Property Basics Flashcards
Cancellation
The termination of an insurance policy before its expiration date
Pro rata cancellation
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
Short rate cancellation
Termination of insurance in which the insurer retains a portion of unearned premium to cover costs.
Generally applies to cancellations initiated by insured
Flat cancellation
The cancellation of a policy on the date the policy becomes effective.
Nonrenewal
The termination of a policy by the insurer at the end of the policy term
Lapse
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.
Binder
Temporary contracts of insurance until policy of insurance is issued lasts 90days
Right of salvage
The right of the insurance to take possession of damaged prop after the loss of prop has been paid.
Salvaged prop belongs to insurer
Salvage value
The anount for which property can be sold at the end of its useful life.
Endorsement
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
Proximate cause
The primary cause of loss
The immediate/or actual cause of loss under an insurance policy
Concurrent causation
When two perils simultaneously cause a loss, the loss is covered even if one of the perils is excluded by the policy.
Concurrency/concurrent policies
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.
Non-concurrent/non-concurrent policies
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.
 deductible
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
Bailee
An individual/firm who was taken into its care, custody, and or control the property of another for servicing repair storage
Bailor
An individual who retains the ownership of prop that has been taken into the care ,custody ,and or control of a Bailee
Primary insurance
Prop coverage that provides benefits up to the limits of a policy
Excess insurance
Prop coverage above the primary amount of insurance. Excess insurance does not pay until any primary insurance has been exhausted.
Open policy
The value of insured property is not agreed-upon in advance but is left to be determined in a case of loss
Valued policy
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.
Occurance
A continious or repeated exposure to the same general harmful condition.
Direct loss
Damage to prop resulting from an insured peril
Indirect loss ( consequential loss )
A second or financial loss occuring as the result of a direct loss.
Ex: loss of rents,business income
Types of perils
Named peril: policy on provides coverage for perils listed
Open peril: coverage for all perils except those specifically excluded .
Actual cash value
The policy pays for the cost to repair or replace the damaged property at the time of loss minus depreciation
Replacement cost
Cost to replace prop with prop of a like kind and quality, without subtracting depreciation.
Extended replacement cost
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
 agreed value
Value of particular prop that is agreed on by insurer and insured.
.if total loss occurs, the insurer will pay the great value.
Stated value
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
 market value
The price a willing buyer would pay for the prop purchase from a willing seller.
Coinsurance
A provisional contained in most policies and sharing commercial or residential property, used to encourage the insured to purchase and maintain insurance to value.
Coinsurance formula
Amount of insurance carried
(Limit of liability policy) x loss
/ min amount of insurance required ( stated% of policy value)
Named insured
Any person, firm, or organization specifically designated by name on the declarations page of the policy
First named insured
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.
Additional insured
A person, firm, or organization, usually added to the policy by endorsement, granted the same coverage and protection as a named insured.
The additional coverage is part of a property insurance policy provides
Coverage that is beyond the coverage set forth as basic coverage
Specific insurance
Means providing a separate policy on each property. Scheduled a blanket insurance covers more than one property per policy
Reporting form
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.
Assignment
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
Declarations
Contain the info that is specific to the individual and property being insured
Subrogation
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. 
Efficient proximate cause doctrine in California states that a loss will be covered:
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
