Chapter 2 [Property Insurance Terms]

Question 1

The insured may not transfer rights of ownership without the insurer’s prior written consent

Answer 1

Assignment

Question 2

The obligations of the insured that must be met following a loss before the insurer will settle the loss

Answer 2

Duties in the Event of a Loss

Question 3

Dispute resolution method used when the insured and insurer cannot agree on the amount of the loss

Answer 3

Appraisal

Question 4

The period of time for which coverage applies

Answer 4

Policy Period

Question 5

The maximum amount the insurer will pay for a covered loss

Answer 5

Limit of Liability

Question 6

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

Answer 6

Accident

Question 7

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

Answer 7

Occurrence

Question 8

The termination of an insurance policy before its expiration date.

Answer 8

Cancellation

Question 9

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

Answer 9

Pro Rata Cancellation

Question 10

A cancellation of insurance that incurs a financial penalty.

Answer 10

Short Rate Cancellation

Question 11

A cancellation of insurance that is retroactive to the effective date of the policy.

Answer 11

Flat Cancellation

Question 12

The termination of a policy at the expiration of its term.

Answer 12

Non Renewal

Question 13

The primary cause of loss.( First event in the unbroken chain of events that resulted in loss.)

Answer 13

Proximate Cause

Question 14

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

Answer 14

Friendly Fire

Question 15

A fire that burns outside its intended boundaries, or becomes uncontrollable.

Answer 15

Hostile Fire

Question 16

A quality within a property that causes it to damage or destroy itself (Rust, rot, fading of paint)

Answer 16

Inherent Vice

Question 17

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.

Answer 17

Binder

Question 18

What is the maximum amount of days a binder can be issued for

Answer 18

60 Days

Question 19

Process whereby a disputed claim is decided by a neutral party.

Answer 19

Arbitration

Question 20

Right of the insurer to take possession of damaged property after paying for its loss.

Answer 20

Right of Salvage

Question 21

The amount for which property can be sold at the end of its useful life.

Answer 21

Salvage Value

Question 22

What is the salvage value in in property insurance

Answer 22

The scrap value of damaged property.

Question 23

A policy form that alters or adds to the provisions of a property and casualty insurance contract.

Answer 23

Endorsement

Question 24

Concurrent Causation

Answer 24

A principle holding that when two perils simultaneously cause a loss

Question 25

In the event of concurrent causation what must the insurer do, even if one peril is excluded in the policy?

Answer 25

The insure must pay the loss

Question 26

Concurrent Policies

Answer 26

The existence of two or more policies covering the same exposures, having the same policy periods, and the same coverage triggers.

Question 27

What happens with concurrent policies in the event of a loss?

Answer 27

Each policy will pay its pro-rate share of the loss.