Chapter 7 Flashcards
List four ways endorsements override specific terms of a policy
Removing covers for certain property or perils
Adding warranties or additional conditions
Altering or removing policy conditions or limitations
Offering permission for activities, occupancy, or parties that may not otherwise be covered
Explain what a free form endorsement is
an endorsement may be specifically written to address particular circumstances of a risk, this is called a free form endorsement. A free form endorsement is analogous to the perhaps more familiar term manuscript wording, which typically applies to a policy wording uniquely composed or particular risk
Explain how an endorsement may be unenforceable and give an example
And endorsement that unreasonably restricts coverage, especially when removing coverage from fire, may prove unenforceable.
Define manuscript wording
policy wording that does not conform to the standard wording in general use within the insurance industry and that is unique to the policy involved
Define endorsement
An amendment added to a written document particular in agreement between parties altering its provisions
explain why expanding coverage often results in an increase in premium but restriction of coverage rarely results in a corresponding decrease in premium
or were coverages expanded in favor of the insured. Conversely, premium is rarely reduced when coverage is restricted or eliminated, because restricting or eliminating coverage is usually reflects on an increase in risk
Explain why the water endorsement was created
since the sewer backup endorsement does not cover damage from flooding, many inters in the Canadian market have developed a stinking endorsements for residential risks or have combined various water exposures to one endorsement form.
List four important factors that can affect the amount of premium charge for earthquake endorsement
Geographic location
Building design, construction, and age
Occupancy
Soil conditions
T/F earthquake endorsement covers volcanic eruptions that occur at the same time
True
within how many hours of an earthquake can a mudslide occur to be considered the same event according to IBC endorsement form? What if the consequence if events are more than the length of the time apart?
96 to 168 hours or 4-7 days an event that occurs after the specified. Is deemed a new occurrence and subject to a separate deductible amount if the building sustains additional damage
Explain what liquefaction means
we’re structures are built on Sand and silt base soils, vibration caused by Earth moving causes a phenomenon called liquefaction
Explain why the restriction to rebuild on the same site maybe relaxed for earthquake perils
Following a major earthquake, the insurance ability to rebuild in a timely way may be substantially impeded, even if contractors are available to perform the repairs or replacement. Some inters have therefore eliminated the usual requirement and personal property policies to rebuild the structure on the same site. The other policy requirements remain unchanged. This is because the soil that the building or property was built on is now destroyed or damaged
What happens when a covered building is vacant for more than 30 days? What happens if occupancy is restored?
homeowners forms exclude loss or damage if it occurs after the dwelling has, to the insurds knowledge, been vacant for more than 30 consecutive days. the exclusion is triggered after 30 days of vacancy and applies for as long as the vacancy persist after that. The policy is not terminated, however, and coverage is automatically reinstated as soon as the vacancy ends
Explain what a vacancy permit is and how is it used
if an insurer or agrees to maintain coverage on a vacant building, it must Grant permission for the vacancy by way of a vacancy permit, for which additional premium is usually charged
Why is it important that the insurer make the mortgage aware of a vacancy permit when it is approved?
The policy will cover a mortgage even if the named insured has breached a policy condition and is there for unable to recover for a loss so even if the insurance fails to inform the insurer that the insured building is vacant, a mortgagee who was also unaware of the vacancy may still be entitled to coverage in the event of a loss.
Explain why the bylaws endorsement is valuable to the insurance. How does the endorsement affect the policy limits?
following loss or damage, building repairs are Replacements must be performed according to the applicable building codes. Complying with code May extend the duration of repairs, which affects consequential losses such as additional living expenses and may add considerable cost to the restoration process. But the insurer will not pay increase cost due to bylaws that is, due to any law regulating the zone.
Why is identity theft Insurance desirable to insure it’s? Why is it offered by so many insurers?
It’s desirable and offered to insurds because it is affordable to the insurers
List seven things identity theft can cover. What is the typical loss limit per occurrence
- Legal cost to notify the appropriate authorities
- Liaison between the insured and credit bureaus, credit card companies, and other financial institutions
- lost wages as a result of time off work to mitigate the laws, coverage is limited to a dollar amount, usually $500 per week
- loan application fees
- legal fees to defend against lawsuits as a result of identity theft
- long distance phone charges
- in some cases, a credit monitoring service for a specified. After the identity theft
explain the true meaning of the word floater, as it applies to Insurance period distinguish it from the term endorsement. Why are the two often conflicted
Floater policy defined: additional coverage for movable items, like jewelry or antiques, Beyond what’s included in the basic homeowners policy. Also called a rider or endorsement. A policy designed to cover property that floats, or moves, from location to location
the term floater is less widespread than it was, and coverages that were ones called floaters are now sometimes simply called endorsements. But a distinction between the two terms is still recognized
List three ways floaters operate
- Floaters and hands limits or perils for property insured in the policy wording
- floaters provide coverage for scheduled items - that is, items of certain types of property shown on a schedule of insurance ( schedule of insurance - a list of items individually covered by a policy)
- Floaters offer coverage on property that might not be covered otherwise
List four things appraisals verify for an insurance floater
- The existence of the item to be insured
- It’s value
- It’s ownership
- It’s condition
why, given that fine artists covered under personal property insurance would the insured desire of floater for fine Arts stored in their home?
