Property insurance concepts

Question 1

Peril

Answer 1

cause of a loss - a fire or windstorm - policy pays for the economic loss associated with the insured peril

Question 2

Hazard

Answer 2

Introduces or increases the chance of the loss from a peril. Increase hazard suspends coverage. 1) Any change, except temporary changes, 2) increase of material hazard, 3) policy covers increase of risk the insured has no control over (will not suspend coverage), 4) adjusters seek to if hazard was material and withing knowledge of the insured.

Question 3

Physical, Moral, Morale

Answer 3

Physical characteristic of an object that increases the severity of a loss by covered perils, moral is is intentional loss (conscious mental attitude of the insured - arson and insurance fraud, morale accident proneness (unconscious mental attitude) careless clients no pride in their property.

Question 4

PROXIMATE CAUSE DOCTRINE

Answer 4

Unbroken connection between a covered occurrence and the damage from the occurrence. (Tree trips over, fire insues)

Question 5

Direct Loss

Answer 5

Physical harm to tangible property

Question 6

Indirect loss

Answer 6

economic loss as a consequence of a direct loss (Frequent underestimated.)

Question 7

Consequential Damage

Answer 7

Damage from a direct loss (Loss of spoilage from lack of power) not covered unless by peril

Question 8

Lender’s interest

Answer 8

insurance assures lenders that collateral property is covered. “Mortage Clause” or “Mortagee Clause” or “Mortgage Holders/Loss Payable Clause (loss payee):

1. Make lender a payee in any covered loss,
2. Gives mortgagee advance notice of cancellation/nonrenewal/reduction of coverage 3) Mortagee is covered even in insured engages in act of omission preventing payment, 4) mortgagee can continue policy if premium isn’t paid.

Question 9

Principle of Indemnity - Loss Settlement Valuations

Answer 9

One should not profit. ACV = Replacement cost less depreciation. Replacement Cost new for old

Question 10

Market value

Answer 10

the price that would have to be paid to purchase an asset in that market

Question 11

Co-insurance

Answer 11

Insured agrees to carry a certain % (80%,90% or 100%) of the property value in insurance. If they do, we will pay the loss; if not we will penalize them. Definition: a clause that required an insured to p ay part of a loss if coverage provided is less than specified percentage of the value of the property at the time of loss. Words must be printed on the face of poolicy and clearly identifiable.

Question 12

Specific insurance

Answer 12

separate limit for each building and contents or item

Question 13

blanket insurance

Answer 13

single limit of two or more covered items - full limit applies to any one item

Question 14

Deductibles:

Answer 14

Straight: deduct flat amount from loss payment, Franchise:Pay the loss from dollar one if the loss equals or exceeds the stated deductible, Percentage a % amount is deducted from the loss (% of property value or % of the policy limits

Question 15

Hurricane

Answer 15

storm system that has been declared to be a hurricane by the National Hurricane Center of the National Weather Service. The duration of the hurrican includes the time period in FL, continuing for the time period which the hurricane conditions exist anywhere in FL; and ending 72 hours following the termination of the last hurricane watch or hurricane warning issued for any party of FL. INSURED HAS A MAX TIME LINE TO FILE A CLAIM FROM A HURRICANE IS 3 YEARS.