Ch. 3 Property Insurance Basics Flashcards
A fire that burns outside of its intended boundaries or becomes uncontrollable
Hostile Fire
Fire that was intentionally set and that stays within its intended boundaries
Friendly Fire
Any act of stealing, including burglary and robbery
Theft
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
Burglary
The taking of property from the care and custody of a person who has been threatened with bodily harm or has been harmed
Robbery
Sometimes property goes missing and the cause of loss is not known
Mysterious Disappearance
A property that contains personal property, but has no occupants
Unoccupied
A property that contains no personal property and has no occupants
Vacancy
A person or organization that has taken the property of another into their care, custody, or control for servicing, repair, or storage
Bailee
The person who retains the ownership of the property that has been taken into a bailee’s care, custody, or control
Bailor
Loss from the immediate result of a peril
Direct Loss
A consequence of a direct physical loss
Indirect Loss
The primary cause of loss is known as…
Proximate Cause
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
Concurrent Causation
A quality within a property that causes it to damage or destroy itself
Inherent Vice
A type of coverage that only provides insurance for the causes of loss that are listed in the policy
Named Perils
Provides insurance for all causes of loss that are not specifically excluded under the policy
Open Perils
The policy will pay for the cost to repair or replace the damaged property at the time of loss, minus depreciation
Actual Cash Value (ACV)
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
Replacement Cost
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
Functional Replacement Cost
The value stated by an insured
Stated Value
The value of an item agreed upon by both the insurer and the insured
Agreed Value
The price a willing buyer would pay for property purchased from a willing seller under fair market conditions
Market Value
The amount for which property can be sold at the end of its useful life is…
Salvage Value
One limit of liability for multiple types of property at the same location or the same type of property at multiple locations
Blanket Limit
One specific limit of liability for one specific type of property
Specific Limit
The amount the insured is responsible for before the insurer pays on a loss
Deductible
Exists to make sure that a property is insured close to its value
Coinsurance
Coinsurance only applies to…
Partial losses
