Insurance Basics 20% Flashcards
1
Q
4 requirements of a legal contract
A
- Offer and Acceptance
- Consideration
- Competent Parties
- Legal Purpose
2
Q
- Offer and Acceptance
A
mutual consent between the offeror and offeree
E.g. signing the contract
3
Q
- Consideration
A
all parties bring something of value
E.g. money in exchange for a car
4
Q
- Competent Parties
A
E.g. 18 years old, sober, and sane
5
Q
- Legal Purpose
A
the purpose of the contract must be legal.
6
Q
Utmost Good Faith
A
A characteristic of insurance contracts: ‘utmost’ meaning the ‘highest degree’ and ‘good faith’ meaning, “act with honesty, fair dealing and full disclosure.” All parties to an insurance contract must act with utmost good faith. It also applies to a fiduciary agent’s
responsibility towards the principal.
7
Q
Representation
A
A statement assumed to be true
8
Q
Misrepresentation
A
A false or misleading statement
9
Q
Fraud
A
Using dishonesty to profit from an insurance policy
10
Q
Soft fraud
A
exaggerating a claim
11
Q
Hard fraud
A
deliberately causing or faking losses
12
Q
Express Waiver
A
Written notice relinquishing a right, claim, or privilege
13
Q
Implied Waiver
A
An assumed relinquishing of a right, claim, or privilege
based on practice
14
Q
Estoppel
A
if an insurer accepts a practice for a time, it cannot later
refuse coverage because of that practice
15
Q
Four Kinds of Hazards
A
- Moral
- Morale
- Legal
- Physical
16
Q
Moral Hazard
A
Deliberate, reckless behavior because of
insurance coverage
17
Q
Morale Hazard
A
Unpremeditated risky behavior because
of the comfort of insurance protection
18
Q
Legal Hazard
A
Increased chance of loss because of legal
action
19
Q
Physical Hazard
A
A physical condition that makes a loss
more likely
20
Q
Negligence in insurance and law
A
Failure to use a reasonable degree of care in a particular situation, which directly results in damage to another
21
Q
Negligence Checklist
A
- the defendant had a legal duty to act or not act in a prescribed manner
- the defendant failed to act accordingly (called a breach of duty)
- the plaintiff suffered actual loss or injury due to the defendant’s action or inaction
- the loss or injury to the plaintiff was a direct result of the breach of duty of the defendant
22
Q
Special Damages
(Compensatory)
A
Money awarded for exact value of tangible damages
Proven by providing medical bills, repair bills, etc.
23
Q
General Damages
(Compensatory)
A
Money awarded for intangible, emotional damages
decided by court
Losses with subjective value include:
● Expected future losses
● Mental anguish
● Permanent injury
● Loss of reputation
● Pain and suffering
● Future losses due to unemployment
24
Q
Punitive Damages
A
Awards money for malicious, willful misconduct on the
part of the tortfeasor
● For intentional acts, such as slander, fraud, violence, oppression, or
recklessness
● Not typically covered in liability insurance
25
No-Fault Liability: Absolute Liability =
Strict Liability with NO exceptions
26
No-Fault Liability: Strict Liability
holds a party liable for damages, whether or not they were negligent, when the activity or instrument they are performing is inherently dangerous
Exceptions
1. act of god
2. consent of plaintiff
3. statutory duty
4. act of a third party
5. plaintiff's own fault
27
No-Fault Liability: Vicarious Liability
a person can be liable for the negligent acts of someone in their charge.
Often applies to:
● Employers: If John’s negligent act takes place at work, his employer is vicariously liable for his actions
● Parents: If John is under the age of 18, his parents are vicariously liable for his actions
28
Peril
The actual cause of loss or damage
Lightning, fire, theft and flood
29
Named Peril
lists each peril that is covered
30
All Peril (Open Peril/ special)
covers all perils except those specifically excluded
31
Loss
1. Reduction in value of an insured item
2. Financial loss due to an occurrence or accident
3. For insurers: the amount paid out in a claim settlement
Loss#1: reduction in value of Dan’s car after accident
Loss#2: medical bills for Dan’s injured wrist
Loss#3: what the insurer has to pay Dan for his property damage and injury
32
Direct Loss
Physical harm to tangible property
● Structural damage to house
● Kitchen walls and cabinets burned by fire
● Flooring damaged by water used to put out fire
33
Indirect/ consequential loss
an economic loss that results from a direct loss
● Renting a hotel room until home is repaired
● Lost rental income if damages cause a tenant to move out
34
Consequential loss
another name for an indirect loss that specifically pertains to lost business income
35
Blanket Coverage
more than one property, type of property, or coverage under a single limit
An example would be a business-owner who has four different store locations but just one insurance policy with a single limit to cover all four.
