Chapter 2 Property Basics

Question 1

Occurrence

Answer 1

an accident and includes continuous or repeated exposure to the same general harmful conditions

Question 2

Proximate Cause

Answer 2

primary cause of a loss

Question 3

Friendly Fire

Answer 3

stays within its intended boundaries

Question 4

Replacement Value

Answer 4

cost to replace it with property of like kind and quality, at current pricing, without a deduction for depreciation

Question 5

Actual Cash Value

Answer 5

replacement value of property minus depreciation

Question 6

Valued Policy

Answer 6

requires the insurance company pay the total scheduled limit of insurance for a total loss

Question 7

Specific Limit

Answer 7

insures a single item on a single policy for a single limit of insurance

Question 8

Scheduled Limit

Answer 8

insures one or more items on a single policy and each item is insured at a scheduled limit of insurance

Question 9

Blanket Limit

Answer 9

insures multiple items of property on a single policy with one limit of insurance applying to all insured property

Question 10

Insuring Agreement

Answer 10

the insurer’s promise to pay the insured

Question 11

Conditions

Answer 11

states the obligations of the insurer and the insured, as well as any other conditions of coverage

Question 12

Subrogation

Answer 12

states the insured’s obligation to transfer to the insurance company its right of recovery against any party causing a loss after it accepts payment from the insurer for a loss

Question 13

Additional Coverages

Answer 13

automatically included in property policies without an additional premium and include items such as debris removal, collapse, and fire department service charges

Question 14

Coinsurance

Answer 14

common property policy provision that requires the insured maintain a certain limit of insurance coverage in order to avoid a penalty in the event of a partial loss

Question 15

Hostile Fire

Answer 15

burns outside its intended boundaries

Question 16

Short Rate Cancellation

Answer 16

incurs a financial penalty - sometimes when the insured cancels the policy before its expiration date, a short-rate cancellation is issued

Question 17

Flat Cancellation

Answer 17

dates back to the effective date of the policy - no coverage is provided and the insurer must refund the policy premium paid by the insured