Property Flashcards
Direct Loss
Physical damage to a property resulting from a covered peril (fire, windstorm, theft)
Indirect Loss
Indirect losses are a result of direct losses (lost rental income or additional living expenses while repairs are being made)
Declarations Page
The first page of an insurance policy that outlines important information about the insured and its coverage (name, policy dates, coverage limits/deductibles, total premium amount)
Named Perils Insuring Agreement
The insurance companies promise to pay for covered perils explicitly stated in the policy
Open Perils Insuring Agreement
The insurance companies promise to pay for all perils covered unless explicitly excluded.
Exclusions
Policy section detailing what is NOT included in coverage. Limits insurers liability and clarifies scope of coverage for the insured.
Conditions
Outlines the rules and responsibilities of both parties (insurer/insured)
Insured - obligation to pay premiums on time, and prompt notification to insurer of any loss
Insurers - right to inspect property and subrogation rights.
Homeowners Insurance
Covers liability exposures, physical structure, and personal belongings of a residential property owner
Dwelling Insurance
More limited than H/O Ins. dwelling policies cover physical structures and personal property for rental or vacation homes.
Commercial Property Insurance
Protects businesses against losses to buildings, inventory, and other physical assets. Usually includes coverage for business income and extra expenses
Inland Marine Insurance
Protects property in transit or other moveable property (such as fine art or construction equipment)
Specialty Property Policies
Additional coverage for risks such as flood or earthquakes.
Basic Form
A limited list of coverage from specific perils such as fire, lightning, wind storm, hail, explosions, and theft.
Broad Form
Includes all perils covered under a Basic Form with the inclusion of other specific perils such as falling objects, water damage from plumbing, weight of snow or ice.
Special Form
Provides coverage on an Open Peril basis meaning all risks are covered unless explicitly stated.
Endorsements and Riders
additions and modifications made to a standard policy. Tailored coverage to meet specific needs of an insured.
Scheduled Personal Property Endorsement
Covers high value items like jewelry or fine art that exceed standard policy limits.
Inflation Guard Endorsement
Adjusts coverage periodically to account for inflation and ensure that the insured property is not underinsured over time.
Ordinance or Law Endorsement
Provides coverage for additional costs when repairing or replacing a building to comply with updated building code laws.
Coinsurance Formula
Claim Payment = (Amount of Insurance Carried/Amount of Insurance Required) * Loss - Deductible
Coinsurance
Requires insured to carry a minimum amount of insurance up to a specific percentage of the property’s value (typically between 80%-100%
Deductible
The amount insured must pay out of pocket before insurer coverage kicks in.
Flat Deductible
Fixed dollar amount applied to each loss (typically $500/$1000)
Percentage Deductible
More common in disaster prone areas, deductible is based on a percentage of the insured value of the property.
