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Insurance Illinois Exam > Property Insurance > Flashcards

Property Insurance Flashcards

1
Q

ACV stands for what?

A

Actual cash value

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2
Q

Actual cash value means what?

A

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

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3
Q

If a producer is convicted of a felony what is the time period they have to tell the director?

A

within 30 days

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4
Q

Another name for the word endorsement

A

Rider or amendment

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5
Q

Coverage A-F does what?

A

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

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6
Q

An insured can be negligent in two ways

A

Omission and Commision

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7
Q

Indemnity means

A

Reimbursement

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8
Q

Commision negligence is what?

A

Doing something that you should have not done

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9
Q

What is underwriting?

A

Process of deciding if the applicant qualifies for coverage and what the premium should be

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10
Q

What is the Gramm-Leach Biley Act or

A

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

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11
Q

What is pretexting

A

Obtaining info by using false pretense

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12
Q

Loss settlement provision also call what?. Requires what

A

It requires that the insured property be insured for at least a specific percentage of its value at all times

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13
Q

The loss settlement provision is also called a

A

Coinsurance clause

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14
Q

Formula for loss settlement when property is not insured to value

A

Loss settlement (adjustment) = Amount carried / Amount required X loss

Amount required = coinsurance percent x replacement cost at time of loss

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15
Q

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

A

41500

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16
Q

Five ways to assure the property is insured to value.

A

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.

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17
Q

ITV

A

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.

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18
Q

Parts of a policy. 5

A

Declarations
The insured
Agreement
Conditions
Exclusions

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19
Q

The agreement part of a policy is also called two other things and explain

A

Insuring agreement
Insuring Clause
This clause states the companies promise to indemnify which means reimburse

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20
Q

Explain coinsurance and it is also called

A

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.

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21
Q

5 parts to a contact

A

Competent parties
Offer and acceptance
Agreement
Consideration
Legal purpose

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22
Q

When must you tell insurance company you had a fire?
When must you show proof

A

Immediate
60 days

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23
Q

What is insurance

A

Transfer of risk

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24
Q

Insured cannot sue insurance company unless requirements are met and must be within ….

