Property Basics

Question 1

Accident

Answer 1

A sudden event from which loss or damage results. Unintended.

Question 2

Occurence

Answer 2

An accident includes continuous exposure to the same harmful conditions.

Question 3

Pro Rata Cancellation

Answer 3

Cancellation of insurance that refunds premium to the insured based on the exact number of days coverage was in effect.

Question 4

Short Rate Cancellation

Answer 4

A cancellation that incurs a financial penalty.

Question 5

Flat Cancellation

Answer 5

A cancellation that is retroactive to the effective date of the policy. No coverage is provided and the insurer must refund the premium paid.

Question 6

Proximate Cause

Answer 6

If two or more perils contributed to a loss, the proximate cause is the one causing the most damage/loss.

Question 7

Binder

Answer 7

Max length is 60 days.
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Contains name of the insurer, the amount, and type of insurance, and the perils insured against.

Question 8

Arbitration

Answer 8

Process whereby a disputed claim is decided by a neutral third party.

Question 9

Concurrent Causation

Answer 9

A principle holding that when two perils simultaneously cause a loss (both perils are considered proximate cause), the insurer must pay the loss even if one peril is not covered.

Question 10

Non-Concurrency

Answer 10

Two or more policies covering the same exposures that don’t have the same policy periods.

Question 11

Difference between Bailee and Bailor?

Answer 11

Bailee - A person or any organization to which property is entrusted. Mechanic, valet, etc

Bailor - A person that entrust property to a bailee.

Question 12

Functional Replacement Value

Answer 12

The cost to replace property with other property that performs the same function, although it is not identical. Typically used with older homes (victorian).

Question 13

Specific Limit

Answer 13

Insures a single item of property for a single limit of insurance.

Question 14

Scheduled Limit

Answer 14

insures one or more items of property on a single policy and the amount applying to each is shown on a schedule.

Example: One farm policy insures the home for $100k and the barn for $200k

Question 15

Blanket Limit

Answer 15

Insures property located at more than one location OR more than one type of property at the same location OR both.

Example: I got a fat mansion in Gville and a small crib in Ocala. It covers both as well as the business personal property contained in each building.

Question 16

What is the standardized policy structure?

Hint: 4 Parts

Answer 16

D - Declarations
I - Insuring Agreement
C - Conditions
E - Exclusions

Additional coverage and endorsements.

Question 17

What’s stated on the Declarations Page?

Answer 17

Who, What, Where, When, How much.

Question 18

What’s stated by the insuring agreement?

Answer 18

It is the insurance company’s promise to pay the insured.

Question 19

What is stated in the conditions section?

Answer 19

States the obligations of the parties to the contract, as well as any other conditions of coverage.

Question 20

Liberalization Clause

Answer 20

The insurer can broaden coverage with no increase in premium, without an endorsement.

Question 21

What are the 4 types of Insured?

Answer 21

Named Insured
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Insured
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First Named Insured
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Additional Insured

Question 22

Named Insured

Answer 22

If insuring a property, the named insured should be the owner, same with vehicles.

Question 23

First Named Insured

Answer 23

The person whose name appears on the declarations first. They are granted rights and responsibilities by the policy that are no granted to other insureds.

Question 24

Additional Insured

Answer 24

Under property policy’s, an additional insured is often a co-owner of real property.

Question 25

Coinsurance

Answer 25

Only applies in the even of a PARTIAL LOSS.