36
Specific Limits
Limits that apply to one specific type of property
A Homeowners policy might have specific limits for certain items like jewelry and silverware.
37
Actual Cash Value (ACV)
A valuation method that takes into account an item's depreciation
● Same as fair market value and depreciated value
● ACV offers lower premiums for less coverage
● Formula: Replacement Cost minus depreciation
38
Replacement Cost
A method of valuation based on the cost of replacing an item at current market prices, regardless of depreciation
Can be determined through simple market research
● No depreciation
● Based on the replacement cost at the time of loss
● Higher premiums
39
Depreciation
An item's estimated loss of value due to wear, tear, and age
Can usually be determined with:
● Standard Depreciation Schedules
● Estimating Software
40
Annual Depreciation:
replacement cost divided by the item's useful life
41
Accumulated Depreciation:
the item's Annual Depreciation multiplied by its age
42
Functional Replacement Cost
● Pays to replace an outdated, obsolete item with a functionally equivalent item not an identical item
● Level of coverage falls between RC and ACV
43
Replacement Cost: Obsolescence
● When something is no longer used or wanted, despite being in good working order
● Usually a result of a newer, improved alternative
● Causes rapid depreciation
44
Valued Policy (a.k.a. Agreed Value or Guaranteed Value):
A valuation method that assigns a set value to each insured item
● Value is determined prior to the issuance of a policy
● Avoids the confusion of assessing appreciation or depreciation
45
Stated Amount (Stated Value)
● Property value is stated by the insured when applying for insurance
● When loss occurs, policy pays up to the stated amount or ACV, whichever is less
46
Policy Structure
D. I. C. E.
- Declarations
- Definitions
- Insuring Agreement or Clause
- Additional/Supplementary Coverage
- Conditions
- Exclusions
- Endorsements
47
Declarations
● Names of both parties (insured and insurer)
● Policy number
● Location & description of insured item
● Value of insured item
● Dates of the policy (beginning and end)
● Amount and limit of coverage
● Deductible
● Premium
48
Definitions
● Not technically essential, but common in policies
● Defines terms used to write policy including “collision,” “decay,” “like kind and quality
● Includes important language for producers to know
49
The Insuring Agreement summarizes:
● What is covered
● Which causes of loss are covered
● Any services provided
● Any exclusions to coverage
● The maximum limit of policy coverage in dollars
50
Conditions
The insurer specifies any limits or qualifications the policyholder must meet.
If a jewelry store owner wants to purchase an insurance policy, the conditions section may require that a security guard be present whenever the store is open.
51
Exclusions
list what the policy does not cover.
Common Exclusions (in nearly all property policies):
● Earthquakes
● Flooding
● War
● Nuclear hazards
● Intentional acts
52
Endorsements (riders, addendum, attachment)
are additions to the policy that can:
● Add or reduce insurance coverage
● Change policy provisions
● Change the premium price after the policy period ends
53
Insurance
Transfers risk of financial losses from one party to another
54
Insured
Individual or organization that pays premiums in exchange for protection
55
Insurer
Company, group, or government agency offering financial protection
56
Common Policy Provisions
● Provisions with in the policy establish terms of the agreement
●Insurance policies are standardized forms, most of which are created by ISO or AAIS
57
What are ISO and AAIS?
● National organizations
● Produce standardized insurance forms for insurers to use
● Collect statistical data
● Provide rating information
● Work with state regulators on behalf of subscribing insurers
58
Policy Period:
inclusive period between inception and termination dates
59
Insured:
person or organization purchasing the policy
60
First Named Insured:
first person or entity listed on dec page
61
Deductible
The amount the policyholder must pay out-of-pocket before the insurer will pay for losses
● Lets the policyholder decide how much risk he is willing to take
● Found on the declarations page of an insurance contract
62
Three Types of Deductibles
1. Fixed
2. Percentage
3. Franchise
Liability Insurance never has a deductible, except for very rare exceptions.