What requirements? 4

A

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

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25
Insurance company must indemnify the insured within
60 days of proof of loss
26
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
27
Pro rata liability clause
Applies when there are concurrent policies. Policies should be identical except in face value amounts
28
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
29
Vacancy and unoccupancy clause
If included states coverage is terminated if property has been left vacant or unoccupied for 60 consecutive days
30
Two types of property and casualty policies
Personal lines property casualty insurance and commercial
31
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)
32
DP1 must be occupied by how many
Four or less families
33
VMM endorsement is excluded if premises vacant for
30 consecutive days
34
Dp2 covers
DO1 stuff WHARVES plus VMM BBBicegolf (Bursting of heating, bursting of water heater, burglary, ice snow sleet weight of, collapse of building, electrical damage artificial, glass breakage, objects falling outside, leakage of water or steam, freezing of pipes
35
What policy can be used for rental properties with more than four families.
Building and personal property policy (form)
36
What policy for office buildings , stores, warehouses or industrial building
Building and personal property policy or form
37
Building and property policies are like property policies how. How is it different
Basic , broad and special All three forms cover sink holes, sprinkler leakage damage and debris removal
38
With building and property policies they are terminated if premises vacant or unoccupied for how many day?. It can be extended with a what?
60 consecutive days Vacancy and occupancy permit
39
Building and personal property policies coverage reimbursements are usually for ….
ACV
40
What is a package policy
All the coverages that one needs all in one policy. Packages property and casualty insurance coverages
41
Difference between property and casualty insurance
Property insurance Covers your assets and belongings, such as your home, car, motorcycle, golf cart, or rental property. Casualty insurance Covers your liabilities as a homeowner, renter, or driver. This includes if you're found legally responsible for an accident that causes injuries to others or if you damage another person's property.
42
To qualify for homeowners policy dwelling there are two requirements
Owner occupied and have four or less families
43
When personal property in a homeowners policy is replacement cost for extra premium, what is the extra premium
70% of coverage A
44
Coverage D pays what percent of coverage A
HO1 and 8 it’s 10% And it’s 30% on all others
45
Coverage E Minimum limit is The insured includes anyone that is … It does not cover …
Personal liability if you are liable for bodily injury and or property damage. 25,000 Member of household who is a relative or is under 21 Personal I jury like defamation, false arrest etc
46
Coverage F describe? Within how many years?
Medical expenses incurred by somebody other than insured. 3 years
47
HO1 is also called It covers … and …… and ……
Basic 3 standard fire policy perils. Fire lightening removal, wharves and VMM
48
HO8 is also called Same as HO1 except….
Modified form Dwelling and personal property determined by ACV
49
HO2 is also called Protects what
Broad Both dwelling and personal property against about 20 named perils
50
HO3 also called Describe opened or named? What parts?
Special Dwelling is opened but personal property is named perils
51
HO5 is also called? Open or closed?
Comprehensive Dwelling is open. Stuff is opened
52
HO4 also called Open or named? ACV or replacement? Coverage D is covers what % of C
Renters insurance. Or broad form tenants coverage About 20 named perils ACV 30
53
HO6 Also called ……. Coverage A is…..coverage Coverage C? Coverage D is what % of C? A-D also called…. E and F called…. Perils?
Condo Unit owners form Replacement cost ACV Section 1. Section 2 20 broad named perils
54
What % of coverage C for loss of personal property off premises
10% of C or 1000 whichever is greater
55
Home owners get how much per tree If many trees then no more than what % of A What type of perils
5% Limited
56
Standard Fire Policies excludes
Most indirect value items: Money, valuable papers, bookkeeping records/accounts
57
Coverages ABCD also referred to as section one exclude what?
The four perils which are also excluded under the standard fire policy. Such as indirect damage to cash accounts/bookkeeping accounts and valuable documents , war, civil unrest, intended fires/neglect, Also, the four perils which are excluded from the extended coverage policy ECP. Nuclear reaction, earth movement, flood (sewer backup and water below the surface) and power interruption away from the premises
58
VMM coverage is excluded after the premises have been vacant for
30 Consecutive days
59
Pro rata liability clause applies when there are
Concurrent policies
60
The what and the what are commercial package policies They combine what?
Business owners policy, BOP and commercial package policy CPP These policies package together, property insurance, and casualty insurance
61
What policy is used to cover commercial or business buildings
Building and personal property policies or forms
62
Building and personal property policies can be written to cover anyone of the three groups of perils, such as? These forms also cover what three things
Basic cause of loss form, broad cause of loss form, and special cause of loss form. Sinkholes , sprinkler leakage, and debris removal
63
Building and personal personal property policies have how many optional additional coverages?
1. crime coverage 2. sign coverage 3. exterior grade floor glass coverage, 4. employee dishonesty coverage 5. boiler and machinery coverage 6. Builders risk coverage 7. Terrorism coverage
64
Business and personal property policies have how many automatic extensions of coverage?
Five
65
In regards to business and personal property policies, what endorsement is used when a business must continue operations while the insured premises are being remodeled or restocked as a result of a covered peril?
Extra expense coverage. It protects the insured against extra expenses of doing business during the period of restoration in excess of normal business cost.
66
Personal article floater contains a what? What is another name for this?
A schedule which is just another name for list
67
A claimant must prove what in court? These are defined how?
Must prove necessary elements. Legal requirements
68
What is it called when a special type of property has a special characteristic to deteriorate under special circumstances Give an example
Inherent Vice Damage to a fur coat stored in a damp place
69
With the removal peril in the standard fire policy , All risk removal damage applies for how many days at each location where property is removed.
5
70
What is it called if a company has the right to assume ownership of damaged property to repair it and sell to recover loss
Salvage
71
DP3 Personal property , coverage C, is protected against damage caused by
The broad form named perils
72
With building and personal property form has the optional addition Coverage C of the personal property of others also called
Bailee Coverage
73
5 automatic coverages of Building and property coverage
Personal property to others temporary on premises . Here is the tv you sold me that you will send off. Off premises New property Valuable papers Trees
74
HO6 Without additional premium buildings and personal property is protected against what type of perils ? With additional premium buildings can be protected against. …perils and personal property against … perils
Broad Special all perils Broad
75
What protects building contractor against loss to buildings under construction and equipment that are within 100 ft of where the building is being constructed
Builders Risk Coverage
76
DP1. Describe coverages
A - acv. 25,000 limit B automatically extended 10% of A. ACV C - optionally additional D. Automatically extended 10% of A
77
DP2
A RCV B - optional additional RCV C - optional additional ACC D ditto Optional additional up to your face value if the policy also called limits of liability
78
Coverage E Min limit Who is covered
Pays for bodily injury and or property damage caused to other people other than the insured. On or away from premises. Minimum limit 25000. Any member in house who is a relative or under 21.
79
Personal property floater
Protects the listed property against all risks worldwide for ACV or RCV with extra premium. It is not blanked coverage it is specific for each listed item.
80
Building and property coverage 3 optional additiona 5 extended
1. A 2 B. Personal property of insured or within 100 ft of premises C personal proper of others called Bailee coverage 1. Personal property of others and personal effects. Occasionally storage of others 2. Off premises 3. Newly acquired property. Valuable papers and records but not bookkeeping 5. Outdoor trees shrubs plant fences antennas and signs not attached he’d. Within 100 ft.
81
Coverage C special limits. List 8 examples
Papers. Watercraft and furnishing like trailer. Protected from theft if on premises Furs , jewels, silverware etc, guns, stuff for business purposes on or off premises Electric car stuff 10% of C for off premises stuff Loss of pairs. ACV to restore the pair

Insurance Illinois Exam (5 decks)

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