Intro To Property Insurance Flashcards
What does the insuring agreement consist of?
- ) property covered
- ) describes key policy coverages in detail and may also specify that certain additional coverages may apply
- )perils insured against
- ) direct loss vs consequential loss
What does the declarations section consist of?
- ) stating who is insured
- ) describes property to be insured
- ) policy period
- ) policy limit (limit of coverage, limit of liability or limit of insurance)
What is direct loss?
Financial loss resulting directly for a loss to property
What is a consequential loss?
Indirect loss; comes as a result of the original loss
What does the exclusions/limitations portion of an insurance contract include?
In a named peril policy, and peril that is not specifically listed as covered is automatically excluded; however they also lost certain exclusions separately to explain/emphasize exclusion
What are the five broad categories of most common found exclusions?
- ) non accidental loss
- ) losses controllable by the insured
- ) extra-hazardous period
- ) catastrophic losses
- ) property covered in other policies
What is concurrent causation?
Refers to a situation where 2+ perils act concurrently to cause a loss. This created a problem when one peril was covered and the other was not. Policy wording has become more specific to avoid this.
What does the conditions portion of an insurance contract cover?
- ) duties following loss
- ) valuation
- ) coinsurance
- ) pair or set
- ) deductible
- ) salvage and abandonment
- ) subrogation
- ) appraisal and arbitration
- ) other insurance
- ) Pro Rata
- ) liberalization
- ) assignment
- ) no benefit to bailee
- ) mortgage condition
- ) policy period and policy territory
- ) vacancy and Unoccupancy
- )reporting forms
What are the insureds responsibilities after a loss?
- Giving prompt notice of claim to company/agent
- Protecting property from further damage
- Completing detailed proof of loss
- Making property available for inspection by company
- Submitting to examination under oath if required
- Assisting the insurer as required during claim investment procedure
What is valuation?
Determining adequate identification:
Insured can collect the lesser of: insurable interest, policy limits, actual cash value, cost to repair, replacement cost
What is coinsurance?
Encourages policy holders to insure property to value. As long as the insured cares the amount of insurance required by the coinsurance condition at the time of loss, the insurer will indemnify losses up to the limit of the policy
What is a pair or set condition?
A loss settlement condition that states that if a part of pair or set is lost or damaged, the loss will be valued at fair proportion to the total value of the set. The insurer is not obligated to pay for loss of the whole set when only one part has been damaged
What is a deductible?
Insured pays the first part of every loss up to the deductible
What is a salvage condition?
The insurance implant can take possession of the damaged property after payment of a loss
What is the abandonment condition?
Insured may not abandon property to the company and ask to be reimbursed at full value
What is subrogation?
An insured suffers a no fault loss but the party at fault does not have insurance; the insurance company can indemnify the insured and sue the other party
What is an appraisal condition?
Provides that either party (insured and insurance company) can demand an appraisal of a loss
What is an arbitration condition?
Similar to an appraisal condition but may also be used to resolve other areas of dispute
What is an other insurance condition?
Sets out how other insurance the insured may have on the same property affects reimbursement under the policy in question when a loss occurs
What is the Pro Rata condition?
The most common method for handling other insurance is to agree to pay only a portion of any loss that is also covered by other insurance.
What is nonconcurrency?
An insured may have two or more policies on the same property that do not provide coverage to the same extent- this can result in coverage gaps or disputed payment
What is liberalization?
Provides that if the insurer broadens coverage under a policy form or endorsement without requiring an additional premium, than all existing similar policies or endorsements will be construed to contain the broadened coverage.
What is assignment?
Specifies that a policy may not be transferred to anyone else without consent from the insurer unless the insured dies.
What is No Benefit to Bailee?
A bailee is a person or organization that has temporary possession of someone else’s personal property and is not covered under the insureds policy
What is the mortgage condition?
Specifies the rights and duties of the mortgage or loss payer under the policy
What is the policy period and policy territory condition?
Provisions that state that a loss will not be covered unless it occurs in the policy territory while the policy is in effect
What is the vacancy and Unoccupancy condition?
Property insurance policies may exclude or limit coverage for losses when a property is vacant or unoccupied
What is a reporting form?
Insured pays a deposit premium and periodically submit reports to the insurer showing the states if those factors in which the premium is based.
Why is a premium audit?
The insurance company may conduct a premium audit of the insureds records before calculating a final premium or final adjustment
