Property Basics

Question 1

Cancellation

Answer 1

The termination of an insurance policy before its expiration date

Question 2

Pro rata cancellation

Answer 2

Termination of insurance that refunds the unearned premuim proportionately based on the number of days coverage was in effectz
Generally applies to cancellations initiated by insurer

Question 3

Short rate cancellation

Answer 3

Termination of insurance in which the insurer retains a portion of unearned premium to cover costs.

Generally applies to cancellations initiated by insured

Question 4

Flat cancellation

Answer 4

The cancellation of a policy on the date the policy becomes effective.

Question 5

Nonrenewal

Answer 5

The termination of a policy by the insurer at the end of the policy term

Question 6

Lapse

Answer 6

Wheb a policy terminates at its expiration date or it’s renewal date if either party fails to renew, it is set to have lapsed.

Question 7

Binder

Answer 7

Temporary contracts of insurance until policy of insurance is issued lasts 90days

Question 8

Right of salvage

Answer 8

The right of the insurance to take possession of damaged prop after the loss of prop has been paid.
Salvaged prop belongs to insurer

Question 9

Salvage value

Answer 9

The anount for which property can be sold at the end of its useful life.

Question 10

Endorsement

Answer 10

A written amendment attached the policy by insurer to broaden or a restrict coverage

Once attached, The endorsement takes precedence over the original provisions of the policy

Question 11

Proximate cause

Answer 11

The primary cause of loss

The immediate/or actual cause of loss under an insurance policy

Question 12

Concurrent causation

Answer 12

When two perils simultaneously cause a loss, the loss is covered even if one of the perils is excluded by the policy.

Question 13

Concurrency/concurrent policies

Answer 13

Two or more policies provide identical coverage for the same risk. Each policy pays the portion of a loss that it limits bear to the total of all the policies.

Question 14

Non-concurrent/non-concurrent policies

Answer 14

Two or more policies cover the same prop against damage or destruction, but the limits of coverage, kinds of property, perils covered, and the dates of coverage are not the same.

In such cases the insured may not be fully covered.

Question 15

 deductible

Answer 15

The specified amount of each loss that the insured must bear.

Premium may be reduced as well as a number of small claims if there’s a larger deductible

Question 16

Bailee

Answer 16

An individual/firm who was taken into its care, custody, and or control the property of another for servicing repair storage

Question 17

Bailor

Answer 17

An individual who retains the ownership of prop that has been taken into the care ,custody ,and or control of a Bailee

Question 18

Primary insurance

Answer 18

Prop coverage that provides benefits up to the limits of a policy

Question 19

Excess insurance

Answer 19

Prop coverage above the primary amount of insurance. Excess insurance does not pay until any primary insurance has been exhausted.

Question 20

Open policy

Answer 20

The value of insured property is not agreed-upon in advance but is left to be determined in a case of loss

Question 21

Valued policy

Answer 21

Expresses an agreement that the item insured will be valued at a specified sum and the insured‘s interest in the insured building or a structure is fixed.

Question 22

Occurance

Answer 22

A continious or repeated exposure to the same general harmful condition.

Question 23

Direct loss

Answer 23

Damage to prop resulting from an insured peril

Question 24

Indirect loss ( consequential loss )

Answer 24

A second or financial loss occuring as the result of a direct loss.
Ex: loss of rents,business income

Question 25

Types of perils

Answer 25

Named peril: policy on provides coverage for perils listed

Open peril: coverage for all perils except those specifically excluded .

Question 26

Actual cash value

Answer 26

The policy pays for the cost to repair or replace the damaged property at the time of loss minus depreciation

Question 27

Replacement cost

Answer 27

Cost to replace prop with prop of a like kind and quality, without subtracting depreciation.

Question 28

Extended replacement cost

Answer 28

The company will cover the cost of repairs or reconstruction of damage dwelling or building up to the stated percentage over the amount for which it is insured usually 20/30% above the face value of the policy

Question 29

 agreed value

Answer 29

Value of particular prop that is agreed on by insurer and insured.
.if total loss occurs, the insurer will pay the great value.

Question 30

Stated value

Answer 30

Specific amount paid in the event of a total loss, regardless of the actual cash value of the property, often used for antiques and fine arts.

This value is determined by qualified professional appraiser

Question 31

 market value

Answer 31

The price a willing buyer would pay for the prop purchase from a willing seller.

Question 32

Coinsurance

Answer 32

A provisional contained in most policies and sharing commercial or residential property, used to encourage the insured to purchase and maintain insurance to value.

Question 33

Coinsurance formula

Answer 33

Amount of insurance carried
(Limit of liability policy) x loss
/ min amount of insurance required ( stated% of policy value)

Question 34

Named insured

Answer 34

Any person, firm, or organization specifically designated by name on the declarations page of the policy

Question 35

First named insured

Answer 35

The person, firm, or organization whose name appears in the first position of the declarations page of a policy when several names are listed. And a commercial lines insurance, the first name insured has certain rights and duties that do not apply to any other named insureds.

Question 36

Additional insured

Answer 36

A person, firm, or organization, usually added to the policy by endorsement, granted the same coverage and protection as a named insured.

Question 37

The additional coverage is part of a property insurance policy provides

Answer 37

Coverage that is beyond the coverage set forth as basic coverage

Question 38

Specific insurance

Answer 38

Means providing a separate policy on each property. Scheduled a blanket insurance covers more than one property per policy

Question 39

Reporting form

Answer 39

A form that provides for monthly or quarterly reporting of the values to be insured. The premium charge is based upon the values reported, and 100% of values must be reported.

Question 40

Assignment

Answer 40

The provision of the insured‘s interest in a property insurance policy may not be transferred to another person without the consent of the insurance company

Question 41

Declarations

Answer 41

Contain the info that is specific to the individual and property being insured

Question 42

Subrogation

Answer 42

The principal of subrogation requires the insured to transfer its right of recovery against any party causing loss of the insurer, after it accepts payment from the insurer for a loss. 

Question 43

Efficient proximate cause doctrine in California states that a loss will be covered:

Answer 43

When the loss is caused by a combination of covered and excluded losses, and the most important cause of the loss is covered by the policy