Chapter 2 Property Basics

Question 1

A sudden, unforeseen, unintended, and unplanned event from which loss or damage results.

Answer 1

Accident

Question 2

An accident includes continuous or repeated exposure to the same general harmful conditions.

Answer 2

Occurrence

Question 3

The termination of an insurance policy before its expiration date. Once cancelled, a policy provides no coverage. A policy may be cancelled by the insured or insurer.

Answer 3

Cancellation

Question 4

A proportionate cancellation of insurance that refunds premium to the insured based on the precise number of days coverage was in effect

Answer 4

Pro Rata (rate) Cancellation

Question 5

A cancellation of insurance that incurs a financial penalty

Answer 5

Short Rate Cancellation

Question 6

A cancellation of insurance that is retroactive to the effective date of the policy. No coverage is provided and the insurer must refund the policy premium paid by the insured.

Answer 6

Flat Cancellation

Question 7

The termination of a policy at the expiration of its term

Answer 7

Nonrenewal

Question 8

Proximate Cause -
If more than two perils caused or contributed to the loss, the proximate cause is the peril having the most significant impact in generating the loss or damage.

Answer 8

The primary cause of loss.

Question 9

A legal agreement issued by an insurance company or a producer that provides temporary proof of insurance until the insurer is able to issue an insurance policy is known as what?

Answer 9

Binder -

Binders contain the name of the insurer, the amount and type of insurance, and the perils insured against.

Question 10

the insurer has the ability to take possession of damaged property after paying for its loss. What is this known as ?

Answer 10

Right of Salvage

Question 11

if an auto policy and an umbrella policy are written with the same policy dates, they are considered to be what kind of policies?

Answer 11

Concurrency/Concurrent Policies

Question 12

What are the responsibilities of a bailee?

Answer 12

A person or any organization to which property has been entrusted, usually for repairs, servicing or storage.

Question 13

There are 2 types of property losses. What are they and how are they defined?

Answer 13

Direct Loss – A loss that causes direct damage to property without an intervening cause.
Indirect Loss or Consequential Loss – A loss that is not the direct result of a peril.

Question 14

What calculation is used to determine the actual cash value (ACV) of a loss?

Answer 14

Replacement cost – depreciation = ACV

Question 15

What does D.I.C.E. stand for?

Answer 15

1. Declarations
2. Insuring Agreement
3. Conditions
4. Exclusions

Question 16

The Declarations Page describes basic information about the policy. there are 5 things. Can you name and explain?

Answer 16

Who – 
What – 
Where –  
When – 
How Much –

Question 17

The insurance company’s promise to pay the insured is known as what?

Answer 17

Insuring Agreement

Question 18

The insureds duties and obligations are spelled out in what section of the policy structure?

Answer 18

Conditions -
The conditions section states the obligations of the parties to the contract, as well as any other conditions of coverage.

Question 19

name as many common property exclusions as you can?

Answer 19

Ordinance or Law
Earth movement
War
Water Perils that are NOT covered by the policy are listed in the exclusions section.
Utility failure that originates off-premises
Neglect of the insured to protect covered property from further loss
Intentional loss
Nuclear hazard, war, and military action
Governmental action
Fungus, wet rot, dry rot, and bacteria (e.g., mold)

Question 20

Coinsurance covers total loss? T or F

Answer 20

False - Coinsurance applies only in the event of a partial loss, as total losses typically are paid in accordance with the Valued Policy Law.

Question 21

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

Answer 21

Robbery

Question 22

A buildings that does not contain sufficient personal property to support intended occupancy or use?

Answer 22

Vacancy

Question 23

The unlawful taking of property from inside a premises by a person who commits forcible entry into, or exit from, that premises?

Answer 23

Burglary

Question 24

The unlawful taking of property and includes any act of stealing?

Answer 24

Theft

Question 25

The loss of property when the cause of loss is not known?

Answer 25

Mysterious Disappearance

Question 26

Replacement cost minus depreciation determines what value?

Answer 26

ACV Actual Cash Value

Question 27

Insures a single item of property for a single limit of insurance. What property insurance limit is this?

Answer 27

Specific Limit

Question 28

DICE is an acronym that is used to describe the structure of what?

Answer 28

standard insurance property policy