63
Fixed Deductible
A specific, set amount
64
Percentage Deductible
The insured pays a percentage of the insured risk’s value
Some policies combine fixed and percentage deductibles
65
Franchise Deductible
Policy kicks in only after the loss exceeds a predetermined amount
● If losses are below the deductible, the insurer pays nothing
● If losses are above the deductible, the insurer pays 100% of the damage
66
Coinsurance
Encourages the insured to purchase an adequate amount of coverage, typically at
least 80% of a property's value
● Financially protects the insurer
● Imposes a penalty on coverage for partial losses if the property is not fully insured– 80% of its RC
67
Other Insurance /Apportionment
Guidelines for settling claims when more than one policy covers the damages
This clause enforces Principle of Indemnity by keeping people from “double recovering” for a loss.
68
Other Insurance Primary
Policy pays up to the limit, regardless of presence of another policy
69
Excess
Policy only pays once the Primary policy’s limits have been exhausted
70
Contribution by Equal Shares
● Each policy pays an equal share of the loss up to lowest policy limit
● Process repeats until loss is paid in full or all policy limits have been reached
71
Pro Rata
Policies split the loss, based on percentage of coverage each policy provides equal to the percentage of the loss
72
Nonconcurrency
The situation in which two or more policies covering the same risk have different
inception and expiration dates
73
Liability Policy Limits: Split Limit
Establishes three liability limits:
50/100/50
Limit1: maximum pay out for bodily injury for each person injured
Limit2: maximum payout for bodily injury to multiple persons
Limit3: maximum payout for property damage
Limits apply per occurrence.
74
Liability Policy Limits: Single Limit
● Establishes one liability limit
● Limit applies per occurrence
- for all liability damages, whether they are property damages or bodily injuries to one or many people
$200,000
75
Liability Policy Limits: Aggregate Limit
Establishes two liability limits:
● Limit 1: maximum payout per occurrence
● Limit 2: maximum payout per policy term
Common in commercial liability policies
300,000/900,000
IF: accident causes: $450,000 covered damages
THEN:
● Insurer pays $300,000 (occurrence limit of policy)
● Construction, Inc. must pay: $150,000
● New limits for remainder of term: 300,000/600,000
76
Restoration / Non-reduction of Limits
Common options:
● Restore limits to original level
● Loss does not reduce limits at all
● Total loss payout ends policy coverage and excess premiums returned to
insured
77
Vacancy
● Specifies a time period (typically 60 days) and a condition, such as a dwelling that is unoccupied or a company that is not open for business
● Commercial buildings may be deemed vacant if less than 31% of the available square footage is occupied for the set time period
78
Common Provisions: Assignment
policy is non-transferable unless insurer agrees
Exception
Death: If insured dies:
● Coverage transfers to the decedent’s legal representative
● Coverage lasts until the next policy renewal date
79
Additional Insured:
Person or organization that is added to the policy at the request of the First Named Insured and benefits from policy, but is not allowed to make changes
80
Changing a Policy
Typically, policy changes must be added by endorsement and agreed upon by both
insurer and insured.
81
Liberalization Clause
says that if insurer broadens policy coverage in course of business, policies already issued must include this increase if the change:
● Was implemented during the policy period (or even shortly before policy period
for some policies)
● Did not raise the policy premium
82
Mortgage Clause (a.k.a. Mortgage holders Condition)
States the mortgagee’s rights in relation to the insurance contract
83
Mortgagee:
the bank or lender that holds the insured's mortgage
84
Mortgagee Rights
● Receive a portion of claims payments, based on their insurable interest in the property
● Be notified if the policy holder fails to adhere to, or pay premiums on, the insurance contract
● Pay premiums to keep the policy active without the consent of the insured in
order to continue protection
The lender can still be indemnified, even if the insured intentionally damages the
property (the insured would not get any money in this case)
85
Loss Payable Clause (or Loss Payee Clause)
● Lender listed as loss payee if a loss occurs
● Protects lender’s interest in insured property
● Allows insurers to compensate a lender if a property, in which the lender has a financial interest, is damaged
86
No Benefit to Bailee
States that coverage does not benefit a third party that has custody or control of the
insured’s property
87
Bailee
A business that holds the property of others for the purpose of storage, repair, or servicing
88
Dispute Resolution: Appraisal
● A definite disagreement must exist prior to appraisal
● Each side chooses an appraiser
● Both appraisers agree on an umpire
● Agreement by any two of the three is binding
● Appraisal only decides settlement amount, not whether coverage exists in the first place
89
- Offer and Acceptance
- Consideration
- Competent Parties
- Legal Purpose
4 requirements of a legal contract
90
mutual consent between the offeror and offeree
E.g. signing the contract
1. Offer and Acceptance
91
all parties bring something of value
E.g. money in exchange for a car
2. Consideration
92
E.g. 18 years old, sober, and sane
3. Competent Parties
93
the purpose of the contract must be legal.
