Property Insurance Flashcards
ACV stands for what?
Actual cash value
Actual cash value means what?
It is the required amount to pay damages or for property loss based on the properties current replacement value minus depreciation
ACV=ReplacementCost×(TotalLifeRemainingLife)
So, in our example: ACV=$300×(105)=$150
If a producer is convicted of a felony what is the time period they have to tell the director?
within 30 days
Another name for the word endorsement
Rider or amendment
Coverage A-F does what?
A - damage to home
B - damage to other structures (fences, detached garages)
C - theft
D - additional living expensed if you can’t live in your house (construction)
E - legal expenses
F - medical payment
An insured can be negligent in two ways
Omission and Commision
Indemnity means
Reimbursement
Commision negligence is what?
Doing something that you should have not done
What is underwriting?
Process of deciding if the applicant qualifies for coverage and what the premium should be
What is the Gramm-Leach Biley Act or
GLB is a privacy act. Provides protection of consumer information. Allows for organizations to share your info but after that it’s private It also must protect consumer from being accessed by others by pretexting
What is pretexting
Obtaining info by using false pretense
Loss settlement provision also call what?. Requires what
It requires that the insured property be insured for at least a specific percentage of its value at all times
The loss settlement provision is also called a
Coinsurance clause
Formula for loss settlement when property is not insured to value
Loss settlement (adjustment) = Amount carried / Amount required X loss
Amount required = coinsurance percent x replacement cost at time of loss
So how much will the insurance company loss settlement be if they have 80% and property not insured to value
Replacement cost 200000 at time of fire
Policy of 140000 and fire loss of 48000
Deductible 500
41500
Five ways to assure the property is insured to value.
1 Producer reviews it annually
2 Add an endorsement for extra charge that increases the face amt of the policy. Inflation guard endorsement
3 Some do this at renewal
4. If you had a coinsurance of 80 you can increase it to 100
5. Extra charge called guaranteed replacement cost endorsement.
ITV
Insurance to value” (ITV) is a concept that refers to the cost to replace or repair a property, and is not the same as the property’s market value. ITV is an estimate of the full cost to restore or replace the property, and is typically written as a percentage. The percentage represents the amount of the reconstruction costs that the insurer will pay.
Parts of a policy. 5
Declarations
The insured
Agreement
Conditions
Exclusions
The agreement part of a policy is also called two other things and explain
Insuring agreement
Insuring Clause
This clause states the companies promise to indemnify which means reimburse
Explain coinsurance and it is also called
Loss settlement clause
No, an 80% coinsurance clause doesn’t mean you’re not insured up to value if you meet the requirements. A coinsurance clause is a common feature of some business and home insurance policies. It requires the policyholder to purchase insurance that’s at least a certain percentage of the insured property’s value. For example, if the policy has an 80% coinsurance clause, the policyholder’s insurance must be at least 80% of the property’s value. If the policyholder meets this requirement, the insurer will pay the full value of any loss, minus the deductible, up to the policy limit.
If the policyholder doesn’t meet the coinsurance requirement, they’ll be penalized when they file a claim. The amount of the penalty is calculated by dividing the amount of coverage the policyholder has by the amount they should have had. For example, if a policy has a $1,000,000 replacement value and an 80% coinsurance clause, the policyholder would need to insure the property for at least $800,000. If they don’t, the insurance company will only cover the percentage of the replacement cost that matches the policyholder’s coverage. The policyholder would be responsible for paying any repair costs that exceed the coverage.
Coinsurance clauses can also encourage policyholders to carry adequate levels of coverage by offering premium reductions for those who meet the coinsurance limits.
5 parts to a contact
Competent parties
Offer and acceptance
Agreement
Consideration
Legal purpose
When must you tell insurance company you had a fire?
When must you show proof
Immediate
60 days
What is insurance
Transfer of risk
Insured cannot sue insurance company unless requirements are met and must be within ….
What requirements? 4
12 months
Must have given insurance company proof of loss within 60 days, must have done your best to have saved the property , must have contacted insurance immediately and must have separated undamaged from damaged and had the company inspect
Insurance company must indemnify the insured within
60 days of proof of loss
Explain subrogation clause
The theory behind a subrogation clause is that the insurance company shouldn’t have to bear the loss if someone else was responsible for the damages. Subrogation claims can be an important tool for insurance companies to help minimize their losses and manage
Pro rata liability clause
Applies when there are concurrent policies. Policies should be identical except in face value amounts
If a mortgagee also called lender is named on the declaration page it requires three things
10 day notice of cancellation. To have loss paid to mortgagee and to provide proof of loss should insured fail to
Vacancy and unoccupancy clause
If included states coverage is terminated if property has been left vacant or unoccupied for 60 consecutive days
Two types of property and casualty policies
Personal lines property casualty insurance and commercial
ECP is what and covers what
Extended coverage policy. WHARVES
Wind , hail, aircraft, riot and civil commotion,vehicle volcanoes, explosions and limited smoke (from a sudden cause)
DP1 must be occupied by how many
Four or less families
