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Insurance > Chapter 2: Property Basics > Flashcards

Chapter 2: Property Basics Flashcards

1
Q

Continuous or repeated exposure

A

Occurence

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2
Q

The termination of an insurance policy before its expiration date

A

Cancellation

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3
Q

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

Unearned premium is the premium refunded to the insured for the number of days coverage was not in place

A

Pro Rata Cancellation

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4
Q

Cancellation of insurance that incurs a financial penalty. Sometimes when the insured cancels the policy before its expiration date

A

Short Rate Cancellation

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5
Q

Termination of a policy at the expiration of its term

A

Non-renewal

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6
Q

First event in the unbroken chain of events that resulted in loss
Most significant impact

A

Proximate Cause

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7
Q

A fire that burn outside its intended boundaries

A

Hostile fire

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8
Q

A fire that was intentionally set and stays within its intended boundaries

A

Friendly fire

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9
Q

Rust, rot, and the fading of paint. not covered by a property policy

A

Inherent vice

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10
Q

Temporary proof of insurance until the insurer is able to issue an insurance policy

A

Binder

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11
Q

Process were disputed claim is settled by a neutral third part

A

Arbitration

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12
Q

Right of the insurer to take possession

A

Right of Salvage

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13
Q

Alters or adds to the provisions of a property and casualty insurance contract

A

Endorsement

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14
Q

A principle holding that when two perils simultaneously cause a loss, the insurer must pay the loss even if one of the perils is excluded by the policy

A

Concurrent Causation

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15
Q

The existence of two or more policies covering the same exposures, having the same policy periods, and the same coverage triggers.
ex. auto and umbrella written with the same policy dates

A

Concurrency/ Concurrent Policies

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16
Q

The existence of two or more policies covering the same exposures that don’t have the same policy periods

A

Non-Concurrency/Non-Concurrent Policies

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17
Q

Tool to limit small claims

A

Deductible

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18
Q

Words, terms, and phrases that are clearly described and used in an insurance policy

A

Definitions

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19
Q

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

A

Bailee

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20
Q

A person or organization that entrust property to a bailee

A

Bailor

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21
Q

ONLY after loss or damage exceeds a stated amount or the limits stated in specific policies or self-insurance. Excess insurance may be written over primary, excess, or umbrella insurance.

A

Excess Insurance

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22
Q

A property that contains personal property but has no occupants

A

Unoccupancy

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23
Q

Does not contain sufficient personal property to support intended occupancy
(like a motel)
-no contents, no people

A

Vacancy

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24
Q

The taking of property from inside the premises or a locked safe or vault by a person who commits forcible entry into, or exit from, the property of another

A

Burglary

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25
Q

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

A

Robbery

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26
Q

The broadest of the crime coverages, the act of stealing

A

Theft

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27
Q

Which of the following is attached to the policy to alter or add to the policy provisions?

a. binder
b. endorsement
c. definitions
d. excess insurance

A

b

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28
Q

A person who takes possession of another person’s property in order to repair it is called?

a. assignee
b. bailor
c. subrogee
d. bailee

A

d

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29
Q

If the insured does not agree with the insurer’s decision regarding a claim, what process helps decide the outcome

a. Insurance company conference
b. Arbitration
c. Inspection
d. Consequential hearing

A

b

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30
Q

Direct damage to property without an intervening cause

A

Direct loss

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31
Q

A loss that is not the direct result of a peril

A

Indirect loss

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32
Q

Only provides insurance for the causes of loss, or perils, listed. If a peril is not “named” in the policy, no coverage applies

A

Named perils

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33
Q

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

A

Open perils

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34
Q

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

A

Replacement Value

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35
Q

Cost to repair or replace property at its replacement value minus depreciation

A

Actual Cash Value (ACV)

36
Q

The insurance company and insured agree to a specific value of a particular property before the policy is issued

A

Agreed Value

37
Q

States the value of a particular property on the declarations page, but provides for the insurer to pay the lesser of the stated value or ACV

A

Stated Value

38
Q

States the value of property as the amount shown on the declarations page and will pay that full face value in the event of a total loss

A

Valued Policy

39
Q

The cost to replace property with other property that performs the same function with similar efficiency

A

Functional Replacement Value

40
Q

The price a willing buyer would pay for property purchased

A

Market Value

41
Q

A building that has a roof, floor, and supports of combustible material, usually wood, and combustible interior walls

A

Frame

42
Q

Building with exterior walls of masonry or fire-resistive construction

A

Joisted Masonry

43
Q

Constructed of noncombustible material

A

Noncombustible

44
Q

Exterior walls of masonry or made fire resistive construction with a rating of not less than one hour

A

Masonry Noncombustible

45
Q

Reinforced concrete and steel. Must have at least a 2-hour fire resistive rating

A

Fire Resistive

46
Q

Fire resistive rating of at least 1 hour, but less than 2 hours

A

Modified Fire Resistive

47
Q

Each of the following is a direct loss, except:

a. loss of income
b. fire damage
c. cracked windshield
d. broken pipe water damage

