Common Policy Provisions

Question 1

ISO

Answer 1

Insurance Services Office

Question 2

AAIS

Answer 2

American Association of Insurance Services

Question 3

Cancelation/ Non Renewal Condition

Answer 3

insured can cancel at any time insurer is more restricted

Question 4

Unearned Premiums

Answer 4

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

Question 5

Liberalization Clause

Answer 5

insured benefit automatically if insurer broadens coverage at no extra cost

Question 6

Representations Conditions

Answer 6

Info for policy is based on what the insured says so if they lied their policy could be voided

Question 7

Concealment, Misrepresentation, & Fraud Condition

Answer 7

If any info is withheld or false from insured they could deny coverage and lead to recession

Question 8

Recession

Answer 8

declaring the policy was never a valued agreement because it was based on false facts

Question 9

Assignment Provision

Answer 9

policy is non-transferable unless insurer agrees or insured dies

Question 10

Additional Insured

Answer 10

Anyone or organization added to policy to receive coverage and benefits but cannot makes changes to policy

Question 11

Other Insurance/ Apportionment

Answer 11

defines how policy will respond when more than one policy covers the risk

Question 12

Primary Policy

Answer 12

pays up limit regardless if there are other policies that cover the same thing

Question 13

Excess Policy

Answer 13

policy only pays once primary has been exhausted

Question 14

Contribution of Equal Shares

Answer 14

insurers pay up to lowest policy limit equally and continue this until loss is covered

Question 15

Pro Rata Apportionment

Answer 15

each insurer agrees to pay its share of the loss according to its share of all policy limits

Question 16

Non Currency

Answer 16

when policies involved have different inception and expiration dates

Question 17

Overinsurance

Answer 17

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

Question 18

Restoration of Limits, Reinstatement of Limits, or Non-reduction of Limits

Answer 18

common options are restore, loss not affecting limits, or total loss payout ends policy and excess premiums will be given back to insured

Question 19

Legal action against an insurer

Answer 19

sets requirements before they can sue the insured

Question 20

Duties in the event of a loss

Answer 20

things insured must do in order to receive coverage like giving all correct info in timely manner and doing as insurer says

Question 21

examination under oath

Answer 21

state they are telling the truth under law

Question 22

Vacancy Condition

Answer 22

establishes when a building is considered vacant and therefore more like to be exposed to loss. Specifies time period and a condition

Question 23

Recovered Property

Answer 23

If party recovers damaged property after they were indemnified they might let the other party know so they aren’t getting more than indemnification

Question 24

Salvage

Answer 24

The portion or value of property that remains after a loss

Question 25

Abandonment clause

Answer 25

Insured can’t force insurer to take damaged property to get repaired or thrown away

Question 26

Pair and set Provision

Answer 26

when something from a set is broken it will restore replace or pay acv

Question 27

Commercial Premium (Premium audit )d

Answer 27

sets estimated deposit premium then at the end of policy determines the actual amount of risk

Question 28

Commercial Premium (Inspection and surveys)

Answer 28

insurer can inspect whenever

Question 29

Commercial Premium (Examination of books and records)

Answer 29

Insurer has right to inspect business records up to 3 years after policy expires

Question 30

Common exclusions

Answer 30

intentional acts, neglect, normal wear and tear, law, government confiscation, off premise power failure, war, nuclear events

Question 31

Loss payment provision

Answer 31

clarifies how, when, and who a claim will be paid

Question 32

Company’s Options ( Standard Fire Policy)

Answer 32

Lists the insurers options to claim settlement and to let claimant know within 30 days

Question 33

Loss payable/Payee clause

Answer 33

for lenders they will be considered a payee for a claim because they have financial interest

Question 34

Mortgagee Clause

Answer 34

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

Question 35

Recoverable Depreciation

Answer 35

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

Question 36

Control of Property

Answer 36

protects insured property from others negligent act upon insureds property

Question 37

No Benefit to Bailee

Answer 37

coverage does not benefit third party that has custody or control of other insured property

Question 38

Separation of Insureds (liability coverage)

Answer 38

Each insured is covered separately when their on same policy

Question 39

Bankrupcy of Insured

Answer 39

even if insured is bankrupt the insurer must move foward w coverage