiple locations

Answer 25

Blanket Limit

Question 26

One specific limit of liability for one specific type of property

Answer 26

Specific Limit

Question 27

The amount the insured is responsible for before the insurer pays on a loss

Answer 27

Deductible

Question 28

Exists to make sure that a property is insured close to its value

Answer 28

Coinsurance

Question 29

Coinsurance only applies to…

Answer 29

Partial losses