A

a

48
Q

_____ is the method of loss valuation that values damages property at the cost to replace with property of like kind and quality, at current prices, and without deduction for depreciation

a. functional replacement cost
b. actual cash value
c. replacement value
d. market value

A

c

49
Q

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

a. market value - depreciation = ACV
b. replacement cost - depreciation = ACV
c. market value - original purchase price = ACV
d. Replacement cost - market value = ACV

A

b

50
Q

Single item of property for a single limit of insurance

  • 1 item
  • 1 limit
A

Specific Limit

51
Q

One or more items of property on a single policy

  • per item
  • all on 1 policy
A

Scheduled Limit

52
Q

Property located at more than one location OR more than one type of property at the same location OR both
-covers everything

A

Blanket Limit

53
Q

D
I
C
E

A

declarations
insuring agreement
conditions
exclusions

54
Q

Which of the following BEST describes a scheduled limit of insurance on a property policy?

a. insures multiple items of property on multiple policies
b. insures multiple items of property on a single policy
c. insures a single item of property on a single policy for a specific limit
d. insures a single item of property at a blanket limit

A

b

55
Q

What part of the policy includes the who, what, where, when, how much

A

Declarations

56
Q

Insurance company’s promise to pay the insured

A

Insuring Agreement

57
Q

States the obligations of the parties to the contract

A

Conditions

58
Q

When the policy is in force

A

Policy Period

59
Q

Broadens coverage with no increase

A

Liberalization Clause

60
Q

Specifies the terms under which the policy can be cancelled

A

Cancellation

61
Q

addresses the requirements of the insurer if it elects not to renew a policy

A

Nonrenewal

62
Q

Specifies that the insured may not transfer rights of ownership

A

Assignment

63
Q
  • prevents the insured from collecting twice
  • helps the insurer control expenses
  • holds the responsible third party accountable
A

Subrogation

64
Q

The insurer will not be responsible for payment of loss in an amount greater than the financial interest of an insured

A

Insurable Interest and Limit of Liability

65
Q

To restore a policy to its initial face value or not reduce limits of coverage after the insurer has paid a claim

A

Restoration/Non-reduction of Limits

66
Q
  • Giving prompt written notice
  • Notify the police if a theft occurred
  • Cooperating
  • Protecting property
  • Inventory of damaged property
  • Allow insurer to inspect damaged property
  • Submit proof of loss
A

Duties in the Event of Loss

67
Q

Proof of loss includes:

A
  1. time and cause of loss
  2. any other insurance that may cover loss
  3. appropriate receipts, evidence, or affidavits to support the loss
68
Q

Addresses disputes about the mount of a loss

A

Appraisal

69
Q

Specifies the process to be followed when more than one policy covers the same loss

A

Other insurance

70
Q

No one may bring suit against the insurer until all terms and conditions of the policy have been complied with

A

Legal Action Against Us

71
Q

How the insurer will make payment for loss

A

Loss payment

72
Q

Insurer is not obligated to accept any property abandoned by an insured

A

Abandonment of Property

73
Q

Specifies how the policy protects the mortgagee’s financial interest

A

Mortgage Clause

74
Q

Specifies how the policy protects the interests of a loss payee. A loss payee has insurable interest in personal property

A

Loss Payable Clause

75
Q

Specifies that no coverage applies if loss payment benefits a bailee

A

Non Benefit to Bailee

76
Q

Insured has the right of keeping the claim payment or returning the claim payment and retaining right to the property after adjustments have been made for any damage

A

Recovered property

77
Q

Perils that are NOT covered by the policy

A

Exclusions

78
Q

What are the exclusions:

A 
Ordinance or Law
Earth movement
War
Water perils 
Utility failure
Neglect of the insured
Intentional loss
Nuclear hazard, war, and military action
Governmental action
Fungus, wet rot, dry rot, and bacteria
79
Q

Coverages that are automatically included in property policies without an additional premium

A

Additional coverages

80
Q

The duties and obligations of the insured are found under what part of the insurance policy?

a. declarations
b. insuring agreement
c. additional coverages
d. conditions

A

d

81
Q

A liberalization clause serves which of the following purposes?

a. at each annual renewal, the policy limit automatically increases in value
b. the insurer has the right to recover from any party causing a loss
c. the insured is given permission to bring suit against the insurer
d. broadened coverage applies automatically to all policies without a premium charge

A

d

82
Q

Each of the following is a typical property insurance policy exclusion, except:

a. ordinance or law
b. flood
c. fire
d. neglect

A

c

83
Q

a provision used to encourage the insured to purchase and maintain insurance to value

A

Coinsurance

80%

84
Q

Which of the following has the broadest coverage under the insurance policy?

a. named insured
b. insured
c. first named insured
d. additional insured

A

a

85
Q

Which of the following is not true of coinsurance?

a. it is a common policy provision
b. it encourages the insured to maintain insurance to value
c. it applies in the event of a loss
d. the higher the coinsurance percentage purchased, the lower the rate the insured pays

A

c

Insurance (6 decks)

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