CH2 - The Evolution of Property Policies Flashcards
What are the five elements any agreement must have to be a legal contract?
1) an agreement
2) between legally capable parties
3) for a consideration
4) demonstrating intent
5) to do something that is legal
What must a loss be?
Fortuitous - a chance event
A _________ policy builds on a “standard” policy that includes the insuring agreement, all normal exclusions and limitations, and the Statutory Conditions. What kind of policy is this?
A specific policy.
Generally, there is a declarations page at the front, with pages added to complete the policy. This type of policy is the sum of several parts. What kind of policy is this?
A modular policy.
What is indirect loss? And what is an example?
Indirect loss arises from direct loss and encompasses other loss suffered as a consequence of damage to physical property, such as lost income or revenue or additional costs/expenses to deal with the loss.
What is the insuring agreement?
The insuring agreement describes the undertaking between the insurer and the insured. “In consideration of the insured paying the premium, the insurer agrees to indemnify the insured.”
The Basic Fire Policy gives effect to the principle of indemnity by paying to the insured the least of:
- the actual cash value of the damaged property at the time of loss
- the interest of the insured in the property
- the amount of insurance
What is the purpose and general characteristics of exclusions?
Exclusions remove certain losses from the policy, which may relate to specific circumstances, causes of an insured peril, or may relate to specific property. Exclusions can be temporary or permanent, and may exclude parts of coverage of render entire policy inoperative.
What is a limited exclusion and what is an example?
A limited exclusion may show that there is some coverage in certain cases. Example: property of others is excluded while being worked on, but there would be covered while the property is waiting for work to begin.
What is excluded under the Nuclear Incident Exclusion?
Both direct and indirect loss are excluded, except for ensuing loss directly from fire, lightning, or explosion (coal, manufactured, natural gas). Contamination by radioactive material is also excluded.
What is excluded under the Alterations and Additions Exclusion?
Loss to a building or its contents during and resulting from alterations or additions to the building is excluded unless written permission has been granted. Normal repairs are allowed without permission.
What are some examples of excluded property?
Money, books of account, securities for money, evidences of debt or title, automobiles, tractors, aircraft, watercraft are excluded.
What is the Vacancy, Unoccupancy, Disuse Exclusion?
Loss or damage to the building or insured property is excluded while the insured knows it to be vacant or unoccupied for more than 30 consecutive days, or if operations has ceased for more than 30 consecutive days.
What is the Volatile Substances Exclusion?
Loss is excluded while the insured knows there are certain volatile substances in the insured building. The exclusion applies to amounts over a gallon (in addition to that of tanks in vehicles).
What is the flashpoint of a liquid?
The flashpoint of a liquid is the lowest temperature at which the liquid gives off enough vapours to become ignitable with a flame or spark.