4. Legal Purpose
94
A characteristic of insurance contracts: 'utmost' meaning the 'highest degree' and 'good faith' meaning, "act with honesty, fair dealing and full disclosure." All parties to an insurance contract must act with utmost good faith. It also applies to a fiduciary agent's
responsibility towards the principal.
Utmost Good Faith
95
A statement assumed to be true
Representation
96
A false or misleading statement
Misrepresentation
97
Using dishonesty to profit from an insurance policy
Fraud
98
exaggerating a claim
Soft fraud
99
deliberately causing or faking losses
Hard fraud
100
Written notice relinquishing a right, claim, or privilege
Express Waiver
101
An assumed relinquishing of a right, claim, or privilege
based on practice
Implied Waiver
102
if an insurer accepts a practice for a time, it cannot later
refuse coverage because of that practice
Estoppel
103
1. Moral
2. Morale
3. Legal
4. Physical
Four Kinds of Hazards
104
Deliberate, reckless behavior because of
insurance coverage
Moral Hazard
105
Unpremeditated risky behavior because
of the comfort of insurance protection
Morale Hazard
106
Increased chance of loss because of legal
action
Legal Hazard
107
A physical condition that makes a loss
more likely
Physical Hazard
108
Failure to use a reasonable degree of care in a particular situation, which directly results in damage to another
Negligence in insurance and law
109
- the defendant had a legal duty to act or not act in a prescribed manner
- the defendant failed to act accordingly (called a breach of duty)
- the plaintiff suffered actual loss or injury due to the defendant's action or inaction
- the loss or injury to the plaintiff was a direct result of the breach of duty of the defendant
Negligence Checklist
110
Money awarded for exact value of tangible damages
Proven by providing medical bills, repair bills, etc.
Special Damages
(Compensatory)
111
Money awarded for intangible, emotional damages
decided by court
Losses with subjective value include:
● Expected future losses
● Mental anguish
● Permanent injury
● Loss of reputation
● Pain and suffering
● Future losses due to unemployment
General Damages
(Compensatory)
112
Awards money for malicious, willful misconduct on the
part of the tortfeasor
● For intentional acts, such as slander, fraud, violence, oppression, or
recklessness
● Not typically covered in liability insurance
Punitive Damages
113
Strict Liability with NO exceptions
No-Fault Liability: Absolute Liability =
114
holds a party liable for damages, whether or not they were negligent, when the activity or instrument they are performing is inherently dangerous
Exceptions
1. act of god
2. consent of plaintiff
3. statutory duty
4. act of a third party
5. plaintiff's own fault
No-Fault Liability: Strict Liability
115
a person can be liable for the negligent acts of someone in their charge.
Often applies to:
● Employers: If John’s negligent act takes place at work, his employer is vicariously liable for his actions
● Parents: If John is under the age of 18, his parents are vicariously liable for his actions
No-Fault Liability: Vicarious Liability
116
The actual cause of loss or damage
Lightning, fire, theft and flood
Peril
117
lists each peril that is covered
Named Peril
118
covers all perils except those specifically excluded
All Peril (Open Peril/ special)
119
1. Reduction in value of an insured item
2. Financial loss due to an occurrence or accident
3. For insurers: the amount paid out in a claim settlement
Loss#1: reduction in value of Dan’s car after accident
Loss#2: medical bills for Dan’s injured wrist
Loss#3: what the insurer has to pay Dan for his property damage and injury
Loss
120
Physical harm to tangible property
● Structural damage to house
● Kitchen walls and cabinets burned by fire
● Flooring damaged by water used to put out fire
Direct Loss
121
an economic loss that results from a direct loss
● Renting a hotel room until home is repaired
● Lost rental income if damages cause a tenant to move out
Indirect/ consequential loss
122
another name for an indirect loss that specifically pertains to lost business income
Consequential loss
123
more than one property, type of property, or coverage under a single limit
An example would be a business-owner who has four different store locations but just one insurance policy with a single limit to cover all four.