personal property policy settled property claims on the basis of actual cash value or replacement cost. But the value of a work of fine Art depends on the reputation of the artist and may fluctuate much more than the value of more ordinary property insured on the usual basis. Under the fine Arts floater, the insured me therefore choose to insure the item on an agreed value basis.
Explain what a fragile art object is covered for and what it is not
fine Arts or items a personal property and are there for not excluded by personal property policies. But fine arts are often fragile or easily damaged and personal property policies such as homeowners forms do exclude loss caused by scratching, abrasion, or chipping of personal property or breakage of fragile or brittle articles, unless such loss is caused by specified peril, by accident to a land vehicle, watercraft, or aircraft, or by theft or attempted theft
Why is agreed value basis used to determine policy limits for fine Art floaters
the value of a work of fine Art depends on the reputation of the artist and may fluctuate much more than the value of more ordinary property insured on the usual basis under the fine Arts floater, the ensured May therefore choose to ensure the item on an agreed value basis
How does putting art on exhibit change the risk profile? What can Insurance do?
regardless of whether an item is insured on a finer’s folder, property on exhibit is not covered in less an exception to that exclusion is specified in the policy. Property on exhibit faces unique exposure to loss not contemplated in the design of personal property policies such as the homeowners forms, valuable items such as fine Arts are especially at risk for theft. It is important that underwriters consider such exposures, because even where an exception is made to permit coverage for property on exhibit, they may still require warranties of the insured or impose other limitations.
List several reasons that homeowners insurance forms include special limits on collectible items
- Collectible items increase in value over time
- these items are vulnerable and easily transported and can be sold with few traceable identifiers
- Theft and disappearance pose a great risk of loss
- proof of ownership and quality are often difficult because - - many items may be passed down through families without documentation
Explain how personal article floaters compensate for special limits on collectible items
a personal articles folder offers additional coverage for those who need it. The premium for a personal article folder may vary depending on the nature of the insured item. Underwriters may require appraisals to verify both ownership and value of the items insured under the folder.
Compare personal article floaters to scheduled personal property endorsement
The scheduled personal property endorsement is similar to the personal articles folder and may be confused with it both forms allow a policyholder to identify particular items of property on a schedule and ensure them for broader coverage or higher limits than under a homeowners form. Still, the types of property insured under each form may be different.
the personal articles folder is suited for collectible items such as those listed in special limits of insurance of a homeowner’s form. And appraisal is often required before the offer of coverage. Alternatively, and trade me require an enhanced coverage on property that is not subject to a special limit but where exclusions under the homeowners form May unfavorably restrict coverage. For additional premium, policyholders May purchase coverage under folder for such items as cameras, for, or jewelry.
under the scheduled personal property endorsement, coverage for scheduled property is not restricted to the principal residence premises. Although there are exclusions, there are far fewer than in the homeowners forms.
Explain the definition, for insurance, of a personal computer. What is included?
The central processing unit and auxiliary equipment common including but not limited to the central processing unit, monitor, speakers, modems, keyboards, printers, disc, and hard drives, cassette tape recorders, and word processing equipment
media, comprising materials on which data are electronically recorded, such as but not limited to magnetic tapes, disc gets, dispatch, cassettes, USB flash drives, and portable hard drives
Software, comprising programs or instructions stored on media
Why made an insurer be unwilling to enhance coverage Beyond special limits for some items?
for certain kinds of property, such as money and securities, ensures may be unwilling to enhance coverage beyond what is allowed by the special limits for insurance. Four other kinds of property, ensures may offer a variety of options to ensure to enhance coverage beyond the special limits.
What methods are available to enhance coverage if the underwriter finds the risk acceptable
- Offer endorsements or floaters, which attached to the primary policy but provide independent coverage for example, on watercraft and accessories
- increase the special limits of insurance without amending perils or deductibles, as might be done for property of students living away from home
T/F coverage for watercraft floaters list limits for each component separately
T/F coverage for each component is offered on a replacement value basis
First statement is true
Second statement is false coverage is provided at actual cash value
Why are losses due to flood and total waves excluded for watercraft coverage?
It eliminates the potential for non-fortuous loss to be covered
