Common Policy Provisions Flashcards
ISO
Insurance Services Office
AAIS
American Association of Insurance Services
Cancelation/ Non Renewal Condition
insured can cancel at any time insurer is more restricted
Unearned Premiums
when insureds policy is canceled before receiving all benefits. insurer will have to pay back any excess money. Therefore the money is a liability not revenue
Liberalization Clause
insured benefit automatically if insurer broadens coverage at no extra cost
Representations Conditions
Info for policy is based on what the insured says so if they lied their policy could be voided
Concealment, Misrepresentation, & Fraud Condition
If any info is withheld or false from insured they could deny coverage and lead to recession
Recession
declaring the policy was never a valued agreement because it was based on false facts
Assignment Provision
policy is non-transferable unless insurer agrees or insured dies
Additional Insured
Anyone or organization added to policy to receive coverage and benefits but cannot makes changes to policy
Other Insurance/ Apportionment
defines how policy will respond when more than one policy covers the risk
Primary Policy
pays up limit regardless if there are other policies that cover the same thing
Excess Policy
policy only pays once primary has been exhausted
Contribution of Equal Shares
insurers pay up to lowest policy limit equally and continue this until loss is covered
Pro Rata Apportionment
each insurer agrees to pay its share of the loss according to its share of all policy limits
Non Currency
when policies involved have different inception and expiration dates
Overinsurance
bought more than enough insurance for a risk therefore insurer only pays up to the amount of risk not any more because it could be fraud where they could decide not to cover at all
Restoration of Limits, Reinstatement of Limits, or Non-reduction of Limits
common options are restore, loss not affecting limits, or total loss payout ends policy and excess premiums will be given back to insured
Legal action against an insurer
sets requirements before they can sue the insured
Duties in the event of a loss
things insured must do in order to receive coverage like giving all correct info in timely manner and doing as insurer says
examination under oath
state they are telling the truth under law
Vacancy Condition
establishes when a building is considered vacant and therefore more like to be exposed to loss. Specifies time period and a condition
Recovered Property
If party recovers damaged property after they were indemnified they might let the other party know so they aren’t getting more than indemnification
Salvage
The portion or value of property that remains after a loss
Abandonment clause
Insured can’t force insurer to take damaged property to get repaired or thrown away
Pair and set Provision
when something from a set is broken it will restore replace or pay acv
Commercial Premium (Premium audit )d
sets estimated deposit premium then at the end of policy determines the actual amount of risk
Commercial Premium (Inspection and surveys)
insurer can inspect whenever
Commercial Premium (Examination of books and records)
Insurer has right to inspect business records up to 3 years after policy expires
Common exclusions
intentional acts, neglect, normal wear and tear, law, government confiscation, off premise power failure, war, nuclear events
Loss payment provision
clarifies how, when, and who a claim will be paid
Company’s Options ( Standard Fire Policy)
Lists the insurers options to claim settlement and to let claimant know within 30 days
Loss payable/Payee clause
for lenders they will be considered a payee for a claim because they have financial interest
Mortgagee Clause
like payee clause but they will be notifies if insured doesn’t pay premiums and can continue to pay premiums if insured doesn’t for their financial interest and if insured commits intentional act the mortgagee can still be indemnified but not insure d
Recoverable Depreciation
applies to replacement cost policies where the insurer pays acv and then after repaired or replace insured can show how much it actually cost to be indemnified the rest of the amount
Control of Property
protects insured property from others negligent act upon insureds property
No Benefit to Bailee
coverage does not benefit third party that has custody or control of other insured property
Separation of Insureds (liability coverage)
Each insured is covered separately when their on same policy
Bankrupcy of Insured
even if insured is bankrupt the insurer must move foward w coverage