Blanket Coverage
124
Limits that apply to one specific type of property
A Homeowners policy might have specific limits for certain items like jewelry and silverware.
Specific Limits
125
A valuation method that takes into account an item's depreciation
● Same as fair market value and depreciated value
● ACV offers lower premiums for less coverage
● Formula: Replacement Cost minus depreciation
Actual Cash Value (ACV)
126
A method of valuation based on the cost of replacing an item at current market prices, regardless of depreciation
Can be determined through simple market research
● No depreciation
● Based on the replacement cost at the time of loss
● Higher premiums
Replacement Cost
127
An item's estimated loss of value due to wear, tear, and age
Can usually be determined with:
● Standard Depreciation Schedules
● Estimating Software
Depreciation
128
replacement cost divided by the item's useful life
Annual Depreciation:
129
the item's Annual Depreciation multiplied by its age
Accumulated Depreciation:
130
● Pays to replace an outdated, obsolete item with a functionally equivalent item not an identical item
● Level of coverage falls between RC and ACV
Functional Replacement Cost
131
● When something is no longer used or wanted, despite being in good working order
● Usually a result of a newer, improved alternative
● Causes rapid depreciation
Replacement Cost: Obsolescence
132
A valuation method that assigns a set value to each insured item
● Value is determined prior to the issuance of a policy
● Avoids the confusion of assessing appreciation or depreciation
Valued Policy (a.k.a. Agreed Value or Guaranteed Value):
133
● Property value is stated by the insured when applying for insurance
● When loss occurs, policy pays up to the stated amount or ACV, whichever is less
Stated Amount (Stated Value)
134
D. I. C. E.
- Declarations
- Definitions
- Insuring Agreement or Clause
- Additional/Supplementary Coverage
- Conditions
- Exclusions
- Endorsements
Policy Structure
135
● Names of both parties (insured and insurer)
● Policy number
● Location & description of insured item
● Value of insured item
● Dates of the policy (beginning and end)
● Amount and limit of coverage
● Deductible
● Premium
Declarations
136
● Not technically essential, but common in policies
● Defines terms used to write policy including “collision,” “decay,” “like kind and quality
● Includes important language for producers to know
Definitions
137
● What is covered
● Which causes of loss are covered
● Any services provided
● Any exclusions to coverage
● The maximum limit of policy coverage in dollars
The Insuring Agreement summarizes:
138
The insurer specifies any limits or qualifications the policyholder must meet.
If a jewelry store owner wants to purchase an insurance policy, the conditions section may require that a security guard be present whenever the store is open.
Conditions
139
list what the policy does not cover.
Common Exclusions (in nearly all property policies):
● Earthquakes
● Flooding
● War
● Nuclear hazards
● Intentional acts
Exclusions
140
are additions to the policy that can:
● Add or reduce insurance coverage
● Change policy provisions
● Change the premium price after the policy period ends
Endorsements (riders, addendum, attachment)
141
Transfers risk of financial losses from one party to another
Insurance
142
Individual or organization that pays premiums in exchange for protection
Insured
143
Company, group, or government agency offering financial protection
Insurer
144
● Provisions with in the policy establish terms of the agreement
●Insurance policies are standardized forms, most of which are created by ISO or AAIS
Common Policy Provisions
145
● National organizations
● Produce standardized insurance forms for insurers to use
● Collect statistical data
● Provide rating information
● Work with state regulators on behalf of subscribing insurers
What are ISO and AAIS?
146
inclusive period between inception and termination dates
Policy Period:
147
person or organization purchasing the policy
Insured:
148
first person or entity listed on dec page
First Named Insured:
149
The amount the policyholder must pay out-of-pocket before the insurer will pay for losses
● Lets the policyholder decide how much risk he is willing to take
● Found on the declarations page of an insurance contract
Deductible
150
1. Fixed
2. Percentage
3. Franchise
Liability Insurance never has a deductible, except for very rare exceptions.
