Chapter 3 Flashcards
Vacant
“empty”; or when the normal occupant is absent and the contents have been removed
Unoccupied
Lack of habitual presence of human beings temporarily
Loading
An additional rate charged over and above the fire rate
Centrifugal Force
The inertia of a body that tends to move it away from the center around which it revolves
Mechanical Breakdown
a failure in the working mechanism of the machinery… a functional defect in the moving parts of the equipment which causes the latter to cease functioning or to function improperly
Electrical Breakdown
A failure in the electrical mechanism of machinery, appliance or device
Trade Loss
The types of losses which might be expected as a part of the every day operation of a business
Wear & tear
“… deterioration or depreciation (i.e. value by ordinary and reasonable use of the subject matter)
Gradual Deterioration
The deterioration of an object which arises naturally over time
Latent Defect
A hidden or concealed defect. One which could not be discovered by reasonable and customary inspection; one not apparent in face of goods, product, document, etc.
Mysterious Disappearance
Disappearance under circumstances which cannot be explained
Three leading causes of fire losses
Failure or malfunction of mechanical or electrical equipment
Arson, suspected arson and other set fires
Misuse of source of ignition
Explain how the defining of policy period in this way can cause potential problems for Insurers
The problem with the wording is that it is 12:01 on that day. so if someone wanted to obtain the insurance halfway through that day, they could technically work around the fact that the insurance is retroactive for 12:01 a.m. Some brokers will amended the insurance to indicate the time of day in which the application for insurance was made, and coverage bound
After a total fire loss to Insured property, the Insurer paid the full amount of the claim directly to the Insured. The Insured immediately left town and was never heard from again. Does the mortgagee named on the policy have any rights of action against the insurer? Explain
The Insurer is obligated to pay the mortgagee so long as they are listed in the policy.
Insurers often do not provide a breakdown of the individual rates charged for coverages provided by the policy. What reason might the Insurer have for adopting this practice?
The reason they do this is to hide the costs of specific items from the competition
What is the policy period start applicable to most policies of commercial property insurance?
Policy period takes effect at 12:01 a.m. local time at the address of the Named Insured as stated on the policy.
Six pieces of information shown on the declaration page
Names of parties to the contract
Policy period
Loss payable or payee
Summary of insurance coverage(s) and amounts for which Insurer may be liable
Rate and premium charged
Subject matter of insurance