Property Insurance Basics Flashcards
The policy conditions define
How parties to the contract must act following a loss
Which of the following would be named on the declarations page of a property or liability policy?
First named insured
Which rating method provides an insurer with that portion of a rate that does not include provisions of expense or profit and is based on historical aggregate loss and loss adjustment expenses projected through development to their ultimate value ?
Loss cost rating
ABC corporation has $100,000 of coverage on it’s building through Company A, and $50,000 through Company B. Assuming coinsurance is not an issue, when a $24,000 loss occurs and the Pro Rata method is used, how much will each insurer pay?
Company A will pay $16,000, Company B will pay $8,000
All of the following are found in the declarations section EXCEPT the
Exclusions
Using an air-cooled engine, a proposed insured has developed a new, experimental aircraft. If the inventor applies for liability coverage, what rating type will the insurer most likely use?
Judgement
The pro rata liability clause is designed to protect the principle of
Indemnity
Which of the following would NOT be classified as personal property for insurance purposes?
A house
What provision in a property policy applies when the insurer broadens coverage but does not increase the premium?
Liberalization clause
The transfer of an insured’s right to seek damages from a negligent party to the insurer is found in which of the following clauses?
Subrogation
An insured’s roof cost $4,000 when installed 5 years ago. It has been damaged by hail and must be replaced. The new roof will cost $6,000 at today’s prices. If the roof has been depreciating at $200 a year and the insured’s policy is written on the actual cash value, how much will the policy pay toward the insured’s new roof?
$5,000
ACV is replacement cost - depreciation
Which of the following would modify the original insurance contract by either adding or removing coverage?
Endorsements
With regards to fire insurance premiums, structures with which of the following type of construction would most likely have the most favorable premium rate for the peril of fire?
Fire-resistive
The declarations page of the homeowners policy provides all of the following information EXCEPT
A statement that earthquake damage is not covered.
To purchase insurance, the policyowner must have financial interest in the property being insured. This is known as
Insurable interest
A type of policy that is used to provide a specific amount of replacement cost for a given risk after an insured property has been destroyed is called a(n)
Valued policy
Which of the following is used in the formula for calculating the actual cash valued of a property?
Replacement Cost
All the following are conditions commonly found in the insurance policy EXCEPT
Insuring agreement
Which part of an insurance policy covers claims-related expenses, reasonable expenses incurred by an insured to protect damaged property from further loss, or defense expenses?
Additional coverage
A building insured, but no one has lived or worked in it for 10 years. The building is completely empty of furniture of personal belongings. From an insurance standpoint, the building is
Vacant
The part of the insurance contract the describes the covered perils and the nature of coverage of the contractual agreement between the insurer and the insured is called the
Insuring agreement
An insured has a liability policy that sets amount from all claims that arise from a single incident at $50,000. Which type of limit of liability does the insured’s policy have?
Per occurence
The loss ratio compares
Earned premium to losses
Which of the following types of valuation works best for property whose value does not fluctuate much?
Agreed value