Three Types of Deductibles
151
A specific, set amount
Fixed Deductible
152
The insured pays a percentage of the insured risk’s value
Some policies combine fixed and percentage deductibles
Percentage Deductible
153
Policy kicks in only after the loss exceeds a predetermined amount
● If losses are below the deductible, the insurer pays nothing
● If losses are above the deductible, the insurer pays 100% of the damage
Franchise Deductible
154
Encourages the insured to purchase an adequate amount of coverage, typically at
least 80% of a property's value
● Financially protects the insurer
● Imposes a penalty on coverage for partial losses if the property is not fully insured– 80% of its RC
Coinsurance
155
Guidelines for settling claims when more than one policy covers the damages
This clause enforces Principle of Indemnity by keeping people from “double recovering” for a loss.
Other Insurance /Apportionment
156
Policy pays up to the limit, regardless of presence of another policy
Other Insurance Primary
157
Policy only pays once the Primary policy’s limits have been exhausted
Excess
158
● Each policy pays an equal share of the loss up to lowest policy limit
● Process repeats until loss is paid in full or all policy limits have been reached
Contribution by Equal Shares
159
Policies split the loss, based on percentage of coverage each policy provides equal to the percentage of the loss
Pro Rata
160
The situation in which two or more policies covering the same risk have different
inception and expiration dates
Nonconcurrency
161
Establishes three liability limits:
50/100/50
Limit1: maximum pay out for bodily injury for each person injured
Limit2: maximum payout for bodily injury to multiple persons
Limit3: maximum payout for property damage
Limits apply per occurrence.
Liability Policy Limits: Split Limit
162
● Establishes one liability limit
● Limit applies per occurrence
- for all liability damages, whether they are property damages or bodily injuries to one or many people
$200,000
Liability Policy Limits: Single Limit
163
Establishes two liability limits:
● Limit 1: maximum payout per occurrence
● Limit 2: maximum payout per policy term
Common in commercial liability policies
300,000/900,000
IF: accident causes: $450,000 covered damages
THEN:
● Insurer pays $300,000 (occurrence limit of policy)
● Construction, Inc. must pay: $150,000
● New limits for remainder of term: 300,000/600,000
Liability Policy Limits: Aggregate Limit
164
Common options:
● Restore limits to original level
● Loss does not reduce limits at all
● Total loss payout ends policy coverage and excess premiums returned to
insured
Restoration / Non-reduction of Limits
165
● Specifies a time period (typically 60 days) and a condition, such as a dwelling that is unoccupied or a company that is not open for business
● Commercial buildings may be deemed vacant if less than 31% of the available square footage is occupied for the set time period
Vacancy
166
policy is non-transferable unless insurer agrees
Exception
Death: If insured dies:
● Coverage transfers to the decedent’s legal representative
● Coverage lasts until the next policy renewal date
Common Provisions: Assignment
167
Person or organization that is added to the policy at the request of the First Named Insured and benefits from policy, but is not allowed to make changes
Additional Insured:
168
Typically, policy changes must be added by endorsement and agreed upon by both
insurer and insured.
Changing a Policy
169
says that if insurer broadens policy coverage in course of business, policies already issued must include this increase if the change:
● Was implemented during the policy period (or even shortly before policy period
for some policies)
● Did not raise the policy premium
Liberalization Clause
170
States the mortgagee’s rights in relation to the insurance contract
Mortgage Clause (a.k.a. Mortgage holders Condition)
171
the bank or lender that holds the insured's mortgage
Mortgagee:
172
● Receive a portion of claims payments, based on their insurable interest in the property
● Be notified if the policy holder fails to adhere to, or pay premiums on, the insurance contract
● Pay premiums to keep the policy active without the consent of the insured in
order to continue protection
The lender can still be indemnified, even if the insured intentionally damages the
property (the insured would not get any money in this case)
Mortgagee Rights
173
● Lender listed as loss payee if a loss occurs
● Protects lender’s interest in insured property
● Allows insurers to compensate a lender if a property, in which the lender has a financial interest, is damaged
Loss Payable Clause (or Loss Payee Clause)
174
States that coverage does not benefit a third party that has custody or control of the
insured’s property
No Benefit to Bailee
175
A business that holds the property of others for the purpose of storage, repair, or servicing
Bailee
176
● A definite disagreement must exist prior to appraisal
● Each side chooses an appraiser
● Both appraisers agree on an umpire
● Agreement by any two of the three is binding
● Appraisal only decides settlement amount, not whether coverage exists in the first place
Dispute Resolution: Appraisal
